Originally Posted by gauss
Did your 401k accept rollover money that was after-tax? I know that mine did not. I thought most would not.
I have only rolled in pre-tax money into my 401K. I think you are correct about
the tax implications or plan prohibitions of rolling after-tax money into a 401K plan.
When doing both backdoor Roth and mega-backdoor Roth, it is important to
keep IRA pre-tax and after-tax monies segregated and be sure to have pre-tax
balances where you want them (probably $0) on Jan. 1 of each year.
It can become a little complicated managing roll-overs, but evidently not that bad,
because I've been able to keep up with it on my own. Because of doing my mega-backdoors
as rollovers, I do an annual round-trip with the pre-tax earnings portion. I roll the
after-tax into a Roth IRA and the earnings go into a tIRA. Prior to year end, I roll
the tIRA money back into the 401K.
I don't want to make it sound too complicated and scare off people who could benefit
from using a mega-backdoor Roth, if they have an eligible plan. I have found Fidelity
to have very capable CSR's, and they know what to do. They won't offer advice,
so it is necessary to be knowledgeable enough to ask the right questions. It has been painless
so far, even for a financial neophyte like myself. As an example, the benefit to me
for 2018 is the ability to move ~$30K into Roth space this year with no additional
tax. That is addition to using my IRA contribution limit + catch-up for a backdoor
Roth and using my full 401K contribution limit + catch-up as pre-tax.