**Updated for 2022 – New Amazon Mega Backdoor Roth video**

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In this video, Amazon employees will learn about the Amazon Mega Backdoor Roth benefit that has become available to them in 2020. We’ll cover many aspects of the Amazon Backdoor Roth Conversion benefit, including:

0:07 An overview of the Amazon Mega Backdoor Roth
0:27 Example: Amazon Mega Backdoor Roth conversion
2:13 After-tax contribution timeline
2:43 Why is the Mega Backdoor Roth conversion important?

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This video is for illustrative purposes only. Individual situations may vary. Please consult your tax advisor to determine if the scenarios discussed in this video are right for you. Investment Advisory services offered through Avier Wealth Advisors.
Avier is not affiliated with Amazon….(read more)

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Amazon Mega Backdoor Roth 2020: A New Tax-Saving Opportunity

With the start of a new year, many investors are looking for new opportunities to save on taxes and grow their retirement savings. One strategy that has gained popularity in recent years is the Amazon Mega Backdoor Roth 401(k) conversion, which allows employees to contribute more than the usual limit to their Roth IRA. This strategy is particularly advantageous for Amazon employees, as the company’s 401(k) plan allows for after-tax contributions, allowing them to take advantage of the Mega Backdoor Roth 401(k) conversion.

The Basics of the Mega Backdoor Roth 401(k) Conversion

The Mega Backdoor Roth 401(k) conversion allows high-income employees to contribute more money to their Roth IRA by making after-tax contributions to their 401(k) plan. This contribution is in addition to the regular pre-tax and Roth contributions allowed by the plan, and can significantly increase the amount of money that can be contributed to a Roth IRA each year.

Here’s how it works: Employees who have already maxed out their pre-tax and Roth contributions to their 401(k) plan can make additional after-tax contributions, up to the total annual contribution limit of $58,000 (for those under 50) or $64,500 (for those 50 and older) in 2020. Once the after-tax contributions are made, these funds can be rolled over into a Roth IRA, where they can grow tax-free and be withdrawn in retirement without incurring taxes.

Why the Amazon Mega Backdoor Roth 401(k) Conversion is Advantageous

For Amazon employees, the Mega Backdoor Roth 401(k) conversion is particularly advantageous because the company’s 401(k) plan allows for after-tax contributions, giving employees the opportunity to take advantage of this tax-saving strategy. In addition, Amazon’s generous benefits package, including a 50% company match on the first 4% of employee contributions, means that employees can maximize their retirement savings by contributing more money to their Roth IRA through the Mega Backdoor Roth 401(k) conversion.

Another advantage of the Mega Backdoor Roth 401(k) conversion is that it allows high-income earners to avoid the income limitations that typically prevent them from contributing directly to a Roth IRA. By making after-tax contributions to their 401(k) plan and then converting them to a Roth IRA, employees can effectively bypass these income restrictions and take advantage of the tax benefits of a Roth IRA.

How to Take Advantage of the Amazon Mega Backdoor Roth 401(k) Conversion

To take advantage of the Amazon Mega Backdoor Roth 401(k) conversion, employees should first ensure that their 401(k) plan allows for after-tax contributions. Once this is confirmed, employees should work with their HR department or financial advisor to set up the after-tax contributions and the subsequent rollover into a Roth IRA. It’s important to note that the IRS has specific rules regarding the timing and process of after-tax contributions and rollovers, so it’s crucial to consult with a tax professional or financial advisor to ensure that these transactions are executed properly.

In conclusion, the Amazon Mega Backdoor Roth 401(k) conversion presents a unique tax-saving opportunity for employees to contribute more money to their Roth IRA and grow their retirement savings tax-free. By taking advantage of the after-tax contributions allowed by Amazon’s 401(k) plan, employees can maximize their retirement savings and take advantage of the tax benefits of a Roth IRA. As always, it’s important to consult with a tax professional or financial advisor to ensure that this strategy is executed properly and in accordance with IRS guidelines.