Extremely helpful! Clearest explanation I’ve received so far. I’ve had a Backdoor Roth for about 10 years but only just found out about the Mega. I understand you can do both but you have to be careful to not over contribute.
You don’t just have to convert to a Roth 401(k). My company’s plan gives us the option of converting to a Roth 401(k) OR to a Roth IRA. I have always chosen the Roth IRA for several reasons - including no RMD req’t for the Roth IRA (which is now going away for the Roth 401(k)), but also for more flexible investment options in the Roth IRA. They call it the “Roll-out Split” - and my after-tax contributions go into the Roth IRA, and the pre-tax earnings (before the conversion) go into a traditional IRA (which I then immediately roll back into my 401(k) so that I maintain a $0 pre-tax basis in my IRAs so that I can also do a “standard” backdoor Roth conversion of the after-tax dollars I contribute to my traditional IRA.
Hello and Thank you very much for the very informative presentation. I am now subscribed to your channel and I hope to learn even more. I was wondering whether I could re-characterize a quantity that I’d previously ré-characterize? I mistakenly did the first in an attempt to convert a Traditional IRA into a Roth IRA. The custodian is telling me I cannot do so but however I’m not seeing any IRS guidance saying that. I see guidelines stating that reversing a conversion is prohibited but nothing stating a re-characterization isn’t reversible. I’m attempting to do this before the tax window closes. Any help greatly appreciated!
Can you do a video on Roth 401K vs Mega Backdoor Roth Conversions? I'm currently doing a Roth 401K but wondering if I should do a Mega Backdoor Roth Conversions instead. I like the option of investing in stocks rather than limited options available in a Roth 401K which is mainly index and mutual funds.
My company offered a Roth 401k after years of only offering a standard 401k. I switched to the Roth 401k and I also max my Roth IRA every year through the back door Roth contribution through an otherwise dormant trad IRA. Since my 401k is already a Roth, does a mega Roth conversion hold any benefits? Does it matter that I max may Roth IRA or does the mega allow for additional contributions to that account annually?
Extremely helpful! Clearest explanation I’ve received so far. I’ve had a Backdoor Roth for about 10 years but only just found out about the Mega. I understand you can do both but you have to be careful to not over contribute.
One of the best explanations I have heard for mega backdoor roth
Thank you!
Great info! Thank You James.
Glad it was helpful!
You don’t just have to convert to a Roth 401(k). My company’s plan gives us the option of converting to a Roth 401(k) OR to a Roth IRA. I have always chosen the Roth IRA for several reasons - including no RMD req’t for the Roth IRA (which is now going away for the Roth 401(k)), but also for more flexible investment options in the Roth IRA. They call it the “Roll-out Split” - and my after-tax contributions go into the Roth IRA, and the pre-tax earnings (before the conversion) go into a traditional IRA (which I then immediately roll back into my 401(k) so that I maintain a $0 pre-tax basis in my IRAs so that I can also do a “standard” backdoor Roth conversion of the after-tax dollars I contribute to my traditional IRA.
Hello and Thank you very much for the very informative presentation. I am now subscribed to your channel and I hope to learn even more. I was wondering whether I could re-characterize a quantity that I’d previously ré-characterize? I mistakenly did the first in an attempt to convert a Traditional IRA into a Roth IRA. The custodian is telling me I cannot do so but however I’m not seeing any IRS guidance saying that. I see guidelines stating that reversing a conversion is prohibited but nothing stating a re-characterization isn’t reversible. I’m attempting to do this before the tax window closes. Any help greatly appreciated!
Can you do a video on Roth 401K vs Mega Backdoor Roth Conversions? I'm currently doing a Roth 401K but wondering if I should do a Mega Backdoor Roth Conversions instead. I like the option of investing in stocks rather than limited options available in a Roth 401K which is mainly index and mutual funds.
Glad it was helpful!
Did you check out @JJ-xv3gs’s question? It’s a good one!
My company offered a Roth 401k after years of only offering a standard 401k. I switched to the Roth 401k and I also max my Roth IRA every year through the back door Roth contribution through an otherwise dormant trad IRA. Since my 401k is already a Roth, does a mega Roth conversion hold any benefits? Does it matter that I max may Roth IRA or does the mega allow for additional contributions to that account annually?
Can you take loan (for college education) out of Mega Backdoor Roth only? Would there be penalty or tax on it ?
If you can use the after tax money to improve your quality life AND your retirement is already well funded, then consider not to do mega backdoor.
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