What Is a Mega Backdoor Roth? The $46,000 Strategy for High Earners

How Does the Mega Backdoor Roth Work?

The 2025 total 401(k) contribution limit is $70,000 (including employee + employer contributions). Most people only use the employee pre-tax/Roth limit ($23,500 + $7,500 catch-up). The mega backdoor uses the remaining space.

Example: You contribute $23,500 pre-tax. Your employer matches $10,000. Total: $33,500. The gap to $70,000 is $36,500. You can make after-tax contributions of up to $36,500, then convert them to Roth — either in-plan (Roth 401k) or via rollover to a Roth IRA.

The conversion is mostly tax-free because after-tax contributions have already been taxed. Only any growth between contribution and conversion is taxable — which is why you convert as quickly as possible (ideally automatic per-paycheck conversion).

What Are the Requirements?

Your employer plan must: 1. Allow after-tax (non-Roth) contributions beyond the elective deferral limit 2. Allow either in-plan Roth conversions or in-service withdrawals/rollovers

Not all plans offer this. Large tech companies (Google, Amazon, Microsoft) and many large employers do. Check your plan document or ask HR about 'after-tax contributions' and 'in-plan Roth conversion.'

If your plan doesn't offer this, the regular backdoor Roth IRA ($7,000-8,000/year) is still available.

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