Personal Finance & Estate › Retirement accounts & pensions › Roth 401(k)
Mega-backdoor Roth (after-tax 401(k) to Roth)
IRS guidance 2014· Concept or strategy
Depends on youExperts differ; the right answer depends on your situation.
Making after-tax 401(k) contributions above the normal deferral limit, then converting them to Roth.
See it on the Personal Finance & Estate map →How it works
The 2026 total 401(k) limit is $72,000, but deferrals are capped at $24,500. If a plan allows after-tax (non-Roth) contributions plus in-plan conversions or in-service withdrawals, you can fill the gap: $72,000 minus your deferrals minus employer money, then convert it promptly to Roth. IRS Notice 2014-54 made splitting after-tax money from its earnings workable. Main traps: few plans allow it, testing limits for highly paid staff, and taxable earnings if conversion is delayed.
Why it matters for you
Depends on you: it can move tens of thousands a year into Roth accounts, far beyond the $7,500 IRA route. Ask your plan administrator and CPA.
Rules, limits and sources (2026)
IRC Sec. 415(c) and IRS Notice 2014-54; plan documents; Vanguard's 'How America Saves' tracks how many plans offer after-tax contributions.
Watch out for
Congress proposed ending it in 2021; whether it survives future tax bills is unknown.
Connections (2)
▸Mega-backdoor Roth (after-tax 401(k) to Roth) is a supersized route into Roth 401(k)Standard practice
How they connect
After-tax 401(k) contributions build taxable earnings until converted. An in-plan Roth conversion moves them into the plan's Roth 401(k) account, where future growth is tax-free; alternatively they go to a Roth IRA. Done promptly, tens of thousands of dollars a year can enter Roth accounts.
When it applies
Workable since IRS Notice 2014-54 (September 2014); available only in plans that allow after-tax contributions and conversions.
How sure?
IRS Notice 2014-54 and IRC Sec. 402A(c)(4), the in-plan Roth rollover rule expanded by a 2012 law; plan documents.
Watch out for
Congress has eyed closing it; whether employers keep offering it, given nondiscrimination testing problems, is uncertain.
▸Mega-backdoor Roth (after-tax 401(k) to Roth) can be built into Solo 401(k) (owner-only plan)Depends on you
How they connect
A solo 401(k) has no other employees, so the nondiscrimination tests that limit after-tax contributions in company plans don't apply. With a plan document allowing after-tax contributions and in-plan conversions, an owner can fill the $72,000 cap with Roth money, limited by self-employment earnings.
When it applies
Offered by some custom-document plan providers; most free brokerage solo 401(k)s don't allow after-tax contributions.
How sure?
IRC Sec. 415(c) total limit and IRS Notice 2014-54; the plan's adoption agreement shows whether after-tax contributions are permitted.
Watch out for
Depends on you: whether the setup cost is worth it, and whether pre-tax profit-sharing beats Roth money, are judgment calls for your CPA.