Author Topic: Mega Backdoor Roth via Solo 401K after gaining employees. Legitimate?  (Read 1001 times)

mmm_tasty

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I'm wishing to perform a mega backdoor roth this coming tax year and am unsure whether I am allowed to do so.

Let me make an attempt at a concise context:
  • I own my own business
  • I have a Traditional Solo 401k that I opened a couple of years ago before I had employees
  • I began hiring full time employees at the start of this year. I stopped contributing to the s401K as a result since I no longer meet the IRS "testing" requirements.
  • The balance of the s401k was rolled into a Traditional IRA last year
  • The s401K remains open with zero balance with TD Ameritrade.
  • TD Ameritrade notes that they are unable to "code" a contribution as an after-tax contribution, however I can still make the contribution as long as a tax consultant or myself accounts for it in my taxes.

Are after-tax contributions allowed to a s401K once the IRS "test" no longer passes, or are they viewed much the same as a usual employer or employee contribution? Is there anything else here that will pose a problem?

Thanks gang!
Thoughts?

protostache

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Re: Mega Backdoor Roth via Solo 401K after gaining employees. Legitimate?
« Reply #1 on: April 28, 2018, 07:12:35 PM »
After tax contributions count toward the ACP test. Talk to your CPA, but I think the answer is no, not legit.