How the Mega Backdoor Roth Can Help You Save Thousands Long-term in Retirement

[@CharlesLiamh1p]

"Retirement isn’t an end goal, but a journey best secured by careful and consistent investments."

[@CharlotteNoah3]

Well said! Retirement is the reward of disciplined investing over the long term, not just a destination.

[@pmonjo]

This is the best video explaining the mega backdoor feature I have found. All other videos expect you to know a lot; this video starts from the very basics.

[@pstratt1294]

Thanks Troy, this was very helpful. I’ve been trying to understand the mega back door for years!

[@bk7097]

Excellent explanation Thanks

[@OakHarvestFinancialGroup]

Thank you so much, and you're welcome! We're glad you enjoyed.

[@terrykarras5598]

Troy, one question and one comment. Q. It was my understanding that the max into a 401(k) was $76,500 for those over 50 ($69,000 + $7,500). Am I mistaken? C. Even if your 401(k) plan doesn't allow for in-service distributions, it may allow for "in-plan conversions", which would allow you to immediately convert the after-tax funds into the Roth portion of your 401(k), avoiding that taxable growth from the after-tax funds. Thanks for the great content!

[@99evets]

I believe it is $76,500 as well.

[@OakHarvestFinancialGroup]

You are correct, I forgot to include the catch up contribution for 401k participants over the age of 50. Thanks for catching that!

[@ForeverLove511]

I wish I could see this video 10 years ago😅 very helpful!

[@theprovenway2950]

Great information!

[@OakHarvestFinancialGroup]

Thanks, glad it was helpful!

[@i5KP]

What if you keep the accounts separate? Ie back door Roth via vanguard and Ira thru fidelity ? So it isn’t co mingled

[@marknettvictoria6870]

Hello does the pro-rata rule apply to the mega backdoor roth ira?

[@Yugiboii]

No, since the after tax was originally in the 401k … IRS treats 401k and IRA as different accounts so no pro rata rule

[@SS-qr5qk]

I’m guessing the pro rata rule applies to an existing Sep IRA, and opening a traditional IRA as a pass through vehicle for the ROTH? Thank you!

[@NinaKim-m3s]

Thank you, helpful video. If you have gains on your after tax 401k, I understand you roll over contribution to Roth IRA and gains to traditional IRA. however what if I already did a backdoor Roth IRA this year? Would that affect anything eg via pro rata rule?

[@OakHarvestFinancialGroup]

Thank you for watching and commenting! The pro-rata rule only applies to IRAs. Nothing done in the 401k would impact the pro-rata determination. If you have traditional, tax-deductible IRA dollars in an account, and then do a separate back-door Roth then there may be a tax issue. We recommend you talk with a CPA regarding your specific situation or your financial advisor.

[@snatraps99]

Hi there. Thanks for the info. I can't do a Roth or a backdoor Roth, so I am trying to do a Mega. My employer plan permits aftertax contributions into the 401K and permits 2 in-service conversions annually. My plan was to make aftertax contributions every paycheck into the 401K and then twice a year transfer the contributions into a Roth IRA and the growth into a traditional IRA. However, after watching your video, it seems I could avoid the two IRAs and convert the contributions into my company's Roth 401k? Will this not affect my max of $23K into the 401K? I want to continue to max that out while also doing a mega backdoor Roth taking advantage of both tax saving strategies (now and later). Thanks!

[@Yugiboii]

The 23k limit are for contribution amount, a rollover from the after tax 401k bucket into the Roth 401k bucket is not treated as a contribution

[@mikeg2538]

Question. If you are 50 with $4 million invested having 50% in etfs based on broad indexes (Dow, Spy, Nasdaq) and 50% money market. Is this $ enough to retire? I rent a 2 bedroom apartment, no debt, no kids. I also ask because I have slight back pain sitting at PC 8 hours a day. I wonder how long I can endure it. I anticipate 6% returns but the past 30 years seem like a rosey picture. I also have 0 pension. Thanks.

[@michaelgreen3036]

I am not a financial advisor, but I personally think you have enough to retire. However, it's my opinion you have too much in money market and should have more in total market index and world market excluding US. Only need to maintain 3 years worth of living expenses in money market so you can allow a large market downturn to recover. Add more to money market every time stocks seem frothy and don't worry if you guessed wrong. You should be able to stay ahead of inflation that way.