Thanks for presenting this topic! For people interested in using a Solo 401(k) to do a Mega Backdoor Roth or just in-plan conversions to Roth, this is possible. You can use a third party administrator (TPA) to create an IRS-approved plan and then choose the brokerage where your accounts will be.
Can you expand on this? I have a solo 401k with Vanguard and have traditional and Roth options, but mt the after tax option needed to do the mega back door Roth conversions.
@@MatthewBennettFPV Since you have a Solo 401(k) that doesn't include the after tax component necessary for a Mega Backdoor Roth, you'd need to connect with a TPA that provides a plan for you that includes an after-tax component and in-plan Roth conversions. You could work with the TPA to move your existing plan to the new plan while usually leaving your assets with your original custodian.
Great video as always! I have a quick question: early 2022, I put 6K in roth IRA but I may not be eligible due to high income bracket due to capital gains. So, I will have excess. So, Can I take out all excess (market value is now 5K due to loss of 6K roth investment) soon (in 2022) and put that money into traditional IRA, then transfer that to roth (via backdoor). All in 2022. Will I be able to do that? Or any suggestions or implications? Appreciated your help :)
Did you already have other money in your Roth IRA at the time you contributed it? That will complicate the math of how much you need to take out. Start by asking your custodian to see if they will do the calc of how much needs to come out. If not, Google "Net Income Attributable Calculation" to learn how to do the calc yourself. Anyway, assuming you take out the excess from the Roth IRA, yes, if you have earned income of at least $6k, you can instead put it into a traditional IRA. And it would be non-deductible. You can then convert that to a Roth IRA. However, if you already any pre-tax money in any of your IRAs, some of your conversion will be taxable as the conversion will be treated as prorated portions of the non-deductible contribution AND some of the pre-tax money you already have in your IRA(s).
I have had solo 401k for years, contributions wise it was amazing but i switched over to defined benefit plan which is like a night and day compared to contribution amounts. Yes, there is cost involved in maintaining a cash balance plan but my contributions were more than twice. So why solo 401k why not DB plan?
Excellent show, gentleman! Thanks!
Sean explained the funding deadlines very well, for employees and employers.
Thanks for presenting this topic! For people interested in using a Solo 401(k) to do a Mega Backdoor Roth or just in-plan conversions to Roth, this is possible. You can use a third party administrator (TPA) to create an IRS-approved plan and then choose the brokerage where your accounts will be.
Can you expand on this? I have a solo 401k with Vanguard and have traditional and Roth options, but mt the after tax option needed to do the mega back door Roth conversions.
@@MatthewBennettFPV Since you have a Solo 401(k) that doesn't include the after tax component necessary for a Mega Backdoor Roth, you'd need to connect with a TPA that provides a plan for you that includes an after-tax component and in-plan Roth conversions. You could work with the TPA to move your existing plan to the new plan while usually leaving your assets with your original custodian.
Great video as always! I have a quick question:
early 2022, I put 6K in roth IRA but I may not be eligible due to high income bracket due to capital gains. So, I will have excess. So, Can I take out all excess (market value is now 5K due to loss of 6K roth investment) soon (in 2022) and put that money into traditional IRA, then transfer that to roth (via backdoor). All in 2022. Will I be able to do that? Or any suggestions or implications? Appreciated your help :)
Did you already have other money in your Roth IRA at the time you contributed it? That will complicate the math of how much you need to take out. Start by asking your custodian to see if they will do the calc of how much needs to come out. If not, Google "Net Income Attributable Calculation" to learn how to do the calc yourself.
Anyway, assuming you take out the excess from the Roth IRA, yes, if you have earned income of at least $6k, you can instead put it into a traditional IRA. And it would be non-deductible. You can then convert that to a Roth IRA. However, if you already any pre-tax money in any of your IRAs, some of your conversion will be taxable as the conversion will be treated as prorated portions of the non-deductible contribution AND some of the pre-tax money you already have in your IRA(s).
I have had solo 401k for years, contributions wise it was amazing but i switched over to defined benefit plan which is like a night and day compared to contribution amounts. Yes, there is cost involved in maintaining a cash balance plan but my contributions were more than twice. So why solo 401k why not DB plan?