Backdoor Roth IRA

[00molavi]

Originally Posted by Mr. Zero

Has anyone else actually gone through the process of creating a backdoor Roth IRA? 00molavi, have you read anything about backdoor Roth IRAs that would make you think twice about it?

Well, I do think twice about everything , but no not really. One thing is that when you put the money in the IRA, before transferring to the Roth, it can appreciate and you have to pay extra for that.

I opening a new IRA, I guess I am being too lazy. Can I have two IRA's with Vanguard?

And for those that state this loophole is intentional, I don't get it. It is used by people who have already maxed out on before tax contributions and then they do not pay taxes on the appreciation of the Roth. So at the end they pay less taxes, so how does this help the IRS?

[mathjak107]

how does it benefit the irs? i answered that question above:


the gov't knows very few Americans are going to be in a higher tax bracket at retirement.
The loss of a paycheck and possibly two pay checks almost guarantees they will be in lower brackets so they want that tax money now while you still have those pay checks and higher tax brackets.


a retired couple can also pull up to 22k tax free from those deferred accounts using just the standard deductions,exemptions and the extra deduction you get at 65. they can also pay as littlw as 1800 bucks tax on 42k from those deferred accounts in retirement.

the gov't does not want you to get anything that is a deal if they can offer you something to tax it now at those nice juicy tax rates you will hit while working.

throw in the fact many relocate to low and no tax states and the states benefit too.