FAQ: After-Tax 401(k) Contributions

Frequently Asked Questions

Need assistance with data entry? RightCapital is here to help! Please use the common questions and answers below to assist you in generating financial plans. For additional assistance use the link to our support team at the bottom of the article.

1

Can I model an after-tax 401(k) contribution if my client doesn’t have access to in-service withdrawals?

Answer: Yes, if the client does not have access to in service withdrawals they can execute an after-tax 401(k) contribution that is converted to a Roth at their separation of service (retirement, leaving job etc..). Simply enter the after-tax 401(k) contribution into the client plan starting and ending  in the same calendar year.  Be sure this calendar year coincides with the separation of service.  

2

Where can I verify that the after-tax 401(k) contribution has occurred?

Answer: To see the mega backdoor roth conversion occurring in the financial plan, visit the Retirement > Cash Flows > Accounts tab and select “net cash flows” in the “addition to accounts” dropdown menu to see the money entering the Roth 401(k) or Roth IRA account.  

3

Can any client execute a mega backdoor Roth conversion?

Answer: No, only clients with a significant amount of income who have the ability to make after tax 401(k) contribution, and in-service withdrawals from their employer sponsored retirement plan are eligible for ongoing mega backdoor Roth conversions. 

4

Where can I learn more about mega backdoor Roth conversions?

Answer: To learn more about mega backdoor roth conversions review this webinar on tax smart saving strategies.  

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