I know that Microsoft allows for a Mega Backdoor Roth. I currently use Fidelity and I would like to know what the process looks like to contribute to a Roth IRA if I make more than the limit needed to contribute. Furthermore, how do I get the Mega Backdoor Roth process working, and does the money end up in a Roth IRA or Roth 401k. I will eventually consult a tax professional, just wanted to get an idea of how the process works for anyone willing to explain, thank you. #personalfinance #investments
In this example you have one Roth IRA and one traditional IRA (both in fidelity) starting with zero money. If you have other money in the traditional IRA IRA itâs more complex For back door you will transfer 6k of after tax dollars from your bank account directly to the traditional IRA, then after a day or so you transfer it ( all of it so you end up with zero balance) your Roth IRA. All of this can be done online with no calls to fidelity For mega back door login to fidelity and go to your 401k account and contributions. Youâll see 3 options : pretax, Roth and after tax. Youâll want to choose after tax and then also hit the drop down and choose âconvert my after tax contributionsâ. Done If you donât choose to auto convert youâll need to call fidelity on every pay period to perform the rollover of the after tax to the Roth IRA. Donât let it sit around too long and earn gains because the gains will be taxes until you roll it over
wow wow wow this is exactly what I needed to learn today. I cannot thank you enough, for laying down the process!
Also just to confirm, if I had contributed to my Roth IRA beforehand, but not my Traditional IRA, will this affect anything?