415(C) Limit and Backdoor Roth IRA

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Cox3497
Posts: 16
Joined: Tue Mar 01, 2016 7:57 am

415(C) Limit and Backdoor Roth IRA

Post by Cox3497 » Sun Apr 14, 2019 9:19 am

Good morning again Ladies and Gents,

Was hoping someone could straighten me out for certain on an investing issue I've had a question on recently. I've had trusted colleagues tell me two different things, so I was hoping the Boglehead experts could weigh in again on the issue as they have for questions I've posed in the past.

I've recently changed jobs to an employer with a pretty good retirement plan in place. The plan is with Fidelity, and includes 401(k) options, in addition to a 401(a). I've never had a plan with a 401(a) before, but I've recently begun after tax contributions to this plan. I then call up the Mega Backdoor Roth conversion desk (for lack of a better "official" term) at Fidelity, and they convert this to a Roth at that point. The main benefit being I'm no longer subject to the $19,000 401(k) employee contribution limit, but instead now subject to the 415(c) limit where both my and my employers contributions are capped at $56,000 for the year. I believe I will be reaching this limit this year, and that is where my question comes into play.

Once I have reached the 415(c) limit, am I still allowed to do a regular (i.e., not MEGA) Backdoor Roth IRA contribution of $6000 to my Roth IRA? I am above the income limits for any other type of IRA contribution. I am familiar with the requirements of not having any money in a traditional IRA, and all the requirements to do the Backdoor Roth IRA. The only part I'm uncertain about is if I can both meet the 415(c) limit of $56,000 in my employee retirement plan account with Fidelity, and still invest another $6,000 in a Backdoor Roth IRA for a total contribution of $62,000 into retirement accounts?

I appreciate any insight you may have to share! Thanks in advance!

lakpr
Posts: 1215
Joined: Fri Mar 18, 2011 9:59 am

Re: 415(C) Limit and Backdoor Roth IRA

Post by lakpr » Sun Apr 14, 2019 9:32 am

Yes you can. The Roth IRA contributions do not figure into the 415(c) limits. For what it is worth, I do the same thing, although I haven’t bumped into the limits because my MegaCorp limits after tax contributions to just 10% of annual income.

Topic Author
Cox3497
Posts: 16
Joined: Tue Mar 01, 2016 7:57 am

Re: 415(C) Limit and Backdoor Roth IRA

Post by Cox3497 » Sun Apr 14, 2019 2:53 pm

lakpr,

Thanks for the response! I was inclined to believe that was the case. Good to get it verified. Appreciate the insight!

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