What is a Mega Backdoor Roth IRA?
A Mega Backdoor Roth IRA is a retirement savings strategy that allows high-income earners to make additional contributions to a Roth IRA, even if they are ineligible to contribute directly to a Roth IRA due to their income. This strategy can be a powerful tool for high-income earners who want to save more for retirement and grow their savings tax-free.
How does a Mega Backdoor Roth IRA work?
A Mega Backdoor Roth IRA works by making after-tax contributions to a 401(k) plan and then rolling those contributions over to a Roth IRA. After-tax contributions are made with money that has already been taxed, so you will not have to pay taxes on those contributions again when you roll them over to a Roth IRA.