What is the mega backdoor Roth and when does it apply?

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AcadiFi · Accepted Answer

The mega backdoor Roth exploits after-tax (non-Roth, non-pretax) contributions to a 401(k), which fit under the total 415(c) limit ($70,000 in 2026) but above the elective deferral limit ($23,500 in 2026). You contribute: regular elective deferral up to $23,500 (pre-tax or Roth), employer match/PS (say $10,000), then fill the remaining space ($70K - $23.5K - $10K = $36,500) with after-tax contributions. Then convert the after-tax contributions to Roth via in-plan conversion or in-service distribution to Roth IRA. Result: up to $36,500/year into Roth on top of the $23.5K regular Roth 401(k) or $7K backdoor Roth IRA. Combined with employer match, a high earner can shove $60-70K/year into tax-advantaged accounts. Requirements: your 401(k) plan must allow after-tax contributions AND either in-plan Roth conversions or in-service distributions. Perhaps 40-50% of large-employer plans support both. Call your plan administrator or check SPD. Example: Calder (age 42, salary $320K) contributes $23,500 pre-tax, employer matches $16,000, Calder adds $30,500 after-tax and does quarterly in-plan Roth conversions. Annual Roth buildup: $53,500 ($23,500 elective Roth if elected, or via backdoor, plus $30,500 mega backdoor). ```mermaid graph TD A[401k total
70K limit] --> B[Elective
23.5K] A --> C[Employer
match] A --> D[After-tax
remainder] D --> E[Convert
to Roth] ```

What is the mega backdoor Roth and when does it apply?

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