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Pro-Rata Rule: If you have other pre-tax IRAs, you may owe taxes on part of the conversion. ... The key component of a mega backdoor Roth IRA plan is dependent on two factors: 1) You are in 401(k ...
But you can run into further complications if you’re moving an employer-sponsored retirement plan. ... the pro rata rule. Even if you have a Roth 401(k) with after-tax contributions, an employer ...
However you can convert funds from a pre-tax account into a Roth IRA through a process known as a “backdoor Roth.” This will let you minimize federal income taxes in retirement at the cost of ...
A Roth IRA is the best retirement account around, according to many experts. It offers huge benefits such as tax-free income and the ability to leave tax-free money to heirs. Plus, because of its ...
Can be converted to a Roth IRA, typically for backdoor Roth IRA contributions. Taxes need to be paid during the year of the conversion. Also, the non-basis portion can be rolled over into a 401(k), if allowed by the 401(k) plan. Changing Institutions Can roll over to another employer's 401(k) plan or to a rollover IRA at an independent institution.
To sum up, being eligible for a mega backdoor Roth depends on what your workplace retirement plan allows. You can use this advanced strategy if you can make after-tax contributions and do an in ...
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