Do You Do a Mega Backdoor Roth IRA? #doctor #personalfinance #ira

Talking about making after tax employee contributions to A 401. This is not Roth contributions. This is not tax deferred contributions. They are a third type of contributions called after tax employee contributions. So if the plan allows you to contribute those to it, you can do so. Typically, a plan that will allow that will also allow you to do an in plan Roth conversion of those dollars. And so that's the mega backdoor Roth IRA. Right? You put maybe $40,000 in there as an after tax employee contribution, and then you convert it the next day to a Roth 401K or 403B, whatever. It's like you made a big, huge Roth contribution in the end. Kind of like the backdoor Roth IRA process. It's the mega backdoor Roth IRA process. It doesn't happen in IRA. It happens in a 401K.