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What tax implications does a mega backdoor Roth conversion strategy have?
AI accountant’s answer:
A mega backdoor Roth conversion strategy allows you to contribute additional funds to a Roth IRA, allowing for tax-free growth and withdrawals in retirement. Here are some tax implications to consider: 1. After-tax 401(k) contributions: To use the mega backdoor Roth conversion strategy, you'll typically make after-tax contributions to your 401(k) plan, up to the annual IRS limit for total 401(k) contributions (for 2022, this limit is $61,000, or $67,500 if you're age 50 or older). 2. Taxable conversion: When you convert the after-tax 401(k) funds to a Roth IRA, you may owe taxes on any earnings that have accumulated on those after-tax contributions. The taxable amount will be the difference between the amount you contributed after-tax and the total value of your account when you make the conversion. 3. No immediate tax deduction: While traditional 401(k) contributions are tax-deductible, after-tax contributions are not. This means you won't receive a tax deduction for the funds you contribute as part of the mega backdoor Roth strategy. 4. Non-deductible IRA contributions: If you do not have access to a 401(k) plan that allows after-tax contributions and in-service withdrawals, you may consider contributing to a non-deductible traditional IRA and then converting those funds to a Roth IRA. Keep in mind that you'll still owe taxes on any gains in the traditional IRA when you make the conversion. 5. Tax-free growth and withdrawals: Once the funds are in your Roth IRA, they'll grow tax-free, and any qualified withdrawals made during retirement will be tax-free as long as you meet the conditions for a qualified distribution (at least 5 years after your first Roth IRA contribution and age 59 1/2 or older). Note that the mega backdoor Roth strategy may not be suitable for everyone, and it's important to consider your individual tax situation and long-term financial goals before pursuing this strategy.
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Judah Broussard, EA, JD
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Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

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Ask an AI Accountant

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AI accountant’s answer:

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Comment from reviewer
This is some text inside of a div block.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Not Correct.
Icon check
Looks good

Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

Find write-offs.
File taxes.

Keeper helps independent contractors and freelancers discover tax deductions and file taxes.

Get started