4 ms·

Roth contributions are withdrawable without penalty. Also most employers offer a match of some amount, which is essentially free money.

sumeno 2mo ago
Not Roth 401ks, only IRAs
- jeffreyrogers 2mo ago
  Yes, although some plans let you roll contributions into an IRA.
what 2mo ago
Most people here are probably paid too much to contribute to a Roth IRA.
- jeffreyrogers 2mo ago
  You can convert your 401k to an IRA when you leave an employer. Some employers also offer in service rollovers (I think these mostly have minimum age restrictions on them though)
  - what 2mo ago
    That’s a traditional IRA, not Roth.
    - seattle_spring 2mo ago
      Right but once your traditional IRA is fully rolled over to a 401k, you can take full advantage of backdoor Roth IRA contributions regardless of income.
    - loeg 2mo ago
      Traditional 401k balances transfer to traditional IRAs, and Roth 401k balances transfer to Roth IRAs.
- ptmcc 2mo ago
  That's what the https://www.investopedia.com/terms/b/backdoor-roth-ira.asp https://www.investopedia.com/terms/b/backdoor-roth-ira.asp is for, assuming you don't have any existing traditional IRA balances
  - jeffreyrogers 2mo ago
    You can also roll your traditional IRA into an employers 401k (if the plan allows this) to zero out your traditional IRA balance.
- pinkyboy 2mo ago
  I have considerable Roth assets because my employer's 401k allows for the Mega-backdoor, which means I can put $30k+ per year of after-tax income into 401k (beyond the normal pre-tax contributions) perform a Roth-in-plan-conversion on the after-tax assets, and then roll it out into a Roth IRA.
  - what 2mo ago
    You can’t personally contribute to a 401k beyond the limit, even after tax. Your employer can add extra via match or profit sharing contributions. What are you talking about?
    - pinkyboy 2mo ago
      For 2026, the 401k limits are $72,000 overall, and $24,500 for pre-tax employee contributions. Assume an employer who matches 50% up to pre-tax employee contribution max, the result is this: $24,500 pre-tax employee contribution $12,250 employer match This leaves $35,250 to the $72k limit. Roth MegaBackdoor enabled plans allow the employee to put $35,250 of _after tax_ contributions in to fill that window, and to convert them to Roth assets. They can even be rolled out into a Roth IRA while the 401k is still active. I have no clue why you think this relatively common plan option is, somehow, impossible.
- ls612 2mo ago
  But you can do a backdoor Roth IRA by maxing out your 401k and then rolling it over into a Roth IRA with recharachterization. You lose the tax benefits of the 401k but gain the tax benefits of the Roth IRA which can be a good trade depending on your tax situation.
  - Kirby64 2mo ago
    No, this isn't how a backdoor Roth IRA works. Backdoor Roth IRAs involve making a traditional IRA contribution and not taking the deduction at tax filing time (because you can't), but then rolling over (not recharacterizing, that's something else) the traditional IRA contribution into a Roth IRA. It's completely tax free, assuming you have a $0 traditional IRA balance once the rollover is complete. The usual way to accomplish this is to roll all traditional deductible IRA balances into a traditional 401k first. What you're kind of thinking of, but also not quite right, is called a 'mega backdoor Roth', which involves contributing to a 401k via a non-deductible contribution (which is not part of 24.5k/yr limit), then immediately rolling it over into a Roth 401k. It has to be allowed by the plan, but some plans even offer to do the rollovers for you automatically. The Mega Backdoor basically lets you get an extra ~40k/yr of Roth contributions, if you can afford it.
dripdry45 2mo ago
The five-year clock is for the original contribution. It’s important not to get that mixed up.
- deleted 2mo ago
  [deleted]
- PopAlongKid 2mo ago
  There is no five year clock for withdrawing your own Roth contributions. Contributions (not earnings or conversions) can be withdrawn at any time with no tax or penalty.
scrapcode 2mo ago
I understand contributing at least the amount an employer will match, and almost always much more than that. But to "max" it would be $24,500/yr which for many if feasible at all would leave little go into different investment vehicles meaning all of your money is tied behind the rules of a 401k until you can access it, or take that 10% penalty. Maybe I'm missing something here but diversification is a pretty fundamental investment rule and I'm not sure why the advice doesn't usually follow it here. Putting everything into a "you can't touch this until you're ~55+" bucket seems like quite a risk.

sumeno 2mo ago

Not Roth 401ks, only IRAs

jeffreyrogers 2mo ago
Yes, although some plans let you roll contributions into an IRA.

what 2mo ago

Most people here are probably paid too much to contribute to a Roth IRA.

jeffreyrogers 2mo ago
You can convert your 401k to an IRA when you leave an employer. Some employers also offer in service rollovers (I think these mostly have minimum age restrictions on them though)
- what 2mo ago
  That’s a traditional IRA, not Roth.
  - seattle_spring 2mo ago
    Right but once your traditional IRA is fully rolled over to a 401k, you can take full advantage of backdoor Roth IRA contributions regardless of income.
  - loeg 2mo ago
    Traditional 401k balances transfer to traditional IRAs, and Roth 401k balances transfer to Roth IRAs.
ptmcc 2mo ago
That's what the https://www.investopedia.com/terms/b/backdoor-roth-ira.asp https://www.investopedia.com/terms/b/backdoor-roth-ira.asp is for, assuming you don't have any existing traditional IRA balances
- jeffreyrogers 2mo ago
  You can also roll your traditional IRA into an employers 401k (if the plan allows this) to zero out your traditional IRA balance.
pinkyboy 2mo ago
I have considerable Roth assets because my employer's 401k allows for the Mega-backdoor, which means I can put $30k+ per year of after-tax income into 401k (beyond the normal pre-tax contributions) perform a Roth-in-plan-conversion on the after-tax assets, and then roll it out into a Roth IRA.
- what 2mo ago
  You can’t personally contribute to a 401k beyond the limit, even after tax. Your employer can add extra via match or profit sharing contributions. What are you talking about?
  - pinkyboy 2mo ago
    For 2026, the 401k limits are $72,000 overall, and $24,500 for pre-tax employee contributions. Assume an employer who matches 50% up to pre-tax employee contribution max, the result is this: $24,500 pre-tax employee contribution $12,250 employer match This leaves $35,250 to the $72k limit. Roth MegaBackdoor enabled plans allow the employee to put $35,250 of _after tax_ contributions in to fill that window, and to convert them to Roth assets. They can even be rolled out into a Roth IRA while the 401k is still active. I have no clue why you think this relatively common plan option is, somehow, impossible.
ls612 2mo ago
But you can do a backdoor Roth IRA by maxing out your 401k and then rolling it over into a Roth IRA with recharachterization. You lose the tax benefits of the 401k but gain the tax benefits of the Roth IRA which can be a good trade depending on your tax situation.
- Kirby64 2mo ago
  No, this isn't how a backdoor Roth IRA works. Backdoor Roth IRAs involve making a traditional IRA contribution and not taking the deduction at tax filing time (because you can't), but then rolling over (not recharacterizing, that's something else) the traditional IRA contribution into a Roth IRA. It's completely tax free, assuming you have a $0 traditional IRA balance once the rollover is complete. The usual way to accomplish this is to roll all traditional deductible IRA balances into a traditional 401k first. What you're kind of thinking of, but also not quite right, is called a 'mega backdoor Roth', which involves contributing to a 401k via a non-deductible contribution (which is not part of 24.5k/yr limit), then immediately rolling it over into a Roth 401k. It has to be allowed by the plan, but some plans even offer to do the rollovers for you automatically. The Mega Backdoor basically lets you get an extra ~40k/yr of Roth contributions, if you can afford it.

dripdry45 2mo ago

The five-year clock is for the original contribution. It’s important not to get that mixed up.

deleted 2mo ago
[deleted]
PopAlongKid 2mo ago
There is no five year clock for withdrawing your own Roth contributions. Contributions (not earnings or conversions) can be withdrawn at any time with no tax or penalty.

scrapcode 2mo ago

I understand contributing at least the amount an employer will match, and almost always much more than that. But to "max" it would be $24,500/yr which for many if feasible at all would leave little go into different investment vehicles meaning all of your money is tied behind the rules of a 401k until you can access it, or take that 10% penalty. Maybe I'm missing something here but diversification is a pretty fundamental investment rule and I'm not sure why the advice doesn't usually follow it here. Putting everything into a "you can't touch this until you're ~55+" bucket seems like quite a risk.