Perhaps what op has in mind is that some of these big companies let you contribute post-tax money to your 401K (that you can then roll over into a roth IRA even if you are above the income limits to contribute directly to a roth) there's a like $56K limit on what you put in your 401K. (this is the total of your pre-tax contributions + your employer matching + your post tax contributions)
Sure, you can just stuff money in your brokerage account and save money post-tax, but then you go without the bankruptcy or tax protections that the stuff that goes through your 401K gets, so there's a lot of benefit to maxing your 401K in these situations. if you can swing it, it's worth scrimping, because as far as I can tell, I can only get money into my 401K that is processed through payroll (bonus and base, but not stock) and jobs that have these post-tax 401Ks are rare, in my experience, so when you get the chance, it's worth some pain to take advantage of it.
I remember my first year at a company with retirement plans like this, I took my signing bonus in cash ('cause I didn't get my 401K sorted by then) but my 'net pay' was 0 for many months afterward as I worked to max out the 401K before year-end
eh, it conveys all the advantages of a roth IRA, plus (I believe possibly) stronger bankruptcy protections, (because it's rolled over from a 401K) - so assuming you can contribute to it (which is to say, you have money after maxing your pre-tax 401K) I think that it's a thing you should consider.
Note, I think that maxing out your pre-tax retirement savings first is a good idea because it manages risk well; when you go to withdraw, you pay taxes based on how much you withdraw; If you are rich when you retire, you'll pay a lot of taxes, but that isn't exactly a disaster. If you don't have enough to withdraw a lot, you won't pay a lot of taxes on the other end as-is, and you will have put more in on the other side, so you are net better off. So overall, I agree that pre-tax contributions should be maxed out first, but after that? if you have the opportunity to add another 26K/yr to a roth IRA, and you are making the kind of money where you can swing it, it's probably a good idea.
(Note, I'm no expert. I'd be interested to hear why you think that saving in post-tax accounts is better than saving in roth IRA accounts, if that's what you are suggesting.)
true, but at the significant cost of losing the ability to do tax loss harvesting on the (presumably) large amount you are investing through the back door. plus the withdrawals are taxed (regular Roth are bit but backdoor is).
so I think what I'm describing here is different from the link - my employer deducts post-tax money from my paycheck into the 401k, then rolls that over into something that will roll over into a roth IRA when I leave the company. As far as I can tell, that's what OP was speaking of (See the "Daily roth in-plan conversion" portion of the paycheck deduction screenshot.)
Sure, you can just stuff money in your brokerage account and save money post-tax, but then you go without the bankruptcy or tax protections that the stuff that goes through your 401K gets, so there's a lot of benefit to maxing your 401K in these situations. if you can swing it, it's worth scrimping, because as far as I can tell, I can only get money into my 401K that is processed through payroll (bonus and base, but not stock) and jobs that have these post-tax 401Ks are rare, in my experience, so when you get the chance, it's worth some pain to take advantage of it.
I remember my first year at a company with retirement plans like this, I took my signing bonus in cash ('cause I didn't get my 401K sorted by then) but my 'net pay' was 0 for many months afterward as I worked to max out the 401K before year-end