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|Subject: After-Tax in-service rollover to Roth?||Date: 10/6/2013 11:20 AM|
|Author: thomasbihn||Number: 73455 of 78166|
I recently found out about a loophole in the Roth IRA limit of $5,500 per year I'm considering taking advantage of. I was wondering what people had for thoughts on the risks to this.
It is my understanding that I can contribute up to $51,000 to a combination of my 401(k) and After-Tax accounts with my employer. My employer caps After-Tax (non-Roth) to 16% of pay. I am allowed to perform in-service withdrawals on After-Tax funds on a day-after basis. I understand that I can then transfer this to a Rollover Roth IRA account, allowing me to contribute more than the $5,500 limit into this.
Currently, I'm maxing out my traditional 401(k) account and my Roth IRA. My current tax bracket is 25%. I'm also contributing about $12,000/yr to my taxable investment account with the brokerage (outside of the company plan). I'm thinking of applying most of this $12,000 to After-Tax, non-Roth in my company plan and rolling over to the Roth IRA.
From my perspective, I see the following advantages to this:
1. I can still access money I've contributed here in an emergency
2. The money will grow tax-free compared to my taxable investment
3. The money will have additional bankruptcy protection
I see the following disadvantages:
1. I can't simply set cash as an option in my company plan and would be forced to allocate 100% to