Help me understand mega backdoor 401k

Amazon
nosler

Go to company page Amazon

nosler
Jan 29, 2020 10 Comments

Aka after tax contribution with in plan conversion to Roth.

Basically, what are the gotcha's?

And some specific questions:

1. Does it matter if my tax protected contributions are Roth or Traditional? As in, if it's Traditional, does the rollover actually convert the Traditional part as well as the after tax part, and should therefore my entire contribution be either Roth or After Tax? Or for some reason all traditional?

2. Any additional filing requirements or will the plan admin (Fidelity) just handle it?

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TOP 10 Comments
  • Salesforce
    ๐Ÿ’ฐ|| ๐Ÿ‘‰

    Go to company page Salesforce

    ๐Ÿ’ฐ|| ๐Ÿ‘‰
    Sure. Let me explain. In the past, there was something called a pension which you would get after a lifetime of work. In the recent past, your corporate overlords decided itโ€™s cheaper and therefore better for the shareholder to not do that anymore and lobbied the government to ask people to bend over and get a good old dose of freedom (tm) to manage their own retirement via all sorts of tax deferred tools. This is one of the tools. If you think they are weird and sometimes complicated, thatโ€™s by design.

    Also, whenever democrats pretend to do something for the people, they often come up with business friendly bullshit like these (like HSAโ€™s for example)
    Jan 29, 2020 1
    • Amazon
      nosler

      Go to company page Amazon

      nosler
      OP
      Sure, I agree with you.

      In the meantime, can you answer my questions? I at least want to make sure I set this up right.
      Jan 29, 2020
  • The gotcha is that not all employers offers such program. Thatโ€™s it!
    Jan 29, 2020 0
  • The gotcha is due to Amazon having hundreds of thousands of warehouse workers that don't put shit in 401k's, you guys aren't allowed to max your front door. Back door is not an option.
    Jan 30, 2020 0