Backdoor roth conversions

 This is the dumbest and possible the best thing ever.   I strongly believe for the first 5 to 10 years ages 15-30 of your career you should be doing Roth IRA contributions.  Your income is just starting to go up and will probably be in the lowest tax bracket you ever will. In some cases you will get married during this time which may increase or decrease your tax brackets. In most cases spouses don't make the same amount and will lower your tax bracket.  Hence besides love marriage can make financial sense. 

Why this is so dumb. If you or your combined family income exceed this 208k barrier as of 2020 you cannot get any tax advantages from a Traditional IRA and you can't directly contribute to an Roth you only avoid paying taxes awhile in the account. So in sort you make too much so you don't get the benefit. 

Now you can contribute to a Traditional IRA with after tax money and let it grow tax free until you take it out and then pay taxes. But it is also locked in until you're 59.5 years old. Blah I would rather just put it in another account.  

Ok now the dumb and great part.  Let's say you have $6k just laying around in January. You can put that money into a Traditional IRA and wait a day or so and the with a few clicks Convert all the amount into an Roth IRA (assuming your traditional is empty).  Don't report your withholding and voila you can contributed to a Roth IRA without paying any extra taxes or fees. That money will now grow tax free and when you take it out at 59.5 it will be tax free.  The big different in this Roth IRA contributions vs a normal contribution is you can't take out your contribution right away you have to wait 5 years or year you put it in plus 4.   Note this is also how you access your 401k for early retirement. Now that is awesome, but WTF if this is legal why is there an income limit on a Roth IRA anyway.  This is also why tax law is dumb.   If I had to guess the reason this loophole exists because the tax law professionals don't know how to remove it with removing the benefit it provides retires in the 70s. Or the tax income the gov't gets when someone rolls over a 401k into a Traditional IRA and then converts that money into a Roth.   Since this is a taxable event and you will pay taxes on gains. IRS probably doesn't care to much since the FI community is probably the most know group using this to there advantage. As we are a small group.

Since these Individual Retirement Accounts are a way to encourage people to save for retirement. I don't see why there would be income limits for even the well compensated individuals.  Even some people make alot of income doesn't mean they have a high net worth. It is interesting.  Would it be better to taxes this high earners more when they are trying to be responsible.  They are trying to save enough money now to avoid being a burden to their family and the system.  Or to use there excess income and tax revenue generated to help those who need it in the system.