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UPS Retirement Topics
401k, Am I doing this right?
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<blockquote data-quote="Ms.PacMan" data-source="post: 1782462" data-attributes="member: 4656"><p>Actually it's not a backdoor Roth. A backdoor Roth is when someone over the income guidelines contributes to a traditional IRA, with the same individual limit of $5,500, and then converts it to a Roth IRA. It's tricky and causes an accounting nightmare because of the pro rata rule. </p><p></p><p>I don't think the 401k after tax conversion to a Roth has a name and the sky's the limit on the amount you can tuck away depending on your salary and the percentage your 401k allows you to put in after tax funds. </p><p></p><p>The IRS ruled last September that this 401k conversion to a Roth was perfectly legal. </p><p></p><p>I'm not sure which one Obama wants to do away with because everyone accidentally confuses the two.</p></blockquote><p></p>
[QUOTE="Ms.PacMan, post: 1782462, member: 4656"] Actually it's not a backdoor Roth. A backdoor Roth is when someone over the income guidelines contributes to a traditional IRA, with the same individual limit of $5,500, and then converts it to a Roth IRA. It's tricky and causes an accounting nightmare because of the pro rata rule. I don't think the 401k after tax conversion to a Roth has a name and the sky's the limit on the amount you can tuck away depending on your salary and the percentage your 401k allows you to put in after tax funds. The IRS ruled last September that this 401k conversion to a Roth was perfectly legal. I'm not sure which one Obama wants to do away with because everyone accidentally confuses the two. [/QUOTE]
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