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Recommended brokerage to set up solo 401(k) for mega backdoor ROTH?

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  • #31
    Originally posted by Nash22 View Post

    Where is the guide?
    If the answer is the tax code, that isn't really what I'm looking for.

    What I am looking for is something like:

    Step 1. Open account at X
    Step 2. Transfer money
    Step 3. Convert money
    Step 4. Fill out form Y and mail to address Z by this date if certain event happens
    Step 5. When filing 1040 at end of year, do the following, etc.

    With regards to E-trade doing their part correct, I'm still not exactly clear what they have to do. In other words, how do I know they've done "it" correctly?
    Apologies, not intended to be disrespectful. Think of this like "bad outcomes" in medicine. It's not so much steps 1-5, it's plans A,B,C that come from navigating multiple issues. Small mistakes or oversights, can be very bad. Poor analogy. People pay not for the time it takes for giving advice and expertise, but for the years it takes to accumulate the knowledge and expertise.

    You have had 2 pages of comments from folks with much more expertise than I. The suggestion seems to be you need some expert help. There is a reason for that.
    Your five step plan will seem to cost you some money. They have suggested that you hire someone. Sorry you didn't like the answer.

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    • #32
      Originally posted by Nash22 View Post
      With regards to E-trade doing their part correct, I'm still not exactly clear what they have to do. In other words, how do I know they've done "it" correctly?
      If you go through with this are you just ignoring the post from Harry Sit telling you that the section regarding allowing non-deductible employee after-tax contributions is now pre-checked “No” on the ETrade application? Answering “Yes” to this question is an essential part of the MBDR.
      PS - that information is correct, “No” is pre-checked: https://content.etrade.com/etrade/es...t_Plan_App.pdf

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      • #33
        Originally posted by GasFIRE View Post
        If you go through with this are you just ignoring the post from Harry Sit telling you that the section regarding allowing non-deductible employee after-tax contributions is now pre-checked “No” on the ETrade application? Answering “Yes” to this question is an essential part of the MBDR.
        PS - that information is correct, “No” is pre-checked: https://content.etrade.com/etrade/es...t_Plan_App.pdf
        I just came here to post this. I went to fill out the application and found that the section for non-deductible employee contributions was checked No (as in not allowed).

        The explanation is this:

        Nondeductible employee contributions:

        This section has been prepopulated to reflect provisions that are in line with our operations. These elections should not be changed. Making changes to these elections on your Adoption Agreement could cause a rejection of your application, a delay in account opening or adverse tax consequences for your plan.

        I will call them to confirm that this cannot be changed.

        The application also asked for:
        Name of adopting employer.
        Employer tax ID number.

        Since I am a sole proprietor, do I just put my SSN, or will I need to establish an LLC and get an EIN if I want to do MBDR?

        Also, I am unclear if I need to apply for the Individual 401(k) or Roth 401(k) plan for the purpose of what i am trying to do. I only want to make pre-tax (not ROTH conversions) to the 401k, but I of course want to contribute the after tax additional contributions to ROTH by rolling them into a roth IRA.

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        • #34
          This is JMO as I have no direct knowledge of what ETrade would do but if you can’t declare your contribution as after-tax they would code it as taxable income on the 1099-R when converting it to Roth. Paying extra tax based on your intent not matching what their plan documents allow would lead me to bail on this plan. If you proceed please post the results here when doing your 2022 taxes next year.

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          • #35
            Originally posted by Nash22 View Post

            I just came here to post this. I went to fill out the application and found that the section for non-deductible employee contributions was checked No (as in not allowed).

            The explanation is this:

            Nondeductible employee contributions:

            This section has been prepopulated to reflect provisions that are in line with our operations. These elections should not be changed. Making changes to these elections on your Adoption Agreement could cause a rejection of your application, a delay in account opening or adverse tax consequences for your plan.

            I will call them to confirm that this cannot be changed.

            The application also asked for:
            Name of adopting employer.
            Employer tax ID number.

            Since I am a sole proprietor, do I just put my SSN, or will I need to establish an LLC and get an EIN if I want to do MBDR?

            Also, I am unclear if I need to apply for the Individual 401(k) or Roth 401(k) plan for the purpose of what i am trying to do. I only want to make pre-tax (not ROTH conversions) to the 401k, but I of course want to contribute the after tax additional contributions to ROTH by rolling them into a roth IRA.
            not sure why you're worrying about these other details, when I think its 99.9% likely that you can't do MBDR with this etrade plan after all (which is how it's always been in the past)

            If you want a MBDR plan, call Employee Fiduciary.

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