We max out my 401k and would like to be using her earnings to add to our retirement savings. Last year we did a backdoor Roth, but it seems there are income limits which we now exceed. My tax guy messed up or was entering it as a traditional roth.

Is there something else we can be doing other than just putting money into our investment accounts?

Does your employer allow for in-plan after-tax Roth conversions in your 401k?

If so this will up your max Roth contribution significantly. (Mega backdoor)

And make sure to take advantage of HSA if your benefits include those.

Probably just a traditional (after-tax) IRA, which I don't think is worth it.

Does your 401k allow after tax contributions? Even better do they allow you to convert them to Roth or do in service rollovers?

Petrino1 said:

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dummble said:

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We max out my 401k and would like to be using her earnings to add to our retirement savings. Last year we did a backdoor Roth, but it seems there are income limits which we now exceed.

Is there something else we can be doing other than just putting money into our investment accounts?

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There are income limits to contribute to a Roth IRA, but no income limit for a backdoor Roth IRA. The backdoor Roth IRA method is where you contribute to a Traditional IRA and then convert to a Roth IRA.

You and your wife are definitely eligible for a Backdoor Roth IRA.

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Still need a sticky for this on this board.

Brian Earl Spinner and permabull are both asking the right questions. You need to look into a mega backdoor Roth if you can do it.

Quote:

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• 401(k) After-Tax Contributions:
  The key is to make after-tax contributions to a 401(k) plan that allows for such contributions.
  
  
• Contribution Limits:
  In 2025, you can contribute up to $23,500 (or $31,000 if you're 50 or older) in pre-tax contributions to your 401(k), plus an additional $46,000 (or $53,500 if you're 50 or older) in after-tax contributions, for a total of $69,000 ($76,500 if you're 50 or older).
  
  
• Conversion to Roth:
  You can then convert these after-tax contributions to a Roth 401(k) or Roth IRA, allowing for tax-free growth and withdrawals in retirement.
  
  
• Plan Requirements:
  To utilize this strategy, your 401(k) plan must:
  
  • Allow after-tax contributions.
    
    
  • Allow in-plan Roth conversions or in-service withdrawals.
    
    
• Tax Implications:
  While the principal of the after-tax contributions is not taxable, the growth within the after-tax account is taxable when converted to Roth.
  
  
• Consult a Professional:
  Due to the complexity of this strategy and potential tax implications, it's advisable to consult with a financial advisor or tax professional before implementing it.
  

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The info here and what we got from our FA was that our tax guy was doing something wrong on his end. He seemed very frazzled on the phone. I keep saying this is the last year we use him, but this might actually be the last year we use him.

Anyways. I talked to our accountant at work and we are adding Roth 401(k)s so she is going to check on the after tax contributions since the mega backdoor would make sense for us.