If you qualify for the 199A deduction, you might want to consider Roth and Mega Backdoor Roth 401 (k) contributions. This strategy is really for people who are maximizing their savings in other avenues first: 401k, … So, what’s a mega back door Roth IRA? The funds can begin compounding on a tax-free basis once the rollover is finalized. When converting a traditional IRA, keep in mind: If you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth … Consider other investments if you can’t do a mega backdoor Roth. Large plans that offer in-plan Roth conversions tend to have institutional share class investments which are lower cost than the equivalent ETF (plus no transaction fees), so you may shave a few basis points off your cost of investing. Ed Slott – a renowned tax expert – on tax benefits of IUL policies, Indexed Universal Life Insurance (IUL) Policy is a Great Tax-Free Retirement Savings Plan. While Fidelity Investments does not offer a solo 401k that allows for voluntary after-tax contributions, which is the first step in implementing the “ mega back door Roth solo 401k strategy, “Fidelity does … If you have a 401(k) retirement plan that allows after-tax contributions, you may be able to open a mega backdoor Roth. Some time should pass between the date of the contribution and the date of … ._3Im6OD67aKo33nql4FpSp_{border:1px solid var(--newCommunityTheme-widgetColors-sidebarWidgetBorderColor);border-radius:5px 5px 4px 4px;overflow:visible;word-wrap:break-word;background-color:var(--newCommunityTheme-body);padding:12px}.lnK0-OzG7nLFydTWuXGcY{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;padding-bottom:4px;color:var(--newCommunityTheme-navIcon)} « Reply #6 on: December 14, 2020, 02:52:37 PM » I have a Fidelity 401K and it does have all 3 options on the screen to choose from (pre-tax, roth … We’ll tackle all your questions on the mega back door Roth IRA. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/ReredditLink.f7b66a91705891e84a09.css.map*/My company did the same, except no phone call was needed. For 2018, you have to make less than … We only need a few data from you (3 mins) to compare quotes of 20+ Indexed Universal Life Insurance (IUL) products from 10+ reputable companies. If your 401K account is with Fidelity and your employer allows after-tax contribution to your 401K. The number is pretty small, but if you can, here’s how you can convert. If you want to open a Roth IRA and make too much money to do so, don’t fret. If you do decide to convert, the timing can be a little bit tricky. Get in Touch. Now for the mega backdoor procedure. You can definitely pursue this. If you want to do this in step #2 above, instead of Roth 401K, you have to call Fidelity to have them move after-tax contribution money in your 401K to a Roth IRA account each time. ._3Qx5bBCG_O8wVZee9J-KyJ{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN{margin:0;padding:0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;margin:8px 0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ.QgBK4ECuqpeR2umRjYcP2{opacity:.4}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label{font-size:12px;font-weight:500;line-height:16px;display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label svg{fill:currentColor;height:20px;margin-right:4px;width:20px}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;padding:0;width:100%}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_ svg{display:inline-block;height:12px;width:12px}.isInButtons2020 ._4OtOUaGIjjp2cNJMUxme_{padding:0 12px}.isInButtons2020 ._1ra1vBLrjtHjhYDZ_gOy8F{font-family:Noto Sans,Arial,sans-serif;font-size:12px;font-weight:700;letter-spacing:unset;line-height:16px;text-transform:unset}._1ra1vBLrjtHjhYDZ_gOy8F{--textColor:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColorShaded80);font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;color:var(--textColor);fill:var(--textColor);opacity:1}._1ra1vBLrjtHjhYDZ_gOy8F._2UlgIO1LIFVpT30ItAtPfb{--textColor:var(--newRedditTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newRedditTheme-widgetColors-sidebarWidgetTextColorShaded80)}._1ra1vBLrjtHjhYDZ_gOy8F:active,._1ra1vBLrjtHjhYDZ_gOy8F:hover{color:var(--textColorHover);fill:var(--textColorHover)}._1ra1vBLrjtHjhYDZ_gOy8F:disabled,._1ra1vBLrjtHjhYDZ_gOy8F[data-disabled],._1ra1vBLrjtHjhYDZ_gOy8F[disabled]{opacity:.5;cursor:not-allowed} You will have to pay Social Security and Medicare taxes, though. you can withdraw the money in your 401(k) while you’re still working for your company). But what is a mega backdoor IRA? >>MORE: Retirement Saving Strategies for High Income Earners. Just make sure you have a valid email on file, cause they’ll have to email you a Distribution & Tax Notice every 6 months. Ordinary income tax rates and employment taxes will apply. If you move the gains into a trad IRA, you will make future Regular Backdoor Roth IRA contributions harder to do. And this should be done routinely to avoid any major gains built up on the after-tax contributions which would also have tax consequences. Okay. ._3-SW6hQX6gXK9G4FM74obr{display:inline-block;vertical-align:text-bottom;width:16px;height:16px;font-size:16px;line-height:16px} You can choose to invest in the same funds or different funds available in your 401K plan. It’s worth clarifying for those considering this that there are generally 2 options: In-Plan Roth conversion - money is converted from after tax to Roth inside the plan, IRA Roth conversion - same idea but the money goes into a Roth IRA, In-plan Roth conversion is good if you have a good plan with solid investments and low fees, and you don’t have to worry about opening and maintaining the Roth IRA. There are usually more fund options to invest in a Roth IRA account than in a Roth 401K account. Today we revisit the issue of doing the mega backdoor Roth in a solo 401k for those of you who are self-employed. My company uses Fidelity too and I’ll be looking into this! We’ll recommend the best 5-8 quotes for your consideration. ._3bX7W3J0lU78fp7cayvNxx{max-width:208px;text-align:center} Re: How to Mega backdoor Roth at Fidelity? I will be calling Monday. It depends on your company's plan, but it could be even better than that. Last year they did quarterly automation that you could opt into simply by clicking a checkbox. DYODD. Basically, the mega backdoor Roth IRA is just like a backdoor Roth, but since you can use 401(k) funds, the amount is a lot more. A mega backdoor Roth offers the opportunity for some investors to contribute up to an extra $37,000 for 2019 to a Roth IRA via their … And do you want to? For most people, you should max out all of your other accounts before considering a mega backdoor IRA. >>MORE: Roth IRA: Everything You Need To Know, >>MORE: Best 10 Firms to Open a Roth IRA Account. Call Fidelity at 1 … And you really shouldn't do this unless absolutely necessary). Are the automatic conversations free? (Mega Backdoor Roth conversion). IUL vs. Roth IRA: Which One is Better for Your Retirement Savings? Obviously, you have to have the income for this to work. Instead, you should look for, and ask Fidelity about "in-service, non-hardship distributions" from your after-tax 40… The day after each payday call fidelity to transfer from your 401k after-tax to your (out of plan) personal Roth IRA that you created. It probably should be called a “ Mega Backdoor 401k … I have an employer 401k at Fidelity that allows in service withdrawals that I can move post tax contributions to a Roth IRA also at Fidelity. Understanding Indexed Universal Life Insurance: Why is It a Good Option for Retirement Savings? We only need a few data from you (3 mins) to compare quotes of 40+ Guaranteed and Permanent Life Insurance (GUL) products from 15+ reputable companies. Fidelity reps may also most likely not know about it. Back door IRA’s exist because of people who make over a certain income are not allowed to contribute to a Roth. … Once in the Roth, you are golden, free from taxes for life. There’s also something called nondiscrimination testing for highly compensated employees that you’ll need to be aware of. This will be extremely time-consuming and complicated. A mega backdoor Roth IRA is a sweet way to get a lot of money into a Roth IRA, but it’s really for folks who have a lot of money to put aside for savings. Over the course of two years, you can max out your after-tax/Roth contributions to your 401k (say $30k per year extra). ._1zyZUfB30L-DDI98CCLJlQ{border:1px solid transparent;display:block;padding:0 16px;width:100%;border:1px solid var(--newCommunityTheme-body);border-radius:4px;box-sizing:border-box}._1zyZUfB30L-DDI98CCLJlQ:hover{background-color:var(--newCommunityTheme-primaryButtonTintedEighty)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:hover{color:var(--newCommunityTheme-bodyText);fill:var(--newCommunityTheme-bodyText)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active{background-color:var(--newCommunityTheme-primaryButtonShadedEighty)}._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{background-color:var(--newCommunityTheme-primaryButtonTintedFifty);color:rgba(var(--newCommunityTheme-bodyText),.5);fill:rgba(var(--newCommunityTheme-bodyText),.5);cursor:not-allowed}._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ:hover,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{border:1px solid var(--newCommunityTheme-body)}._1O2i-ToERP3a0i4GSL0QwU,._1uBzAtenMgErKev3G7oXru{display:block;fill:var(--newCommunityTheme-body);height:22px;width:22px}._1O2i-ToERP3a0i4GSL0QwU._2ilDLNSvkCHD3Cs9duy9Q_,._1uBzAtenMgErKev3G7oXru._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._2kBlhw4LJXNnk73IJcwWsT,._1kRJoT0CagEmHsFjl2VT4R{height:24px;padding:0;width:24px}._2kBlhw4LJXNnk73IJcwWsT._2ilDLNSvkCHD3Cs9duy9Q_,._1kRJoT0CagEmHsFjl2VT4R._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._3VgTjAJVNNV7jzlnwY-OFY{font-size:14px;line-height:32px;padding:0 16px}._3VgTjAJVNNV7jzlnwY-OFY,._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs{font-size:14px;line-height:32px;padding:0 16px}._2QmHYFeMADTpuXJtd36LQs,._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2QmHYFeMADTpuXJtd36LQs ._31L3r0EWsU0weoMZvEJcUA,._2QmHYFeMADTpuXJtd36LQs:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2QmHYFeMADTpuXJtd36LQs ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none}._2CLbCoThTVSANDpeJGlI6a{width:100%}._2CLbCoThTVSANDpeJGlI6a:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2CLbCoThTVSANDpeJGlI6a ._31L3r0EWsU0weoMZvEJcUA,._2CLbCoThTVSANDpeJGlI6a:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2CLbCoThTVSANDpeJGlI6a ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} Thank you so much for bringing this to my attention. Funding your retirement can still be accomplished in any number of other ways. Our Fidelity plan started doing this in 2017. It has often been max your 401k match, then max a Roth IRA and then do more before-tax 401k. ._2cHgYGbfV9EZMSThqLt2tx{margin-bottom:16px;border-radius:4px}._3Q7WCNdCi77r0_CKPoDSFY{width:75%;height:24px}._2wgLWvNKnhoJX3DUVT_3F-,._3Q7WCNdCi77r0_CKPoDSFY{background:var(--newCommunityTheme-field);background-size:200%;margin-bottom:16px;border-radius:4px}._2wgLWvNKnhoJX3DUVT_3F-{width:100%;height:46px} My company (also with Fidelity) had an email sent out in December which informed us that, as of Jan 1, 2019, we could enroll to have all after-tax 401k contributions automatically rolled into a Roth 401k daily. ._1EPynDYoibfs7nDggdH7Gq{margin-bottom:8px;position:relative}._1EPynDYoibfs7nDggdH7Gq._3-0c12FCnHoLz34dQVveax{max-height:63px;overflow:hidden}._1zPvgKHteTOub9dKkvrOl4{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word}._1dp4_svQVkkuV143AIEKsf{-ms-flex-align:baseline;align-items:baseline;background-color:var(--newCommunityTheme-body);bottom:-2px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap;padding-left:2px;position:absolute;right:-8px}._5VBcBVybCfosCzMJlXzC3{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;color:var(--newCommunityTheme-bodyText)}._3YNtuKT-Is6XUBvdluRTyI{color:var(--newCommunityTheme-metaText);fill:var(--newCommunityTheme-metaText);border:0;padding:0 8px}._3YNtuKT-Is6XUBvdluRTyI:active,._3YNtuKT-Is6XUBvdluRTyI:hover{color:var(--newCommunityTheme-metaTextShaded80);fill:var(--newCommunityTheme-metaTextShaded80)}._3YNtuKT-Is6XUBvdluRTyI:disabled,._3YNtuKT-Is6XUBvdluRTyI[data-disabled],._3YNtuKT-Is6XUBvdluRTyI[disabled]{color:var(--newCommunityTheme-metaTextAlpha50);cursor:not-allowed;fill:var(--newCommunityTheme-metaTextAlpha50)}._2ZTVnRPqdyKo1dA7Q7i4EL{transition:all .1s linear 0s}.k51Bu_pyEfHQF6AAhaKfS{transition:none}._2qi_L6gKnhyJ0ZxPmwbDFK{transition:all .1s linear 0s;display:block;background-color:var(--newCommunityTheme-field);border-radius:4px;padding:8px;margin-bottom:12px;margin-top:8px;border:1px solid var(--newCommunityTheme-canvas);cursor:pointer}._2qi_L6gKnhyJ0ZxPmwbDFK:focus{outline:none}._2qi_L6gKnhyJ0ZxPmwbDFK:hover{border:1px solid var(--newCommunityTheme-button)}._2qi_L6gKnhyJ0ZxPmwbDFK._3GG6tRGPPJiejLqt2AZfh4{transition:none;border:1px solid var(--newCommunityTheme-button)}.IzSmZckfdQu5YP9qCsdWO{cursor:pointer;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO ._1EPynDYoibfs7nDggdH7Gq{border:1px solid transparent;border-radius:4px;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO:hover ._1EPynDYoibfs7nDggdH7Gq{border:1px solid var(--newCommunityTheme-button);padding:4px}._1YvJWALkJ8iKZxUU53TeNO{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7{display:-ms-flexbox;display:flex}._3adDzm8E3q64yWtEcs5XU7 ._3jyKpErOrdUDMh0RFq5V6f{-ms-flex:100%;flex:100%}._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v,._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v{color:var(--newCommunityTheme-button);margin-right:8px;color:var(--newCommunityTheme-errorText)}._3zTJ9t4vNwm1NrIaZ35NS6{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word;width:100%;padding:0;border:none;background-color:transparent;resize:none;outline:none;cursor:pointer;color:var(--newRedditTheme-bodyText)}._2JIiUcAdp9rIhjEbIjcuQ-{resize:none;cursor:auto}._2I2LpaEhGCzQ9inJMwliNO{display:inline-block}._2I2LpaEhGCzQ9inJMwliNO,._42Nh7O6pFcqnA6OZd3bOK{margin-left:4px;vertical-align:middle}._42Nh7O6pFcqnA6OZd3bOK{fill:var(--newCommunityTheme-button);height:16px;width:16px;margin-bottom:2px} It takes way more detail that you can share on APC. If you’ve already maxed out your 401(k) contributions and you’re interested, consult with a financial professional so that you don’t penalize yourself by violating tax-rules you were unaware of. Learn how your comment data is processed. Wonder if this is still an option or if I should just work on increasing my before tax contributions... Reposting this comment from /u/Joeliolioli because it really needs to be higher: Just to chime in here, it makes no sense to do a mega backdoor Roth unless you are maxing out your tax-advantaged accounts: $19k in 401k, $6k in IRA, & $3.5k in HSA (if available). If not, do a trustee-to-trustee transfer of the after-tax 401(k) to a Roth 401K, Select the % of your salary for after-tax contribution on Fidelity app or website, Contact Fidelity and ask them to set it up so that as soon as your after-tax money hits your 401K, it will roll over automatically to the Roth 401K that Fidelity offers. Over the course of two years, the $60k is drawn down to zero and you now have $60k in a Roth that will grow tax free forever. So what is the strategy? For instance, if you do the max $19k before-tax contributions and then get $6k in matches, you can then make as much as $31k in after-tax contributions per year and convert that to a Roth. My company has our 401k with Fidelity. If a mega backdoor Roth is unavailable to you, you have options: Not everyone can do a mega backdoor Roth IRA, and that’s okay. @keyframes ibDwUVR1CAykturOgqOS5{0%{transform:rotate(0deg)}to{transform:rotate(1turn)}}._3LwT7hgGcSjmJ7ng7drAuq{--sizePx:0;font-size:4px;position:relative;text-indent:-9999em;border-radius:50%;border:4px solid var(--newCommunityTheme-bodyTextAlpha20);border-left-color:var(--newCommunityTheme-body);transform:translateZ(0);animation:ibDwUVR1CAykturOgqOS5 1.1s linear infinite}._3LwT7hgGcSjmJ7ng7drAuq,._3LwT7hgGcSjmJ7ng7drAuq:after{width:var(--sizePx);height:var(--sizePx)}._3LwT7hgGcSjmJ7ng7drAuq:after{border-radius:50%}._3LwT7hgGcSjmJ7ng7drAuq._2qr28EeyPvBWAsPKl-KuWN{margin:0 auto} You had to really know what you are doing and then make periodic phone calls to to a conversion. First of all, many employers don’t allow after-tax contributions to a 401(k) AND in-service withdrawals. A mega back door Roth IRA is for people who maxed out their 401(k) and IRA accounts already and still have money to invest for their retirement. If your employer offers a Roth 401(k), just do an in-plan rollover and your done. ._2YJDRz5rCYQfu8YdgB_neb{overflow:hidden;position:relative}._2YJDRz5rCYQfu8YdgB_neb:before{background-image:url(https://www.redditstatic.com/desktop2x/img/reddit_pattern.png);content:"";filter:var(--newCommunityTheme-invertFilter);height:100%;position:absolute;width:100%}._37WD6iicVS6vGN0RomNTwh{padding:0 12px 12px;position:relative} The reason to do a backdoor Roth IRA (as opposed to just funding it through the front door) is because there are income limitations for contributing. It looks like the Amazon 401k plan at Fidelity limits the after-tax non-ROTH … A Roth IRA has certain advantages. Since the start of the year, I've had ZERO taxable growth on my after-tax contributions prior to them being rolled over into my Roth 401k. *My opinions are skewed towards the Roth because I’m at the upper limit. Press J to jump to the feed. >>MORE: Self-Directed Roth IRA: Its Pros and Cons. ._1x9diBHPBP-hL1JiwUwJ5J{font-size:14px;font-weight:500;line-height:18px;color:#ff585b;padding-left:3px;padding-right:24px}._2B0OHMLKb9TXNdd9g5Ere-,._1xKxnscCn2PjBiXhorZef4{height:16px;padding-right:4px;vertical-align:top}._1LLqoNXrOsaIkMtOuTBmO5{height:20px;padding-right:8px;vertical-align:bottom}.QB2Yrr8uihZVRhvwrKuMS{height:18px;padding-right:8px;vertical-align:top}._3w_KK8BUvCMkCPWZVsZQn0{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-actionIcon)}._3w_KK8BUvCMkCPWZVsZQn0 ._1LLqoNXrOsaIkMtOuTBmO5,._3w_KK8BUvCMkCPWZVsZQn0 ._2B0OHMLKb9TXNdd9g5Ere-,._3w_KK8BUvCMkCPWZVsZQn0 ._1xKxnscCn2PjBiXhorZef4,._3w_KK8BUvCMkCPWZVsZQn0 .QB2Yrr8uihZVRhvwrKuMS{fill:var(--newCommunityTheme-actionIcon)} How Is It Different from Traditional Roth IRA? Figure out how much your employer contributes to your 401(k), Now figure out how much you contributed before taxes and subtract that from $57,000, This is the amount you can contribute in after-tax contributions. 1. It essentially eliminates Roth income limits and opens up the ability to save more like $30k per year vs. the $3k per year in a normal Roth. If they can manage to auto-invest the monthly contributions into pre-selected funds, that would fully close the circle. Yes. Not everyone can contribute lots of after-tax money to their 401(k). Guaranteed Universal Life Insurance (GUL) provides the same guaranteed and permanent coverage for less than half the cost of Whole Life Insurance premiums. Blue Bell Office: 350 Sentry Parkway Building 670, Suite 205 Blue Bell, PA 19422. Using the mega backdoor Roth method was cumbersome previously. The Mega Backdoor Roth IRA is another potential tool to maximize tax savings IF you have more bandwidth for savings. Elect to do these after-tax contributions from your salary. They call this in-plan conversion to Roth 401K, Now you have both before-tax contribution to your traditional 401K and after-tax contribution to your Roth 401K. You’re probably familiar with traditional IRA’s and Roth IRA’s. Also, since you contributed to the 401(k) with after-tax contributions, you won’t pay income taxes when you convert. Many employers will match funds to contribute to a 401(k) as well. Say you inherit $60k and want to invest it long term. In many ways the Mega Backdoor Roth is a supersize version of the Backdoor Roth IRA, but done in a 401k. The employers matching contributions doesn’t count as your personal contribution. When you leave your current employer, you can select to roll your Roth 401K over to Roth IRA at Fidelity or another brokerage firm. If you prefer, you can download and mail in a Fidelity Roth IRA Conversion form (PDF); or call 800-544-6666 for assistance. Once converted, these Roth … Say you inherit $60k and want to invest it long term. You can make up for the shortfall in income this causes by replenishing the contributions with the $60k inherited. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} Also, there are no required minimum distributions (RMD) for a Roth, and there’s no penalty for withdrawing the money whenever you want it, providing you’ve held the account for at least five years. This vastly simplifies this incredible wealth-building strategy. This can be a little tricky. ._2a172ppKObqWfRHr8eWBKV{-ms-flex-negative:0;flex-shrink:0;margin-right:8px}._39-woRduNuowN7G4JTW4I8{border-top:1px solid var(--newCommunityTheme-widgetColors-lineColor);margin-top:12px;padding-top:12px}._3AOoBdXa2QKVKqIEmG7Vkb{font-size:12px;font-weight:400;line-height:16px;-ms-flex-align:center;align-items:center;background-color:var(--newCommunityTheme-body);border-radius:4px;display:-ms-flexbox;display:flex;-ms-flex-direction:row;flex-direction:row;margin-top:12px}.vzEDg-tM8ZDpEfJnbaJuU{color:var(--newCommunityTheme-button);fill:var(--newCommunityTheme-button);height:14px;width:14px}.r51dfG6q3N-4exmkjHQg_{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between}._2ygXHcy_x6RG74BMk0UKkN{margin-left:8px}._2BnLYNBALzjH6p_ollJ-RF{display:-ms-flexbox;display:flex;margin-left:auto}._1-25VxiIsZFVU88qFh-T8p{padding:0}._3BmRwhm18nr4GmDhkoSgtb{color:var(--newCommunityTheme-bodyText);-ms-flex:0 0 auto;flex:0 0 auto;line-height:16px} Check with your 401k company if this is a doable strategy for you under your plan before embarking on it. 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