Preface
This article is for those in the USA who
- Have access to after-tax 401(k) contributions with immediate in-plan conversion to Roth 401(k), aka, Mega Back Door Roth (MBDR)
- Have a taxable brokerage account with sufficient assets that can be leveraged to facilitate the MBDR
Introduction
Usually, most people set their retirement contributions so that their net pay covers living expenses. Assuming one is already maxing out contributions to tax-advantaged retirement accounts and has accumulated a nontrivial amount of investments in a taxable brokerage, the question naturally arises:
Does it make financial sense to take advantage of the MBDR even if it means that one has to draw down on the taxable brokerage to fund living expenses?
