Microsoft 401(k) and Mega Backdoor Roth in 2023 - Save Thousands to a Roth

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In 2023, you can contribute up to $66,000 if you’re under 50 and $73,500 if you’re 50 or older to your Microsoft 401(k).
You can fully leverage these limits by taking advantage of the Mega Backdoor Roth. This is a powerful benefit within your Microsoft 401(k). It allows you to contribute after-tax dollars and convert those dollars to Roth.
Your 401(k) contributions also increased in 2023. If you’re under 50 you can contribute up to $22,500 and if you’re 50 or older you can contribute up to $30,000.
Microsoft will match 50% of your 401(k) contributions. You can earn up to an additional $11,250 in free money from Microsoft.
Key moments in video:
00:00 Introduction
00:25 2023 401k Contribution Limits
00:56 What is the Microsoft Mega Backdoor Roth?
01:26 Mega Backdoor Roth example
02:37 Tax benefits of the Mega Backdoor Roth
02:59 Tax benefits associated with a Roth
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Using the Mega Backdoor Roth feature, Microsoft employees can contribute up to the federal limit. Here’s an example of how an employee, under 50 years old, can save $32,250 to a Roth:
• 401(k) contribution $22,500 (pre-tax or Roth)
• Earn Microsoft match: $11,250
• After-tax contribution converted to Roth: $32,250
Your after-tax contribution, along with your 401(k) contribution and employer match = $66,000.
⭐⭐Reduce future taxable income.⭐⭐
The Mega Backdoor Roth is way for high-income earners way to utilize the benefits of a Roth. Within a Roth your money grows tax-free. These same dollars and the interest earned are tax-free when accessed in retirement (59.5+ years old).
Having additional money in a Roth account enables you to manage your retirement distributions. This gives you more control over future taxable income.
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We focus on providing comprehensive financial planning and investment advisory strategies for tech professionals and their families.
Third Party: Avier Wealth Advisors is not affiliated with Microsoft. There is no guarantee that the information we have provided is accurate. Microsoft employees are encouraged to contact their employer should they have any questions regarding their employee benefits.
Taxes: Avier Wealth Advisors does not prepare taxes. The tax ideas presented are meant to demonstrate general concepts rather than precise calculations. We consult with your tax professional for exact calculations.