Nightflyer

Perfect. Thanks Raptor. I was thinking of converting some of my after tax savings to a back door Roth. I've been maxing out my 401K for years, and doing a Roth as well, but now college costs are starting to creep up, so it is good to have this option as a backup plan.

FDXLAG

I'll bet the college costs are income dependent, IOW don't count on it.

PurpleToolBox

I was telling my dad about this thread and he heard this guy on the radio. I searched his website and found the following article regarding pre- and post-tax contributions and how you can roll them over without tax implications.

https://www.kitces.com/blog/irs-noti...th-conversion/

kwri10s

Ok, I hate thinking that I know something and learning that I do not. My head is about to explode with this.

Let's see if I have this under control

There is a traditional IRA. Pre-tax contributions, pay tax at the income rate when withdrawing. We make too much to contribute pre-tax money into a traditional IRA. $5500 cap for next year's contributions. We can make after tax contribution

Then there is a Roth IRA. This is post-tax contributions. We make too much money to contribute directly to a Roth IRA. All Roth earnings are tax free.

At FDX, we have a 401k that we can contribute up to 17500 pre-tax. Will pay taxes on distributions at income rate.

Then we can contribute to our 401k post tax up to 5%? Those funds can be rolled into a Roth IRA post retirement in all distrobutions will be tax free. Is this a Roth 401 contribution option? Do we have such a thing.

IF I do not currently have a traditional IRA (or one with a small enough balance to allow me to convert it into a Roth,) then I can open a traditional IRA and then convert those funds into a Roth IRA. Effectively backdooring the rules against Roth contributions.

Did I get it right?

Nightflyer

Yes, I think you did.

The backdoor Roth works for now, but there is tax legislation in the works in Congress, so they might eliminate this "loophole" in 2015.

Just to be sure, I would make your 2014 "non-Roth" contribution, and convert it to Roth, prior to the end of the year.

We don't have Roth 401K at FDX, I believe UPS does.

I asked former MEC Chairman with the initials DW if we couldn't get one in the 2006 contract. His answer was "ALPA doesn't think there are enough crew members that will benefit". In other words, due to income limits, only the junior guys would benefit, and it didn't square with DW's agenda to make a contract that benefitted the senior guys. Of course, later on, far fewer guys benefitted from the FE's going back to the front seat, but that was OK with DW, because it was the "right thing to do".

I submit it was the "right thing to do" to give the junior guys the Roth 401K option, and would have cost very little to do so.

I believe our union would be much more accountable to the membership if we didn't have agency shop. With agency shop, the leadership can do whatever they please, without worrying about a dues fall off.