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B BEDELFINANCIAL III 23. I've heard of the Backdoor Roth IRA strategy, however, I recently came across the term Mega Backdoor Roth IRA. How does this strategy work? To Your Wealth - August 13, 2019 The Mega Roth IRA is similar in nature to the Backdoor Roth IRA strategy but takes it a step further through an employer sponsored 401k. To capitalize on this strategy, your employer plan MUST allow after-tax contributions and in-service distributions (or non- hardship withdrawals) in conjunction with the normal salary deferral and subsequent match. [*It's important to note that After-Tax does not mean Roth 401k contributions.] To implement the strategy, ensure you are set to max out your 401k *[$19,000 for 2019] and determine the amount your employer will be matching on your behalf. The IRS limits total annual contributions to a 401k *[$56,000 in 2019) so you will want to make after- tax contributions for the difference ($56,000 limit - $19,000 deferrals - employer match]. As soon as feasibly possible (to avoid taxes due on any growth), rollover the after-tax contributions to your Roth IRA and be sure to keep accurate records. *Aforementioned limits are increased for individuals 50+ Back to the Top | Submit a Question | Bedel Blog

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