Maxing out 401k at Amazon using Mega Backdoor.
Jan 22, 2021
23 Comments
I would like to contribute the maximum $58k into my ROTH using the mega backdoor approach as quickly in the year as possible.
It looks like the Amazon 401k plan at Fidelity limits the after-tax non-ROTH contribution to 10% of base salary. Per my calculations, that effectively draws out the contributions and limits it to ~$40k per year.
Am I thinking about this wrong?
Is there a way to get to the maximum $58k?
Will switching from Fidelity help?
What options do I have?
TIA
#personalfinance #investments #FIRE #401k
comments
Also, you can withdraw everything no penalty if you retire early. Look up SEPP IRA.
See the "Employee Retirement Income Security Act", companies providing 401ks need to prove their plans don't overly favour employees earning over $130k. Amazon limits to 10% of your salary going into an after-tax 401k (after the base $19.5k basic limit for traditional + Roth 401ks) to satisfy auditors during the annual 401k discrimination test.
There are a lot of fulfillment center workers who have lower salaries so that any mega backdoor contributions are almost exclusively useful for high earning employees, so Amazon has to throttle more than tech companies that don't have physical warehouses and stores.
Could they raise this limit and still be in the clear with the IRS? I'm not sure.