By definition any Roth contributions you make should come from after-tax money and should not be "taxed like any other investment until you leave", rather they should be tax free forever once you put the money in. You should be able to roll them tax free into any other Roth IRA you have once you leave your job without having to do any backdoor anything.
I think I conflated "Roth contributions" and "after-tax contributions" because this is apparently the difference between them - according to https://www.madfientist.com/after-tax-contributions/
After-tax contributions are made with money you’ve already paid tax on (like Roth contributions) and the contributions can grow tax-free but all growth will be taxed upon withdrawal.
My provider specifically said they allow "Roth contributions (source 2)" (as opposed to "after-tax contributions" which is actually what I asked about).
This is exactly what I'm trying to acheive:
I ask because my 401k plan allows after tax contributions, but not in service withdrawals (arg!), so I'm wondering if it is still advantageous to contribute after tax but just leave the contributions in the 401k and not pull them out into an IRA. Then when I leave the company, roll the whole thing (both before tax and after tax) into my respective tIRA and Roth IRA at Vanguard.
Without in-service withdrawals this still seems like a good idea because I can increase my investment into accounts where the gains will be tax-free. If I could withdraw the funds each year I could save taxes for that year, but I still get the benefit when I leave the company and roll into trad & roth IRAs right? What am I missing?
The short answer is that Roth contributions are made with after-tax money and are tax free after. Vanilla after-tax contributions are also made with after-tax money, but are also taxed when you take them out. The Mega-backdoor allows you to convert from vanilla after-tax contributions to Roth contributions. If you already have the option of contributing straight to a Roth account, there is no need to worry about any kind of backdoor contribution.
For example, my 401k allows
three types of contributions: pre-tax, Roth, and after-tax. I can contribute $18,500 combined into the first two, but no more. Since I am making a full salary, I put all $18,500 into my pre-tax 'bucket'. At this point I can no longer contribute any to the Roth. I
can however contribute up to $56,000 into all 401k accounts combined (including my employer match). Thus, I can contribute money in excess of the $18,500 into the after-tax bucket and later convert that into a Roth IRA.