Suggestions
Somehow support "Mega Backdoor Roth IRA"
This is confusing because it - relies on 401k after-tax contribution limits (which are not modeled in projectifi yet) - while the money ends up in the Roth IRA account
This is confusing because it - relies on 401k after-tax contribution limits (which are not modeled in projectifi yet) - while the money ends up in the Roth IRA account
I think it’s also possible for the money to just stay in the Roth 401k. For example, I think plans can allow “voluntary after-tax contributions” and rollovers to the Roth portion of the 401k. But not allow in-service distributions out to Roth IRA.
Perhaps this doesn’t matter a ton for modeling. But the destination account of the backdoor roth money could matter because of different fees and investment options, which could lead to different returns and fees described on the account.
The higher custom limit gets us part of the way there, but the Roth IRA goal is missing two things: the option to state that contributions are fixed, and the contributions can be deducted from a specific income stream (salary). I’ve been using the Roth 401k account type with a custom limit instead which has these options, but the drawback is that there is no option to allow withdrawing the contributions at any time like the Roth IRA account type. Both these options have another drawback in that the user needs to manually specify the limits; the tool has all of this information already because it knows the total contribution limits for the 401k plan for the given year.
I think a dedicated account type makes the most sense here because it’s starting to be a relatively common benefit provided by employers, especially in the tech industry, and it has nuances that make it unique from both a Roth 401k and IRA.