Mega backdoor Roth
Also known as: Mega backdoor
A 401(k) strategy where an employee contributes after-tax dollars beyond the standard employee deferral limit and converts them to Roth, either inside the plan or via in-service withdrawal to a Roth IRA. Can add up to approximately $47,500 of additional Roth contributions per year for employees of plans that permit it.
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The mega backdoor Roth exploits a specific provision of Internal Revenue Code Section 415(c) that caps total contributions to a 401(k) plan — across employee deferrals, employer match, and employee after-tax contributions — at a much higher limit than the headline employee deferral cap. In 2026, the employee deferral cap is $24,500 (or $32,500 with catch-up), while the total contribution cap (including after-tax employee contributions and employer match) is $72,000 (or $80,000 with catch-up). The difference between these two caps, after subtracting the employer match, represents the after-tax contribution capacity that the mega backdoor Roth captures.
For a representative employee earning enough to max the $24,500 employee deferral and receiving a $10,000 employer match, the math is: $72,000 total cap − $24,500 deferral − $10,000 match = $37,500 of remaining after-tax contribution capacity. (With no employer contribution at all, the full $47,500 gap between the two caps would be available — that is the ceiling the headline figure refers to; employer money reduces the space dollar for dollar.) That $37,500 is contributed with after-tax dollars (not deductible). The strategy converts those after-tax contributions to Roth as soon as possible — either through an in-plan Roth conversion if the plan permits, or via an in-service withdrawal of the after-tax balance into a Roth IRA at a separate brokerage. Once converted, the after-tax dollars and their future growth compound entirely tax-free.
The strategy requires two specific plan features that not all 401(k) plans offer: the ability to make after-tax (non-Roth, non-Traditional) employee contributions beyond the deferral limit, and the ability to convert those after-tax contributions to Roth through either an in-plan Roth conversion or an in-service distribution. Plans at large tech companies, financial services firms, and some other high-end employers commonly offer both. Many smaller employers and traditional plans do not, in which case the mega backdoor Roth is unavailable regardless of the employee's income. The right question for any employee considering the strategy is whether their plan's Summary Plan Description allows after-tax contributions and either in-plan Roth conversion or in-service distribution.
The economic value of mega backdoor Roth for an eligible high-income worker is substantial. An additional $37,500 of Roth contribution per year, growing for 30 years at a typical equity-return rate of 7% real, becomes approximately $3.5 million in tax-free retirement assets. That is on top of the $24,500 in Traditional or Roth 401(k) deferrals and the employer match, which together generate a similarly large tax-advantaged balance. For workers eligible to use the strategy, mega backdoor Roth is the single highest-impact retirement planning lever available in the US tax code. The strategy has been at risk of legislative elimination in past Congresses but remains in effect as of 2026.
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- 401(k) An employer-sponsored defined contribution retirement plan governed by Internal Revenue Code Section 401(k), allowing employees to defer pre-tax compensation (Traditional 401(k)) or post-tax compensation (Roth 401(k)) into investment options selected by the plan. The largest US retirement savings vehicle by assets.
- Roth IRA An Individual Retirement Account funded with post-tax dollars where contributions are not tax-deductible, growth is tax-free, and qualified withdrawals after age 59½ are tax-free. Subject to annual contribution limits and income-based phase-outs.
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