Beware of 401(k) articles with tax advice, speak to a pro

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

It sounds so great on paper because you read an article. An advisor clued me into an about a Mega Backdoor Roth IRA, utilizing a 401(k) plan and a little-used provision called the Voluntary Contribution provision that could potentially allow highly compensated employees to put in after-tax contributions in excess of any Roth 401(k) contributions.

The only problem is that almost all plans don’t allow and any voluntary contribution must be used with the plan’s matching contribution compliance testing called the ACP test and if the plan’s not a safe harbor 401(k), chances are that voluntary contributions would make the ACP fail. That detail was missing from the article.

So when you read an article with tax advice, talk to a tax expert to make sure it’s right.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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