Congress Approved Back-Door Roth IRA

Roth IRA contributions are allowed only when adjusted gross income doesn’t exceed a certain level. (The income level doesn’t apply to conversions of traditional IRAs to roth iras.) In the back-door Roth IRA, someone with income above the Roth IRA limit makes a nondeductible contribution to a traditional IRA. Then, the IRA is converted to a Roth IRA. Some have argued that the back-door Roth IRA is an unintended loophole that the IRS or Congress could close at any time. But in the Tax Cuts and Jobs Act, Congress specifically stated that the back-door Roth IRA is legitimate tax planning.