- Andre Nader strategically built a seven-figure investment portfolio before reaching 40 by adhering to effective financial principles: saving a significant portion of his income, investing in low-cost index funds, and maximizing contributions to tax-advantaged accounts.
- He capitalized on his successful tech career and the benefits of being part of a dual-income household to amplify his savings and investment strategies.
- To optimize his tax situation, one of the advanced strategies he employed is referred to as ‘a mega backdoor Roth,’ allowing him to sidestep income limits on Roth IRA contributions.
Andre Nader achieved the impressive milestone of building a seven-figure portfolio before he turned 40 by diligently applying a few key financial fundamentals: consistently saving a portion of his income, investing wisely in low-cost index funds, and fully utilizing tax-advantaged retirement accounts to grow his wealth.
His career in the tech industry proved to be incredibly beneficial. Nader initially started on a modest salary of $40,000 fresh out of college but ultimately secured a lucrative position at Meta in 2014, which significantly boosted his earnings.
“I won the income game by being in tech, by being a dual-income household,” Nader, whose partner works as a designer at Uber, elaborated to Business Insider. Their combined incomes allowed them to build substantial savings.
When Nader faced a layoff in 2023, both he and his wife had enough income from her position in tech and their accumulated savings, which provided a financial cushion that made it unnecessary for him to seek new employment immediately. In the years since, Nader transitioned from writing about financial independence on his blog FAANG FIRE to writing full-time on Substack and offering personalized coaching on achieving FIRE (financial independence, retire early).
As a high earner who identifies as “naturally frugal,” Nader regularly found himself with surplus income at the end of the month. While employed full-time, he and his wife decided to use one of their salaries to cover household expenses while diligently saving the other. This disciplined approach allowed them to build a robust financial foundation.
He often contemplated the question, “How do I save this in the most efficient way possible?” Nader remarked. “For many in tech, specifically, it’s crucial to take advantage of those tax-advantaged accounts. During those peak earning years, any portion that can be deferred for tax purposes is potentially immensely valuable.”
A Roth IRA, known for its significant advantages such as tax-free growth, does come with certain restrictions. For instance, in 2024, single tax filers need to earn less than $146,000 to be eligible for direct contributions to a Roth IRA, while married couples filing jointly must have a combined income of less than $230,000.
However, Nader cleverly navigated these limitations through the use of a mega backdoor Roth strategy, which he wholeheartedly recommends for high earners looking to take full advantage of their retirement savings opportunities.
Using a mega backdoor Roth to contribute up to $69,000 a year into his 401(k)
To grasp how a mega backdoor Roth strategy operates, it is vital to first understand after-tax contributions to a 401(k) plan. Some employers provide an after-tax 401(k) option — a benefit Nader had while at Meta, and his wife currently utilizes at Uber — which allows individuals to exceed the standard contribution limits once they have fully funded their traditional 401(k) accounts.
In 2024, the annual contribution limit for employee contributions to a 401(k) is set at $23,000. However, the total combined contribution limit for both employee and employer contributions rises to an impressive $69,000. For example, if an individual maxes out their 401(k) by contributing $23,000 and their employer matches with an additional $5,000, they would have $28,000 accumulated in their 401(k). Given the $69,000 limit, they are then eligible to add an additional $41,000 in after-tax contributions, provided their plan accommodates it.
For Nader’s wife, Uber offers a match of up to $8,000, which means that after maxing out her own 401(k) contributions in 2024, she will still be able to contribute an additional $38,000 in after-tax funds to reach the $69,000 maximum ($69,000 – $23,000 – $8,000), further enhancing their retirement savings.
It is important to note that while funds remain in the after-tax state, any earnings accrued on those contributions will be subject to taxation.
This is where the mega backdoor Roth strategy becomes advantageous. It enables individuals to move after-tax contributions from their 401(k) into a Roth IRA or Roth 401(k), allowing that money to appreciate free from tax burdens. However, it’s crucial to recognize that not all 401(k) plans support this conversion, and individuals need to familiarize themselves with their specific plans and any limitations before proceeding with after-tax contributions.
Nader found that executing the mega backdoor Roth strategy while at Meta was a straightforward process. He simply logged into his Fidelity NetBenefits account (the provider for his 401(k)) and selected the percentage of his after-tax income he wished to contribute, then completed an in-plan conversion by choosing the “convert after-tax contributions” option.
“Every time I share this on LinkedIn, I encounter people who are unaware of this benefit,” Nader stated, noting his impressive following of nearly 25,000 LinkedIn users. He specifically crafts content aimed at FAANG (Facebook, Amazon, Apple, Netflix, and Google) employees who are on the path to financial independence. “This extra $30,000 can effectively end up in a Roth 401(k), which is an incredibly powerful tool.”
While he acknowledges that this strategy might not be viable for everyone — nor will all have the means to save up to $69,000 annually in a 401(k) — Nader emphasizes that for those fortunate enough to earn high incomes and whose plans allow for a mega backdoor Roth, it’s vital to be aware of this opportunity.
**1. What are the main financial strategies discussed by Andre Nader that contributed to his early financial independence?**
**Interview with Andre Nader on Achieving Financial Independence**
**Interviewer:** Thank you for joining us today, Andre! Your journey to building a seven-figure investment portfolio before the age of 40 is truly inspiring. Can you share the key financial principles that guided your success?
**Andre Nader:** Absolutely! I attribute my success to a few core principles: consistently saving a significant portion of my income, investing in low-cost index funds, and making the most of tax-advantaged accounts. These strategies allowed me to build a solid foundation for my financial future.
**Interviewer:** You mentioned that your tech career significantly boosted your earnings. Can you elaborate on how that influenced your financial journey?
**Andre Nader:** For sure. I started my career earning a modest $40,000, but securing a position at Meta in 2014 really changed the game for me. Being in the tech industry and part of a dual-income household with my wife, who works as a designer at Uber, allowed us to amplify our savings. Our combined incomes enabled us to build substantial savings and invest wisely.
**Interviewer:** That makes sense. You faced a layoff in 2023. How did your financial strategies help you navigate that situation?
**Andre Nader:** Fortunately, because of the disciplined saving and robust financial cushion we built, I didn’t have to rush into finding new employment immediately. My wife’s income and our accumulated savings provided us with the security we needed during that transition. It really showcased the importance of financial independence.
**Interviewer:** You’ve utilized a strategy known as the “mega backdoor Roth.” Can you explain what that is and why you recommend it for high earners?
**Andre Nader:** Certainly! A mega backdoor Roth allows individuals to contribute more to their 401(k) than the standard limits by making after-tax contributions. Many people aren’t aware that if your employer offers this option, you can significantly increase your retirement savings. In 2024, for example, the total contribution limit is $69,000, which includes both employee and employer contributions. Utilizing this strategy allows high earners to sidestep the income restrictions associated with direct Roth IRA contributions, maximizing their tax-advantaged growth potential.
**Interviewer:** What advice would you give to young professionals looking to follow in your footsteps and achieve financial independence?
**Andre Nader:** My best advice would be to live below your means and start investing early. Take advantage of any employer-sponsored retirement plans, especially tax-advantaged accounts. Lastly, always be curious about your financial options—strategies like the mega backdoor Roth can make a substantial difference in your portfolio over time.
**Interviewer:** Thank you, Andre, for sharing these invaluable insights. Your journey and advice will surely inspire many to take charge of their financial futures.
**Andre Nader:** Thank you for having me! It’s been a pleasure to discuss these important topics.
