The other use of a mega back door Roth is college savings. By rolling the funds over into an Roth IRA, I can have access to the contributions penalty free for kids college expenses. I don't have to worry about over contributing to a 529 if my kids plans change and can use any unused funds for extra retirement money.
This was an interesting read but not applicable to most working young individuals. I would be more interested in a article revolving around guaranteed fixed annuities. This topic is gaining traction in YouTube discussions with higher interest rate environments.
Over 30 years ago, I took a friend’s advice to save any kind of bonus income and forget you received it. I put those funds in a brokerage account until mega backdoor became available in our 401(k) plan. I max out the tax deferred portion and then keep contributing the same amount per paycheck for the remainder of the year to after-tax. I use year-end bonus income to capture the remaining amount of after-tax.
If your company’s plan record keeper is BofA Merrill (Benefits Online), the tech is there to do after-tax with automatic conversion to Roth once you check the box.
The other use of a mega back door Roth is college savings. By rolling the funds over into an Roth IRA, I can have access to the contributions penalty free for kids college expenses. I don't have to worry about over contributing to a 529 if my kids plans change and can use any unused funds for extra retirement money.
This was an interesting read but not applicable to most working young individuals. I would be more interested in a article revolving around guaranteed fixed annuities. This topic is gaining traction in YouTube discussions with higher interest rate environments.
Daniel, appreciate your work on explaining a mega back door Roth. A question remains: "Should you do it?"
Over 30 years ago, I took a friend’s advice to save any kind of bonus income and forget you received it. I put those funds in a brokerage account until mega backdoor became available in our 401(k) plan. I max out the tax deferred portion and then keep contributing the same amount per paycheck for the remainder of the year to after-tax. I use year-end bonus income to capture the remaining amount of after-tax.
If your company’s plan record keeper is BofA Merrill (Benefits Online), the tech is there to do after-tax with automatic conversion to Roth once you check the box.