Meed some help understanding the back door Roth method.
My income is above the limit to directly contribute to a Roth. My employer provides a pre-tax 401k without a mega back door option (also no post-tax contribution options). I contribute about 12k a year to this employer 401k (pre tax)
From what I understand, I can open a traditional IRA at any institution like fidelity or Charles swabb, and contribute 6k of post- tax money. From there I should be able to use a back door Roth to convert it into a Roth savings?
Can someone confirm if my understanding above is correct? Trying to understand what my options are. Also typically when do people contribute to their traditional Ira and trigger the back door Roth? At the start or end of the year?
TIA!
TC:250K
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comments
So, does old 401K that's not rolled over but still in the original plan come under pro-rata rule? The Q is whether it would be considered as an IRA, which I guess it doesn't?
The link doesn't seem to cover that.
Flagged by the community.
Mega Backdoor Roth (through your employer) would go away in 2022.
For 2021, you will have until April 15th 2022 (or whatever the deadline will be next year if they push it) to contribute to the 2021 tax year’s IRA.