Mega Backdoor Roth

Investing

The Mega Backdoor Roth is a strategy allowing contributions far above standard Roth limits, requiring specific 401(k) plan features. Steps: (1) make after-tax (not Roth) contributions to your 401(k) above the $24,000 employee limit, up to the $70,000 total annual limit, (2) execute an in-plan Roth conversion or in-service distribution to Roth IRA. Capacity depends on what your employer matches: if employer puts in $10K and you've contributed $24K, you have $36K of after-tax capacity ($70K – $24K – $10K). Only available if your 401(k) plan allows after-tax contributions and in-service distributions/conversions.