Mega Backdoor Roth

Submitted by IRAQuestion5 on Mon, 2020-12-07 16:22

Client is amending their 401k plan for the business and wants to know what all is required to do the Mega Backdoor Roth strategy. Am I missing anything?
1. The plan has to allow for after-tax contributions.
2. These after-tax contributions and earnings have to be separately accounted for from other plan assets.
3. The plan has to allow for in-service distributions of the after-tax contributions and earnings.



Submitted by Alan - IRA critic on Mon, 2020-12-07 20:17

  1. The plan must allow non Roth after tax contributions.
  2. Yes, but be aware these contributions will be subject to ACP testing.
  3.  Correct, and the frequency of such distributions could be limited, eg quarterly, semi annual, or annual, or could be unlimited.

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