Mega backdoor Roth allows contributing up to $69,000 to Roth accounts in 2025 ($76,500 age 50+).

Process: 1) Max out 401k ($23,500 employee deferral), 2) Make after-tax 401k contributions (up to $69,000 total limit minus employer match), 3) Immediately convert after-tax funds to Roth 401k or Roth IRA.

Example: $23,500 pre-tax + $10,000 employer match + $35,500 after-tax = $69,000 total.

Requires plan allowing after-tax contributions and in-service conversions.

Only 20-30% of 401k plans support mega backdoor Roth.

Required features: After-tax (non-Roth) contribution option beyond $23,500 limit, In-service distributions or in-plan Roth conversions (while still employed), Immediate conversion ability (avoid taxable earnings).

Check plan documents or ask HR: "Does our plan allow after-tax contributions and in-service Roth conversions?" Common at tech companies, less common at small businesses.

2025 total 401k limit is $69,000 ($76,500 age 50+).

Calculate mega backdoor space: Total limit $69,000 - Employee deferrals $23,500 - Employer match (varies) = After-tax space.

Examples: With $5,000 match: $69,000 - $23,500 - $5,000 = $40,500 mega backdoor.

With $15,000 match: $69,000 - $23,500 - $15,000 = $30,500 mega backdoor.

High earners can add $30,000-45,000 annually to Roth accounts tax-free.

Backdoor Roth: $7,000 annual limit ($8,000 age 50+), uses Traditional IRA, available to anyone, simple process, good for high earners exceeding Roth IRA income limits.

Mega backdoor Roth: Up to $45,000+ annual limit, uses 401k after-tax contributions, requires specific 401k plan features, complex process, supercharges retirement savings.

Both achieve same goal: getting money into Roth accounts tax-free.

Can do both simultaneously if eligible.

Convert IMMEDIATELY after each contribution to avoid taxes on earnings.

Immediate conversion (recommended): $10,000 after-tax contributed Monday, converted Tuesday = $0 earnings = $0 taxes.

Delayed conversion (risky): $10,000 grows to $10,500 before conversion = $500 taxable earnings = $150 tax bill (30% rate).

Set up automatic conversion if available.

Pro rata rule does NOT apply to 401k conversions (unlike IRA conversions).

Some plans allow daily automatic conversions.

Risks: Plan rules can change mid-year (contribute cautiously), Job change may prevent completing strategy (stuck in after-tax account), Earnings before conversion are taxable (convert quickly), Complexity increases audit risk (keep documentation).

Downsides: Locks up money until 59.5 (Roth principal can withdraw but complicated), Reduces current take-home pay significantly, Not available if plan lacks features, Some plans charge fees for conversions.

Best for: stable high earners, maxing other retirement accounts, 10+ years to retirement.