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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 "Managed Income Portfolio II Class 2" which has the potential for an income between purchase and redemption.
1.a. This may cause some headache at tax time.
1.b. This will require active exchanges of funds each pay period for those in my 401(k) portion of the company plan.
2. If I'm wrong about this being a loophole, there could be penalties that negate the benefits (why I'm posting here).
3. I don't know if there are additional fees yet for this - if there are, the costs of the fees may negate the tax advantages.

If anyone is doing this or can advise if this is a reasonable investment strategy or if there are other factors I should consider, please let me know.
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