I'm trying to decide if I should enroll or continue to save via a mega-backdoor Roth. I'm already maxing out Roth IRAs and HSAs, not maxing out my mega-backdoor Roth.
Our current 401k plan allows for Pre-Tax contributions, Roth contributions, and Post-Tax contributions. The company provides a match on all 3 the same way, even post-tax contributions. In addition, they allow for post-tax contributions to be converted into the Roth 401k at the end of the year. Last year I signed up to do this automatically so I don't have to call. I should note that I'm not maxing out my Mega Backdoor Roth.
Now I have this new option for a non-qualified excess retirement savings plan. It is a spill-over plan such that I can allocate %'s between pre-tax and Roth, but once I hit the IRS 401k limit, all contribution %'s turn into pre-tax and go into this non-qualified plan. This non-qualified plan has the same investment options as the 401k retirement savings plan. In addition, they do the same match as the 401k plan. Distribution can be lump sum, or a variety of installment periods up to 15 years max once over 55. Once I make selections for %'s and investments, I can't change them.
The way I've summarized the differences in my mind are...
- The non-qualified excess retirement savings plan is able to save more than a Mega backdoor roth (But I'm not at that savings level yet).
- The non-qualified excess retirement savings plan is pre-tax, where a Mega backdoor roth is currently post-tax.
- Both provide the same company match.
- The non-qualified excess retirement savings plan has pretty strict distribution requirements (i.e. can't change in the future), but could provide income between 55 and retirement age. I'm currently 37.
- There seems to be an additional risk on the non-qualified plan due to bankruptcy of the company, although it is a fortune 500 company.
Is there anything I'm missing?