What You Need to Know
- House Democrats changed some of the effective dates in their revised plan, Ed Slott said.
- The estate tax and capital gains tax changes are out as of now.
- This is a very fluid situation that advisors must stay on top of, Slott said.
The elimination of backdoor Roth IRA conversions has made it back into the latest version of House Democrats’ tax and spending bill.
President Joe Biden’s Build Back Better framework excluded the retirement planning provisions that were approved in the House Ways and Means Committee’s Build Back Better bill in mid-September.
House Democrats “changed some of the effective dates” for some of the provisions, with “some not effective until 2029, so that’s a long way out,” IRA expert Ed Slott of Ed Slott & Co. told ThinkAdvisor Thursday morning.
The estate tax and capital gains tax changes “are out,” as far as the updates made to House Democrats’ plan last night, Slott said.
What Your Peers Are Reading
The updated bill would prohibit further contributions to a Roth or traditional IRA for a taxable year if the total value of an individual’s IRA and defined contribution retirement accounts generally exceed $10 million as of the end of the prior taxable year. This limit would apply to taxpayers with income in excess of $400,000 (single), or $450,000 (married-joint), but would not be effective until 2029.
An increase to required minimum distributions from IRAs larger than $10 million would be pushed back “from starting next year to now starting in 2029 for some reason,” Slott said.
Under that provision, if an individual’s combined traditional IRA, Roth IRA and defined contribution retirement account balances generally exceed $10 million at the end of a taxable year, a minimum distribution would be required in 2029.