Is Backdoor Roth Still Allowed In 2022? What You Need To Know

Is the Backdoor Roth Strategy Still Viable in 2022?

As of January 2022, significant changes have impacted the Backdoor Roth strategy. First, mega backdoor Roth conversions have been discontinued, effectively closing this popular avenue for some individuals. Additionally, there is now a cap on the total retirement account balances that can be aggregated for tax purposes, potentially affecting the tax efficiency of your retirement savings. Moreover, starting in 2029, minimum distributions will be mandatory for certain retirement accounts, introducing a new requirement for those planning their financial futures. Finally, it’s important to note that the Backdoor Roth strategy is slated to be permanently phased out by 2032, signaling a limited window of opportunity for those considering this approach. These changes were enacted on September 12, 2022, and have significant implications for retirement planning.

What are the changes to the Backdoor Roth IRA contribution limits for 2022 and 2023? In 2022, individuals can contribute up to $6,000 to a Roth IRA, and this limit increases to $7,000 for those who are 50 years old or older. However, in 2023, the limits go up to $6,500 for regular contributors and $7,500 for individuals aged 50 and above. These limits pertain to annual contributions to Roth IRAs and play a crucial role in retirement planning.

Is it possible to execute a Backdoor Roth for the tax year 2022 in 2023? Absolutely, you can perform a Backdoor Roth IRA contribution and conversion annually. For the 2023 tax year, the contribution limit stands at $6,500, with an increased limit of $7,500 if you’re 50 years of age or older. This strategy allows you to make use of the Backdoor Roth method consistently, providing a valuable tool for your retirement savings strategy.