ForumsMega Backdoor Roth Solo 401kMegabackdoor IRA maximizing

Forums Solo 401k Mega Backdoor Roth Solo 401k Megabackdoor IRA maximizing

  • Megabackdoor IRA maximizing

    Mark Nolan replied 2 years, 11 months ago 2 Members · 2 Posts
  • 1 Reply
  • Top SubjectMega Backdoor Roth Solo 401k
    Top ForumsMega Backdoor Roth Solo 401k

    Aarti G
    Top SubjectMega Backdoor Roth Solo 401k

    June 17, 2021 at 8:14 am

    I have a query w.r.t maximizing megabackdoor Roth IRA. Here is the situation

    Two taxpayers working for a big employer (They are earning160k base and 350k Equity). They also own an S corp 50-50 with employees. The big employer offers pre tax and after tax 401k contributions. They:

    1. Maximize pre tax =19,500

    2. Employer match is =3,200

    3. Maximize After tax =16,000 (limited to 10% of base salary)

    4. Use backdoor Roth IRA = 6,000

    Question – How to maximize the after tax to take advantage of the 58k limit ( 58000-19500-3200-16000-6000 =13300). Is there a way they can contribute 13k to another plan after tax? S corp has employees.

    Thank you in advance.

    Aarti G
  • Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions
    Top ForumsSolo 401k, Solo 401k Contributions

    Mark Nolan

    Mark Nolan

    Top SubjectSolo 401k,Solo 401k Contributions

    June 18, 2021 at 1:22 pm

    It appears the S-corp employs non-owner W-2 employees who work full-time, correct? If so, then your client won’t be able to open a solo 401k plan, as a solo 401k is for for owner-only businesses with no full-time W-2 employees.

    However, if they did qualify, then they could each contribute the overall limit of $58,000 for 2021 as a solo 401k voluntary after-tax contribution regardless if they are already maximizing their 401k contributions to their “big employer” assuming they are not owners of that business.

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