Time May Be Running Out on Backdoor Roth IRAs | Small Business Trends


The passing of President Biden’s Build Back Better (BBB) legislation could mean the scrapping of a loophole referred to as the backdoor Roth Individual Retirement Account (IRA). The Roth IRA unlike traditional IRAs is funded with after-tax dollars making contributions not tax-deductible. But once account holders start withdrawing funds, the money is tax-free. It gives them an edge over traditional IRA deposits which are generally made with pretax dollars and income tax is charged when money is withdrawn from the account during retirement

Critics of the backdoor Roth say that it allows individuals a loophole to get around the income limits that normally prevent high earners from owning Roths.

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