In the recent presidential debate, NY Times has reported that Trump only paid $750 in federal income taxes in 2017. So in today’s video, I’m going to talk about what a Mega Backdoor Roth is (which is one of the biggest tax hack), its eligibility criteria and a detailed walk-through on how to set it up at Vanguard via its Roth In-plan Conversion. You can also deploy the same strategy with Charles Schwab or Fidelity if they are your employer retirement sponsor. I would recommend Mega Backdoor only if you have already max’ed out pre-tax 401K, HSA or Roth IRA (you can check out details in this video:
0:00 Intro
1:24 What is Mega Backdoor Roth
1:54 Difference between Pre-tax, Roth and After-tax 401K
4:52 Eligibility Criteria
6:16 How to Set Up via Vanguard (Roth in-plan conversion)
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What Video to Watch Next?
Right order to contribute to 401K, IRA, and HSA:
How to Set up Backdoor Roth:
Mega Backdoor Roth via In-service Distribution:
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When I first knew Mega Backdoor Roth 3 years ago I thought it was rocket science and I was afraid to maneuver. After watching the video, me like: implement Mega Backdoor Roth? right away; thumb up, subscribe? right away.
By when can one contribute to a megabackdoor roth for a given year? End of calendar year or end of tax/financial year?
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Great video. This was the best explanation I’ve seen on this topic.
超级感谢，已经订阅
Thanks for the video. Is there a way to view Converted Roth 401K balance? I only see the my ROTH IN PLAN CONVERSION contribution, but the 401K account doesn't show many much Roth 401K in it. Is Roth 401K a separate account?
Ying, thank you so much for your video. It's much more clear than everything I read before. However, I still have several questions please… (1) by selecting in plan conversion, the contribution to the After Tax 401k will automatically go to my roth IRA? (2) Do I need to connect the ira account and the 401k account first? (3) Is it assuming that the same provider supports both my roth ira account and my 401k accounts? (4) What if, say, my roth is with Fidelity and my 401k is with vanguard. (5) Will the contribution stop automatically when the maximum amount is reached? Or do I need to calculate first and then set the contribution amount to the after tax 401k?
Apologize for so many questions. Thanks a bunch!
I am new to online investments, I have been practicing using a demo account. I like to prepare for my future, I wanna start up a Roth IRA account. I don't know much about it or which is better. I am scared that I don't know enough to start all by myself. I am willing to try, but I need help with what to do next.
Great video. Can you help add the link for the Vanguard "Manage Roth conversions"? I cannot find it on the Vanguard website. Thanks.
What would the differences be with me being self employed?
Hey Ying if my employer doesn't offer this can I manually convert Trad. IRA to Roth? Great video!
Is there a way to convert after tax 401k to a roth IRA without the use of the traditional 401k? I only use the roth 401k and I have a roth IRA. I dont want to use the traditional 401k. Great video by the way.
How often can you do this?
What a great video
Thanks for the great info!
Very helpful. Thank you.
What if I don't have an employer? Can I do the mega backdoor conversion from my SEP IRA as long as the contributions made for the year aren't deductible?? Would this allow me to convert up to 58K a year to my Roth??
I don't mind contributing after-tax income as long as I get to invest more than the paltry 6 grand to grow and be wtihdrawn tax-free.
The problem for me is that I rolled over my old 401k to a traditional IRA years ago. And the IRA considers ALL traditional IRA accounts as the single aggregated account, so I can never get a clean non-taxable contribution of the full amount, unless I pay tax and convert all my Traditional IRA to Roth first. For example, my Traditional IRA has $58,500 in it, the tax free amount after my new $6500 traditional IRA contribution, despite in a separate new traditional IRA account, is just 10%. That's a big caveat and a lot of taxes.
Can i do this for 2020? Or is it only for current year?
thanks for the explainer! What is your withdrawal plan for these converted roth 401k funds? I know about the basic strategy for TRADITIONAL 401k -> roth IRA conversion ladder… But not sure if the same rules apply for a ROTH 401k -> ROTH IRA conversion. Do you have insights into that?
Great video and a clear explanation. You got a sub!
This is the best explanation I have heard for the back door Roth. The examples you used were extremely helpful. Thanks for the content!
Do you have to do the rollover from the after-tax 401(k) to the Roth IRA every two weeks when you’re paid or do you do it all at once at the end of the year
Can I do a mega backdoor Roth in addition to a backdoor Roth ira within the same year?
You recommended to max out pretaxed 401k, Roth ira first before doing megaback door, why?
It's not a "loophole." It's 100% legal tender within the confines of tax law.
Btw, Trump “did not pull it off”. He didn’t pay his taxes, he cheated.
Please try to make the voice LOUDER that will attract MORE VIEWERS!