I am in the last 6 months of my career.
For the last 3-4 years I have taken advantage of Mega BackDoor, many companies but not all support it in their 401k plans.
Check your plan.
I would have done it sooner if I knew about it.
I was told by a friend/co-worker.
So doing what he did for me and passing on the information and suggestion to do it.
Why do it for a bogglehead ?
We talk about taxes a lot here and the different types of accounts: Taxable, TaxFree, TaxDefer
The way I see megaback door is a way to move a large chunk of money from Taxable Accounts to Roth. For over 50, it is around 80k.
In the 401k options, if supported, it is referred to as After-Tax. You do need to make sure the company does do the Roth Conversion.
For my company, I had to call Fidelity to confirm and set it up.
People will ask, what if I need the money now ?
This works for people who also have money in a taxable account like a brokerage account where the money lost can be replaced by money from taxable.
I have mine set aggressively because I am only working 6 months this year.
So my take home after Taxes, ESPP, 401k and After-Tax is 5%
To make up for the shortfall, I transfer money from MM in Taxable to Checking Account
From my view, I am moving extra money from Taxable to Roth.
How much ? Total for me is around 80k for 401k+After_Tax+employee match.
Just want to help and share a suggestion that I only found out when someone shared with me, so passing forward.
Take Care
For the last 3-4 years I have taken advantage of Mega BackDoor, many companies but not all support it in their 401k plans.
Check your plan.
I would have done it sooner if I knew about it.
I was told by a friend/co-worker.
So doing what he did for me and passing on the information and suggestion to do it.
Why do it for a bogglehead ?
We talk about taxes a lot here and the different types of accounts: Taxable, TaxFree, TaxDefer
The way I see megaback door is a way to move a large chunk of money from Taxable Accounts to Roth. For over 50, it is around 80k.
In the 401k options, if supported, it is referred to as After-Tax. You do need to make sure the company does do the Roth Conversion.
For my company, I had to call Fidelity to confirm and set it up.
People will ask, what if I need the money now ?
This works for people who also have money in a taxable account like a brokerage account where the money lost can be replaced by money from taxable.
I have mine set aggressively because I am only working 6 months this year.
So my take home after Taxes, ESPP, 401k and After-Tax is 5%
To make up for the shortfall, I transfer money from MM in Taxable to Checking Account
From my view, I am moving extra money from Taxable to Roth.
How much ? Total for me is around 80k for 401k+After_Tax+employee match.
Just want to help and share a suggestion that I only found out when someone shared with me, so passing forward.
Take Care
Statistics: Posted by retirewithjoy — Wed Jan 22, 2025 2:05 pm — Replies 1 — Views 364