Simon Kelvington | Wealth Management
Retirement Savings Strategy:
The Mega Backdoor Roth
If you participate in a 401(k) or 403(b) retirement plan, you are subject to a maximum contribution amount (called your elective deferral limit). In 2024 the amount is $23,000 or if you are over age 50-- $30,500.
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The total amount that you can put into a retirement plan annually, including profit sharing or employer match, is $69,000 or $76,500 if over age 50.
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However, there may be limitations. If you are subject to those limits, then a Mega Backdoor Roth may be the workaround you need for significant tax benefits.
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Ask us if the Mega Backdoor Roth is a solution for you.
To Roth or Not To Roth
People often ask which is better -- A Roth or a Traditional IRA?
​Financial institutions sometimes provide calculators that attempt to answer that question. Unfortunately, these calculators have assumptions built into them and the big assumption that determines the answer is "What will your tax rate be at retirement?"
Simply put, if you know your tax rate will be higher in retirement than it is now, the Roth is probably better. If not, then Traditional is better. And if you are not sure, it is ok to have both Roth and Traditional.