So I see that the proposed tax bill has a ban on backdoor Roth "contributions" by specifying that no after-tax monies an in IRA or qualified plan can be converted to a Roth IRA no matter what your income is.
Leaving aside any political wisdom or lack thereof of that, I'm wondering how the heck that'll even work in practice.
If you have an IRS with some basis, any distributions (even Roth conversion distributions) get prorated to determine the taxable and non-taxable part of the distribution. However, the proration ratio cannot be known until the following Jan 1 because it depends on the Dec 31 account balances.
So how the heck is this supposed to work? You do a conversion in May and then the following January you can finally figure out what part of the conversion was after-tax money and so not allowed to have been done? Does the IRS institute a special rule for Roth conversion distributions so that they're deemed to be pre-tax first instead of prorated?
And there's another twist. I read the actual language of the law and to my not-a-lawyer/not-an-EO eyes it sure seems to be saying that if there's any after-tax basis at all a conversion simply is not allowed period. It has language along the lines of conversions not being allowed "if any portion of the distribution would be treated as not includible in gross income" -- well, ANY distribution of an IRA with after-tax basis would have a portion of the distribution that "would be treated as not includible in gross income". Thus this language would seem to make it impossible to do any Roth conversions if your IRA accounts collectively had even a single dollar of after-tax basis in them. Yikes!