In 2023, Shell professionals can use the Mega Backdoor Roth strategy in the Provident Fund to save up to an additional $10,500 in an account that grows tax-free for life! For the financially savvy Shell professional, you can use the Mega Backdoor Roth strategy each year to make the most of your financial planning and retirement savings.

Want to learn more? Watch our free on-demand webinar that shows how Shell professionals can save over $73,500 in tax-efficient accounts in 2023 here:

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Video highlights:
01:30 Mega Backdoor Roth Strategy
02:00 How to contribute to after tax
02:48 Why Roth IRA vs Taxable Account

What’s the Mega Backdoor Roth Strategy?

When you make after-tax contributions in your Shell Provident Fund 401(K), you have two options for what you can do with those funds: leave them in the 401(K) or roll them out via a Roth conversion to a Roth IRA.

If you leave the funds in the 401(K), at withdrawal, your contributions will be tax-free, and any growth you accumulate will be taxed at ordinary income rates. That’s not too tax-efficient.

If instead, you annually roll the after-tax funds over to a Roth IRA, the growth and contributions grow tax-free for life!

How to Max Out Your 401(k) at Shell this Year?

If you’re under age 50, the IRS’ total 401(K) contribution limit in 2023 is $66,000. Shell contributes anywhere from 2-10% of an employee’s salary based on tenure, up to $33,000. This means employees under age 50 can contribute the remaining $33,000 to the Shell Provident Fund between the after-tax source (up to $10,500) and the Pre-Tax or Roth sources (up to $22,500 between the two).

Learn how to Max Out Your Shell 401(k) here:

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Willis Johnson & Associates
5847 San Felipe St., #1500
Houston, TX 77057
713.439.1200
marketing@wjohnsonassociates.com

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Disclosures:
Willis Johnson & Associates is a registered investment advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Corporate benefits may change at any point in time. Be sure to consult with human resources and review Summary Plan Description(s) before implementing any strategy discussed herein. Willis Johnson & Associates is not a CPA firm….(read more)

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If you’re looking for a way to supercharge your retirement savings, the Shell Mega Backdoor Roth strategy could be just the ticket. With this method, you can potentially funnel up to $10,500 into your Roth IRA this year, giving your nest egg a significant boost.

So, what is the Shell Mega Backdoor Roth strategy, and how can you take advantage of it? Let’s dive into the details.

The Shell Mega Backdoor Roth strategy is a maneuver that high-income earners can use to contribute extra funds to their Roth IRA. While traditional Roth IRA contributions are limited to $6,000 per year ($7,000 if you’re over 50), the Shell Mega Backdoor Roth strategy provides an opportunity to maximize your retirement savings beyond these limits.

Here’s how it works: If your employer offers a 401(k) plan that allows after-tax contributions, you can contribute money beyond the standard pre-tax and Roth contribution limits. Once these after-tax contributions are made, you can then roll them over into a Roth IRA – this is where the “backdoor” component comes in.

To put it simply, the Shell Mega Backdoor Roth strategy involves making after-tax contributions to your 401(k) and then transferring these funds into a Roth IRA, where they can grow and be withdrawn tax-free in retirement.

But how do you get $10,500 into your Roth savings this year using the Shell Mega Backdoor Roth strategy? Let’s break it down.

The IRS sets a total annual contribution limit for 401(k) plans, including both employee and employer contributions. For 2021, this limit is $58,000 for individuals under 50 and $64,500 for those 50 and older. If your employer allows for after-tax contributions to your 401(k), you can potentially contribute up to this total limit, minus your regular pre-tax and Roth contributions. For example, if you contribute the maximum $19,500 in pre-tax or Roth contributions, and your employer matches $9,000, then you would be able to make after-tax contributions of up to $29,500 ($58,000 – $19,500 – $9,000 = $29,500).

With this strategy, you can then roll over the after-tax contributions into a Roth IRA, up to the IRA annual contribution limit of $6,000 (or $7,000 if you’re over 50). This means that, by taking advantage of the Shell Mega Backdoor Roth strategy, you could potentially contribute an additional $10,500 ($29,500 – $6,000 = $10,500) into your Roth savings this year.

It’s important to note that not all 401(k) plans allow for after-tax contributions, and even for those that do, the rules and limits can vary. Additionally, this strategy is best suited for individuals who are in a financial position to maximize their retirement savings and can afford to make large after-tax contributions to their 401(k).

If you’re considering employing the Shell Mega Backdoor Roth strategy, it’s crucial to consult with a financial advisor or tax professional to ensure that you understand the rules and potential tax implications. While this strategy can be a powerful tool for supercharging your retirement savings, it’s important to approach it with careful consideration and expert guidance. With the right approach, the Shell Mega Backdoor Roth strategy can help you turbocharge your retirement savings and set yourself up for a more secure financial future.