Amazon Mega Backdoor Roth in 2023

Amazon’s 401K plan allows employees to make Mega Backdoor Roth contributions. For 2023, the Federal limit for total contributions to a 401K is $66K. To make a backdoor contribution you would first max out your normal 401K contribution of $22,500 while receiving Amazon’s match of up to 2% of your salary. Let’s say your salary is $160K and you contribute $22,500. Amazon would then match 2% of that $160K salary which is $3,200. That would leave you an additional $40,300 you can contribute to hit the $66K 401K limit. Thus you would make a $40,300 after-tax contribution to your 401K and use the plan’s option to roll that money into a Roth.

Scott Caufield, CFA, CPA

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