Mega-Backdoor Roth Guide (2025 Update)

What is the mega-backdoor Roth?

The mega-backdoor Roth strategy involves making after-tax 401(k) contributions and then converting those funds to a Roth IRA or Roth 401(k). This strategy allows high-earners to save more aggressively and tax-efficiently for retirement.

Does my company offer the mega-backdoor Roth?

The best way to confirm that your company offers the mega-backdoor Roth is by reviewing your 401(k) plan summary description. The process of reviewing a 30-80 page plan summary description is a bit of a cumbersome task, so if you are unsure, a best practice is to ask your 401(k) plan administrator or financial planner.

Many technology companies offer the mega-backdoor Roth, including: Alphabet (Google), Amazon, Apple, Dell, IBM, Meta (Facebook), Microsoft, Netflix, Oracle, Uber, and Zoom.

Here’s a more comprehensive list of companies offering the mega-backdoor Roth.

Step-by-step instructions for how to set up the mega-backdoor Roth

Step 1: Confirm that your 401(k) plan allows for after-tax contributions.

Step 2: Determine the eligible amount for after-tax contributions.

• Under age 50: Begin with $70,000 in 2025 and subtract $23,500 for elective deferrals and your employer’s company match. The remainder is the maximum amount you can contribute as after-tax contributions.
• Age 50 to 59 or over 63: Begin with $77,500 in 2025 and subtract $31,000 for elective deferrals and your employer’s company match. The remainder is the maximum amount you can contribute as after-tax contributions.
• Age 60 to 63: Begin with $81,250 in 2025 and subtract $34,750 for elective deferrals and your employer’s company match. The remainder is the maximum amount you can contribute as after-tax contributions.

Step 3: Contact your 401(k)’s plan administrator to set-up in-service conversions or in-service distributions. Ideally, your plan allows for this to take place automatically!

Step 4: Elect for after-tax contributions in your 401(k).

How much can an individual put into a 401(k) in 2025?

In 2025, the defined contribution plan limit is $70,000 if under age 50. The defined contribution plan limit is $77,500 if age 50 to 59 or older than 63. The defined contribution plan limit is $81,250 if age 60 to 63.

401(k) contribution components

Pre-tax / Roth Elective Deferral and Catch-up Contribution

• An individual under age 50 can make a pre-tax or Roth elective deferral 401(k) contribution of $23,500.
• An individual age 50 to 59 or over 63 can contribute $23,500 plus an additional $7,500 catch-up contribution.
• An individual age 60 to 63 can contribute $23,500 plus an additional $11,250 catch-up contribution.

Employer Match

• An employer may offer a company match.

After-Tax Contribution

• An individual under age 50 can make after-tax contributions up to the defined contribution plan limit as follows: $70,000 – $23,000 elective deferrals – employer match = after-tax.
• An individual age 50 to 59 or over 63 can make after-tax contributions up to the defined contribution plan limit as follows: $77,500 – $23,000 elective deferrals – $7,500 catch-up contribution – employer match = after-tax.
• An individual age 60 to 63 can make after-tax contributions up to the defined contribution plan limit as follows: $81,250 – $23,000 elective deferrals – $11,250 catch-up contribution – employer match = after-tax.

Source: 2025 Important Planning Numbers

When should I consider the mega-backdoor Roth?

• Your 401(k) plan allows after-tax contributions.
• Your 401(k) plan allows in-service conversions to Roth 401(k) or distributions to Roth IRA.
• You maxed out your pre-tax or Roth 401(k) elective deferral and have additional funds to save for retirement.

When should I consider using a mega-backdoor Roth instead of saving in a taxable account?

• Saving in a Roth means tax-free earnings. Saving in a taxable account means paying taxes on interest, dividends, and capital gains.
• You are saving toward retirement and not for shorter-term financial goals (ex. home, college).
• One of the best benefits of this strategy setting yourself up for better tax diversification.

When should I not consider the mega-backdoor Roth?

• You are not planning to max out your 401(k) elective deferral. However, you may still have the ability to save tax-efficiently with pre-tax and Roth contributions. Additionally, most 401(k) plans only match pre-tax and Roth contributions, not after-tax contributions.
• You have other financial goals than retirement that need more immediate attention for savings.
• If your 401(k) plan does not allow in-service conversions or distributions, then you will need to wait until you leave your job to complete a Roth conversion. Waiting makes this strategy much less effective because after-tax earnings are taxed at ordinary income when converted.

What are the tax consequences of the mega-backdoor Roth?

After-tax contributions have already been taxed and therefore are nontaxable once the Roth conversion takes place.

Investment earnings on after-tax contributions are taxed at ordinary income rates at the time of the in-service conversion to Roth 401(k) or distribution to Roth IRA. This makes it very important to make sure your plan allows in-service conversions or in-service distributions. One of the best strategies for the mega-backdoor Roth is to confirm automatic in-service conversions.

Investments grow tax-deferred in a Roth IRA or Roth 401(k). Qualified distribution withdrawals during retirement are tax-free from a Roth IRA or 401(k).

Mega-backdoor Roth Case Studies

Jeff (60) at Amazon

Jeff is a product manager at Amazon. Amazon’s 401(k) provides a 50% match on employee contributions, up to 4% of eligible pay. Catch-up contributions are not matched. Jeff earns $500,000 annually and wants to save more for retirement using the mega-backdoor Roth strategy.

• Jeff contributes $23,500 as an elective deferral and an additional $11,250 as a catch-up contribution.
• Amazon matches $10,000.
• Jeff can contribute an additional $36,500 in after-tax savings toward the Mega Backdoor Roth.

Mark (55) at Meta

Mark is an account executive at Meta. Meta’s 401(k) matches 50% of elective deferrals and catch-up contributions. Mark earns $250,000 annually and wants to save more for retirement using the Mega Backdoor Roth strategy.

• Mark contributes $23,500 as an elective deferral and $7,500 as a catch-up contribution.
• Meta matches $15,500.
• Mark can contribute an additional $31,000 in after-tax savings toward the Mega Backdoor Roth.

Kelly (48) at Dell

Kelly is a senior director at Dell. Dell’s 401(k) matches 100% of contributions, up to 6% of eligible pay, with a maximum match of $7,500. Kelly earns $300,000 annually and wants to save more for retirement using the Mega Backdoor Roth strategy.

• Kelly contributes $23,500 as an elective deferral.
• Dell matches $7,500.
• Kelly can contribute an additional $39,000 in after-tax savings toward the Mega Backdoor Roth.