Hey all, question for you about mega back door roth conversion:
My company MIGHT be adding the after-tax non-roth category to our 401k. I'm pretty stoked, but am wondering about how to maximize my investments / minimize my taxes.
We have about 200k saved in a after-tax brokerage account. It's mostly invested in FSTVX and SPY but due to life events (selling a house) it's only been there between 6 months to a year.
Here's my question:
We max out our 401k already, roth IRA also. I don't think we make enough money to fully fund the megabackdoor roth. But, we have at least 4 years of living expenses in non-tax advantaged account. So, I could theoretically gradually sell off my 200k of stock, live off of that, and plow most of my income into my 401k, roth IRAs, an megabackdoor roth.
Advantage: I could get an extra 70k into Roth IRA a year. Disadvantage: I would probably pay long term capital gains on the selling of my stock.
Or should I just keep the non-tax advantaged accounts as they are, and instead of putting more money into those, plow all extra money into megabackdoor?
Advantage: Taxes on the stock would be deferred until my income was reduced in retirement. Disadvantage: I could probably only put $15-20k into megabackdoor a year.