Mega-backdoor Roth

A "mega-backdoor Roth" uses after-tax 401(k) contributions combined with either an in-plan Roth conversion or an in-service rollover to a Roth IRA. This can move significantly more money into Roth annually than the regular IRA contribution limit.

How it works

The 2026 401(k) total annual addition limit is $70,000 (plus $7,500 catch-up if 50+). This consists of:

• Employee pre-tax + Roth 401(k) contributions: up to $23,000
• Employer match
• After-tax contributions (the remainder)

If your employer plan allows after-tax contributions AND in-plan Roth conversion (or in-service rollover), you can:

1. Max your regular 401(k) elective deferral ($23,000)
2. Receive employer match
3. Contribute the remainder as after-tax
4. Convert/roll the after-tax balance to Roth (with minimal tax — only growth that occurred before conversion is taxable)

Plan requirements

Not all 401(k) plans support this. The plan document must explicitly allow:

• After-tax contributions (separate from Roth 401(k))
• Either in-plan Roth conversion OR in-service distribution / rollover

Ask your benefits team or check the SPD (Summary Plan Description).

Coordination with other moves

The mega-backdoor stacks with:

• Standard Roth IRA + Backdoor Roth
• Roth 401(k) elective deferrals
• HSA contributions

Together, a high-income founder/executive can move $80K+/year into tax-advantaged accounts.