Answer from my financial advisor regarding ROTH backdoor

C
CLM2020
楼主 (文学城)

I wrote an email to my 401K financial advisor regarding the Roth backdoor rollover:

*********************************************

Hello xxx

Thank you for the information provided about after-tax 401k plan my company currently has.

I keep studying this subject on the varieties of retirement plans. Based on my understanding, there are 3 types of accounts:

Pre-tax 401k(this is what I have now), 

Roth 401K(not sure if I could have this one), 

After-tax 401K(not allowed from your last email).

The question I would like to ask is:

Does my current pre-tax 401K support the following two options?

1: In-service Roth Distribution

2: In-plan Roth Conversion

My purpose is to see if I could possibly convert or rollover some fund to Roth IRA by using the backdoor.

Thank you, 

******************************************

Below is his answer a week later:

******************************************

Good morning xxxx, thank you for your patience. In response to your questions.

ROTH 401k Contributions, are not available for the plan In-service ROTH Distribution, not available In-plan ROTH Conversion, not available. At age 59.5 you can take an in-service distribution.

Although the features you are asking about are not available currently. A strategy you may want to consider is.

When you are able to (age 59.5) take the in-service distribution and move the money to your traditional IRA. Then do ROTH conversions every year up to your tax bracket. I know this is not the exact goal you want to accomplish. It could help accomplish part of your goal.

*************************************

C
CLM2020
it looks like i dont' have many options to move money into

ROTH IRA other than the annual $7000/$8000 contribution regardless if the money is pre-tax or after-tax.

I also have no idea to what side business LLC I can create to generate some income such that I can create employer 401k for myself. Any idea what else I can do?

C
CLM2020
If after-tax cash is not low, what else can I do to put

money into ROTH IRA?

Q
QuantFields
你做不了每年3万的mega backdoor,因为贵司没有after-tax 401K,但总是能做每年7千的普通

backdoor。每年自己存钱到traditional IRA,7千左右,然后自己转到Roth IRA。普通backdoor和公司401K没关系。

https://www.youtube.com/watch?v=c52YcW1Aut4&t=106s

Q
QuantFields
感觉你需要搜索Solo 401K,但我没研究过,只知道有这个概念。
米奇的厨房
可以的,但是公司收入需要付FICA Tax,如果你个人的marginal tax rate 不是最高档的话,基本上大概是

breakeven,省不了税

未知
这是啥公司呀,到现在连Roth401K plan都没有

那就更谈不上mega backdoor conversion了。

C
CLM2020
thank you for your video, I do enjoy watching it

it's really helpful for people to understand how to put money into ROTH IRA despite it does not work for my situation.

米奇的厨房
很多公司没有啊,LD公司连公司付的match都没有
C
CLM2020
that's what I thought, FICA tax might not help

in my situation.

米奇的厨房
唯一的好处是你可以做Mega backdoor了,去年投坛有很多关于这个的讨论
C
CLM2020
how? another ID 未知 says "那就更谈不上mega backdoor conversion了"

because i don't have ROTH 401k

米奇的厨房
你自己建个公司啊,然后就可以操作了
C
CLM2020
年底公司管理层有税后cash bonus, 本想放到 roth ira,看来也只能放在普通brokerage帐号
C
CLM2020
米奇太太,能不能send more info to my private message box? I really

like to know more about how to do it this way.

米奇的厨房
油管上很多啊,你狗狗solo 401k mega backdoor 就行了
C
CLM2020
got it, thank you for the direction
米奇的厨房
税后cash bonus 啥意思? 公司给付税?
未知
哈哈,公司401K鄙视链

第0级(最低级):公司没有401K plan,

第1级:公司只有传统税前401K,没有公司Match 401K,

第2级:公司有税前401K,并有Match 401K,

第3级:公司有税前,Roth,和Match 401K,

第4级:公司有税前、Roth、Match、Aftertax 401K,但不支持In-plan Aftertax 401K Mega backdoor Roth conversion,

第5级(最高级):公司有税前、Roth、Match、After Tax 401K,并且有In-plan Aftertax 401K Mega backdoor Roth conversion.

很多传统公司还停留在第1 or 2 级。有时可以向公司HR建议。

几年前,我在公司用Fidelity,但没有Aftertax401K,当然也就没有mega backdoor。我知道Fidelity的系统完全支持aftertax 401K和Mega backdoor, 就向公司HR询问建议,第二年果真就增添了,不知道是巧合不是,但相信要求的人多了,公司会考虑的,反正费用也不高。

 

米奇的厨房
LD公司以前就是0级的,后来好歹变成一级了

犹太人老板,抠门啊

C
CLM2020
"很多传统公司还停留在第1 or 2 级"--our company is at level No.2
C
CLM2020
没想道还可”增添“ upon your request. thumbs up!!!
Q
QuantFields
第4级和第5级差别不大,没有In-Plan Roth Conversion就自己打电话手动转Roth IRA
C
CLM2020
"相信要求的人多了,公司会考虑的,反正费用也不高"---as far as you know, what is the

ballpack for the 费用 you mentioned? maybe I should try to ask our HR department, anyway, no harm to try.

C
CLM2020
our company use Lincoln Financial Group, migth not be as

flexiable as Fidelity.

https://www.lincolnfinancial.com/public/individuals

C
CLM2020
some cash bonus hand out by big boss

not a popular or usual way to reward employee

C
CLM2020
something similar to this

未知
添加一个401K功能,大约几到几十美元/每年/每员工

所以比起工资和其它福利,是非常少的。多数是因为公司嫌麻烦或者HR对投资理财不懂造成的。

米奇的厨房
哈哈哈,这个好!我喜欢
米奇的厨房
不止,每个月还差不多
C
CLM2020
as you mentioned that HR might not have the necessary

knowledge for this after-tax 401K. not sure if a 401K plan provided by LFG(lincoln Financial Group) can just accept adding one or two employees upon my request or even just a few employees such that company can minimize the extra cost introduced by adding this after-tax 401K.

米奇的厨房
这种是CFO决定的
米奇的厨房
一个非常普通的benefit plan,公司需要花的setup的钱至少大约100多刀每人每月,如果员工比较多,那是不少钱

十几年前在startup做过几天HR,还负责IT,甚至办公室买桌子椅子

未知
要加,所有employees都加,不可能只加个别员工,否则公司401K plan无法管理了

后台的软件也变得无限复杂,没有401K管理公司会这样做,IRS的规定上也不会容许。

C
CLM2020
"所有employees都加,不可能只加个别员工"---this answered
未知
你说的没有错。我说的是,在现有的401K plan上面,扩充一个Roth或者Aftertax 可选项

也就是说从原先的100刀/人,到120刀/人。起始建立新的401K plan,则贵的多, 还有初始费几万刀 per plan。