I decided to start doing Mega Backdoor Roth this year (I’m already maxing employee portion of 401k, HSA and Backdoor Roth IRA). I called Fidelity and confirmed that my 401k plan allows after-tax contributions, as well as both in-service after tax withdrawal and in-Plan Roth Rollover. The only thing that’s missing is automated withdrawals/rollovers, so it looks like I will have to call in every paycheck. I guess I doesn’t have to be done every paycheck, but then my understanding is I’d have to pay ordinary income tax on potential earnings.
I haven’t decided if I should move money to my Roth IRA or keep it within the plan by rolling over to Roth IRA. If I move it to Roth IRA my plan was to buy FZROX, and if I leave it at 401k then I’d be buying VSTAX Institutional Plus Shares (0.02% expense ratio). There are no other 401k fees. Fidelity customer service representative said that there is no operational difference regardless which option I choose. I read that 401k plans have better creditor protections.
What would you advise to do in my situation, IRA withdrawal or 401k rollover? Does anyone have experience with Fidelity Mega Backdoor Roth without automatic option? Is it a big nuisance to call them?
I’m 32, my wife is 34 and we most likely plan to retire in our late forties or early fifties. The plan is to have a bridge account (joint brokerage account) for first 15-20 years of retirement funded by them. We also plan to max out HSA until then (and save down medical receipts for later reimbursement). Given this we shouldn’t need to touch Mega Backdoor Roth portion of 401k/Roth IRA until we are in our sixties or later.
I’d be very grateful for any response! Please feel free to question my understanding, it’d be my first year of doing it and I might be missing some important details.
I haven’t decided if I should move money to my Roth IRA or keep it within the plan by rolling over to Roth IRA. If I move it to Roth IRA my plan was to buy FZROX, and if I leave it at 401k then I’d be buying VSTAX Institutional Plus Shares (0.02% expense ratio). There are no other 401k fees. Fidelity customer service representative said that there is no operational difference regardless which option I choose. I read that 401k plans have better creditor protections.
What would you advise to do in my situation, IRA withdrawal or 401k rollover? Does anyone have experience with Fidelity Mega Backdoor Roth without automatic option? Is it a big nuisance to call them?
I’m 32, my wife is 34 and we most likely plan to retire in our late forties or early fifties. The plan is to have a bridge account (joint brokerage account) for first 15-20 years of retirement funded by them. We also plan to max out HSA until then (and save down medical receipts for later reimbursement). Given this we shouldn’t need to touch Mega Backdoor Roth portion of 401k/Roth IRA until we are in our sixties or later.
I’d be very grateful for any response! Please feel free to question my understanding, it’d be my first year of doing it and I might be missing some important details.
Statistics: Posted by Greg_Boston — Thu Feb 29, 2024 7:36 pm — Replies 3 — Views 291
