2024 Updates for the Intel Mega Backdoor Roth
The Mega Backdoor Roth is a powerful tool for high-income earners to contribute after-tax dollars to their Intel 401(k) and convert them to Roth.
In 2024 you can contribute thousands to a Roth using this provision within your Intel 401(k)
The 2024 federal contribution limits for 401(k) plans are:
- $69,000 if you’re under 50
- $76,500 if you’re 50 or older
You can leverage these limits by taking advantage of the Mega Backdoor Roth. This powerful benefit can help you maximize your retirement savings and take advantage of the tax benefits associated with a Roth.
Intel 401(k) Basics and the Intel Employer Match
Before we dive into the Mega Backdoor Roth, it’s helpful to understand the basics of the Intel 401(k) plan and your employer match.
In 2024, you can contribute the following to your Intel 401(k):
- Under 50: $23,000
- 50 or older: $30,500 ($23,000 + $7,500 catch-up contribution)
Intel Employer Match
Intel will match up to 7% of your salary. * For example, if you make $200,000, Intel will contribute $14,000 (pre-tax) to your 401(k), assuming you also contribute at least $14,000.
*Important note: The Intel matching rate of 7% is only for 2024 contributions.
Tax-Free Growth on After-Tax Roth Contributions
The Mega Backdoor Roth is a way for high-income earners at Intel to contribute after-tax dollars to their 401(k) over and above the 2024 contribution limits. These after-tax contributions can be converted to Roth.
Roth Benefits:
Your contributions and any interest or investment gains grow tax free and can also be tax free when you access them in retirement.
You can easily manage your retirement distributions from a Roth.
You have more control over future taxable income.
How Much Should I Contribute?
The dollars you invest into your Mega Backdoor Roth are long-term dollars. Fortunately, the amount you want to contribute is totally up to you! You can look at your current situation and decide how much to contribute. It can be $1,000, $10,000, or any amount up to the federal limit.
Supplement Your Cash Flow Using Intel Restricted Stock Units (RSUs)
As an Intel employee you receive Restricted Stock Units. RSUs can be sold once they vest. With thoughtful planning you can sell these shares and use the proceeds for your day-to-day living expenses.
There are a couple of reasons to consider using this strategy. First, it helps you maintain a diversified portfolio. And second, it can free up cash from your salary to allocate towards your 401(k) and Mega Backdoor Roth.
Long-Term Benefits of the Intel Mega Backdoor Roth
The long-term benefits of increasing your retirement savings, particularly by utilizing the Intel Mega Backdoor Roth Conversion strategy, could make a massive positive impact on what your retirement looks like.
Questions About Your Intel Benefits?
If you have questions about how to maximize your benefits, be sure to schedule time with one of our advisors. We can help you make informed decisions about your retirement planning and create a plan tailored to your goals.