A High-Class Problem

Considering the options in a post-backdoor world. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_improvingfinances&utm_content=32429&elqTrackId=161834f6115145d09d567c959162bf61&elq=7a3dfdc7ac01460a934301a7dff4a102&elqaid=32429&elqat=1&elqCampaignId=14987) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] Will we see meaningful changes on the tax front this year? That’s an open question, but the House Ways & Means Committee advanced a proposal to do so in September. One component that has been widely anticipated to pass muster in a deeply divided Congress is [the elimination of the so-called backdoor Roth IRA](. Getting funds into a Roth IRA via the backdoor has been growing in popularity over the past decade-plus, as high-income savers have sought to shelter their gains from taxes amid a soaring stock market. But if the backdoor Roth goes bye-bye, what’s left? [I recently discussed that topic]( with Tim Steffen, director of tax planning at Baird. I also waded into [whether high-income investors should even bother with IRAs]( at all if they can no longer get in through the backdoor. I concluded that it won’t make sense except in a few situations. What will continue to make sense for high-income folks are health savings account contributions for those who qualify to make them. Health savings accounts have been growing like a weed thanks to the confluence of strong markets and the uptake of high-deductible healthcare plans, and [their tax benefits are indeed unmatched](. Pretax dollars go in, the money grows tax-free, and withdrawals for qualified health-care expenses are also tax-free. (Alas, you can’t be covered by Medicare to contribute to an HSA; you must be covered by a qualified high deductible health plan.) Our analyst team recently came out with [a report rating the largest HSAs]( and it’s a must-read; Susan Dziubinski and Megan Pacholok discussed the best HSAs for “[spenders]( and “[investors]( I’ve also written about how to use HSAs—specifically, [how much to invest in one]( as well as [what happens to your HSA in retirement](. I believe that tax planning is one of the most reliable ways to boost take-home returns. As always, we’ll be keeping an eye on the tax landscape to help you do just that. With warm regards, Christine Benz [What Proposed Tax Changes May Mean for You]( Here's a rundown of the provisions to keep on your radar. [Watch Now]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [Without the Backdoor, Aftertax IRA Contributions Don't Add Up]( Better tax treatment, low yields argue for using a taxable account instead. [Read More]( [Is the Door Closing on Backdoor Roth IRAs?]( The 'mega-backdoor Roth IRA' is on the chopping block, too, but neither is a done deal. [Read More]( [Should Spouses Obtain Separate Healthcare Insurance?]( With more employers levying spousal surcharges, obtaining coverage on a single plan isn't necessarily the most cost-effective for dual-earning couples. [Read More]( [Zachary Karabell: Brown Brothers Harriman Is the Story of American Capitalism]( Author Zachary Karabell discusses the firm's evolution and what made it different from many of its Wall Street counterparts. [Listen Now]( [Are Supply Chain Woes Abating?]( Dhananjay Phadnis, a Fidelity portfolio manager who focuses on Asian equities, discusses what he's seeing on the ground. [Read More]( Listen Now Get the latest investing insights and market updates with [Morningstar’s podcasts]( available on your iPhone, iPad, Android, PC, or smart speaker. Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2021 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602