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Mega Backdoor ROTH Conversions

Updated: Jul 10

401(k) After-Tax Contributions/Mega-Backdoor-Roth:

What is it? Some 401(k) plans have a unique feature that allows employees to exceed the usual $19,500 IRS limit up to the Annual Additions limit of $58,000 (2021) or $64,500 for age 50+

How do I know if I can do a Mega Backdoor ROTH conversion But you need to check with your employer first to verify if they allow both of the following:

1. After-Tax Contributions

2. In-Plan ROTH Conversions


My 401(k) allows for after-tax contributions and I can convert them to Roth. Should I do this? How does it work?


Check out the accompanying informational graphic, but please note the following:

o It only makes sense for you to do after-tax contributions if you are already on pace to max out the $19,500 this year and is planning to immediately convert their after-tax contributions to Roth.



o Once the first after-tax contribution is made, you will then need to call their 401(k) provider and authorize the automatic in-plan Roth conversion. This ensures that moving forward, every after-tax contribution automatically gets converted to Roth and they won't end up paying ordinary income tax on the gains.




The foregoing content reflects the opinions of Mountain Wealth Planning and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

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