Mega Backdoor Roth: How High Earners Save Even More for Retirement

The standard 401(k) employee contribution limit is $23,500 in 2025. But the total limit across employee contributions, employer match, and after-tax contributions is $70,000. If your plan allows after-tax contributions and in-service conversions, you can use that gap to funnel tens of thousands more into a Roth account every year — the mega backdoor Roth.

How It Works, Step by Step

1. 1Max out your regular pretax or Roth 401(k) contribution ($23,500 in 2025)
2. 2Contribute additional after-tax dollars (separate from Roth) up to the $70,000 total plan limit
3. 3Convert those after-tax dollars to Roth — either via an in-plan Roth conversion or an in-service withdrawal to a Roth IRA
4. 4Future growth on the converted amount is completely tax-free

Do You Qualify?

• Your employer plan must allow after-tax contributions (a separate bucket from Roth 401(k))
• Your plan must allow in-service withdrawals or in-plan Roth conversions
• Most common at large employers and tech companies with generous plan designs
• Ask HR or check your Summary Plan Description — not all plans offer this

A Simple Example

Say you contribute $23,500 as an employee and your employer adds $10,000 in match — that's $33,500 toward the $70,000 limit. That leaves about $36,500 in room for after-tax contributions you can then convert to Roth (2025 limits).

Mega Backdoor Roth vs. Regular Backdoor Roth

• Regular backdoor Roth: a nondeductible traditional IRA contribution (up to $7,000) converted to a Roth IRA — for anyone above the Roth IRA income limits
• Mega backdoor Roth: uses the 401(k) after-tax bucket, allows far larger amounts, but only works if your specific plan supports it

Things to Watch For

• Convert quickly — any earnings on the after-tax money before conversion are taxable
• The IRA pro-rata rule does not apply to 401(k) after-tax conversions
• Check your plan for extra fees on after-tax contributions
• Confirm both after-tax contributions AND in-service conversions are allowed — some plans offer only one