Supercharge your retirement savings by funneling up to $69,000+ into Roth accounts using after-tax employee contributions and immediate in-plan conversions.
While standard Roth IRA contributions are capped at $7,500 per year, high earners who have maxed out regular employer 401(k) deferrals can use the powerful "Mega Backdoor Roth" strategy to shelter tens of thousands of additional dollars from future taxes.
1. How the Mega Backdoor Roth Works
Under IRC Section 415(c), the total annual limit for all contributions (employee elective deferrals, employer match, and after-tax non-Roth contributions) exceeds $69,000. If your employer's plan allows after-tax contributions and in-service distributions or in-plan Roth conversions, you can convert those after-tax funds directly into a Roth 401(k) or Roth IRA.
2. Plan Document Requirements
Not every employer 401(k) supports this strategy. Your plan document must specifically permit voluntary after-tax contributions (distinct from Roth elective deferrals) and provide automated daily in-plan conversion or in-service non-hardship distributions.
Disclaimer: Always verify employer plan options with your plan administrator and tax counsel.