In 2023, you can contribute up to $66,000 if you’re under 50 and $73,500 if you’re 50 or older to your Meta 401(k).

You can fully leverage these limits by taking advantage of the Meta Mega Backdoor Roth. This is a powerful benefit within your 401(k). It allows you to contribute after-tax dollars and convert those dollars to Roth.

Video Highlights:
00:00 Introduction
00:17 Meta Mega Backdoor Roth
00:46 2023 Federal 401k Limits
00:59 Meta Mega Backdoor Roth Example

Your 401(k) contributions also increased in 2023. If you’re under 50 you can contribute up to $22,500 and if you’re 50 or older you can contribute up to $30,000. Meta will match dollar for dollar, up to 50% of the IRS federal limit. You can earn up to an additional $11,250 in free money from Meta, if you’re under 50.

If you’re 50 or older Meta will also match 50% of your catch-up contribution. This is an additional $3,750 on top of the $11,250 for a total match of $15,000.

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Using the Mega Backdoor Roth feature, Meta employees can contribute up to the federal limit. Here’s an example of how an employee, under 50 years old, can save $32,250 to a Roth:

— 401(k) contribution: $22,500 (pre-tax or Roth)
— Earn Meta match: $11,250
— After-tax contribution converted to Roth: $32,250

Your after-tax contribution, along with your 401(k) contribution and employer match = $66,000.

The Mega Backdoor Roth is a way for high-income earners to utilize the benefits of a Roth. Within a Roth your money grows tax-free. These same dollars and the interest earned can be tax-free when accessed in retirement.

Having additional money in a Roth account enables you to manage your retirement distributions. This gives you more control over future taxable income.

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Avier Wealth Advisors
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info@avieradvisors.com

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We focus on providing comprehensive financial planning and investment advisory strategies for tech professionals and their families

Third Party: Avier Wealth Advisors is not affiliated with Meta. There is no guarantee that the information we have provided is accurate. Meta employees are encouraged to contact their employer should they have any questions regarding their employee benefits.

Taxes: Avier Wealth Advisors does not prepare taxes. The tax ideas presented are meant to demonstrate general concepts rather than precise calculations. We consult with your tax professional for exact calculations….(read more)

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In the world of retirement planning, the Roth IRA has long been a favored vehicle among savers seeking to grow their nest eggs tax-free. While traditional Roth contributions are subject to income limits, the introduction of the Mega Backdoor Roth in recent years has opened up new possibilities for high-income earners. Now, in 2023, a new strategy known as the Meta Mega Backdoor Roth has emerged, allowing individuals to contribute thousands of dollars more to a Roth IRA.

The Meta Mega Backdoor Roth is essentially an enhanced version of the original Mega Backdoor Roth. The traditional Mega Backdoor Roth allows individuals to make after-tax contributions to a workplace 401(k) plan, subsequently converting those contributions to a Roth IRA. This conversion is attractive since it provides an opportunity to grow retirement funds tax-free.

With the Meta Mega Backdoor Roth, individuals can potentially contribute even larger amounts to their Roth IRA, further maximizing the tax advantages. This strategy takes advantage of a provision in the tax code that allows individuals to make after-tax contributions to their 401(k) plans, regardless of income limits. Typically, the maximum you can contribute to a 401(k) plan in 2023 is $20,500 for individuals under the age of 50 and $27,000 for those over 50. However, some companies may impose contribution limits on the Mega Backdoor Roth feature.

Here’s how the Meta Mega Backdoor Roth works: Once you’ve maxed out your pre-tax contributions to your 401(k) plan, you can make after-tax contributions up to the overall contribution limit for the plan, which can be as high as $59,000 in 2023. After-tax contributions differ from traditional Roth and pre-tax contributions since they do not receive an immediate tax benefit.

Once you’ve made your after-tax contributions, you can then withdraw those funds from your 401(k) plan and convert them into a Roth IRA. Since these contributions have already been taxed, there are no additional tax consequences upon conversion. Thus, the Meta Mega Backdoor Roth allows individuals to effectively contribute significant sums of after-tax dollars to their Roth IRA accounts, taking advantage of the tax-free growth potential.

It’s important to note, however, that not all workplace retirement plans offer the Meta Mega Backdoor Roth. Employers must choose to offer this provision in their 401(k) plan. Therefore, individuals interested in this strategy should check with their employer or plan administrator to determine if it is available to them.

The benefits of the Meta Mega Backdoor Roth are quite enticing. By contributing after-tax dollars to a Roth IRA, individuals can achieve tax-free growth and potentially withdraw funds tax-free during retirement. Additionally, Roth IRAs do not mandate minimum distributions, providing greater flexibility in managing retirement income streams.

While the Meta Mega Backdoor Roth is an excellent strategy for highly compensated individuals, it may not be suitable for everyone. It requires careful planning and consideration of individual financial circumstances. Consulting with a financial advisor or tax professional is crucial to fully understand the implications and determine if it aligns with your long-term financial goals.

As the financial landscape continues to evolve, savers are finding innovative ways to optimize their retirement savings. The rise of the Meta Mega Backdoor Roth in 2023 is yet another testament to the enduring appeal of tax-advantaged investment vehicles. By taking advantage of these strategies today, investors can pave the way towards a financially secure future.