How to unlock the automated Mega Backdoor Roth conversion if I have funds in an after-tax account on Carry?
If you have an after tax account that is visible to you - you can use the instructions linked here to unlock MBDR.
Step 1: You'll first need to move all funds out of the after-tax account to the destination account (either Roth IRA or Solo 401k Roth account) so that the after-tax account has a $0 balance.
To get the balance in the after tax account to $0, follow the steps below:
Once the funds when you click into the cash section of the After Tax account show as 'available to withdraw' you can move them to your preferred destination account: either your Roth IRA or Roth Solo 401k account.
Steps to do this:
Click into the After tax account
Click 'Transfer or Withdraw'
input amount
input destination account (either Roth IRA or Roth Solo 401k account) and complete the flow.
Once the funds have been fully moved to either your Roth IRA or the Roth Solo 401k, you will be able to unlock the updated Mega Backdoor Roth flow for you so that the funds would move to the destination account you prefer automatically and then you could invest it them.
To confirm this click into the cash section of the destination account and see if the cash is showing as 'available to invest'. Once you see this, go to step 2.
Step 2: Go to the Investments page of your Solo 401k Roth account. If you don't have one, you'll need to open one to unlock the new flow even if you don't plan to deposit funds into this account.
Step 3: Click "Unlock" in the floating banner
If you're in your Solo 401k account, make sure you're selecting your Roth account on the left hand side menu.
Step 4: In the Unlock flow, confirm the Roth account that you want your Mega Backdoor Roth funds to land in
Continue through this flow to complete unlocking your automatic Mega Backdoor Roth contributions:
When making deposits for your Mega Backdoor Roth, the steps will be as follows:
Go into your Solo 401k account and click "Deposit"
Choose Solo 401k Mega Backdoor Roth as the destination account like as shown below and select the year:
The funds will then be sent to the destination account you selected (either Roth IRA or Solo 401k Roth account). The process end to end typically takes 5-10 business days.
Don’t forget to report the conversion in your 1099-R
Mega Backdoor Roth conversions must be reported to the IRS using the 1099-R form. Learn more about the 1099-R here.