Backdoor Roth & MEGA Backdoor Roth #personalfinance #doctor

And we're going to talk about some nuances with the backdoor Roth IRA and the mega backdoor Roth ira. Remember, the backdoor Roth IRA process is done with an ira. The mega backdoor Roth IRA process is not done with an IRA. It is done with a 401k. Okay, so in both cases you make non deductible contributions to a retirement account, and in both cases you do a Roth conversion. There is a pro rata calculation that occurs with the backdoor Roth ira such that you need to empty out all of your traditional IRAs by the end of the year. Traditional IRAs, simple IRAs, SEP IRAs gotta be $0 on 1231 or you're gonna get prorated with the mega backdoor Roth ira. There is no pro rata calculation. You never get prorated with a MEGA backdoor Roth IRA process.