Hi fellow mustachians,
I'm in a spot where I am comfortable enough to start looking into investing/saving more money, and from the sticky thread about "Investment Order" from this forum, I see that my next step is the called: "Mega Backdoor Roth IRA"
I tried to find out the details about the process, found madfientist example (
https://www.madfientist.com/after-tax-contributions/)
But I still have questions.
As I understand, I have to set up my employer 401K to, not only withdraw pretax, but also after tax.
My current setup (contributions) in my Vanguard account are:
401(K) PRE-TAX BASIC -> 20%
401(K) ROTH BASIC -> 10%
For the sake of the argument I will add exactly the values of my last paycheck (2 weeks)
-> Roth Rewards $348.00
-> Reward 401k $696.00
And so far into this year:
Your contributions Amount
401(K) PRE-TAX BASIC $1,392.00
401(K) ROTH BASIC $1,044.00
Total $2,436.00
Employer contributions Amount
401(K) MATCH $278.40
Total $278.40
Now, I understand that the 19K limit is for 401K and ROTH, so my Roth contributions are taking a chunk of this amount, so I don't understand how this is going to let me put more than the 19K a year.
I also don't understand the next step which I guess is the most important one. Do I have to transfer the Roth contributions into a Roth IRA right away?
Please be super detailed in your comments, so I can follow.
Thank you