(760) 692-5700

Click on the image above to view this Savvy Minute video.

What is a Mega Backdoor Roth Conversion?

What exactly is a Mega backdoor Roth IRA?

It requires that your employer 401k allows after tax contributions. A Mega Backdoor Roth IRA allows you to contribute an additional $37,000 in 2019 into a Roth IRA or Roth 401K, this is on top of your regular contribution limits of $19,000 and if you are in an employer 401K plan that allows after tax contribution up to the current limit of $56,000 in 2019 or $62,000 if age 50 and older. This $56,000 limit consists of your $19,000 contribution (combination of pre-tax and Roth), as well as any matching contributions your employer makes, employer profit-sharing, and after-tax traditional 401(k) contributions made.

Remember, not all 401k plans allow them, so I would make sure and check with your Human resources department or plan administrator. Even if your employer offers after-tax traditional 401(k) contributions, you may not be able to fully maximize the contribution due to plan limits and nondiscrimination testing for highly compensated employees. Also, you will need to check to see if your employer offers in service distributions to a Roth IRA or if you are able to move money from your after-tax portion to a Roth IRA.

There are some moving parts to this strategy, I would suggest your consult with a Certified Financial Planner™ representative to look at your overall financial situation to see if this strategy makes sense for you. For your specific tax related questions consult with your tax advisor.

Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER TM and Managing Partner at Savvy Women Wealth Management in Carlsbad California.

We help women invest wisely and create custom financial plans for their way of living so they can enjoy a fulfilling retirement with peace of mind…
…without giving up their lifestyle.

If you are wondering if a Mega Backdoor Roth might be right for you then please schedule a FREE strategy session.

We’ve found that many of our clients reach out to us when they have a financial issue or question surfacing for them.

If you have something coming up and would like to discuss or need a sounding board then please schedule a FREE strategy session. It’s over the phone, maybe 15 -30 minutes and we can see if it makes sense to talk more.

Many people schedule a FREE Strategy Session with us for the following reasons:
-They want to know if they are saving enough so they won’t run out of money in retirement.
-They want to know If they’re in the right investments.
-They would like to create a financial plan tailored to their lifestyle.
-They have some serious financial decisions to make and need a professional unbiased opinion.
-They know they need to do something but they’re not sure where to start.
Whatever it is, let’s talk.

This is approximately a 15 – 30-minute phone call where we can discuss your questions and or concerns and see if it makes sense to meet for a free consultation.
Click on the button below to schedule your FREE Strategy Session.

Click to Schedule a Free Strategy Session