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Thread: Money

  1. #821
    Senior Member
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    Things I think I know that I think you are missing:
    • Rollovers into Roth IRAs are treated as Contributions after a 5-year seasoning period. I think these Mega Backdoor rollovers can fall into that category. (Roth IRAs allow tax and penalty free withdrawals of Contributions)
    • There are "ways" to contribute more than $19,000 to your 401(k) annually. $19,000 is the employee elective deferral limit. There are other, higher, limits ($56,000 sticks in my head), but my company doesn't offer Roth 401(k) so I haven't explored them in detail.
    • 401(k)s often have shit-tier fund options, and rolling out into an IRA can get you access to better funds. Though I think it's dubious that a shit-tier 401(k) would also offer Roth and in-service rollouts...

  2. #822
    Darth Small Macheath's Avatar
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    Quote Originally Posted by liuv View Post
    • Rollovers into Roth IRAs are treated as Contributions after a 5-year seasoning period. I think these Mega Backdoor rollovers can fall into that category. (Roth IRAs allow tax and penalty free withdrawals of Contributions)
    Okay, an interesting wrinkle... though hopefully 401k and IRA funds can remain untouched until withdrawals would be un-penalized anyway... hopefully brokerage/other savings would cover you during early retirement... otherwise, are you really ready for early retirement?

    Quote Originally Posted by liuv View Post
    • There are "ways" to contribute more than $19,000 to your 401(k) annually. $19,000 is the employee elective deferral limit. There are other, higher, limits ($56,000 sticks in my head), but my company doesn't offer Roth 401(k) so I haven't explored them in detail.
    Yeah, same. I'm aware of the 56k limit, but I don't really understand it. Can I put $19k pre-tax into my traditional 401(k) and then another 37k after-tax into my Roth 401(k)? That would make sense from the same perspective a Roth IRA makes sense: the money's already taxed, might as well maximize untaxed growth whenever possible.

    If it works that way, and if you have so much money flying around that you can max out your traditional 401(k), plus do the normal backdoor Roth, and still pull this maneuver on top of it... I mean, I'd definitely take $37k in a Roth IRA rather than a brokerage.

    Quote Originally Posted by liuv View Post
    • 401(k)s often have shit-tier fund options, and rolling out into an IRA can get you access to better funds. Though I think it's dubious that a shit-tier 401(k) would also offer Roth and in-service rollouts...
    You might be able to get better funds in an IRA, but that just means your 401k sucks. Institutional funds can be way better, if available.

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