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The IRS website says its $5500 contribution max per year. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limi

The IRS website says its $5500 contribution max per year. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits https://www.irs.gov/retirement-plans/plan-participant-employ...

sokoloff 9y ago
Yes, but read the "mega backdoor Roth" technique. It allows many people to effectively contribute much larger sums into Roth IRAs, even though there is a $5500 "front door" limit. If you have a low current marginal rate and a lot of money to stash away for retirement (that might be a semi-uncommon combination), it's absolutely something to look into. I have a high marginal rate, so I haven't done it.
- rpazyaquian 9y ago
  So it's basically opening a Trad IRA, putting money into it, then immediately rolling it into a Roth IRA? I thought the contribution limit was across all IRAs you own, so you still wouldn't be able to put any extra into the IRAs in general? This is complicated and weird. I might hold off until I understand it better.
  - sokoloff 9y ago
    Mega backdoor Roth primer is here: http://www.madfientist.com/after-tax-contributions/ http://www.madfientist.com/after-tax-contributions/ Don't get hung up/paralyzed into doing nothing for fear that something slightly better might be available if you did hundreds of hours of research. The most important thing is to get started, IMO.
    - pilom 9y ago
      Just to be clear. The Mega backdoor Roth requires a 401k that allows After-Tax Contributions. Most won't let you do that. Their software will say "that contribution percentage you have selected will result in more than $18k/year in contributions and that isn't allowed" or you'll get to the end of the year and they'll just refund you the extra contributions. Which also doesn't help you.
thaumasiotes 9y ago
That is a limit on the labels you can use on official forms as you move money around, not a limit on how much money you can move.

sokoloff 9y ago

Yes, but read the "mega backdoor Roth" technique. It allows many people to effectively contribute much larger sums into Roth IRAs, even though there is a $5500 "front door" limit. If you have a low current marginal rate and a lot of money to stash away for retirement (that might be a semi-uncommon combination), it's absolutely something to look into. I have a high marginal rate, so I haven't done it.

rpazyaquian 9y ago
So it's basically opening a Trad IRA, putting money into it, then immediately rolling it into a Roth IRA? I thought the contribution limit was across all IRAs you own, so you still wouldn't be able to put any extra into the IRAs in general? This is complicated and weird. I might hold off until I understand it better.
- sokoloff 9y ago
  Mega backdoor Roth primer is here: http://www.madfientist.com/after-tax-contributions/ http://www.madfientist.com/after-tax-contributions/ Don't get hung up/paralyzed into doing nothing for fear that something slightly better might be available if you did hundreds of hours of research. The most important thing is to get started, IMO.
  - pilom 9y ago
    Just to be clear. The Mega backdoor Roth requires a 401k that allows After-Tax Contributions. Most won't let you do that. Their software will say "that contribution percentage you have selected will result in more than $18k/year in contributions and that isn't allowed" or you'll get to the end of the year and they'll just refund you the extra contributions. Which also doesn't help you.

thaumasiotes 9y ago

That is a limit on the labels you can use on official forms as you move money around, not a limit on how much money you can move.