My new job allows employees to make after-tax (different from Roth) 401k contributions. I understand the benefit of getting more money into a Roth account, but since the earnings are taxed (CONT)

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This is the premise of the mega backdoor Roth. Your after tax plan must allow in service distributions so you can roll the funds over throughout the year

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You should be able to rollover your after tax contributions to a Roth account immediately. Otherwise, you may be responsible for taxes on gains.

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Yes - I do this on a monthly basis. Rollover my after tax contribution to my personal Roth IRA. After tax contributions are not like 401k contributions that you cannot pull out or rollover until after you leave the job. Very important but critical decision to avoid paying taxes on additional gains in the interim.

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Minimizes but doesn’t eliminate

Your employer would also need to offer in-service withdrawals for this to work

It seems like the benefit of getting that extra money into the Roth account is delayed until you terminate employment and the Roth money is rolled over into a Roth IRA, which would allow you to invest and generate tax free earnings. Am I missing something?

It seems like rollovers aren’t available until the next calendar year. So if I contribute during 2019, I can’t make the in-service withdrawal until January 2020. I imagine it is still worth it to participate? But it will create some difficulty between Roth and traditional components?

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