Why Is Everyone Talking About the Mega Backdoor Roth IRA?

The mega backdoor Roth IRA is a tactic that can supercharge your retirement savings and help you shelter investment growth from taxes in retirement. Using the mega backdoor could allow you to contribute up to $38,500 to a Roth IRA per year. The House Ways and Means Committee thinks it's a loophole that only benefits wealthy Americans, and it should be closed.

In its recent tax proposal to help raise funds for President Joe Biden's $3.5 trillion social infrastructure plan, the committee includes several changes prohibiting both the backdoor Roth IRA and the mega backdoor Roth IRA. Specifically, it "prohibits all employee after-tax contributions in qualified plans and prohibits after-tax IRA contributions from being converted to Roth regardless of income level."

Here's how these changes might affect your retirement savings plans.

Continue reading

Source Fool.com