Sean Pyles

So essentially you're contributing after tax funds to your 401k with the goal of doing a mega backdoor Roth.

The best way to avoid paying taxes on this as a result of the pro rata rule is to convert these funds before they have the opportunity to grow, which I assume is why Doug's coworkers are doing this every two weeks.

So this can be achieved by converting your contributions to a Roth account as soon as possible.

Two weeks is their schedule.

They might be able to do it more frequently, but also.

Some employers limit the amount of conversions you can do in a single year.

You're really going to want to look at what your own workplace plan offers and even has available.

So yeah, this whole thing sounds like kind of a pain and it really can be, but here's the thing.

It can save you a ton in taxes compared with putting money in something like a taxable brokerage account for additional retirement savings after you've maxed out your 401k deferral.

So as ever with really complicated financial moves that have tax implications,

You're going to want to consult with a tax professional to understand what kind of tax bill you could be on the hook for.

And also, again, people should know that mega backdoor Roths aren't an option offered by all employers.

So if you don't have that at your workplace, then don't even worry about any of this.

You are.

You're doing a great job.

Thank you.

You hear that, Elizabeth?

People want to hear all your messiness and mine and mine.

There's plenty of it.

Yeah, simplifying the amount of accounts that you have is really important as you get closer to retirement because you want to make sure that you know how much money you have.