learning on Joseph Chen

re: Mega Backdoor Roth

Sun, 12 Oct 2025 15:36:00 -0500

Let’s talk about the Mega Backdoor Roth! Note that only some employers allow for this as it’s 1) more expensive 2) more complex 3) more overhead in general 4) targeted towards higher earners only

Pleasantly surprising, United Airlines has this baked into our Fidelity 401(k) plan, which I, despite being a bit too low-earning to fully take advantage of it, will try it out.

What is a Mega Backdoor Roth? So, this is a retirement strategy that comprises of two features inside a 401(k) plan to get tens of thousands more dollars into Roth status (meaning it can grow tax-free FOREVER!), far beyond the traditional ~$7k Roth IRA limit.

Those two features, which again may not be available for all 401(k) plans, are after-tax 401(k) contributions and Roth in-plan conversion. The former is a third contribution type after traditional pre-tax and Roth. The latter is the ability to roll this after-tax money out to a Roth IRA while still employed. With both, one can execute the Mega Backdoor Roth.

A 2022 report by Plan Sponsor Council of America found that only 21% of 401(k) plans allow after-tax contributions, and that’s only one of two mechanisms needed for this to work. I’d guess only 10-15% of 401(k) plans fully enable this strategy.

IRS Limits So, let’s talk about limits. 401(k) contributions are known to have a ~$23,500 cap. However, that only applies to pre-tax and Roth 401(k) contributions only. There’s actually a further limit of ~$69,000 which includes pre-tax and Roth, as well as employer match and after-tax! This means you can contribute after-tax contributions to your 401(k) even after meeting the $23,500 pre-tax and Roth cap. You don’t necessarily have to wait until you reach that $23,500 cap to start doing after-tax contribution. It’s just that it’s best to fully take advantage of the $23,500 pre-tax/Roth contributions first as it is the most tax-efficient and allows for essentially free money w/ employer match. I personally plan to do a percentage for pre-tax and after-tax on each paycheck for now as to not need a mid-year manual adjustment. Fidelity also helps cut the contributions off if they are set to go over the limits, which further reduces needed headspace.

Flow Paycheck → After-tax 401(k) → Roth in-plan conversion (inside 401(k) plan) → Grows tax-free as Roth 401(k) → Leave employer → Rollover Roth 401(k) to personal Roth IRA (no deadline, but never hurts to do it sooner than later) → No RMDs, Lifetime Tax-Free Growth

Summary Even among the financially-literate, many think the annual Roth contribution limit is strictly capped at ~$7,000. But inside certain 401(k) plans, this Mega Backdoor Roth strategy allows the conversion of up to $40,000+ per year into Roth status… tax-free forever. It’s lowkey ridiculous, but hey, enjoy it while it lasts. As for me, I do not get paid enough yet to fully partake in it, but that’s a me problem, not a you problem :D

how early should we arrive to the airport?

Mon, 06 Oct 2025 23:17:38 -0500

currently reading gad allon’s post about when to arrive at airports (typing as i go, so it’s not going to be the most organized/concise/well-written). he introduces this idea of the newsvendor problem where a newsvendor has to decide how many newspaper to stock each day w/o knowing exact demand. hitting average means high stockouts or excess inventory, and the proposed solution is choosing a quantile of the demand distribution determined by relative cost of each outcome.

so for this airport arrival, studies have found that security wait times are let’s say 20 minutes. to calculate the cumulative distribution of waiting time b/w arrival to gate (F_s), we do C_o / (C_o + C_u) with Co being cost of overage or cost per minute of waiting too long and with Cu being one-time penealty of being late. we then input into F_s L*, which is the optimal arrival buffer or the quantile of the distribution that balances those costs.

thus, averages are misleading as you’d likely be in the 90th-99th percentile where the lower range would be for leisure and higher range would be time-sensitive, high-premium travel. you, as a passenger, would likely not be in 50th percentile as underage cost can be ridiculously expensive as we see with my dear friend Hope who had to pay an exorbitant fare to take the next international flight out to make it back home in time for work a month or so ago. as for the overage cost, even if we assume $100,000 average annual income at ~$48/hr, the additional hour, let’s say, is marginal, especially considering time spent in lounges or browsing shops, which may reduce the perceived cost of overage.

rational travelers optimize to higher quantiles, not the mean, as cost of missing a flight would likely easily dwarf the cost of waiting, especially for international flights.

so, yes, on average, you don’t have to be 2 hours early. but the variance remains too high and the underage cost too daunting that the safest strategy is as the century-old newsvendor says: overstock. whether it be time or newspaper, you’d rather have extra on hand than none at a time of desperation.

for myself, i almost always arrive quite early at international airports abroad. i try to aim for at least an hour between post-security/immigration and boarding, allowing me some time to explore the airport, grab some drinks and maybe food at lounges (w/ priority pass [essentially only valuable abroad]), and prepare all my offline entertainment. for domestic flights, i try to aim to be past security right as we start boarding. there’s no valuable lounge access that i have, and i’m less intrigued by domestic airports. however, aiming for that has led me to arrive at airports like SFO in the middle of boarding, yet I still somehow made it through security & onto my international flights ontime. tbf, they were all cases of poor route time estimation by uber + unplanned traffic incidents + optimistic time buffers; thus, that’s why you aim for the 90th+ percentile, not 50th. anyways, as for airport dad, i’m more convinced he doesn’t want to suffer emotional and mental exhaustion of post-missed-flight drama and chaos rather than the financial damage.

source: gad allon’s article

Tue, 06 May 2025 20:35:32 -0500

just studying for cs61c, going to be a really tough final; perhaps the toughest in my undergrad career simply due to the lack of preparation, discipline, and prioritization

reaping what i sow… it’s genuinely such an interesting class, but just have a sizable amount on my plate the entire semester, sighs. however, now on lecture 38, guest speaker Dave Patterson from Google and UC Berkeley

lessons from the first 50 years of my career

People

Family first! Don’t sacrifice your family’s happiness on the altar of success.
Choose happiness.
It’s the people, not the projects, that you value in the long run.
The cost of praise is small. The value to others is inestimable.
Seek out honest feedback; it might be right.
“For better or for worse, benchmarks shape a field.”
“I learned that courage was not the absence of fear, but the triumph over it.”
Beware of those who believe that they are the smartest person in the room.

Career

“Most of us spend too much time on what is urgent and not enough time on what is important.”
“Nothing great in the world has ever been accomplished without passion.”
“There are no losers on a winning team, and no winners on a losing team.”
Lead by example.
“Audentes Fortuna iuvat.” (Fortune favors the bold).
Culture matters.
It’s not how many projects you start; it’s how many you finish.
Look for the positive opportunities.

here’s the presentation url saved in my drive. it’s really nothing more than what’s written above, but it’s a nice ppt format: [drive.google.com/file/d/1g…

Tue, 29 Apr 2025 22:28:45 -0500

sorry to myself that I have been blogging much/tweeting much. super hectic end of sem. have so much to get done; slogging away it seems. took grad pics today! got mimi to mechanic to get her checked out for her check engine light. fingers crossed that works out. but rn, quite quite sick. head is awful. body is warm. throat feeling scratchy? just overall fatigued and unmotivated. terrible timing. had a volleyball skill assessment today to as like a PE class final, and after coming back home, I was basically out of commission for five hours. ggs. here’s a sneak pic of grad photos!

Sun, 06 Apr 2025 19:45:16 -0500

im so cooked! so much stuff to do, so little time. time is of the essence. and also, going into a recession is crazy. trade war is disappointing. macro-scale, life seems meh. micro-scale, busy but doing ok. however, exam prep aint looking good. sajdsancoajs

Sun, 30 Mar 2025 00:00:29 -0500

finished All Quiet on the Western Front today for my NLP class. honestly really appreciated the excuse to read. it was nice not having to worry about not advancing my academic backlog of work and be able to enjoy a nice book. I have wondered oftentimes whether reading a book is similar to watching a tv show, especially if both are fiction. but having not truly read in a while, I can see the benefits of being exposed to more varied, thoughtful, intentional, and creative writing. what a shame that we’re transitioning into a world that no longer substantially rewards those who practice and master the art of writing. in high school, I longed to write as eloquently as the authors I was subjected to read. now, despite my understanding that effort spent is not wasted, it still feels like a waste to devote oneself to a skill so easily mimicked mindlessly. of course, it’s not 100% the same, but even 80% is a skill level largely attainable traditionally through trying practice and time. I can’t even begin to sympathize for artists and designers out there. of course, there are many that can take advantage of newer technologies to grow and succeed. perhaps this is simply another blip in the march of technological growth and its impact. but one can’t seem to pause and consider what might be lost in the process for our generations today.

Wed, 19 Mar 2025 04:14:30 -0500

hmm… midterms didn’t go great. in fact, quite probable it’s the worst performance in my Berkeley career. really not enough time this semester to do the things I need and want, which includes studying and genuinely being familiar with the material. it’s a shame really, the classes are interesting, but I have notably more responsibilities & also a heightened desire to enjoy life this semester than previous ones.

Tue, 11 Mar 2025 01:57:19 -0500

I thought an assignment re. a DCF was due tonight, so I instead did comparable trading multiples instead due to time and I was like, I’m sorry!! I didn’t have time, but I did put in full effort for the comparables… it turns out it’s due tomorrow night… question is whether I should redo it and actually do a DCF and be like, whoops, I did have time… I’ll let tomorrow me decide since I have a midterm Wednesday morning. I feel as though I over-committed myself this semester, seems like I always have things to do and things due. Oh well.

update: did not re-do it bc of a competing priority, that being a midterm for another class, which I did post about (tl;dr: didn’t go well)