{ "media_type": "text", "post_content": "Can someone explain the benefit of taking my post-tax 401k contributions and rolling them over into my Roth IRA? Does the post-tax contribution not grow in a similar tax-free manner?", "post_id": "616ff96df1b815002f0bd329", "reply_count": 3, "vote_count": 1, "bowl_id": "59064a3cb12379001006592c", "bowl_name": "Personal Investment Chatter" }

Can someone explain the benefit of taking my post-tax 401k contributions and rolling them over into my Roth IRA? Does the post-tax contribution not grow in a similar tax-free manner?

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After tax and Roth 401ks are different accounts. Roth is post tax, but after tax is an account type. Roth is part of the 19.5k limit. After tax is part of the 58k sum of all 401k accounts limit After tax 401k accounts are post tax principle with taxable growth. The megabackdoor IRA option rolls the non-taxable principle into a (fully) non-taxable account ASAP, which means the growth transitions from taxable to non-taxable (bc the taxes were called “paid” but also near $0). This saves significant tax in the future (as income) in exchange for withdrawal penalties.

Wait, so if they get rid of the back door contribution as proposed, what would be the advantage to continue to contribute post tax?? Is there one?

Deferral of tax on the earnings I suppose but given it comes out at ordinarily rates that doesn't seem too appealing to me.

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