I have always had set 15% as pre tax contribution in fidelity to get the employer match (11K). Rest of my contributions are all at 0%. This year I want to start doing mega backdoor to just get a taste of it and see if I can pull it off without adverse effect on my monthly expenditures. Let’s say my base pay is 250K and bonus is 50K for a total of 300k. Not including RSU which is 200K/yr. My monthly mortgage and expenses are say 10K What is the min % I should set for pre-tax, pre-tax bonus, after-tax and after-tax bonus to get most of the tax free growth benefits? I was thinking to set 15% for base and 25% for bonus as contributions for both pre and post tax boxes. I also set daily Roth in plan conversion option to enable mega back door. Does that sound like a good plan? What would you do differently and why? Don’t want to front load contributions since I need liquid cash for mortgage and other expenses. I can technically use RSU money for expenses but will try that next year. Another question is..after my contributions are maxed out to IRS limit (58k across all accounts) will payroll automatically stop the contributions or do I need to go and change the contribution % in fidelity after few months? I know it stops for pre tax contributions but not sure about post tax. Am I going to hit full mega door contribution with my elected % contributions this year or not? Is there a formula or website where I can plugin numbers to get the ideal min percentage contributions to set? #personalfinance #investments
OP are you also saving enough to live for today?
Yes. I do save by selling RSU on vest and putting into index funds via brokerage account
No that's not what I mean. Parable of surplus grain
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You have enough TC to fully max everything out. I personally put 100% of my bonus each year into pre/after-tax. And yes, it will automatically stop contributions to after-tax after you reach the max.
Are you saying keeping 100% for pre-tax and post tax bonus is a better option than splitting between base pay and bonus? So if I put 💯 contribution for bonus then with the employer match.. 50K + 11K, it would meet the 58k IRS limit. Right? I’m guessing that’s better so you don’t have to worry about each paycheck being sufficient to pay for expenses
It's $69k for all sources in 2024, so you'll still need to put some in from your paycheck. You don't have to be exact though and can just keep it at 15% until it hits the max.