[Music] um menwell has a question for you. He says, How does the back Mega backdoor fit in the foo and the three buckets? I'm in steps 7 through 9. I max my HSA, Roth IRA, and pre-tax 401K. It seems powerful to park the next long-term dollars in the mega backdoor over brokerage. Do you have any thoughts on this? Yeah, yeah, that's a great, that's a, he's in the right place too, by the way. Yeah, about that. That is a financial mutant question, and we actually get this a pretty good bit, Brian. People ask us, Let me lay out what the mega backdoor is, and then why don't you talk about the priority where it goes. So, a lot of people don't recognize that when you contribute to your 401k, most of us are familiar that you can either do a pre-tax contribution or you can do a Roth contribution, and those contributions are limited this year to $23,000 per year if you're under the age of 50. However, a lot of 401ks

actually have a third contribution type that's lesser known. You can do pre-tax, you can do Roth, or you can do an after-tax contribution. The way that those contributions work is you put your money in after-tax, so you pay tax on it, and then those dollars grow tax-deferred. Well, one of the beauties of the after-tax bucket is that you're not capped at the $23,000 salary deferral. You can actually go above and beyond that all the way up to the section 4115 limit, which I think this year is like $69,000. So, it's an opportunity to save a lot of money into your 401k. Well, okay, I don't get a tax deduction. It goes in after tax. It grows tax-deferred. That's pretty cool. It gets a lot cooler if your plan allows for in-plan Roth conversions or in-plan Roth rollovers. One thing that you can do is you can fund that after-tax portion of your 401k, and then you can immediately convert those dollars to

Roth or you can either convert them in planned Roth, or you can roll them out into your Roth IRA, where now all those will grow completely tax-free. It's a way to do a mega, oftentimes as much as $20,000, $30,000, $35,000 backdoor Roth contribution every year. So, it's incredibly exciting for folks who have 401(k)s that are structured to allow that contribution. So then the question becomes, It's so amazing, when do I do it, where do I do it, how do I prioritize it? Well, that's why this is a great question. And the fact that step seven, if you look at, if you go get your free copy of the Financial Order of Operations, money.com resources. I think a step that is often misunderstood is what exactly is Step S in hyper-accumulation. And that's why one of the things, because you see it, you're like hyper-accumulation, what is that, what is that goal even doing? Well, it's exactly what this question is asking. This is the part where steps one through six is

getting your financial foundation underneath you and then even maximizing all the tax benefits that are set up so you can have money for the future. Step seven is the first one that says, Hey, take a deep breath in. Let's figure out how you're actually going to use this money in the long term, because everybody is different. You know, for somebody who's going to work until they're 70 years old because they love their job, not just because they need the money, but just because they love it, their goals are going to be completely different from the person that wants to tap out at 45 or 50 years of age because they want to go and transition into a different phase of life. Those are completely different goals and completely different account structures. Hyper accumulation just means now you're beyond saving and investing 25%, so you can think about how you're going to use it. And I got to tell you, in Millionaire Mission, when I wrote this, if I think about chapters I'm proud of, if we were handing out trophies, this would be Most Improved. Would be the

chapter on hyper accumulation because this is like the kid that you put out in right field because they could barely catch, and people don't know what this means. So now we put them on third base where they can take the hot shots and actually know what's going on, and that's what the three strategy is going to work through. I walk through every one of the reasons why you want to consider different things, and I think about CU. You even alluded to it and the fact that we have a lot of people who are just going to land on after-tax or your taxable brokerage accounts because it's so easy to. It's really a flexible player. You can get access to that money easily if you have an emergency. It's easy to get to that. It doesn't have all the penalties and contribution limits that you do with all the retirement accounts. If you're retiring early, it's very easy. But you're right. I mean, I will tell you 'cause y'all know my favorite tax bucket is that.

tax-free bucket. I mean, I always tell you it really is your precious in a lot of ways, is that it's you fund that, and then you're trying to even figure out how you can use it for legacy planning because that tax-free growth opportunity is so valuable. So, if you have something chance to turn it into a mega Roth where you get to really load up on those tax-free savings accounts, yeah, it's important, but you just got to make sure, and it's valuable, but it's got to fit into what your future needs are as well. And that's why don't sleep on step seven, the hyper accumulation, because that's going to be where you really kind of begin with the end in mind and know exactly what you're trying to expect out of the future so that you can plan for it today and maximize those account structures. Now, I'd be remiss if I didn't say this is one of those unique areas where this does get a little bit complicated, that the one, the logistics of actually doing

Mega back doors change from plan sponsor to plan sponsor, and sometimes you can do it and have unintended tax consequences that you did not recognize because maybe there's some earnings component on there. So, you have to be sophisticated in how you do that. And then other times, there might be other employer benefits that you ought to take advantage of. Instead of the after-tax, you might be amazed to find out that oftentimes for small business owners, true where we get to tell them how to build their 401k, and they'll say, Hey guys, I really want to do Mega back. Do I really want to do it? I'll say, Hey, that is an idea, but what might make more sense at your tax bracket is to do a full profit-sharing contribution plus a cash balance plan. So, there's a different structure there that might make sense. If you're beginning to investigate these kinds of questions and you're starting to bump up against this kind of planning, this might be the time that it really makes sense to consider.

taking the relationship to the next level because while it's no longer past fail, the level of optimization you're able to achieve will likely be great if you have an expert who can at least look over your shoulder and say, Oh yeah, yeah, did you think about this? Did you think about that? This might be something, and we'd love to be those experts for you. So if you've not checked it out, go check out our Work with Us page and can go to moneyguy.com or aboundwealth.com, Work with Us, and consider taking the relationship to the next level because this right here is the exact kind of stuff that we love getting to help you guys out with. Is that cool? That was a solid drop-in because it's true. This is taking it to the next level because this is the stuff where I kind of lick my chops on, is that because if you can show a successful family how you can, if they're in an effective tax rate, if they're paying 40 to 50% depending on which state they

live in that. Hey, let's maybe you need to structure this way. They're going to love you forever. Game changer.

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