Mega BackDoor Roth IRA for High Income Earners

📣 A Mega Backdoor Roth IRA is a way for high-income earners to get tens of thousands extra every year into their Roth IRA accounts.

The Mega Backdoor Roth is like a cool hack for those who make too much to put money directly into a Roth IRA. You first put cash into a traditional IRA (where income doesn't matter) and then shift it to a Roth IRA.

The maximum contribution for a Roth IRA is $7,000 in 2024.

To supercharge this to $46,000 in 2024 you must understand the Mega Backdoor Roth.

The HOW:

To do this your 401(k) has to have the ability to do two things.

1. Allow after-tax contributions

and

2. Roll those after-tax contributions to a Roth 401(k) or Roth IRA.

Example:

You max out your pre-tax amount of $23,000 for the year.

~ Receive a current-year tax deduction for that.

*Your employer matches $2,000. (estimated)

• Pre tax total = $25,000

• This leaves you $44,000 to make after-tax contributions.

• Make the $44,000 after-tax contribution.

Then do one of two things:

In-Service Distribution ~ This allows you to move money from an active 401(k) plan outside of it.

or

In-Plan Conversion ~ This allows to you move your after-tax contribution to a Roth 401(k) option.

The WHY

The Roth IRA is a tax-free compounding machine.

For high-net-worth families, the lack of a Required Minimum Distribution (RMD) in retirement offers tax planning flexibility in later years.

The Mega Backdoor Roth IRA is a way to supercharge savings and lower your lifetime tax bill.

So Remember,

•Understand your plan

•Understand your options

•Determine your ability to save

•Ran a tax projection to see the potential benefit

It might save you thousands off your lifetime tax bill.

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To a wealthier future!

Best regards,

Wealth Uncorked

[email protected]

The fine print.

_{While I love diving into investing- and tax law-related data, I am not a financial professional. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. The investment products discussed (ETFs, index funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your due diligence. Past performance does not guarantee future returns. Some content may contain affiliate or referral links. I only feature credit cards, services, and apps that I use and love, and unless otherwise explicitly noted, the references to services and products are unpaid and unsponsored.}