From The Blog
A mega backdoor Roth lets you put after-tax dollars into your 401(k) beyond the normal employee deferral limit, then convert them to Roth so they grow tax-free for the rest of your life. In 2026, the employee deferral limit is $24,500, but the total that can flow into your 401(k) from all sources is $72,000, and that gap is what this strategy fills. It is worth it if your plan actually allows it, you have already funded the basics, and you have cash left over that would otherwise go into a taxable brokerage account. What is a mega backdoor Roth, in plain English? Let me define the terms first, because this strategy is one where the name does more harm than good. A regular backdoor Roth is a small maneuver involving an IRA, worth about $7,500 a year in 2026. A mega backdoor Roth happens inside your work 401(k), and it can be worth five or six times that amount. Same word, completely different plumbing. Here is the basic idea. Most people think of a 401(k) as having one limit, the amount they can defer out of their paycheck. In 2026, that number, which the code calls the 402(g) limit, is $24,500, plus $8,000 more if you are 50 or older, or $11,250 if you happen to be 60, 61, 62, or 63. But a second, much larger limit sits above it. Internal Revenue Code Section 415(c) caps the total of everything that goes into your 401(k) in a year, meaning your own deferrals plus the company match plus any profit sharing plus any after-tax money, at $72,000 for 2026. Catch-up contributions sit on top of that number rather than inside it, so a 50-year-old is really working with $80,000 of total room.
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