Newbie here …, would like some advice pls

I have a rollover IRA (from old company) that has approx 150k in it.

I’m reading about the mega back door, does this mean I can convert all of that to a Roth IRA?

It sounds too good to be true? What am I missing here ?

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Mega backdoor is only for 401k and has no bearing on your rollover IRA. You may be able to convert your rollover IRA to Roth IRA, but you may be liable for taxes. The IRA tradition to roth conversion is called a backdoor conversion.

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Nice work on the $150k already. You should be able to roll it all into a new or your current Roth, but will need to pay the taxes on it, and should do it with outside cash, as stated above. Common approach is to do it over a few years because of the tax hit. But should definitely make sure you follow the steps your broker lays out to keep it clean.

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How much would my tax be? About 25%? I’ve never done my taxes

Call you company’s plan administrator to find out how much is eligible for rollover. I called my Hr 401k admin and they told me the # that was eligible. In 15 minutes the wheels were in motion. Way simpler than I expected. Not looking forward to the tax bill in march though!!

Backdoor conversion works best when you have outside cash available to pay the tax. If you try to use a portion of your traditional 401k to pay the tax, it will be 10% penalty on that portion.

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