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solo 401(k) back door Roth?

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  • solo 401(k) back door Roth?

    I am a self employed dental specialist and my wife and I are the only employees. We both currently have a solo 401(1)k with Vanguard and try and max that each year. I believe that is 18k employee and 35k employer contribution so, its alot!

    The more i listen to the WCI podcasts, the more i wonder if i should be doing a back door Roth instead or in addition. Seems complicated and i'm not sure my situation will yield much benefit. Thoughts?

    In addition, i just started a Roth 401(k) @ Vanguard and this is the first year that i'll be funding the 18k into that account, in place of my 401(k). My efforts are geared towards balancing tax free vs tax deferred accounts.



  • #2
    Yes, I recommend you also include a backdoor Roth in your long-term retirement strategy. It's not that complicated and, in your situation, I'm sure you're working with a professional so you might ask them to guide you.

    You can contribute $54k to your 401k in 2017.

    Just a small clarification: you are not contributing the $18k to the Roth in place of your 401k but in place of your deductible employee contributions.

    This post might be helpful:

    Explaining Backdoor Roth IRAs
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      106K/year into retirement is great.  But, to best answer your question, we need more info.  What are your ages?  Current net worth?  Current retirement savings?  Retirement goal in money and time?  Are you a FIREer?  Debt?  Income?  Highest Marginal Tax rate?  Kids and 529s?  Will your wife be an employee long term?

      Honestly once you answer those, you may figure it out for yourself!



      • #4
        A lot on here want to max out tax-advantaged accounts, but I probably wouldn't contribute $100k+/year into tax-deferred accounts for a lot of years unless you are also building a somewhat comparable amount of assets in a taxable account too.