ForumsMega Backdoor Roth Solo 401kMega Backdoor Roth Solo 401k: Contribution vs. Conversion

Forums Solo 401k Mega Backdoor Roth Solo 401k Mega Backdoor Roth Solo 401k: Contribution vs. Conversion

  • Mega Backdoor Roth Solo 401k: Contribution vs. Conversion

    1 Reply
  • Steven D. Kurland

    Top SubjectSolo 401k,Mega Backdoor Roth Solo 401k
    Top ForumsSolo 401k, Mega Backdoor Roth Solo 401k

    Steven D. Kurland

    Steven D. Kurland

    Top SubjectSolo 401k,Mega Backdoor Roth Solo 401k

    July 29, 2021 at 7:51 am

    1. Is the mega back door roth 401k a conversion or a contribution?

    2. If contribution, does this plan already have the provision in it to have this Roth 401k account in the plan or does it have to be added? if it has to be added, then can we add it for 2020 or are our option is for 2021?

  • George Blower

    Top SubjectPrivate: My Community Webinars,Mega Backdoor Roth Solo 401k
    Top ForumsPrivate: My Community Webinars, Mega Backdoor Roth Solo 401k

    George Blower

    George Blower

    Top SubjectPrivate: My Community Webinars,Mega Backdoor Roth Solo 401k

    July 29, 2021 at 7:57 am

    @Steve

    Steven D. Kurland

    Top SubjectSolo 401k,Mega Backdoor Roth Solo 401k

    Thank you for posting your questions!

    QUESTION:

    1. Is the mega back door roth 401k a conversion or a contribution?

    RESPONSE:

    It is both. First, a voluntary after-tax contribution is made into a separate voluntary after-tax subaccount for the solo 401K. Next, funds are converted from the voluntary after-tax subaccount to either a Roth solo 401k subaccount or a Roth IRA. Please note that one of the following online forms (as applicable) must be completed in order to provide us the information needed to prepare the 1099R to report the conversion:

    After-Tax Solo 401k to ROTH IRA

    Voluntary After-Tax to Roth Solo 401k

    QUESTION:

    2. If contribution, does this plan already have the provision in it to have this Roth 401k account in the plan or does it have to be added? if it has to be added, then can we add it for 2020 or are our option is for 2021?

    RESPONSE:

    This confirms that our plan allows pretax, Roth as well as voluntary after-tax contributions. Such contributions must be made into separate subaccounts so if there are not already separate sub-accounts they would need to be opened.

    If (i) the plan was established on or before December 31, 2020 and (ii) if a timely extension was filed for the business tax return, 2020 contributions can still be made on or before the extended deadline for the business tax return.

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