In this video, I’m going to do a step-by-step guide walking you through how to set up the mega backdoor roth in-plan conversion through the Fidelity brokerage platform. This is a common retirement strategy that’s offered by large tech firms, large corporations, etc. If your employer offers it and you have already maxed out your pre-tax 401K and backdoor roth but still want to contribute more to your retirement, the Mega Backdoor Roth is a great financial option to consider. As of 2021, you can contribute up to $38,500 to Mega Backdoor Roth as supposed to only $6,000 to a regular backdoor roth.
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Mega Backdoor Roth explained (Vanguard step-by-step):
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How to Set up Backdoor Roth:
Mega Backdoor Roth via In-service Distribution:
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I don’t have the daily Roth in plan conversion option.. can I still call them to set this up?
What do you think about taking a distribution of your after tax contributions and sending it to a Roth IRA ? I want to do this so I have the ability to invest in cryptocurrency and still keep taxes to a min. (roth)
this is great thank you!
Thanks for the video, i maxed out pretax and after tax with same day Roth in plan conversion as well. But I didn’t do the front loading thing, for more consistent net take home pay. Hopefully BBB provisions on mega backdoor Roth never passes!
Thank you so much !!!
Excellent content! Finding something like this is a best case scenario when trying to go through personal finance chores. Keep it up!
Question, trying to roll over my after tax contributions to Roth IRA but I will be suspended for 3 months from making contributions following the rollover bc it’s employer sponsored, does it make sense to do the rollover in beginning or end of the year? What do ppl think?
Hey! First of all, this was a really helpful video. There's one really important fact that I wanted to point out though. You're not done yet with just these steps. The in plan conversion simply moves your after tax conversion into your Roth account. You need to call Fidelity and roll this money into your Roth IRA. I believe that this creates a taxable event so it's best to do it as soon as possible. You should probably call Fidelity to confirm all this but I think this is the most important step since the Roth IRA is the huge loophole advantage of the mega backdoor roth.
Thanks for your video, super helpful! One thing I feel confused, you have three options from the manage contribution page, pre-tax, Roth, and after-tax. You set pre-tax and Roth to 0, why Roth is 0 here? I thought Roth is the same with after-tax? What's the exact difference between Roth and after-tax option here? Thanks a lot!
Hi Ying, when I select the roth inplan conversion does it automatically roll over to the Roth IRA account I have set up in Fidelity? What If i have a roth IRA with another brokerage. Do i need to open one up with Fidelity?
Hello Ying, this is an informative video for step-by-step instructions. Thanks a lot. Basically, I have the same question Mason have. I did the exact operation "Convert after-tax contributions". After 1 pay period, I notice that thses roth (after_tax) contribution goes to my main 401k account. That mean, I have a mixed 401k account now with both before- and after- money. Is this expected? I thought it should go to a dedicated roth IRA account.
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I revisited again. Looks like my current 401k account has both pre_tax and after_tax contribution within one account. I suppose I should be able to convery it to real roth IRA in future. So that's fine.
Does the fidelity daily conversion move the after-tax balance to a Roth 401K balance or does it automatically convert it to a Roth IRA?
Does any pre-tax balance get subject a pro-rata rule like with the “normal” back door Roth conversion with IRAs?
Thank you!
To the point. Great video!
Great video and thanks for the tips at the end with fund comparisons!
Hi @Yingcredible Tips. Where did you get $38,500? If the contribution limit is $58,000 for the Aftertax Defined Contribution Plan and you subtract $19,500 limit on your 401k or 403b, I guess you can contribute up to $38,500. Is this number ($38,500) also true for people over 50 years old with a catch-up contribution? Thanks.
How would I do this as a solo 401k? I am confused because everyone suggests using random companies for the 401k but I'd prefer to use fidelity, td or a known safe company. Any idea?
My company plan seems doesn't have the "roth in-plan conversion", can you share the link/resource for the other method "in service distribution"? to roll the after-tax to roth IRA (more manually)? thank you a ton!
Thank you for the tutorial, I have a specific question. I contribute max $19,500 at an employer's 401K plan. I also have my S-corp with a solo 401K plan, I would like to max out the After Tax $38,000 (correct me if I am wrong) allowed by IRS in my S-corp's solo 401K, my solo 401K plan can do After Tax contribution and In Service distribution. My question is : Pre Tax contribution can not be more than the salary earned, is there such a limit regarding After Tax contribution ?
You mentioned you maxed out your Pre-Tax before and then moved to After-Tax. Why not max out the 19,500 in the Roth, then continue adding to the Roth with After-Tax automatic conversion. That way you have all Roth. I have similar options and am not sure what to do. Thanks, great video.
Very easy to follow! When you front load do you miss out on the company's match?
Iam first comment
Nice sharing