What Is the Mega Backdoor Roth?

The mega backdoor Roth is a two-step strategy that lets you contribute far more to your Roth retirement savings than the standard elective deferral limit allows. It works by making after-tax contributions to your 401k (beyond the normal pre-tax/Roth limit), then immediately converting those dollars to Roth via an in-plan Roth conversion.

The result: up to $72,000.00 per year in total 401k contributions (for 2026), with the after-tax portion growing tax-free in Roth once converted.

Understanding the Two 401k Limits

The IRS imposes two separate limits on 401k contributions. Most people only know about the first one.

Let's Look at an Example

Say you earn $200,000 at one employer with a 6% match on contributions:

That $35,500.00 in after-tax contributions, converted to Roth each paycheck, is your mega backdoor Roth.

Does Your Plan Support It?

Not every 401k plan allows this strategy. Before you start, confirm your plan has:

• After-tax contributions - distinct from Roth elective deferrals. Your plan must explicitly allow non-Roth after-tax contributions.
• In-plan Roth conversions - the ability to convert after-tax money to Roth while still employed. Some plans instead allow in-service withdrawals to a Roth IRA, which achieves the same goal.

Check your plan's Summary Plan Description (SPD) or ask your HR / benefits team directly.

Step-by-Step Execution

1. Max your elective contributions first. Set your pre-tax and/or Roth deferral percentages to reach $24,500.00 over the year. Consider spreading this evenly across paychecks to avoid front-loading (more on that below).
2. Calculate your after-tax room. Take the $72,000.00 415(c) limit, subtract your elective contributions, and subtract your expected employer match. The remainder is your after-tax space.
3. Set your after-tax contribution percentage. Divide your after-tax room by your remaining gross pay for the year. Set this as your after-tax percentage in your payroll system.
4. Convert to Roth immediately. After each paycheck, request an in-plan Roth conversion of the after-tax balance. The faster you convert, the less taxable earnings accumulate.
5. Repeat and adjust. If you get a raise, bonus, or change jobs, recalculate. The simulator handles this automatically.

Common Pitfalls

Front-Loading and Match Loss

If you set your elective percentage too high, you'll hit the $24,500.00 limit before December. Once you hit the limit, your elective contributions stop, and so does your employer match (since match is calculated per-paycheck as a percentage of your contributions).

Taxable Earnings on Delayed Conversions

After-tax contributions sitting in a traditional 401k sub-account earn investment returns. Those returns are taxable when converted to Roth. To minimize this, convert as soon as possible after each contribution - ideally the same day.

ACP Testing for Highly Compensated Employees

If you're a Highly Compensated Employee (HCE), your after-tax contributions may be subject to Actual Contribution Percentage (ACP) testing. If the plan fails testing, your contributions could be refunded. Check with your plan administrator.

Exceeding the 415(c) Limit

If the total of your elective contributions, employer match, and after-tax contributions exceeds $72,000.00 at one employer, the excess must be corrected. Your payroll system should stop contributions automatically, but it's worth modeling in advance to set the right percentages.

2026 IRS Limits

Model Your Mega Backdoor Roth

The numbers above are general guidelines. Your actual after-tax room depends on your salary, pay frequency, employer match formula, bonus timing, RSU vests, and whether you change jobs mid-year. Run the Numbers models all of this at the paycheck level.