Crushing the Mega Roth

[Civex]

Well, crushing it may be an exaggeration, but I just began the rollover process for my second Mega Roth contribution! This contribution will be just over $11k, for a year to date contribution of just under $15k! It isn't a huge deal, but I'm pretty excited, since a year ago my Roth account was a measly $3k, and once this contribution is added, it will have grown to $24k. Thank you for letting me share, since IRL, I can only tell my SO! :)

I am only allowed access to the after tax 401k option(necessary for Mega Roth) this year due to HCE status at my company, so I'm trying to get as close as I can to the IRS limit of $35000 ($53 total-$18 pretax=$35000 remaining.) I don't know if it will be possible for me to hit this, since I have been contributing over 40% of my gross straight to the various 401k options, but I'm going to try.

I know I would not be nearly as aggressive with savings if it wasn't for this forum and bogleheads; I really appreciate this community. When my manager was helping me set up the profit sharing account for work, he was trying to make helpful suggestions regarding fund choices and contribution amounts. He suggested a minimum of 5% to get the match and 100% allocated to different actively managed stock funds due to my age. He mentioned he was being more aggressive, investing 8% split between the traditional 401k option, and Roth 401k- in 100% actively managed stock funds. You would have thought I grew a second head when I put the contribution amount at 35% of gross, split 80/20 in the index funds. A month or two later he asked me if I still was at such a, "crazy" contribution amount. I said that, "No (I had increased it to 65% in an attempt to max it in the remaining three months,) I was just trying to get some money in their before the end of the year."

I'm not providing the anecdote to sound like a dick, but to show that without the info I've learned here and on Bogleheads, that I would have likely have followed his advice- and while it isn't terrible advice (get the match, choose an allocation based roughly on your age,) it isn't nearly as awesome as  Mustachian/Boglehead approach(high savings/passive investment-boom). Thanks!

[spud1987]

Congrats!

I'm doing a mega Roth as well.

I am planning on maxing out the $53,000 limit ($18k to pre-tax, $15k to employer pre-tax match, $20k to the mega Roth).

My plan doesn't allow in-service rollovers so I'll only get the benefit of a Roth rollover when I quit, which is likely in a few years. Hopefully the rule doesn't change before then. Even if the rule changes, I'll just rollover to an IRA and then do a Roth conversion ladder once I'm FIRE-d.

[ZiziPB]

Congratulations!

I started doing the Mega Roth a couple of years ago and did my first in-service rollover earlier this year (my company has a 2 year waiting period for in-service rollovers so it was after-tax money I contributed in 2013).

Just wanted to point out one thing:

so I'm trying to get as close as I can to the IRS limit of $35000 ($53 total-$18 pretax=$35000 remaining.)

that $35,000 includes any match you receive from your employer so make sure you don't over contribute and lose any remaining match.

[Civex]

Thanks for the support!

My plan doesn't allow in-service rollovers so I'll only get the benefit of a Roth rollover when I quit, which is likely in a few years.

That definitely would be tougher for me, so good job! We are allowed 4 withdrawals/rollovers per year, which helps satisfy my need to be, "doing something."

so I'm trying to get as close as I can to the IRS limit of $35000 ($53 total-$18 pretax=$35000 remaining.)

that $35,000 includes any match you receive from your employer so make sure you don't over contribute and lose any remaining match.

Mostly unfortunately, my employer contributes the match in February of the following year. I say mostly, because my understanding is that they do true up for the whole year (so, front loading is possible.) I'm not sure if I were to quit in December of a year I am eligible for the match, that I would get any match at all. So, my 2015 match will be deposited in as part of my 2016 contribution. I think its part of their logistics for keeping people from quitting-the match and discretionary match are made in February, and bonuses/raises are given in August. Puts you in a place of staying for a few more months for the 5-10% payout.

[ZiziPB]

Mostly unfortunately, my employer contributes the match in February of the following year. I say mostly, because my understanding is that they do true up for the whole year (so, front loading is possible.) I'm not sure if I were to quit in December of a year I am eligible for the match, that I would get any match at all. So, my 2015 match will be deposited in as part of my 2016 contribution. I think its part of their logistics for keeping people from quitting-the match and discretionary match are made in February, and bonuses/raises are given in August. Puts you in a place of staying for a few more months for the 5-10% payout.

Oh got it. That's a nice match if you get 10%!  In your case then the $35k for this year will consist of the match you got in February plus your after tax contributions but you can definitely front load if you want. I have to be a lot more careful as my employer matches on a per paycheck basis. So I need to spread my contributions throughout the year.
In any event, great job!

[BBub]

Nice job!  I am so tempted to max my mega-roth as well.  At this point I am padding our taxable stash to a level of $100k.  We are also maxing traditional 401k's plus backdoor roths, but I just love the idea of being able to contribute an extra $30kish into the mega-roth.  Maybe next year.

[Civex]

Thanks! I would really like to start taxable investing, but since I still have student loans, it doesn't make sense. I'm taking a small risk betting that the money compounding in the Roth (tax free!) will have a higher return than my 5% student loan rate. My plan is Mega Roth this year, and student loans 2016.

I also sort of feel that if you are maxing out two 401Ks and two Roths that you have already won the game :) - good job! My SO and I are both on track to do the same this year.

[BBub]

Sounds like you're indeed crushing it.  I agree with your plan to pay off the loans before taxable investing.   We did the same.

[mom22boys]

Awesome! That's a huge accomplishment, when you compare to most working people. I used to be bad with savings too, but I'm pumped to start my mega backdoor contributions also in August (after bonuses, stock). I'm go from saving maybe $7000 last year to $38000 this year into my 401k (both pre and after tax). I'm hoping I have some money left still after the Mega backdoor to also pay down more specials on my house.... similar to your student loans.

[Civex]

Awesome! That's a huge accomplishment, when you compare to most working people. I used to be bad with savings too, but I'm pumped to start my mega backdoor contributions also in August (after bonuses, stock). I'm go from saving maybe $7000 last year to $38000 this year into my 401k (both pre and after tax). I'm hoping I have some money left still after the Mega backdoor to also pay down more specials on my house.... similar to your student loans.

Nice work! From $7k to $38 is HUGE! Happy to see another MNer doing well, I just hit my one year anniversary as a Minnesotan :).

[mom22boys]

Thanks Civex, and welcome to MN!