What Is A Mega Backdoor Roth?

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The Roth IRA is a powerful tool that can allow investors to reduce their tax bills significantly in the future. However, high-income earners are not normally eligible to contribute to a Roth IRA. Enter a mega backdoor Roth.

Using the mega backdoor Roth strategy, investors can potentially contribute an extra $46,500 to a Roth IRA and/or Roth 401(k) in 2025. While the strategy can be complex, it might be worth considering if you want to contribute more money to these accounts. However, not everyone is eligible for this retirement strategy so it’s important to do your research before attempting a mega backdoor Roth. Consulting with a financial advisor can be helpful, too.

What is a mega backdoor Roth?

A mega backdoor Roth is a strategy that allows individual investors to contribute more to a Roth IRA and/or Roth 401(k) than the standard contribution limits. It can also be beneficial to those who exceed the income limits for a Roth IRA.

You can only contribute to a Roth IRA if your income is less than $165,000 in 2025 ($246,000 if married and filing jointly). Those with incomes exceeding those levels cannot normally contribute anything to a Roth IRA. However, with a mega backdoor Roth, it may be possible for those with high incomes to contribute to a Roth IRA and/or Roth 401(k).

How a mega backdoor Roth works

If you are interested in pursuing the mega backdoor Roth strategy, you should first understand how the process works. Here’s a quick overview of the basic steps:

1. Pre-tax contributions: The individual must make the maximum pre-tax contribution to their 401(k) for the year. For 2025, the maximum pre-tax contribution is $23,500 for all accounts ($31,000 for those aged 50 and over).
2. After-tax contributions: Once the individual has reached their maximum pre-tax contribution, they can make additional after-tax contributions up to the total 401(k) limit for the year. For 2025, this limit is $70,000 or $77,500 for those aged 50 and over. These limits include the individual’s contributions, employer contributions and after-tax contributions.
3. Roth conversion: The final step is to roll the after-tax contributions into a Roth IRA or convert them into a Roth 401(k) if the plan allows. This lets the money in the account not only grow tax-free but also be withdrawn tax-free in retirement. Remember that conversions could trigger a tax event, so it’s best to consult with a tax professional about your specific situation.

The ability to use this strategy has some caveats. For example, your plan must allow in-service distributions or conversions to a Roth account. In-service distributions (also known as withdrawals) are those made while still employed.

If you want to convert your after-tax contributions into a Roth 401(k) but are unsure whether your plan allows this, contact your HR department or plan administrator. You should also consult with a financial advisor or tax professional before implementing this or any other investment strategy.

Who is eligible for a mega backdoor Roth?

Generally, the specifics of your employer-sponsored retirement plan will determine whether you are eligible for the mega backdoor Roth strategy.

Here are some things to keep in mind:

• 401(k) plan rules: Your employer’s retirement plan must allow after-tax contributions beyond the standard pre-tax or Roth contribution limits. For 2025, the maximum is $23,500, or $31,000 for those aged 50 and over.
• In-service distributions or conversions: Your employer’s plan must allow you to either make in-service distributions or conversions to a Roth account. This allows you to roll the after-tax contributions into a Roth IRA, or convert to a Roth 401(k) while you’re still employed.
• Those who have enough funds: Of course, you must have enough money available to contribute the maximum to your 401(k). You must then still have the cash to contribute additional funds beyond the standard limit, which you will use for the mega backdoor Roth strategy.

Frequently asked questions

Bottom line

A mega backdoor Roth is a strategy that lets investors — who normally couldn’t add to a Roth account due to their high income or contribution limits — move specific 401(k) contributions into a Roth account, like a Roth IRA or Roth 401(k). Not all plans allow this, and you must have enough cash to contribute extra amounts. However, the strategy can be effective for those who are eligible. Before getting started, consider working with a financial advisor or tax professional who can provide specific guidance for your situation.

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.