Posted over 4 years ago

Execute Mega Backdoor Roth Solo 401k (After-Tax 401k Contributions)

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I am trying to execute the "mega backdoor roth solo 401k". Can you confirm the steps below:

1) Open a Solo 401k account by December 31.

2) Since my self-employed business is a sole proprietorship, contribute $54,000 of self-employment income to the plan as an after-tax contribution by April 17, 2018.

I max out a 401k with my day-time employer, and receive an employer match. This should not affect my Solo 401k after-tax contribution limit of $54,000.

3) Rollover the $54,000 in my plan to my Roth IRA account with Fidelity. How long after my $54,000 contribution does it normally take to make this rollover?

Am I missing anything?


Your understanding is correct.

Once the after-tax contribution is made to the designated account titled "After-Tax" and the funds clear, you can immediately transfer the funds to the Roth IRA.

The Solo 401k provider  will also provide the direct rollover form do document the conversion to the Roth IRA and will also issue a 1099-R to report the conversion even though it will not be a taxable event as long as just the basis is transferred over. Therefore you will want to make sure to transfer the after- tax funds immediately before earnings accrue, as the entire after-tax amount will generally need to be converted. 

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To learn more about the Solo 401k regulations, VISIT HERE

Comments (1)

  1. Why not convert to Roth within the solo 401k where alternative investments will be possible, rather than transfer to fidelity Roth IRA where only stocks and mutual fund investments will be possible? 

    Is the Roth account within solo 401k strictly for alternative investments, and hence it is not possible to invest in stocks and mutual funds within that?