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  #11  
Old 08-18-2017, 05:16 PM
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twig93 twig93 is offline
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Originally Posted by GoldenGoal View Post
Some employers allow you to contribute after tax dollars which is separate from from the 18k pre tax or roth allowance in a 401k plan. So I've been contributing 18k pretax and as much possible after tax with the plan of converting the after tax to a Roth when I leave the employer.
I think this is either incorrect or (more likely) clumsily worded.

You cannot legally contribute more than $18K to a 401k plan in a year, regardless of whether that's 100% Traditional, 100% Roth, or some combination of both.

However, many employers do have other, additional, plans that are not 401k plans to which you may contribute. Perhaps a Profit Sharing Plan or something of that nature.

So you can contribute $18K to your 401k plus even more to the PSP.

The limit there (415c limit) is that the sum of the following may not exceed $54,000 (for 2017).
*Your 401k contributions (Trad and Roth)
*Your employer's 401k contributions
*Your PSP contributions
*Your employer's PSP contributions

So you have to be a little bit careful to not over-contribute early in the year as that may force you to forego some employer contributions late in the year.
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  #12  
Old 08-18-2017, 05:18 PM
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Originally Posted by celalta;9072047[B
]Currently IRS sets a limit of 53k on total contributions to a 401k plan in a single year[/b] - this includes your contributions (upto 18k of traditional 401k and/ or Roth 401k + employer's match + after - tax 401k).

After-tax contributions are not the same as Roth contributions for this purpose. Not all employer's give the option for making after-tax contributions.
The limit applies to all Defined Contribution plans, not just 401k. And it was $53,000 in 2016, but was increased to $54,000 for 2017. See my post above.
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  #13  
Old 08-18-2017, 06:10 PM
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Originally Posted by Klaymen View Post
It does seem curious that I can only put $5,500/yr in a Roth IRA but I could put $18,000/yr in a Roth 401k. In the past I have rolled over a "mixed" 401k in the way you described just then, and assumed there was nothing taxable going on.
Thanks! Some good threads in here. I accidentally contributed after tax dollars for a few years and thought I was going to get screwed on it. Now this is making me think I should just be dumping extra in as my company allows it. We have both Roth and standard 401ks as well offered. So I guess I can do my 18k to Roth and then dump in after tax into the standard 401k and roll it at a future time.

I'm a bit concerned the IRS guidelines change, either become vague where this is sketchy or banned. Any concern about that?

My picture is also muddied by a rather large LCF that actually can offset future gains in my taxable accounts but I guess after tax contributions also have the advantage of dividends and interest payments being tax free (can't be used to offset LCF).
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  #14  
Old 08-18-2017, 06:17 PM
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Originally Posted by twig93 View Post
You cannot legally contribute more than $18K to a 401k plan in a year, regardless of whether that's 100% Traditional, 100% Roth, or some combination of both.
You can contribute more than $18k if the excess is in an after-tax 401k (not the same as a Roth 401k) and you don't exceed the $54k (or whatever it is now) limit from all sources. It does not have to be profit sharing plan like you state later in your post. People do this to utilize the Mega Backdoor Roth if their plan allows for in-service distributions.
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  #15  
Old 08-18-2017, 07:09 PM
nonlnear nonlnear is offline
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Originally Posted by LifeIsAPoissonProcess View Post
What does this mean? Reportable where?
Form 1099-R, I think
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  #16  
Old 08-19-2017, 07:11 AM
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Originally Posted by twig93 View Post
I think this is either incorrect or (more likely) clumsily worded.

You cannot legally contribute more than $18K to a 401k plan in a year, regardless of whether that's 100% Traditional, 100% Roth, or some combination of both.

However, many employers do have other, additional, plans that are not 401k plans to which you may contribute. Perhaps a Profit Sharing Plan or something of that nature.

So you can contribute $18K to your 401k plus even more to the PSP.

The limit there (415c limit) is that the sum of the following may not exceed $54,000 (for 2017).
*Your 401k contributions (Trad and Roth)
*Your employer's 401k contributions
*Your PSP contributions
*Your employer's PSP contributions

So you have to be a little bit careful to not over-contribute early in the year as that may force you to forego some employer contributions late in the year.
You can contribute more than 18k to a 401k plan so long as it is after tax dollars and the after tax dollars are not to a Roth 401k. Of course, your employer has to allow this option. And yes, as you said you are capped at the 54k total contributions (employer and employee)

The 18k limit within a 401k is not a cap to the 401k plan it is solely a cap to pre tax contributions and after tax dollars contributed to a Roth 401k.
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Last edited by GoldenGoal; 08-19-2017 at 08:06 AM..
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  #17  
Old 08-21-2017, 10:34 AM
axjoke axjoke is offline
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So for after tax contributions. When its time to convert. Does all the contributions + earnings (which haven't been taxed) roll into a Roth IRA or does just the after tax contributions go to the Roth IRA while the earnings roll into a Traditional Roth. Both are good but obviously the first is much better.
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Old 08-21-2017, 10:42 AM
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Originally Posted by axjoke View Post
So for after tax contributions. When its time to convert. Does all the contributions + earnings (which haven't been taxed) roll into a Roth IRA or does just the after tax contributions go to the Roth IRA while the earnings roll into a Traditional Roth. Both are good but obviously the first is much better.
I assume you mean Traditional IRA in that last bit.

I do not know if you can transfer the earnings to a separate place avoid being taxed today, so maybe someone else can answer that.

Regardless, if you are doing Mega Backdoor Roth, you rollover immediately so there are no earnings to tax (or ASAP, putting it in a cash account for the couple of days until the rollover goes through). Once in the Roth IRA, everything there is Roth IRA dollars and earnings won't be taxed upon withdrawal.
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  #19  
Old 08-21-2017, 10:59 AM
lulzEMH lulzEMH is offline
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Originally Posted by Mr F View Post
I assume you mean Traditional IRA in that last bit.

I do not know if you can transfer the earnings to a separate place avoid being taxed today, so maybe someone else can answer that.

Regardless, if you are doing Mega Backdoor Roth, you rollover immediately so there are no earnings to tax (or ASAP, putting it in a cash account for the couple of days until the rollover goes through). Once in the Roth IRA, everything there is Roth IRA dollars and earnings won't be taxed upon withdrawal.
Correct, meant traditional Roth.

How can you immediately roll over? Everything I read suggested you had to switch employment to roll over? Maybe I'm missing the best part of this whole thing.
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  #20  
Old 08-21-2017, 11:09 AM
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Originally Posted by lulzEMH View Post
Correct, meant traditional Roth.

How can you immediately roll over? Everything I read suggested you had to switch employment to roll over? Maybe I'm missing the best part of this whole thing.
I mentioned it earlier, but Mega Backdoor only works if your plan allows in-service distributions. Some do, some don't.

ETA: Google 'Mega Backdoor Roth' and your first few hits will be decent overviews.

Last edited by Mr F; 08-21-2017 at 11:19 AM..
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