The Front Door Opens Wide for the Backdoor Roth IRA

8 Pages Posted: 5 Jul 2017 Last revised: 2 Dec 2019

See all articles by Philip Manns

Philip Manns

Liberty University - School of Law

Timothy M. Todd

Liberty University School of Law

Date Written: May 29, 2017

Abstract

Invoking allusions to Caligula and Roman tax law, the Sixth Circuit, in Summa Holdings, reversed the Tax Court and held that the Commissioner could not use the substance-over-form doctrine to prevent taxpayers from combining the tax savings effects of a domestic international sales corporation with a Roth IRA. In this article, we argue that the Summa Holdings rationale supports and allows the backdoor Roth IRA — that is, making a nondeductible, traditional IRA contribution and then converting it into a Roth IRA (ostensibly to avoid the income limits on direct contributions to Roth IRAs).

Keywords: tax, IRA, Roth, Roth IRA, tax planning, retirement planning, substance over form, Tax Court

JEL Classification: K1, K00, K19, K2, K34

Suggested Citation

Manns, F. Philip and Todd, Timothy M., The Front Door Opens Wide for the Backdoor Roth IRA (May 29, 2017). Tax Notes, Vol. 155, No. 9, 2017. Available at SSRN: https://ssrn.com/abstract=2995644

F. Philip Manns

Liberty University - School of Law ( email )

1971 University Boulevard
MSC Box 710129
Lynchburg, VA 24515
United States

Timothy M. Todd (Contact Author)

Liberty University School of Law ( email )

1971 University Boulevard
Lynchburg, VA 24515
United States

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