Note that depending on the employer plan, one might not be able to move Roth funds (Roth 401(k) contributions) while still employed. Converting Roth portion to Roth IRA after employment should be allowed which separates Roth and non-Roth portions.
I followed that advise and rolled my Meta 401K into IRA in Robinhood. And eventually realized what I did -- I lost the chance to contribute to the Backdoor Roth IRA. Is this completely irreversible?
I don't believe you can roll funds into a plan after you leave. Your best options will probably be to roll the rollover ira into your next employer, if you have side-income you could open up a solo 401k and roll the rollover into that, or just skip the backdoor roth for now.
I've still got my 401k from Disney, a job I left 6 years ago. It's just sitting there, with no new contributions from me or my employer, and it's doubled since I left.
if you posted basics of mega backdoor roth with examples? Could you please point to that or any good reference? I still am not very clear about how to contribute to that, how to calculate tax impact and use that info to decide whether / when / how much to put in it.
Currently i simply do 401k only with employer matching, each year
Wait isn't there one option you're missing here? If the 401k is transferred to a Trad IRA, then from the Trad IRA to the Roth IRA, you can avoid any pro-rata issues. Or is the assumption that that would not be worth it in most cases? I was trying to estimate this out yesterday actually...
What you are describing would avoid the pro-rata rule... although normally you avoid the pro-rata rule to with the goal of not accidentally doing a normal roth conversion (which is what you are describing doing intentionally).
You would typically want to wait to do that in a year where you have lower income (during a sabbatical or early retirement).
You would need to run the lifetime taxation math to see if that would make sense. I need to write on roth conversions during FIRE still!
Hmm yeah that makes sense. Would be helpful for a future article to do a breakdown of what types of conversions, events, or investment changes to make broken down by high vs. low income, high vs. low tax, etc. In this case it seems it's best to hold off on Roth conversions until the tax rate is low relative to other years.
Note that depending on the employer plan, one might not be able to move Roth funds (Roth 401(k) contributions) while still employed. Converting Roth portion to Roth IRA after employment should be allowed which separates Roth and non-Roth portions.
I followed that advise and rolled my Meta 401K into IRA in Robinhood. And eventually realized what I did -- I lost the chance to contribute to the Backdoor Roth IRA. Is this completely irreversible?
I don't believe you can roll funds into a plan after you leave. Your best options will probably be to roll the rollover ira into your next employer, if you have side-income you could open up a solo 401k and roll the rollover into that, or just skip the backdoor roth for now.
I've still got my 401k from Disney, a job I left 6 years ago. It's just sitting there, with no new contributions from me or my employer, and it's doubled since I left.
if you posted basics of mega backdoor roth with examples? Could you please point to that or any good reference? I still am not very clear about how to contribute to that, how to calculate tax impact and use that info to decide whether / when / how much to put in it.
Currently i simply do 401k only with employer matching, each year
https://www.faangfire.com/p/mega-backdoor-roth-ira-401k?r=8tqoq&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false
Thank you - my main problem, it talks about "start contributing to mega backdoor roth".
Doesn't quiet explain (unless i missed it), what if i want to convert some of whats already in 401k, and how to estimate the tax portion on that.
Wait isn't there one option you're missing here? If the 401k is transferred to a Trad IRA, then from the Trad IRA to the Roth IRA, you can avoid any pro-rata issues. Or is the assumption that that would not be worth it in most cases? I was trying to estimate this out yesterday actually...
What you are describing would avoid the pro-rata rule... although normally you avoid the pro-rata rule to with the goal of not accidentally doing a normal roth conversion (which is what you are describing doing intentionally).
You would typically want to wait to do that in a year where you have lower income (during a sabbatical or early retirement).
You would need to run the lifetime taxation math to see if that would make sense. I need to write on roth conversions during FIRE still!
Hmm yeah that makes sense. Would be helpful for a future article to do a breakdown of what types of conversions, events, or investment changes to make broken down by high vs. low income, high vs. low tax, etc. In this case it seems it's best to hold off on Roth conversions until the tax rate is low relative to other years.
What? AI gibberish.