The Backdoor Roth and Mega Backdoor Roth

The Backdoor Roth and Mega Backdoor Roth are maneuvers designed to maximize the amount that you can contribute to your retirement accounts.

Both strategies involve contributing post-tax/after-tax dollars to your IRA or 401(k), and then converting those dollars to a Roth account. The key difference in the two is that the Backdoor Roth happens inside of an IRA and the Mega Backdoor Roth happens inside of a 401(k). However, for the Mega Backdoor Roth, there may be instances where the 401(k) plan would allow for a rollover to an IRA.

When performing a Mega Backdoor Roth, the contribution to the 401(k) must take place in a special “voluntary after-tax” account, not to be confused with a Roth account. The funds are then converted to a Roth account.

How to do a Backdoor Roth or Mega Backdoor Roth

Backdoor Roth

1. Non-deductible contribution to a traditional IRA
2. Conversion to a Roth IRA

Mega Backdoor Roth

1. Contribution to a voluntary after-tax 401(k) account
2. Conversion to a Roth account.

Why do a Backdoor Roth or Mega Backdoor Roth

Backdoor Roth

The main benefit of a pre-tax IRA contribution is tax deferral. You contribute to your IRA now, the funds generate earnings, and you don’t pay taxes on the contribution or earnings until you start taking distributions.

The IRS sets limits on the amount that you can deduct if you or your spouse are eligible to participate in an employee-sponsored retirement plan. The Backdoor Roth allows you to circumvent the IRS deduction phaseout for IRAs because you can make a non-deductible contribution to a traditional IRA and convert it to a Roth IRA.

Mega Backdoor Roth

The Mega Backdoor Roth earned its name from the massive contribution that the strategy enables.

The standard employee deferral limit is $24,500 for 2026. However, employees are allowed to make voluntary after-tax contributions up to the lesser of $72,000 or 100% of their compensation. For each plan that you participate in, your voluntary after-tax contribution limit is reduced by your employee deferrals and your employer’s contributions. For example, if you have a salary of $73,000 and contributed $24,500 as an employee deferral, you can contribute up to $47,500 to a voluntary after-tax account and then do an in-plan conversion to a Roth 401(k).