What Is a Mega Backdoor Roth?

If you're a high earner looking for ways to save more for retirement in a tax-friendly way, the mega backdoor Roth might be one of the most powerful tools you’ve never heard of. It’s a strategy that lets you put a lot more money into a Roth account than the usual IRS limits allow—potentially tens of thousands more each year.

Normally, Roth IRAs have strict income limits. In 2025, if you make over $165,000 (single) or $246,000 (married), you can’t contribute directly to a Roth IRA at all. That’s where the mega backdoor Roth comes in.

The standard 401(k) pre-tax contribution limit in 2025 is $23,500 for employees under age 50. If you're 50 or older, you can make a $7,500 catch-up contribution, raising your total to $31,000.

Thanks to the SECURE 2.0 Act, there's even more flexibility for those aged 60 to 63, who can make an additional $11,250 enhanced catch-up contribution, bringing their total pre-tax limit to $34,750.

But here's where the mega backdoor Roth comes in.

Some employers allow after-tax contributions on top of these limits. Once you've maxed out your regular and catch-up contributions (and your employer contributions are also factored in), you can contribute additional after-tax dollars to your 401(k). From there, you roll those funds into a Roth IRA or a Roth 401(k) — that's the "backdoor" move.

You're effectively putting extra money into a Roth account without going through the usual income-restricted front door.

But — and this is a big but — not every 401(k) plan allows for this. Your plan has to specifically allow after-tax contributions. It also needs to let you either roll that money into a Roth IRA while you’re still working there (called an in-service distribution) or convert it to a Roth 401(k) within the plan itself. If it doesn’t offer either of those features, you’re kind of stuck unless you change jobs.

Timing also matters. The sooner you roll the money over to Roth, the better. If you wait, those after-tax dollars might earn investment income in the 401(k), and then that growth gets taxed when you do the rollover. So ideally, you move the money quickly and avoid paying tax on the growth altogether.

Now, this isn’t a beginner strategy. You generally want to have already maxed out your regular 401(k) contributions, and ideally your Roth IRA (if you’re eligible or using the standard backdoor Roth). This is more of a next-level move for people who are already saving aggressively and looking for more tax-advantaged space to grow their money.

That said, there are some downsides. If you don’t handle the rollover correctly, you could end up owing taxes you didn’t expect. Some plans aren’t very user-friendly when it comes to this process, and not all employers allow the necessary features. There’s also something called nondiscrimination testing—if too few lower-paid employees use the plan, the IRS might make you take some of your contributions back.

Still, if you’re in the right situation, the mega backdoor Roth is a rare opportunity to get a lot more money into a Roth account — where it grows tax-free and can be withdrawn tax-free in retirement. It’s especially great if you think you’ll be in a higher tax bracket later on.

Bottom line: this is one of those "hidden gem" strategies that could seriously boost your retirement savings if your plan allows it and you're willing to put in a little extra work. Just make sure to check your 401(k) plan rules carefully or talk to a financial advisor to see if it makes sense for you.

The information provided in this blog post is intended for general informational purposes only and should not be construed as legal or tax advice. While every effort has been made to ensure the accuracy of the information, tax laws and regulations are subject to change, and individual circumstances may vary. For personalized advice and to ensure compliance with current tax laws, it is strongly recommended that you consult with a qualified tax professional, financial advisor, or legal counsel. The author and publisher of this blog assume no responsibility for any errors or omissions, or for any actions taken based on the information contained herein.