Hack Your Wealth

As a lawyer / engineer / MBA, how can you achieve FIRE (financial independence, retire early) rapidly to quit the rat race, pursue your passions, and live life on your own terms? Andrew Chen – founder of the Hack Your Wealth Blog and lawyer, financial expert (CFA graduate), and tech industry veteran – shows you strategies and tactics to (1) earn, (2) save, (3) invest, and (4) protect as a high earner so that you can build massive wealth and create a portfolio that’s a FIRE machine. Through solo lessons, expert interviews, and side hustle profiles, you’ll learn about tax strategies, retirement account optimization, asset allocation & rebalancing, passive income (real estate investing, side hustling, online business, digital nomading), family finances (e.g., strategizing college education costs), travel hacking, estate planning, and career transitions. Andrew podcasts about the big picture concepts, then adds step-by-step implementation guides downloadable from the Hack Your Wealth website to help you FIRE strategically, methodically, and rapidly.

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Hack Your Wealth

Mega Backdoor Roth

April 05, 2022 • Andrew Chen • Episode 88

#88: Have you maxed out your backdoor + mega backdoor Roth conversions yet?

For high earners, direct contributions to a Roth IRA, and tax-deductible contributions to a traditional IRA, are limited by income thresholds.

But ALL taxpayers – even high earners – can still invest money into a Roth via backdoor Roth conversion. And if your employer’s 401k has the right plan features, you can turbo-charge your Roth conversions another 7x by doing the “mega backdoor” Roth conversion.

What the heck do these mean? And how exactly do you do them?

This week, I share what these concepts are, tips for how to execute them successfully, and what you need to know about your employer 401k to turbo-charge your Roth conversions.

I explain:

The difference between a backdoor Roth vs. mega backdoor Roth
How to execute each one + tips to ensure no tax liability when you convert
What plan features your employer 401k must have to do a mega backdoor Roth
Workaround if your employer 401k does NOT allow in-plan Roth conversions, but DOES allow after-tax contributions (yes, you can still move that money into Roth)
How recent proposed legislative changes would curtail the backdoor Roth strategy, and whether you need to worry about it
A note about doing mega backdoor Roth conversions via Solo 401k.

Check it out here:

https://hackyourwealth.com/mega-backdoor-roth

Have you done a backdoor or mega backdoor Roth conversion before? If you’ve decided not to, what dissuaded you? Let me know by leaving a comment.

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Intro/Outro: Old Bossa by Twin Musicom.