Mega Backdoor Roth
The Mega Backdoor Roth is a 401(k) strategy that moves up to ~$46,500 (2026, after employee elective deferrals and employer match) of after-tax non-Roth contributions into a Roth account via in-plan conversion or in-service rollover. The strategy effectively unlocks Roth-status saving far beyond the $7,000 IRA limit.
The arithmetic: the §415 total annual addition limit for 2026 is $70,000 per plan. Subtract the maximum employee elective deferral ($23,500 for non-catchup participants) and a typical $13,000–$15,000 employer match — leaving $31,000–$33,000 of headroom under §415 for additional contributions. Plans that permit after-tax non-Roth employee contributions allow the participant to fill that headroom with after-tax dollars. Plans that ALSO permit either in-plan Roth conversion or in-service rollover let the participant move those after-tax dollars to Roth status, where they grow tax-free.
The gating is plan-feature availability. After-tax non-Roth contributions are uncommon at small-employer plans and increasingly common at large-employer plans (around 40% of Fortune 500 plans support them, growing). The conversion mechanism (in-plan Roth conversion OR in-service rollover to a Roth IRA) is rarer still — combined availability is roughly 25–30% of large-employer plans. A participant whose plan supports both can make a Mega Backdoor Roth contribution worth ~$31,000+ per year of Roth-status saving, in addition to the $7,000 standard IRA backdoor.
The strategy interacts with the §415 limit, not the §402(g) elective-deferral limit. The §402(g) limit ($23,500 for 2026) caps employee pre-tax + Roth elective deferrals only; after-tax non-Roth contributions are a separate category. A high earner maxing the §402(g) limit can still contribute additional after-tax dollars within the §415 ceiling. The aggregate cap, with maximum employer match, is the §415 number minus the match.
H = §415_limit − employee_elective_deferrals − employer_contributions- H
- = after-tax non-Roth headroom available for Mega Backdoor
- §415_limit
- = $70,000 for 2026 (indexed)
- employee_elective_deferrals
- = pre-tax + Roth deferrals (capped at §402(g) limit, $23,500)
- employer_contributions
- = match + non-elective + profit-sharing combined
§415_limit=$70,000, elective_deferrals=$23,500, employer=$15,000. H = $70,000 − $23,500 − $15,000 = $31,500.Synthetic households at large-employer plan sponsors should carry the after-tax non-Roth sub-account flag with realistic balances reflecting whether the household member is taking advantage of the Mega Backdoor strategy. The plan-feature support flags (after-tax non-Roth contributions; in-plan Roth conversion; in-service rollover) drive realistic distribution of who can vs. cannot execute the strategy.
Common pitfalls
- Confusing the §415 total annual addition limit with the §402(g) elective-deferral limit — they're different caps and the math depends on which one is binding.
- Treating the after-tax non-Roth bucket as the same as the Roth elective deferral bucket — they have different tax treatment at distribution and are tracked in separate sub-accounts.
- Failing to convert promptly — earnings on after-tax dollars before conversion are taxable as ordinary income on conversion.
- Assuming the strategy works at every plan — fewer than 30% of large-employer plans support both required features.
Examples
Participant earns $250,000 with a 6% safe-harbor match. §402(g) elective deferral: $23,500. Employer match: $15,000. After-tax non-Roth headroom under §415 ($70,000 cap): $70,000 − $23,500 − $15,000 = $31,500. Participant contributes $31,500 after-tax non-Roth, then immediately in-plan Roth converts. Net Roth-status contribution: $31,500 (vs. $7,000 standard IRA backdoor).