What is the process to add a Mega Backdoor Roth to my 401(k) plan?

You mentioned that you were interested in adding a Mega Backdoor Roth contribution for this year. Since you have an existing 401K plan document there are some details we need to consider. 

Step 1: Check your 401K plan documents 

• Since Emparion did not write your plan documents for the 401k plan we need to check if the document allows for an after-tax to Roth rollover overs/conversions. Generally, most of the basic 401K plan documents out there don't allow for this. You can send us a copy of your adoption agreement for the 401K Plan and we can check. If your plan does allow for it then you can chat with your current 401K plan's administrator and discuss their process. If the plan does not allow for mega backdoor Roth contributions see the next steps.

Step 2: If your existing plan doesn't allow for Mega Backdoor Roth we have 2 options

1. Emparion can take over the existing 401K Plan. This will allow us to restate the original document and in that process we would allow for  after-tax to Roth rollover overs/conversions.
   • • Please note this will require you to open completely new accounts for the 401K plan. One will hold any pre-tax assets that you may have already contributed in the past. The 2nd will be for the after-tax/Roth funds. You can stay with your current custodian, however, you'll need to move the current assets into the new accounts to make sure the plan is no longer subject to the original plan document's operations.  

2.  Emparion can create a new plan, that will just be for the Mega Backdoor Roth contributions. 

• The key thing to consider here is that you will then have 3 different retirement plans. Each will require its own 5500.

1. 1. 1. 1. The Original 401K plan
         2. Cash Balance Plan
         3. The new Mega Backdoor Roth Plan

• With this option you can keep your existing 401k plan assets where they are and open a new account linked with your new plan. 

Step 3: Getting Started

• Let us know how you would like to proceed, if that's option 1 or option 2 from above.
• We will then send out an fee of $590. This will cover the process of creating a new plan document or amending an existing plan document.

Step 4: Opening The New Account(s)

• Once the new plan documents are ready to go we will provide instructions for opening new accounts with the custodian of your choice. You can choose to stay with the custodian you are currently using. We just need to make sure we are using their investment only account option. 
• Once the new accounts are opened, if we are taking over the existing plan you would then roll the existing assets in to the new accounts, and close the old accounts. 

Step 5: Administer the Mega Backdoor Roth and annual administration 

• Here is a link overviewing the process for funding your Mega Backdoor Roth contribution.
• We will provide you with your maximum contribution amounts for each type of contribution (employee deferral, employer profit sharing, and mega backdoor roth)
• Annually our fee for administration including, 1099-R, consultations, and preparation and filing form 5500EZ is $590.

Pricing Overview:

• Amendment/Set up Fee: $590
• Annual Administration Fee: $590