Mega Backdoor Roth Strategy

August 19, 2021

Roth IRAs can be funded in multiple ways including direct contributions, backdoor Roth contributions, Roth conversions of pre-tax IRA assets, and through certain employer 401(k)s through a provision known as mega backdoor Roth IRA. By utilizing the mega backdoor Roth contribution, certain 401(k)s grant their employees the ability to contribute up to $58,000 per year of after-tax funds into a separate account. If the employee is eligible for in-service distributions, the after-tax contributions can be rolled directly to a Roth IRA. Although not every employer 401(k) allows for mega backdoor Roth contributions, it is worth considering contributing funds to a Roth 401(k) if available.

At Brandywine Oak, we guide our clients through the complexities of retirement saving to maximize their after-tax returns. To learn more about this topic, please read IRA Expert Ed Slott’s thoughts:

#BOPW #TaxPlanning #PrepareDontRepair