Biden’s budget targets backdoor Roths and $10M retirement accounts

investmentnews.com:

Wealthy Americans would lose some of the tax perks they can currently access through various retirement savings accounts under the budget proposed Monday by President Joe Biden.

Those cuts are part of a wider push by the White House to raise taxes or eliminate loopholes for corporations and very wealthy households, while proposing certain tax reductions for lower-income families.

On the cutting board is the so-called “backdoor” Roth IRA conversion, a strategy that’s used by high earners to get around the income limits on contributions to individual retirement accounts. The proposed budget, which includes many changes previously floated by the administration, would also tamp down on high account balances in various tax-deferred accounts.

“The provision would prohibit a rollover to a Roth IRA of an amount distributed from an account in an employer-sponsored eligible retirement plan that is not a designated Roth account (or of an amount distributed from an IRA other than a Roth IRA) for a high-income taxpayer,” an explanation of the budget by the Treasury Department read, defining high income as $450,000 for those married and filing jointly, $425,000 for the heads of households, and $400,000 in other cases.

Curiously, the Treasury’s “green book,” which explains the proposed budgetary provisions, does not mention 401(k) plans once in its 256 pages. It’s unclear whether the retirement account limits would apply to those account types, as the Treasury cites other types of employer-sponsored plans, including 401(a)s, 403(b)s, 457(b)s and simplified employer pension plans, that would be subject to limits.

Biden would also prohibit Roth IRA rollovers “unless the distribution was from a designated Roth account within an