UPDATE: Great News! The mega backdoor will not be banned for 2022 (LEARN MORE HERE) as President Biden announced on December 16 that the Build Back Better bill won’t get passed in 2021so you just need to adopt the solo 401k plan by December 31, 2021 so that you can make all solo 401k contribution types including the voluntary after-tax for 2021 by your business tax return due date plus extension in 2022.
Nov. 3rd, 2021: The Proposed Band of the Backdoor Roth & Mega Backdoor Roth is Back–See the following for more Information: https://www.mysolo401k.net/back-again-backdoor-roth-and-mega-backdoor-roth-added-back-to-pending-reconciliation-bill-build-back-better-act-of-2021/
The latest draft of the Build Back Better Act has good news for IRA and 401k including solo 401k account holders. Essentially, the proposed ban of both the backdoor Roth IRA and mega backdoor 401k including the mega backdoor Roth solo 401k has been dropped from the bill.
Propose Ban Mega Backdoor Roth Solo 401(k)/IRA & IRA Accredited Investment Removed from Bill – Build Back Better Act
The additional provisions that would have impacted self-directed retirement accounts have also been removed from the bill:
- The proposed new required minimum distribution for high-balance retirement accounts has been removed.
- The proposed ban on Roth conversions for high-income taxpayers has been removed.
- The proposed ban on IRA accredited investments has been removed.
- Also, the IRA LLC or the solo 401k LLC will not be banned.