Perhaps the critical part of the article is quoted below. Do you know if your 401k plan allows
1. after-tax contributions?
2. in-service withdrawals?
Let's start there....
Steps to take
Obviously, this is a somewhat complicated process, so contacting your financial advisor and your company's 401(k) provider is the most important step to take. Some plans don't allow for after-tax contributions -- which would make this strategy null and void.
Still others won't allow for "in-service withdrawals." In layman's terms, this simply means that you can't divert your after-tax 401(k) money into a Roth until you leave your current job. You could still, of course, take advantage of this strategy when you leave your job, but any growth your after-tax principal experiences could be taxed upon withdrawal.
But if, after taking the requisite steps to ensure this is the right plan for you, you realize you can use this strategy, the IRS has given you a huge gift: the go-ahead to make a mega-backdoor Roth contribution -- every year!
