In the News: Jeff Corliss’ Take on the Mega Backdoor Roth
Could a Mega Backdoor Roth Help You Save More for Retirement?
For many high-income earners, saving for retirement can come with an unexpected challenge: earning too much to contribute directly to a Roth IRA.
In a recent U.S. News & World Report article, Jeff Corliss, Managing Director at Hightower Signature Wealth, shared his perspective on a lesser-known strategy that may help certain investors build additional tax-free retirement savings: the mega backdoor Roth.
Three Things to Know about a Mega Backdoor Roth
01 | It can unlock additional Roth savings
Many investors are familiar with traditional 401(k) contributions and Roth IRAs, but fewer realize some workplace retirement plans offer another opportunity. As Corliss explains:
“A mega backdoor Roth can be a powerful retirement planning strategy, especially for high-income earners who have already maximized their traditional 401(k) contributions or don’t qualify to make a Roth IRA contribution and are looking for additional tax-advantaged savings opportunities.”
02 | Tax Flexibility can be valuable in retirement
One of the primary benefits of Roth accounts is that qualified withdrawals are tax-free. But Corliss notes that the value goes beyond simply reducing taxes. “Having various funds with different tax consequences can provide flexibility when people withdraw funds.”
03 | It works best as part of a larger plan
“A mega backdoor Roth should rarely be viewed as a standalone decision. The strategy works best when evaluated within the context of a client’s broader retirement, tax and estate plan.” Corliss emphasizes that investors should avoid viewing the strategy in isolation. While the mega backdoor Roth can be powerful, it is not available through every employer plan and is not necessarily the right fit for everyone.
Could This Strategy Make Sense for You?
If you’ve already maximized your retirement contributions or are looking for additional tax-advantaged savings opportunities, it may be worth reviewing whether your employer’s plan allows after-tax contributions and Roth conversions.
Sometimes the most impactful retirement strategies are the ones investors haven’t heard about yet.
This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
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