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Mega Back Door Roth folks. BE CAREFUL!
Just got off the phone with a guy who works for a large conglomerate. He told me this company, who you'd certainly know, DOES allow after tax contributions to the 401k AND does allow an annual inservice distribution. Good so far, no?
But... if you do this you sacrifice your ability to make contributions to your 401k for at least the next 6 months! Which means if your employer matches your contribution you don't get that.
So, again, BE CAREFUL!
Another reason I'm just not that keen on these strategies. Lots could go wrong.
So I just verified and my 401k company has been steadily collecting my 401k contributions from my weekly paycheck all year long and my company matching is still being added during the time I did the deed. Josh you are making my heart race I can feel the big one coming on (Sanford and son). Good thing I have long term disability insurance 😂. I am assuming every company does it differently I also spoke to several senior people in my retirement company about what I was doing and they were very aware and said it was smart. They said it was ridiculous to leave the after tax principle in my 401k and explained what I should do with it. Honestly I called and spoke to several advisors and a CPA about it because I was seriously confused it is not as simple as one would think. I had to fill out a load of documents to get the in service distribution correctly done. For the record my company is very well known with over 150k employees. Our retirement managing company is consider to be One of the largest retirement managing firms. From their website approximately $570 billion in assets for 8.7 million retirement plan participants. Still you are giving me reason to investigate more. I am thinking about visiting my IRS center for clarification. Though we know they are not always well read either. We also know that no mater how large a retirement managing company is it boils down to the people you get and not all are as wise and as cautious as you sir. So I shall investigate more. Also my company mentioned my plan can do in service distribution ever 30 days if we wanted which I don’t... also the amount I had in after tax was around 85k which was collected since I was 22 to now. I had no idea I was investing too much and so the extra went to an after tax contributions bucket for many years. Now they stop the contributions when I max and I must now explicitly state I want after tax contributions to happen.
Also Microsoft managing company even did a video on it. https://youtu.be/VnFCg5duUUQ
Last one this guy says it was ruled on https://youtu.be/FKJg8aBc7Ug
Alright alright alright (My cousin Vinny) so I found this on the IRS website it feels like a great explanation of what is allowed with examples on the IRS site. Josh let us know what you think of IRS explanation and examples. https://www.irs.gov/retirement-plans/rollovers-...