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Mega Backdoor Roth Made Simple, With Kelley Long
In 2023, investors are able to put $66,000 into their 401(k) or 403(b) plans. But most contribute less than half of that, even if they have sufficient income.
Kelley Long joins Michael to discuss the Mega Backdoor Roth, a strategy for making after tax contributions to a qualified plan and then immediately converting to a Roth account in a nontaxable event.
Watch On YouTube
Episode Highlights
- Summary of the Mega Backdoor Roth, including who can and should use it.
- Why the Mega Backdoor Roth IRA can be a better option than a taxable brokerage account.
- Step by step walk through the mechanics of executing a Mega Backdoor Roth.
- Common mistakes made with the Mega Backdoor Roth and the drawbacks associated with this strategy.
- Potential for the Mega Backdoor Roth to be eliminated in future legislation.
Episode Resources
- How The Mega-Backdoor Roth Works (Journal Of Accountancy)
- Episode 1: Backdoor Roth IRA
- Requirements of a 401(k) or 403(b):
- Offers a Roth option (most will); AND
- Allows after-tax contributions after the annual elective deferral limit has been reached; AND
- Offers one of the following:
- In-plan conversions to Roth (more common)
- In-service withdrawals of funds (less common).
Today’s Guest: Guest, Company
About The Tax Efficient Investor Podcast
On the Tax Efficient Investor podcast, we show you how to protect, grow, and transfer your wealth by implementing tax-advantaged investment strategies. Host Michael Johnston demystifies tax strategies that are favored by the most successful and sophisticated investors, including 1031 exchanges, IRA & 401k plans, HSA accounts, trusts, real estate, and more.
