Author Topic: 401k Plan Experts - Get ITT - Question re: contributions  (Read 1870 times)

YTProphet

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401k Plan Experts - Get ITT - Question re: contributions
« on: April 29, 2015, 11:50:22 AM »
Question for all you 401k plan experts out there.

I just had a conversation with my HR benefits manager. I asked him about the mega backdoor Roth IRA contribution discussed by the MadFientist. He said we're permitted to make after-tax deductions and could roll them directly to my Roth. My only question remaining is this - can I make those after-tax contributions with money that's doesn't come from my paycheck? I'd like to make one, lump sum contribution of $30,000 ($53,000 - $18,000 - $5,000 of employer contribution = $30,000) rather than having a few thousand deducted from my paycheck over the course of the year. The reason I prefer to do it all at once is that I can roll it over the next day and know that I will have minimal tax consequences vis-a-vis gains or losses. However, if I contribute from my paychecks over the course of the year, then those gains or losses could be hugely variable. Do 401k plan administrators allow that?
« Last Edit: April 29, 2015, 11:59:10 AM by YTProphet »

dandarc

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Re: 401k Plan Experts - Get ITT - Question re: contributions
« Reply #1 on: April 29, 2015, 11:53:34 AM »

MDM

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Re: 401k Plan Experts - Get ITT - Question re: contributions
« Reply #2 on: April 29, 2015, 11:59:46 AM »
If you can't do it all at once, can you direct 100% of your after-tax paycheck to the after-tax 401k until you hit $30K?

YTProphet

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Re: 401k Plan Experts - Get ITT - Question re: contributions
« Reply #3 on: April 29, 2015, 12:05:42 PM »
If you can't do it all at once, can you direct 100% of your after-tax paycheck to the after-tax 401k until you hit $30K?

Yes, I could do that. However, I make $125,000/year so it would take me about 4 months to hit $30,000 in after-tax contributions. The market might have large gains or losses during that time and could screw up my taxes.

dandarc

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Re: 401k Plan Experts - Get ITT - Question re: contributions
« Reply #4 on: April 29, 2015, 12:09:11 PM »
If you can't do it all at once, can you direct 100% of your after-tax paycheck to the after-tax 401k until you hit $30K?

Yes, I could do that. However, I make $125,000/year so it would take me about 4 months to hit $30,000 in after-tax contributions. The market might have large gains or losses during that time and could screw up my taxes.
Check with your employer that you can only do one rollover per year - that might not be the case.