Just when I thought we were starting to understand 401(k)s & their benefits, my husband’s Employer notified us that starting in 2018 they will be offering after-tax contributions with Roth In-Plan Conversions.
I’m trying to read as much as I can to understand the benefits to putting over the $18.5k limit (which is in a traditional 401k) in this new account versus just putting it in our taxable account. The letter said we can put up to $54k.
Is anyone else familiar with this account or is this another way to add more fees on top of what is being charged already?
Appreciate any pros or cons.
I am very new to this, having started my own thread on these after tax contributions just yesterday.
In plan Roth conversions are an alternative to the Mega Backdoor Roth IRA that we hear so much about. They are treated as Roth for tax purposes, but I do not believe that you have access to the contributions themselves as you do for a Roth IRA. It is still a reasonable option for long term planning.
Your employer may continue to match the after tax contributions.
As I understand it, the $54k is your regular contributions up to $18.5 + employer matching + after tax contributions.
As for the fees, what fees does your plan have?