Harvard Law Attorney George Blower provides an in-depth review of the mechanics of a Mega Backdoor Roth Solo 401k for a self-employed business taxed as a sole proprietorship, single-member LLC or 1099-MISC/NEC Independent Contractor.
Topics Covered:
-Contribution Limits, Deadlines & How to Report
-Contribution Scenarios
-Convert to Roth Solo 401k vs Roth IRA
-Many other topics
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The solo 401k plan, commonly referred to as self-directed Solo 41k is the retirement plan of choice for self-employed individuals or owner-only businesses including for the features highlighted below:
-The highest contribution limits for any defined contribution plan including up to $57,000 (or even $63,500 if you are 50 or older) for 2020 (for 2021: $58k or $64.5 if you are 50 or older).
-The ability to make pre-tax, Roth, and even Mega Backdoor Roth contributions.
-401k participant loans of up to $50,000
-Invest with checkbook control in real estate, cryptocurrencies, notes, private placements, and other types of alternative investments.
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Regarding the scenario at 25:00, what is the reason $19,500 was contributed to the Roth Solo 401k? Would it not be simpler to contribute $58,000 (assuming 2021) to the voluntary after tax contributions instead? Is there a requirement to fulfill the $19,500 employee contribution first before the $38,500 contribution to voluntary after tax can be made?
Great video! Does the pre-tax contribution (employer) result in deduction from the self-employed income, thus resulting in less that can be contributed in the after-tax bucket?
Can the Roth and After-Tax accounts be the same account since the after-tax is always converted to Roth?
Thank you for the participation in the webinar. Here is the link I mentioned: https://www.mysolo401k.net/solo-401k/mega-back-door-roth-using-solo-401k-plan/