Mega Roth Strategy Solo 401k

While the Roth backdoor strategy is generally associated with making nondeductible IRA contributions and subsequently converting those funds to a Roth IRA, the "mega Roth strategy" is associated with making voluntary after-tax contributions to a  plan and immediately converting those funds to either a Roth IRA or a  plan. 

The purpose of the mega Roth strategy also know as the  is for solo 401k participants to accumulate more savings in their solo 401k plan Roth accounts or in their Roth IRAs after the voluntary after-tax contributions have been converted to either the Roth IRA or the Roth solo 401k plan. 

The Roth Mega Back Door Strategy Works as Follows: 

• The solo 401k participant make nondeductible employee (voluntary after-tax) contributions to the solo 401k plan, up to the annual additions limit (IRC Sec. 415). This limit is $55,000 for 2018 and $56,000 for 2019, and is the combination of all employer and employee contributions, excluding catch-up contributions. 
• The Solo 401k participant then fills out IRS required conversion forms  to move the voluntary after-tax contribution to either a Roth IRA or to the Roth solo 401k bucket within the same solo 401k plan. 
• Subsequently, the  issues a Form 1099-R by February of the following year to report the non-taxable conversion (assuming the funds are converted right away so that no earnings accumulate; otherwise, the earnings converted will generally be taxable)  to the IRS.