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I'm just catching up with this thread...

Assume you are currently maxing out your 401k, then investing additional money into a taxable account (Vanguard in my case).

Assume also that your employer offers a Roth option in the 401k (mine does). Assume also that your employer allows you to roll after-tax contributions to your 401k into a Roth IRA (I'm not sure yet about my employer here).

It sounds like what is being suggested is that, instead of putting that extra after-tax money into a taxable brokerage account, you can put it into your 401k and later (when, the following year at tax time?) roll it into a Roth IRA without paying any *additional* tax up front? And of course you'll pay 0 tax later (5+ years/after age 59.5) when withdrawing from the Roth, versus capital gains taxes (and dividends) in the taxable account.

Is this true? If so, is it a loophole for high earners to get into Roths? Maybe it is meant to reward people for maxing out their deductible 401k contributions?

I've read about Roth conversions many times before, here and elsewhere, but I always figured I would do them when I retire and my income drops significantly to bring me to a low tax bracket. This feels like a loophole.

Thanks for any clarifications.

-progmtl.
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