Mega Backdoor Roth: Sheltering Up to $46,000/Year in a Roth
How high-income tech and corporate professionals legally funnel up to $46,000 per year of after-tax 401(k) contributions into a tax-free Roth IRA or Roth 401(k).
U.S. employees whose company 401(k) plan specifically allows After-Tax contributions and In-Service distributions or in-plan Roth rollovers.
Understanding the IRS Section 415(c) Limit
Most investors only know the basic elective employee deferral limit ($23,000 in 2024). However, the total additions limit under Section 415(c) is $69,000 (or $76,500 if 50+).
This $69,000 total bucket includes:
- Your employee elective deferral: up to $23,000 (pre-tax or Roth)
- Your employer match: e.g., $10,000
- Remaining space: $36,000!
If your plan allows it, you can contribute that entire remaining $36,000 in after-tax non-Roth dollars and immediately convert it to a Roth.
The Two Plan Requirements (Must Verify)
- After-Tax Contributions: Your employer plan document must support after-tax non-Roth contributions (distinct from standard Roth 401k deferrals).
- In-Service Distribution OR In-Plan Roth Conversion: The plan must permit you to immediately convert after-tax dollars to Roth before earnings accumulate.
If both rules exist, you set payroll deductions to auto-convert after-tax dollars to Roth on each paycheque.
Automatic Daily In-Plan Conversions
Leading 401(k) recordkeepers (Fidelity, Vanguard, Schwab) offer automated daily in-plan conversion toggles. Enable this to ensure zero tax drag between the contribution and the Roth conversion.
Need help understanding how this applies to your plan?
Use the Premium AI Investing Education Tutor to ask specific follow-up questions about this strategy.
Open Dashboard & AI Tutor →