mega backdoor roth ira: is it really mega?

The Mega Backdoor Roth takes investing to the next level for high-income earners. If you meet the eligibility requirements, you could stash an extra $41,500. However, it’s complicated, and mistakes can be costly.

An individual retirement account (IRA) is a savings and investment account with tax advantages. A traditional IRA uses pre-taxed dollars. As a result, it has tax savings.

What Is an Individual Retirement Account (IRA)?

A Roth IRA is an individual retirement account (IRA) funded with after-tax dollars. The traditional IRA offers an upfront tax-deduction on contributions with taxable withdrawals during retirement. However, It doesn’t come with income limits.

Roth IRA Versus Traditional IRA

The Mega Backdoor Roth IRA allows you to supercharge your investments. The Mega Backdoor Roth IRA is complicated. However, here are the basic principles:

Mega Backdoor Roth IRA

1. Your company must offer the option to make after-tax contributions to your 401(k). 2. Your company must allow your 401(k) conversions to a Roth IRA. 3. You have to max out your traditional 401(k) contributions.

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