New Grad here. To my knowledge, Google basically match 50% of $19,500 (401k pre-tax contribution limit in 2020). With employer match, there will be a total of $19,500 * 1.5 = $29,250 in the 401k. Since the maximum annual contribution is $57,000, one can contribute additional $57,000 - $29,250 = $27,750 after-tax money to 401k. Question: Using mega backdoor Roth IRA, only the after-tax portion ($27,750) can be roll-over or everything in the 401k ($57,000) can be roll-over to Roth IRA account? TIA. TC: π₯ YOE: 0 #401k
Whatβs a mega backdoor??
https://www.nerdwallet.com/blog/investing/mega-backdoor-roths-work/
Ty
You have the option to roll over only the after tax portion or pre tax as well. Pre-tax roll over however will trigger the tax consequences. So IMHO, best thing to do is rollover the after tax 401K contribution to Roth IRA asap in order to minimize the tax on the gains that you might have on after tax contribution.
Thanks for the comment. But what if there's only pre-tax contribution from me and employer match in the 401k account? Roll-over will ofc trigger tax for $19,500 * 1.5 = $29,250 plus some earnings if there is. Is it possible without additional 10% penalty? I just wanna take out for down payment of my first home.
@OP there are really good docs on the subject internally. Sign up for the mailing list or search