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The Roth IRA is one of the most popular ways to save for retirement, but not everyone can make direct contributions to a Roth IRA because of the limits put on high earners.
Single taxpayers who make $165,000 or more in 2025 won’t be able to make direct contributions to a Roth IRA. For those who are married and file a joint tax return, the cutoff is $246,000.
However, using the mega backdoor Roth strategy allows those with high incomes to potentially still make contributions that may be well above the regular limits. Here’s how the mega backdoor Roth works and how to know if it makes sense for you.
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What is a mega backdoor Roth?
*Note: Not all plans allow for the mega backdoor Roth strategy.
The mega backdoor Roth is a way for individuals to make contributions to a Roth IRA or Roth 401(k) above the standard contribution limits. The strategy also allows high earners, who normally aren’t able to make direct Roth IRA contributions, to set themselves up for lower tax bills in the future.
Here’s how it works:
- Make after-tax contributions to your 401(k) or workplace plan
- Convert to a Roth IRA or Roth 401(k)
| Types of 401(k) contributions | |||
| Tax treatment | Contribution limit (2025) under age 50 | Total contribution limit (2025) under age 50 | |
| Pre-tax | Make pre-tax contributions and withdrawals are taxed at ordinary income rates. | $23,500 | $70,000 |
| Roth | Make after-tax contributions and withdrawals are tax-free. | ||
| Employer contributions | Made on a tax-deferred or after-tax basis. | ||
| After-tax | Make after-tax contributions. Withdrawals of contributions are tax-free, but earnings are taxed at ordinary income rates. | ||
This means that in 2025, if there were no employer contributions, an individual under age 50 could set aside an additional $46,500 in after-tax contributions and then roll it into a Roth IRA or Roth 401(k). In contrast, direct contributions to a Roth IRA are limited to $7,000 for those under age 50 in 2025.
The rollover can be complex and depends on what is available through your retirement plan. There can also be tax implications because you’ll owe taxes on any earnings you’ve made on the original contributions.
It may make sense to work with a tax professional or a financial advisor to guide you through the process. Bankrate’s financial advisor matching tool can help you find an advisor in your area.
Mega backdoor Roth: 5 ways to know if it makes sense for you
1. Your 401(k) plan allows for it
The first thing to figure out when you’re interested in a mega backdoor Roth is if the strategy is even available through your 401(k) plan. Here are a few things you’ll need to have in your 401(k) plan:
- The ability to make after-tax contributions
- The ability to convert those contributions through an in-plan conversion to a Roth 401(k) OR
- The ability to roll over the after-tax contributions to a Roth IRA
2. You have the ability and desire to save more for retirement
A major factor contributing to whether the mega backdoor Roth makes sense for you is if you have the ability to save that much more. Many people struggle to max out their regular contributions, let alone contribute tens of thousands of additional dollars.
You’ll also want to consider where you’re at in terms of meeting your retirement goals. If you’re already on track, you may find other uses for the money that you’d contribute in additional after-tax contributions. On the other hand, if you’re behind, the mega backdoor Roth could help you achieve your goals.
3. You’re willing to deal with the added complexity
Adopting a mega backdoor Roth strategy does come with some added complexity that might not be worth it for everyone. You’ll need to carefully track the contributions you and your employer have made to make sure you don’t exceed the limits.
You’ll also need to pay taxes on any earnings that are included in the conversion to a Roth 401(k) or rollover to a Roth IRA. Working with a tax specialist may be helpful to make sure everything is accounted for.
4. You’re on track with non-retirement financial goals
Retirement is often the biggest financial goal in people’s lives, but that doesn’t mean it’s the only one. You don’t want to contribute so much toward retirement that you end up underfunding shorter-term goals, such as saving for a house or funding your children’s education.
Take a look at your overall financial picture and see if you’re on track with all your goals. If you are, then you can decide if the mega backdoor Roth makes sense for you.
5. You’ve considered the tax impacts
There are a few tax implications you’ll want to think through before going ahead with the mega backdoor Roth. Here are some to think about:
- Can you pay the taxes on any earnings that are due as a result of the conversion?
- How does your current tax rate compare to your expected tax rate in retirement?
- How will the conversion to a Roth 401(k) or rollover to a Roth IRA impact your current year tax rate?
Thinking about these issues before you move forward will help ensure there aren’t any surprises when you file your taxes.
Bottom line
The mega backdoor Roth strategy is a way for high earners to set aside more money that will be shielded from taxes during retirement. The strategy potentially allows for higher contributions than are available through direct Roth IRA contributions and lets those who exceed the Roth IRA income limits still contribute.
The strategy can be somewhat complex and may have tax implications. Consider working with a financial advisor to determine if the mega backdoor Roth makes sense for you.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
