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Income limits apply to IRAs, not 401ks. If you want to do a Roth IRA, you need to backdoor if you’re above the limit.
Chief
It’s not BS, but I imagine you are mixing a couple of things up in your head. You can’t just use the word ‘Roth’ and have it mean something. It’s a type of both IRAs and 401ks. I’m going to guess the first ‘Roth’ you mention is not being eligible for a Roth IRA, likely do to your income. That has nothing to do with an employer (IRA being ‘individual’). If you want to contribute to an IRA and are above that income limit, you would want to back door that (assuming no traditional IRA balance, it’s quite straightforward. If you do have a traditional IRA balance, it becomes a more complicated decision, still straightforward process.)
For an employer plan - your 401k, you can elect to contribute to a Roth 401k or traditional. Nothing to back door on the 401k limit. Note that employer matches will be in traditional even if you contribute to Roth.
A ‘mega back door Roth’ is 401k related. Not every employer allows it, but is a way to contribute after tax to your 401k up to the 401k max (employer and employee combined). You’d want to find out if your employer allows for that before going into how to actually do it.
Chief nailed it. To the comments below, there ARE income limits to a 401k. This year it's $305k. Other things can get in the way to maxing out too, like if your plan fails IRS testing.
Chief
They are correct. There are four different options here, two versions each of IRA and 401(k). IRAs are subject to income limits, 401(k)s are not.
- Roth IRA
- Traditional IRA
- Roth 401(k)
- Traditional 401(k)
As you can see, one can’t just say “my Roth,” because it’s unclear which of the two Roth vehicles you mean.
No income limit for Roth 401k
Wow, how did I miss that income limits don’t apply to 401k? Thank you all so much!