Nike employees can contribute after-tax dollars to their Nike 401(k) and convert those dollars to Roth using the Mega Backdoor Roth provision. In 2023, Nike allows you to contribute 3% of your annual salary to the Mega Backdoor Roth, up to $9,900.

First, it’s important to understand the 2023 401(k) contribution limits and the Nike employer match.

2023 401(k) contribution limits:
Under 50 years old: $22,500
50 or older: $30,000

The Nike employer match is 5% of your annual salary. To receive the full match, you must contribute at least 5%.

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00:00 Introduction
00:17 2023 Nike 401(k) Contribution Limits
00:28 Nike Employer Match
00:56 Example: Nike Mega Backdoor Roth
01:32 Tax Benefits
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The Mega Backdoor Roth is a way for high-income earners to contribute after-tax dollars to their 401(k) over and above the 2023 contribution limits and then immediately convert the after-tax dollars to their Roth 401(k).

We think this is one of the best Nike benefits available to employees.

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Using the Mega Backdoor Roth feature, a Nike employee who is under 50 years old and earning an annual salary of $200,000 can contribute an additional $6,000 in after-tax dollars to the Mega Backdoor Roth. These dollars can then be converted to Roth:

• 401(k) contribution $22,500
• Earn Nike match: $10,000
• After-tax contribution converted to Roth: $6,000

Reduce future taxable income utilizing a Roth. Within a Roth your money grows tax-free. These same dollars and the interest earned are tax-free when accessed in retirement (59.5+ years old). 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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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 Nike. There is no guarantee that the information we have provided is accurate. Nike 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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Nike 401(k) and Mega Backdoor Roth in 2023 – Save Thousands to a Roth

retirement planning is a crucial aspect of financial management, and individuals are constantly seeking ways to maximize their savings and investments for the future. In 2023, Nike employees have an excellent opportunity to save thousands of dollars in a Roth IRA through their 401(k) plan and a Mega Backdoor Roth strategy.

Nike, one of the world’s leading sportswear companies, has always been committed to the well-being of its employees. This commitment extends to their retirement benefits, including the 401(k) plan that allows workers to save pre-tax dollars for their golden years. Additionally, Nike offers a match program that provides a significant boost to employees’ retirement savings. The company matches a percentage of the employee’s contributions, based on their salary and years of service.

In 2023, Nike employees will have an even more enticing retirement saving avenue – the Mega Backdoor Roth strategy. This strategy is particularly attractive to high-income earners who want to contribute more to their retirement savings accounts. It allows individuals to contribute after-tax dollars into their 401(k) plan, and eventually convert these funds into a Roth IRA, which offers tax-free growth and withdrawals in retirement.

So, how does the Mega Backdoor Roth strategy work? Let’s break it down:

1. Max out your traditional 401(k) contributions: Nike employees should aim to contribute the maximum amount allowed by their 401(k) plan, which is $19,500 in 2023. By doing so, they can take full advantage of the pre-tax contributions and potential Nike match.

2. Contribute after-tax dollars: Once the employee has reached the maximum pre-tax contribution limit, they can continue contributing to their 401(k) plan with after-tax dollars. In 2023, the overall contribution limit is $61,000. This means that if an individual has already contributed the maximum pre-tax amount, they can contribute an additional $41,500 with after-tax dollars.

3. Convert after-tax contributions to Roth IRA: To benefit from tax-free growth, individuals can initiate a conversion of their after-tax contributions to a Roth IRA. This can typically be done once a year or as permitted by the employer’s plan.

Utilizing a Mega Backdoor Roth strategy in 2023 can result in substantial tax benefits for Nike employees. By paying taxes upfront on the after-tax contributions, employees can enjoy tax-free growth and tax-free withdrawals in retirement. Moreover, this strategy allows individuals to shield a considerable amount of their retirement savings from future tax increases.

It is important to note that Nike employees interested in the Mega Backdoor Roth should consult with a financial advisor or tax professional to understand all the variables and ensure compliance with IRS regulations. Additionally, individual financial circumstances may vary, so it is crucial to evaluate whether this strategy aligns with personal retirement goals and overall financial plan.

In conclusion, Nike employees have a unique opportunity in 2023 to take advantage of the company’s generous 401(k) plan and the Mega Backdoor Roth strategy. By contributing to their traditional 401(k) and utilizing after-tax contributions, employees can save thousands of dollars into a tax-free Roth IRA. This strategy not only provides potential tax benefits but also enhances long-term financial security. As retirement planning gains increasing importance, Nike’s commitment to empowering its employees’ financial well-being shines through in its innovative offerings.