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Messages - r4inv

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Taxes / Re: Mega Backdoor Roth, Earnings Destination
« on: August 18, 2020, 07:50:31 AM »
Thank you for the options, and for the heads-up on the 10% penalty.

Taxes / Mega Backdoor Roth, Earnings Destination
« on: August 13, 2020, 06:24:25 AM »
Hello team,

I am glad I found this forum, and this is my first post. I just realized that my wife's 401k allows after-tax contributions and non-hardship in-service withdrawals: contributions rolled over into a Roth IRA, earnings into a Traditional IRA. Jackpot! She is now considering implementing the mega backdoor Roth strategy.

We are concerned about rolling the earnings into a Traditional IRA because we also do regular non-mega backdoor Roths, which would trigger taxes on these funds. The alternative is to withdraw the earnings into a taxable account, but that would also trigger taxes.

Which way should we go? FWIW, our marginal tax rate is 26%.

Any input would be much appreciated. Thank you!

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