Author Topic: Mega Backdoor ROTH IRA question  (Read 775 times)


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Mega Backdoor ROTH IRA question
« on: May 08, 2018, 01:45:12 PM »
Me: I have 9-5 job where I contribute 18,500 to 401k and company contribution is like 2-3K. I also contribute alittle to Traditional IRA due to income limits. I have no Roth IRA

Wife: Sit home mom. She is not working and she contributes 5,500 to Traditional IRA. No Roth IRA

I have side business where the net income will be 60K this year. This is a sole prop and I am planning to file taxes as Qualified Joint venture (QJV) where me and my wife will be partners. The goal here is to maximize tax deferral savings so I will allocate say 80% to wife and 20% to me.

I am planning to open up a solo401k for her where she can contribute 18,500 plus 25% of 80% of net income. For simplicity purposes I am ignoring SE taxes for now. So this will be 18,500+ 12000 = 30,500

The max per calendar year that one can contribute to tax deferral accounts is 55K so what can we do with the difference between 55,000-30,500=24,500

1) If we design the solo401k properly, can we contribute $24,500 from unearned income like from personal savings account or should it be from earned income?

2) Either way, $24,500 should go towards solo401k Roth, right? Is what I am doing here Mega backdoor ROTH IRA?


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