The MEGA Backdoor Roth - What You Need to Know

The Mega Backdoor Roth is a special type of 401(k) saving strategy used by people with higher incomes to get nearly triple the amount of funds into their 401(k), while converting a good portion of them to Roth right away.  This little-known strategy works under very particular circumstances for people with plenty of extra money they would like to stash in Roth.

 

Show Notes:

Jane is 45 years old, makes 150,000 a year in income.

Single filer for taxes which puts her over the Roth IRA contribution limit 

Company 401(k) match of 50% of first 10% contribution

 

She does:

$19,500 salary deferral pretax into her 401k

$7,500 company match

$27,000 total contributions 

 

She could then contribute up to $31,000 (58,000 -27,000) into the after-tax source of the 401(k) before hitting the overall cap.

 

Then she can convert those after-tax dollars to the Roth inside her 401(k) or outside to a Roth IRA if plan allows without penalty.

 

Please visit www.rhitch.com/resources for more information.

 

Ryan Hitchcock

Financial Planner

High Point Capital Group

 

Direct: 414-253-4611

rhitch@hpcg.com

 

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is not guarantee of future results.  Securities and investment advisory services offered through SagePoint Financial, Inc. (SPF), member FINRA/SIPC. SPF is separately owned and other entities and/or marketing names, products or services referenced here are independent of SPF. 

 

1200 N. Mayfair Rd., Suite 300, Milwaukee, WI 53226. Phone: 414-253-4600.