patrick.net

clambo says

So, the "backdoor Roth" requires you are working for someone else with a W2?

There's two 'back door Roth' protocols at play here.

For all types of ROTH's you need a corresponding amount of earned income - but not necessarily W2 income. Self employed income is acceptable.

You are correct in that the standard 'back door Roth' means converting Traditional IRA money into an annual Roth IRA contribution which is limited to $8k for 50+ year olds.

As Maga Chaos Monkey posted above, there is a second backdoor Roth called "Mega backdoor Roth" and this is done through your 401k - so in fact this one does require you to have W2 income, I should think. The MEGA version allows for much higher annual contributions of employer sponsored plans - With catch up's and matching I'm sure you can get to the $70k mentioned by MCM. The main caveat of this is that YOUR COMPANY PLAN HAS TO ALLOW IT. That's a big rub since I worked for a couple of big pharma companies (Abbott and JNJ) and neither had a plan that would allow it.

With the advent of ROTH 401k's (which is a third thing) I'm not sure that the Mega Backdoor Roth is a thing anymore - it's been over a decade since I looked at it. However, since the main purpose of doing any back door is to get around the maximum income limits of a ROTH contribution, a Mega Backdoor would still make sense?

There's also a weird quirk in 2025 and 2026 tax law regarding catch up contributions for anyone that will be between 62 and 64 during those years - you get an extra $3,750k 401k contribution limit on top of the existing $7,500 catch up contribution limits.

Saving's and Tax should not be this complicated - but how else would your congressman get to pick the winners and losers?

stfu says

There's also a weird quirk in 2025 and 2026 tax law regarding catch up contributions for anyone that will be between 62 and 64 during those years - you get an extra $3,750k 401k contribution limit on top of the existing $7,500 catch up contribution limits.

For individuals aged 60-63, SECURE 2.0 allows for increased 401(k) catch-up contributions. In 2025, those eligible can contribute up to $11,250 as a catch-up contribution

It's if you are aged 60-63 at the end of the year, not 62-64. Yes I checked. Yes, I will turn 60 before the end of the year that's why I checked.

If the "backdoor Roth" means you convert an IRA to a Roth IRA this is usually taxable.

I have converted a few bucks from an IRA to a Roth IRA and they sent me a 1099R and it's income.

I still like a tax efficient investment (Vanguard Tax Managed Capital Appreciation).

Edit: I mentioned it here somewhere, but I also bought a Vanguard Variable Annuity with extra dough decades ago.

This contains mutual funds which are called "sub accounts", and my expense ratio is very low.

You can stash a million bucks in one of these, and Uncle Sambo will never know you did; its contents aren't reported to the IRS, unlike your 401K, IRA, etc.

To avoid any unwanted distributions, I set the "annuity age" to age 99 in the contract.

Of course like all retirement accounts it's immune from civil judgement, which means you can run over a Mexican with a baby stroller and the shyster can't touch it.

clambo says

So, the "backdoor Roth" requires you are working for someone else with a W2?

I think so yeah. Mine is through Fidelity and my employer. I've been dumping my paychecks into that for almost 4 years.

what’s QQQ Rin?

Fortwaye says

what’s QQQ Rin?

It's the basic ETF which tracks the Nasdaq100. It's more or less, the main 'tech sector' tracker.

The reason why I don't like the S&P500 is that the Mag 7-10 tech sector stocks are nestled into their returns w/o trying to separate 'em out.

This keeps a layer of separation between the Nasdaq and Dow30.

"How NOT to Invest" by Barry Ritholtz

Fortwaye says

what’s QQQ Rin?

An index fund tracking Nasdaq 100.