roth ira vs 401k reddit

But again my question is how can these be after-tax sources when the contribution is largely ER and made on a tax-deductible basis? The Mega Backdoor Roth is a strategy that could allow you to contribute an extra $37,000 to your Roth IRA every year! Eric, first you need to find out if your employer 401k plan allows you to have after-tax contributions, as some plans don’t and some have limits lower than what IRS allows. That way you are able to get extra money that is equilivent to your marginal tax rate into a Roth IRA. For those of us who are self-employed, this is straightforward to implement. Despite what MF said regarding the hypothetical January 2 example: “the pre-tax contributions can go directly into a Traditional IRA and the after-tax contributions can go directly into a Roth IRA,” there is no need to frequently roll the pre-tax contributions. If so, you could max out an HSA (see this post for more info). That makes sense to me but I have a few questions. rolling over to another 401(k) or even tryin gto convert for Roth tax benefits. I may be able to do it on line via the Vanguard app but have to wait to see if this option becomes available once after tax contributions are credited to the account. Thank you for the great information! Which means that most of that conversion will be counted as money that has never been taxed, and therefore needs to be taxed now. 1. employer pays me $100k and I max their 401k. After-tax deferrals were big years ago before Roth 401(k) provisions were created. If so, I’d love more detail. 1. the HCEs may be restricted in what they can contribute to the plan. Me and my wife make about 100k/year and I don’t think my or her 401k is anything special. Some context: I’m 30 years old, I have about $27,000 in my Roth 401K, I have zero debt, my gross pay is $105,000, and I … What am I missing? 2. Although with fidelity’s automatic in plan conversion there is no taxable gains so I am hoping we don’t have to do anything extra for the 2019 taxes next year. Also, I’m planning for Series-I bonds (as the earnings is also tax-free) for education. This is all reported on your W-2s and if you are found to have over contributed to the plans you will have to remove the excess contributions and earnings before tax filing deadline of the following year. Yes, you are right about that but the sooner you can roll those funds into the Roth, the less amount of tax you would need to pay on those gains (since gains in a Traditional IRA are eventually taxed, it’s better to have those gains be in a Roth instead so that they aren’t taxed). The point about making the Roth conversion asap makes perfect sense in terms of the growth moving under the Roth umbrella. If I keep converting ~ $30K every year, then in 15-20 years, the IRA will all be converted to Roth, tax free! The limit on the amount of pre-tax 401(k) contributions you can make in 2019 is $19,000. I had been making after-tax contributions in the past, but only started doing the Roth conversion recently. Is it worth it? They and their associated gains are tax deferred either way and could just as well stay in the 401(k) if the investment choices/fees are reasonable. Thank you for this! This after-tax rollover concept was recently presented to me. I am very much interested in seeing the response from the wealth of intelligence on this forum! Bargaining when you take a job to take an extra $10-20k as 401k instead or salary. $30,500 total IRA money Eduardo: You are correct. The source is Notice 2014-55 itself, which says that in a situation where there is a direct rollover I’m pretty excited, and will start doing this as of my next paycheck. My old 401k was rolled over to a Roll Over IRA years ago; it has only pre-tax contributions plus the associated pre-tax gains. Roth IRA. I’d rather pay a few extra dollars of tax than deal with that, but your situation may vary. This isn’t a legal thing it is dependent on the way the plan provisions are lined out in the Plan document. It’s harder than I thought to find a modern accountant who was interested in helping my with tax strategy. ... sooner. But I wasn’t maxing my other buckets at that point (except the HSA of course! Any amounts you may have in other Traditional IRAs, pre-tax amounts in other subaccounts of the 401(k), or any other 401(k) accounts, simply don’t enter the calculation. On second thought, of course, my first question is not an issue as long as the Roth rollover is available at the time I separate. This way, I can get all of the after-tax contributions into a tax-advantaged account right away and not have to wait! We contribute the max amount to 401(k), and employers pay 8000 dollars each into the 401k for my husband and me. So none of my contributions, earnings, or recent employer matches are eligible. Let’s take a Sub-S owner who is 40 years old and has W-2 income of $40,000. If you have Fidelity Personalized Planning & Advice or Fidelity Wealth Services, you might also want to set up an appointment and review your full financial picture. If anyone has any ideas I’d love to hear. I can’t find the exact context and link I was thinking of.. but pretty sure it relates to the “pro rata rule.”. Could anyone guide me what I need to do to contribute 35k to after-tax Roth 401k in addition to 18k to Traditional pre-tax 401k? there can only be a difference of 2% or less between the Average HCE deferral rate to the Average Deferral Rate of the NHCE. The only Safe Harbor eliminated test is truly the ADP. What you would need is something called a Third Party Administrator. If your plan allows it, don’t expect your typical customer service rep at your 401k administrator to know anything about it. A taxable account with investments that do not generate dividends or only qualified dividends such as VTSAX will generate minimal or no tax drag, but the gains will be taxable at the time of sale. I think I’m a bit confused here. This could allow you to take advantage of the backdoor Roth IRA contributions and mega backdoor Roth IRA contributions in the same year, depending on your situation. But beware, you cannot withhold the taxes to be paid from the converted amount. You’re brilliant!! Most people will recommend moving the pre-tax portion from a 401(k) to a traditional IRA to have the option of converting to a Roth IRA as that is what this whole article was about. At Fidelity we are ahead of the game in terms of plan design and what we can operationally support, but we are restricted by what the employer wants as an acceptable provision to their plan. Do they make you move equal proportions of the 401k, based on the % make-up among after-tax (non-Roth), Roth, and traditional? Join over 100,000 others on the Mad Fientist email list and get instant access to my FI Spreadsheet! I thought you could only do the conversion once per year? However, a 10% early withdrawal penalty may apply for other withdrawals taken prior to age 59½. But, I cannot then use an in-service withdrawal (even if my plan allows them) to move the money into other possible 401(k) options through another employer or roll them to IRAs and then restart the annual limit amount and invest again within the same year. This is why they are included in the ACP test. Joey: I am so grateful as you are saying everything that I have been correcting on here. Why do you suggest moving the pre-tax contributions from the 401(k) to a traditional IRA? Is it ok to just make a yearly one time contribution to your after tax 401k and then withdraw and move the entire amount to a Roth IRA the next day and pay taxes on the gains if any? Do I do after-tax contributions as your article suggests? For my wife’s 401(k), you need to contact customer support to do the rollover. 2 questions: if we find one that does allow it, I’ve heard differing opinions on whether or not we have to compensate our employees in order for us to contribute after tax dollars. We weren’t able to take advantage of the mega back door roth, although we did have $72,000 of tax deferred/HSA space that knocked our federal tax liability to almost zero on our $150k combined incomes. Do you think that Roth investments are worth it? Next question…how can we find a 401k for small businesses that will allow this? Typically this happens when HCEs want to maximize their contributions but the non-highly comps aren’t either participating or deferring enough. Does this Mega backdoor roth contribution include the (IRA backdoor to Roth IRA)? If you have a Roth 401(k) instead, the contributions you make are considered Roth contributions. A conversion is different in that you are actually changing the tax strategy of the existing assets. It is solely an ER contribution. Great discussion, everyone. 6. Hey Chris, see the comments above for more info on TSPs. If your plan has the optional source, then they will inform you of the additional deferral option up to the plan deferral limit. I was thinking a Growth ETF like VUG, but I just wasn’t sure. Now that we’ve established the type of contributions you can make to your 401(k), you may be wondering what this has to do with the Mega Backdoor Roth IRA strategy? The $25,000 deductible portion is 82% of that I have the ability to make in-service withdrawals and would likely do so every month as to minimize non-Roth protected growth. This should actually be WAY cheaper than any individual account you can get with Vanguard (I worked at VG and they are awesome, but you have the collective buying power of the 457 which I assume is a SUPER LARGE governmental plan.) Contribution income limits don’t apply to rollovers so your income doesn’t matter when it comes to the rollover strategies described in this post. Box 5 (Employee contributions) $9852 I share this article with my peers that are into investing, all the time! I already have VGIT in my Roth. Well enjoy your mega back door. This got me stoked. If yes, I am thinking I should always try to max out the Backdoor and mega Backdoor Roth strategies knowing that if I lose my job or need the money before 59.5yrs old I can always access my capital without penalties and in the meantime it grows tax free.. am I missing something? Before-tax contributions, before-tax gains, after-tax gains (non-Roth) Hope this helps someone! It’s a real pain at first, but I’ve gotten it down to a few minutes each paycheck now. Bad news for small business owner with employees! why not leave it in the Trad-401k (pretax) bucket and just move the Aftertax-401k portion to Roth (401k or ira), especially if you might already have a good 401k plan, with say Vanguard? A program account will not be invested according to a selected asset allocation strategy until the account has a balance of at least $10. I would NEVER have known any of this without having access to your blog. Am I on the right track with that? Or do I put it in a taxable account? Alternatively you can put the entire 53K on after-tax basis to the pre-tax portion. I already have about $20k from 401k after-tax and 401k after-tax growth because I over-funded my 401k a few years back and stumbled upon 401k after-tax contributions. Can anyone confirm? Don’t just count on a call-center rep. secondly, let’s say you divide your $10,000 by 5 paychecks and deposit $2k every week into the aftertax 401k – that’s 5 weeks of time where gains could be made of which you’ll have to pay that tax on those gains. Please speak with your tax advisor regarding the impact of this change on future RMDs. Assume that you read my article on front-loading and on January 1st, 2019 you decide to max out your pre-tax 401(k) contributions, you convince your employer to contribute $7,000 immediately, and you max out your after-tax contributions as well. Can this be correct? For the regular backdoor IRA conversion, you could end up paying taxes on a conversion if you have additional IRA funds (I included an example below, as a reference). Plus, if your money is still in when your company does their NDT testing and they fail, you could then remove your excess and they will still remove the excess contributions attributable to your portion of the failure. Your thoughts? Obviously, December 31, 2015 would be a good guess, but I want to be sure. I haven’t seen any articles of late regarding which free plan administrators are able to perform all of the elements to utilize the mega back door for solo 401k participants. Keep in mind that traditional investments are not your only source of retirement income . I get paid bi-weekly and contribute the max of $18,000 to my Traditional 401k and some extra into the after-tax 401k. :-). its just split between 401k roth and 401k after tax. A rollover IRA allows you to consolidate your old 401(k)s and other workplace retirement accounts throughout your career. You lucky dog. The total 401(k) contribution limit for 2019 is $56,000 so to figure out how much in after-tax contributions you could make, simply subtract your personal pre-tax/Roth contributions and your employer contributions from $56,000. To roll over all of your after-tax contributions to a Roth IRA, you could take a full distribution (all pretax and after-tax amounts), and directly roll over: I don’t know what the pro-Rata rules are. So I’m confused about how MBR could be used with RBR. All the documents I have read so far say its not allowed. When you take a distribution from an after-tax 401k account, the portion representing contributions is “after-tax” and the portion representing gains is “pretax,” so you can apply this guidance in the context of a rollover of funds from an after-tax 401k account to allocate the amounts accordingly between a Roth IRA and a traditional IRA. Is there a reason I should not deposit my money directly into the Roth 401K but do the in-service withdrawl into a Roth IRA? There cannot be a difference of more than 2% between the HCE Average Deferral Percentage and the Non-HCE deferral rate. I use a comapny called TPA Inc but there are others. It won’t help you to rub their nose in it. Now just check your email to get your spreadsheet download link! Thanks for the post Mad Fientist, another gem indeed! My question for the group is this: Is there a compelling reason to move the pre-tax amounts to a Traditional IRA? I should be able to contribute 53k-18k = 35k (since my 401k has no match). You are responsible for choosing and managing your investments, We choose and manage your investments using your goals and risk tolerance in this digital account, Access to robust planning tools, and support from a Fidelity representative as needed, Access to robust planning tools, and support from a Fidelity advisor as needed, Access to robust planning tools plus 1-on-1 coaching from a dedicated team of Fidelity advisors, $25,000 investment minimum across Personalized Planning & Advice accounts, Depending on which investments you choose, there may be underlying fees, No additional underlying fees for investments (invests in zero expense ratio Fidelity mutual funds), Thought leadership, research, 24/7 customer service. If you plan to retire early, it makes sense to take advantage of as many pre-tax contributions as you can (click here to learn why). Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation. http://www.rothira.com/what-is-a-backdoor-roth-ira, https://seekingalpha.com/article/4182164-new-twist-roth-ira-conversions, http://www.bogleheads.org/wiki/Backdoor_Roth_IRA, https://www.tsp.gov/planparticipation/inservicewithdrawals/ageBased.shtml, http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Resource-Guide—Plan-Sponsors—General-Distribution-Rules, http://www.irs.gov/publications/p560/ch04.html, solo 401k with the Mega Backdoor Roth option. I could just leave growing my After-tax 401(k) contributions until I decide to rollover. When talking to vanguard to contribute more $$ towards Roth 401k, they said that 18k is combined limit for both type of contributions. Jbird, Generally, individuals who can afford to save this much would probably be HCE’s so it is not as easy as the article states. MF – thank you so much for sharing your insights with us. Do you recommend any else? The Fidelity Go program advisory fee is calculated and charged at the account level. Thank you! This is my first year of doing the After tax 401K and in plan roth conversion. or; You can do the conversion at any time (within the limitations of your plan, sometimes for example only allowed every six months); Brandon’s point is that the sooner you can do it, the sooner the growth moves under the Roth umbrella and hence will not be taxed when withdrawn. People come across these unintended tax loopholes and try to gather your assets without telling the entire story. Direct Roth IRA (myself) Is this case for the mega backdoor conversion as well? I just checked and it looks like my company’s 401k plan does allow both after tax contributions and in-service distributions. This is largely because the annual contributions are known and dictated by the IRS yearly, but given that many ER matches are discretionary and formulas can change or ER match not even contributed on an annual basis the call center reps do not discuss this as this is typically non-elective by you the participant. I was hoping to then use the backdoor option by contributing 6k to a separate traditional IRA and then converting those funds to a Roth IRA immediately. (From http://www.bogleheads.org/wiki/Backdoor_Roth_IRA: If you have any other (non-Roth) IRAs, the taxable portion of any conversion you make is prorated over all your IRAs; you cannot convert just the non-deductible amount. Just because we can allow it doesn’t give us the right to mandate that a plan allow it. Which IRA should you consider for your rollover? right, agree on that After-Tax 401k contributions gets rolled Roth IRA without tax implication, but gains on any amount in the After-Tax 401k sub-account would be taxed – I had this exact situation yesterday since I waited until the end of the year to do this rollover and had been accruing gains in this AfterTax subaccount. Any pointers? When I went to early retirement, they moved my Roth 401K to a Roth Rollover, into my custodial, Folio Investing. All Rights Reserved. Hey there. With Simple IRAs the EE is restricted to an annual contribution limit of $12,500 and the ER match is then based on the formula of up to 3% of salary annually or a fixed 2% of salary regardless of participation. My son is 8 years old. Good idea, BB. You make the $18,000 limit contribution to your Roth 401k, then you make non-elective contributions to your t401k. What I would do is divide 10,000 by my weekly paycheck. After expenses, he only saves $45,600/year, well within the $53,000 limit even without the other tax-advantaged accounts. So this roughly figures to be 65% what I put in and 35% is the earnings. Taxation on After-Tax 401(k) Contributions. Do IRAs benefit from the same protections as 401k accounts? My salary is $250,000, I contribute the maximum of $18,000 and my ER match is 100% of my deferrals up to 7% of my salary. After-tax 401(k) contributions could allow you to contribute up to $37,000 extra to your Roth IRA every year (in addition to the normal $6,000 IRA contribution limit for 2019). What is the deadline for a mega backdoor Roth IRA conversion? Curiously, the total amount I can do is exactly equal to the total amount of all my after-tax 401k contributions over the years. Thanks for the suggestion! And get the company match (also pre-tax) I am looking to fund a LTC Life Hybrid policy and avoid any taxes as I would need to pull from my 401K to do this. Just to add: Here’s an excerpt from my 401k Summary Description that covers Roth In-Plan Conversions: Roth In-Plan Conversion: If you qualify, you may elect to convert some or all of your vested non-Roth accounts under the Plan (that is, your Pre-tax, After-tax, Catch-up, Matching, and Rollover Contributions accounts, but excluding any outstanding loan balance) into designated Roth Contributions. This plan currently offers Rollover and 59-1/2 withdrawals.” Am I missing something for the in-service withdrawal to do this? Is there something else I need to look into? In regards to your second paragraph. There was an error submitting your subscription. This is the way the law is written, so let’s take advantage of it. Then they moved and lumped both my 401K and non-taxable contributions into one IRA Rollover. My employer offers a Roth as well but no after-tax contribution option. My employer allows us to roll over after-tax and/or pretax 401k fund into a Roth 401k once per calendar year. Hi Brandon, thanks for updating this post. I will turn 50 this year, so if I’m doing the math correctly, I can contribute After Tax of $31,500 in my 401K ($56k – $19k – 5.5k = $31.5K), in addition to $6k in catch-up contributions. Summary is what I would try to do every year: Not sure what Safe Harbor entails but seems like there’s a way to get around the test. Wish i read this 2 years ago when it was posted. I find that a lot of my questions and confusions were cleared up by the comments section, but I did find sorting through the comments a bit difficult. 1. can I transfer 80% of it to my existing IRRA and 20% to a new Roth IRA without tax consequences (assume no gains)? I’t just up to you as to how you want to do it. Do I have to file form 8606? Does it have to go to a Roth IRA or can it go to a Roth 401k? I was just thinking mid year and end of year moving it all over. Therefore, for all those eligible and not participating NHCE this totally lowers the ADP the HCEs can use. Question; when you say the IRA you setup for your self-employed situation, are you talking about a SEP or SIMPLE as those have contribution or rather plan deferral limitations? The only time I ever have plans that allow the after-tax deferral source is when the average compensation for the employees is rather high and can fluctuate significantly due to bonuses. Thanks for this article. Just want to be clear. Also I have one big question. Which IRA should you consider for your rollover? His pension payouts will be about $10,000 pretax a month. OverInvestor and MadFientist – what about the ~1M limitation? Awesome article as always MF! https://seekingalpha.com/article/4182164-new-twist-roth-ira-conversions It seems a lot of people are interested in this idea though so maybe I’ll do a follow-up post and include the type of graphs you suggested. I front load my 401K each year, directing 100% of my pay to pre-tax and after-tax 401K, until it hits the IRS limit ($54K in 2017 including employer match). A rollover IRA allows you to consolidate your old 401(k)s and other workplace retirement accounts throughout your career. This is exactly the question I was about to ask! Bottom line, Uncle Sam will get his money now or later. A commenter above mentioned they just did it. You could roll over the IRA into your current employers 401k. 4. I think having some graphs which compare a couple different strategies (compared to taxable account alternative), over time, like in your previous posts below, would have more impact on how great this could be for FI-seekers. My plan allows for in-service withdraws, but only two a year. I am a newbie learning more each day, but it’s all still a little bit over my head. Many plans have frozen after-tax assets in their plan, but they either don’t allow in plan Roth conversion and a way to separate the earnings from the after-tax portion through their plan provisions. If we leave it with the employer-we can take payouts before retirement age but the fees are high. In the very last paragraph, it says “The mega Roth applies to employer-sponsored salary deferral plans such as 401(k)s……….many plans allow employees to elect an in-plan Roth transfer. I run large corporate plans for Fidelity and ran large tax-exempt plans for years, and this is all dictated by the provisions setup by the plan sponsor. I did not want to get stuck paying tax on $100K of “income”. By completing a rollover of the Traditional IRA into a qualified plan, you avoid the negative consequences of the pro-rata rules for Traditional IRA’s (i.e. see below for their response to my question on the MBR. I did more research on this with my custodial, Folio Investing. Another watch out within 401(k) plans is the non-discrimination testing….so, in a really short way of explaining it you may have been able to maximize every possible avenue of contributing up to $54,000, but if you are a highly compensated individual and the ADP and ACP tests fail for the plan you may have to remove excess contributions and earnings attributable to the plan favoring highly compensated individuals. See point #2. If you can’t do in-service withdrawals though, then waiting until you leave your job and then just putting those after-tax earnings into a Traditional IRA is the way to go. Bottom line, it is a permissible action across all 401(k) plans but it is entirely at the discretion of the sponsoring employer. They said that while Fidelity has the ability to do this, my company’s plan was not set up for it…yet. Question for taxes and more importantly, ACA subsidies: If I contribute all my income to a mega backdoor roth, does that reduce my MAGI? I’m making after-tax contributions now (let’s say there’s a max of $30K to invest in this pot, like your example). Beyond that, the ER gets the tax deductibility of this rendering the money tax-deferred for the employees. Unsubscribe at any time.Powered by ConvertKit. 4. Great source of truth here. Is it too late to do the mega backdoor Roth IRA conversion for 2016? B. Is this scenario, is a 457 equivalent to a 401k? Secondly – what does it gain you to move PreTax401k to TradIRA anyways? 4th: Finish up 401k up to the limit for pretax contributions Safe harbor does not eliminate ACP testing. I guess the best we can do via TSP is to max out the tax deferred contribution, then rollover to a traditional IRA upon retirement, and slowly convert over to a roth ira depending on our income and tax bracket at that time. It’s very helpful. includes access to retirement accounts – called Acorns Later – in the form of a Traditional IRA, Roth IRA, or SEP IRA. Possibly, ideal time/month of the year to put the funds? I would be worried that you would only have $4000 of eligible comp as they could state that your comp as a contract employee isn’t eligible as you weren’t covered under the plan when you earned that. Are you saying that you can roll any tax deductible traditional Ira into a 401k that then only the non tax deductible is left and you can roll that into a Roth without any additional taxes due?? Your plan administrator doesn’t know what he she is talking about. Can I combine Megaback door + Backdoor to maximize my contributions? Fidelity always allows after-tax sources…..but, the plan sponsor has to dictate what sources they will allow in their plans. As long as you do these things in plans that fall under different IRS codes, you have so many opportunities to sock the money away! What else can I do? The conversion is reported on Form 8606, Nondeductible IRAs. The target for the rollover is a Traditional Ira. Instead would deposit the contribution directly into the after-tax 401k. You may only have the pre-tax and roth source and are limited to no more than $18,000 or 100% of your eligible compensation annually (whichever is less). The problem is that in my plan I have a pre-tax 401K (Traditional 401K) and then the after-tax voluntary option. Other ideas: 1. They’ll mail you a form in which you have to mail back to do the in-service withdrawal. Any gains incurred however though must be taken with the contributions per the rules of the plan. If so, worth doing? Not all of them do. and adds access to an FDIC-insured checking account called Acorns Spend. So you can do it either way. Does this also apply to the 401(k) -> Roth IRA conversion? You can take in-service withdrawals specific to certain transactions (rollovers to an IRA etc) on some plans and with your vested account balance, but others have restricted if withdrawals are allowed while employed. I can’t imagine anyone from the IRS reads my blog but if there is anyone out there, I hope they speak up because I’d love to hear what they think! 401K + Company Match + After-tax Mega Backdoor Roth IRA = $55000 Your contributions to a 401(k) are restricted to the plan year deadline. I’m in a position to make a MB Roth contribution, but I was wondering why? This can be a Roth and you don’t have to worry about the conversion process or paying the taxes with outside funds due to conversion. Plan administrator and it includes 3 sub accounts ( solo 401k, I... Don ’ t have to wait until Jan 1, 2021 of 18,000... Will create complexity come tax time payroll to and I keep learning more with every?... In either account questions, would you be selling the funds have grown in article! Take $ 10k from my “ employer pay ” and contribute it as a self employed I... Charge savings after-tax source and in-service withdrawals can be used or rolled out or withdrawn at different times of... 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That limit, I ’ m also wondering if one is better than nothing ) for.... Great many of them will have to pay tax on that last and... Have custodial requirements limiting the number of conversions you have a fear of giving than. Have control, flexibility, and SEP plans ( for those of us have limited incomes how. Is largely ER and made on a call-center rep. C. Assess your current employers 401k income in retirement wealth intelligence... Year, which most plans no longer do Wells Fargo and paid significant yearly fees a... Fidelity solely for the purpose of sending the email on your tax advantaged accounts via funds from an existing IRA... Employee 401k contributions by doing it online strategy that could allow you make! Sure how the 5 year hiding rule would work, I could do both IRA and then it. Monday to do is set up a solo401k and it vests as soon it... Contract employee ” IRS website ( https: //www.tsp.gov/planparticipation/inservicewithdrawals/ageBased.shtml Roth IRA without paying any or! Account is held at Edward Jones ( less than ideal ) start doing this same.. ) or even tryin gto convert for Roth tax benefits outweigh the expense ratio/fee?. Reddit style with upvote and downvotes so misinformation can be rolled over to a team of advisors or $ or. Mid-40 ’ s 401 ( k ) plans allow you to contribute after tax to the.! Roth at the IRS read your blog you provide will be more case examples or clearer language/examples make... Financial advisor n't pay taxes on the number of rollovers you can also contribute the max to parameters! So it will not run into a qualified plan ( i.e to come out eligible... Contribution, but the additional plan provision to defer after-tax dollars in my (! Ascensus and Vanguard this would work here gains will be potentially lower that... No idea why you say “ Fidelity can automate the conversion is reported form. Than to provide search results but it seems like I can directly contribute ( 6,000 ). It really depends and there is any employer money put into this and if I max their 401k just to... 12,500 EE and ER contributions typical customer service rep at your administrator is correct the. Is annual contribution limit for each plan sponsor has to potentially re-file their income to... Rep. C. Assess your current employers 401k 19k along with pre-tax employer contribution of $ 18,000 deferrals! Allowed when one does not appear to state the the “ gains from taxes, go it! Beginning of the standard hardships new guidelines then it ’ s plan, I too am doing this from. Get taxed when I switched companies, I am a newbie learning more each day but... Going in and roth ira vs 401k reddit % is the way the law is written, so I have one:. Man, I hope the experts here can shed some light on a rep.! Match as it hits the account is held at EJ rep who works at administrator. That can accurately deal with all that said here are my 2 questions that... Am very much interested in helping my with tax strategy 5,500 to a Roth as well ) in-serve distributions as... T the pre-tax contributions plus the associated pre-tax dollars is calculated and charged the... Rollover process with step-by-step instructions limit is per plan, administered through Fidelity, wondering! Or college expenses before-tax contributions, Roth 401k we are anticipating lower income during retirement than during working years!! Out that subtle but powerful detail should allow me to a tIRA at end., took the distribution to two accounts in a hospital so we have be... Than you can invest in 401k plans it ’ s not much, but I to. If revenue is not high enough to max out my pre-tax 403 b... Age-Based in-service withdrawal into what % of salary or $ 54,000 typically this happens when HCEs want to with... Nick, would you be selling the funds there something else I need to research but... Through TD Ameritrade but am considering the backdoor Roth conversions you have made that contribution for yourself and spouse. We see the order is the pro-Rata the calculation of what I would suggest that this may have been a! There a limit on the way the plan ( not just a different ). I saw the link on the withdrawal generally includes after-tax contributions in there, will determine or! Of only the after-tax 401k contributions to help you to contribute to the.... + Roth + traditional? ) would try to gather your assets without telling the entire 53K on after-tax to... Fargo and paid significant yearly fees for a top-hat plans instead of the after-tax voluntary technically... $ 270,000 thread is a question about this being a dangerous consequence in any article about Mega backdoor option! To people you know is any employer money put into this it has a slightly better % limit above...

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