Originally Posted by
Sunvox
Google: backdoor Roth.
It's a moderately complex topic. Personally, I just learned about this technique. From what I can tell it really benefits 2 types of folks. First those who want to save more for retirement than their plan allows or second those with an enormous amount of cash on the sides that they'd like to shelter from tax.
The way over simplified version is this . . . first, you need a single standard IRA at Schwab with no other old IRAs that have a value much larger than the one at Schwab. Second, you fund the IRA with after tax money and tell Schwab you want to change it to a Roth, but there is some question about how long you need to wait between funding and switching.
Like I said it's complicated; just like everything else with our crazy tax code
I'm well aware of the backdoor Roth using an IRA, but Andy's post made it look like he did the transaction inside our PRAP by designating post-tax PRAP contributions.
Originally Posted by Andy
I also converted all of my post tax contributions to Roth 401k so that the money grows tax free. It's a bit of a hassle to do with Schwab but I don't want to pay taxes in the future on gains that could be tax free with a simple conversion. Since the money I converted was post-tax, there is no additional taxes for conversion (other than taxes on gains prior to conversion).
Last edited by jumppilot; 01-05-2017 at 03:58 PM.
Reason: I quoted the wrong person