To have a Mega Back Door Roth IRA your retirement plan needs to have two components
Your 401k Plan Must Meet Specific Criteria To Do A Mega Backdoor Roth IRA
In order to do a Mega Backdoor Roth IRA, your 401k plan needs to offer:
- After-Tax Contributions Above and Beyond the $19,500 Pre-Tax Contribution Limits
- In Service Distributions Or Non-Hardship Withdrawals
If these two conditions are part of the retirement plan then you contribute to the 401K up to the limit for pre-tax contributions. Then contribute to the plan after-tax contributions up to the limit of 25% of your pre-tax income or $56,000 or if you are over 50 years old you can add another $6,000. Which ever is less.
Then you transfer the after-tax contributions to your Roth IRA account.
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