A Popular Tax Trick for Savers, the Mega ‘Back Door’ Roth IRA, Is Eliminated in House Bill - WSJ

The IRA measures will raise tax revenue to help pay for items such as universal prekindergarten and lower prescription drug prices.

What an accounting trick!

They eliminate the tax payments the government receives today from a 35 year old couple making backdoor Roth IRA in exchange for taxes paid at withdrawal on a traditional IRA at least 25 years away, but book the assumed additional tax revenue today.

This is Enron-style accounting.

Of course, many models suggest that these high earners that Congress is targeting would be better off using a pre-tax strategy during peak earnings years anyways. The assumptions made by this Congress are dubious, to say the least.

And I’d be remiss if I didn’t point out that the Democratic leadership looking to kill the Backdoor Roth today are the same ones who codified it into law when they held power in 2010.