Sage Financial Planning

T he Roth IRA, Backdoor Roth IRA and Mega Backdoor Roth IRA are oft misunderstood and underutilized retirement savings strategies. In my Roth three-part series this week, I'm going to break down each Roth IRA strategy, who is eligible to use them, and what you need to know when using them. This article focuses on the Mega Backdoor Roth IRA. You can find my other articles from the Roth IRA series here . What Is The Mega Backdoor Roth Strategy? The after-tax 401(k) has a much higher limit than the standard 401(k) annual limit; for 2023 it’s limited to $66,000 in total 401(k) contributions. This means $66k minus your combined pre tax and Roth 401(k) contributions (up to $22.5k for 2023) and minus any employer contributions. This usually leaves a lot of room for extra tax advantaged retirement contributions. Who Is The Mega Backdoor Roth Strategy For? The Mega Backdoor Roth may be for you if you (and your spouse if MFJ) are over the Roth IRA IRS-determined income limits. This is wher...

  The Roth IRA, Backdoor Roth IRA and Mega Backdoor Roth IRA are oft misunderstood and underutilized retirement savings strategies. In my Roth three-part series this week, I'm going to break down each Roth IRA strategy, who is eligible to use them, and what you need to know when using them. This article focuses on the Backdoor Roth IRA. If you have an after-tax 401(k), forget the Backdoor Roth and read about the Mega Backdoor Roth instead. You can find all the articles from the Roth IRA series here . Who Is The Backdoor Roth IRA Strategy For? For those who don't qualify to contribute directly to a Roth IRA because income is too high and do not have access to the Mega Backdoor strategy, a standard Backdoor Roth is the next step. The Backdoor Roth strategy can be useful to increase your tax-advantaged retirement contributions using personal IRA accounts. The contribute limit is the same as regular Roth contributions. Remember that Traditional and Roth IRAs share the same contr...

The Roth IRA, Backdoor Roth IRA and Mega Backdoor Roth IRA are oft misunderstood and underutilized retirement savings strategies. In my Roth IRA three-part series this week, I'm going to break down each Roth IRA strategy, who is eligible to use them, and what you need to know when using them. This article focuses on the center of the Roth universe: the Roth IRA. You can find the other articles from the Roth IRA series here . Who Is Eligible To Contribute To A Roth IRA? The regular ol' Roth IRA is a fairly straightforward retirement savings vehicle. As long as you are under the preset income limits (reassessed annually by the IRS) and you have earned income equal to or greater than your contribution amount up to the maximum contribution amount (also reassessed annually by the IRS), then you have an opportunity to take advantage of tax free investment growth and completely tax free withdrawals on qualified distributions from your Roth IRA in retirement. Roth IRAs have the same r...

The CFP® marks are the gold standard of the financial planning and advising industry for good reason. Namely, CFP® practitioners are highly educated, tested, trained ongoing, and are fiduciaries bound to act in their clients' best interests at all times. No exceptions.  Here is the Fiduciary Oath as created by the Committee for the Fiduciary Standard. http://www.thefiduciarystandard.org/wp-content/uploads/2015/02/fiduciaryoath_individual.pdf