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Level 1
posted Feb 27, 2024 5:57:15 PM

I'm maxing out my employer's (government) 401k and 457 plans. May I additionally contribute to a separate "backdoor" Roth IRA, without incurring penalties and fees?

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3 Replies
Expert Alumni
Feb 27, 2024 6:06:57 PM

Yes.  Your employer provided retirement plan contributions have no impact on your eligibility to do a backdoor Roth.  As long as you are eligible to make a non-deductible contribution to a Traditional IRA, you are eligible to do a backdoor Roth.  There will be no fees or penalties.

Level 1
Feb 27, 2024 6:32:46 PM

Apologies for my ignorance. How do I know if I’m eligible to make a non-deductible contribution to a traditional IRA? My original concern was that the traditional IRA and 401k “buckets” are treated as one in the same, such that if I’m maxing out the 401k, I can’t pass any additional funds through the Traditional IRA (for purposes of funding the backdoor Roth) without exceeding the yearly max.

Level 15
Feb 28, 2024 5:05:17 AM

The amount in box 1 of your W-2 minus any amount in box 11 is compensation that will support a traditional IRA contribution.  Otherwise, the amount that you contribute to a 401(k) or a 457(b) is not a factor in determining the amount that you are eligible to contribute to a traditional IRA.  (If you defer all of your available compensation to to the traditional 401(k) and the 457(b) accounts, there would be a zero in box 1 of your W-2.)

 

There is no limit on the amount that you are eligible to convert to Roth.