If you've ever gone online and researched ways to save more for retirement, you may have come across a strategy referred to as the "mega backdoor Roth." This strategy entails 2 steps: (1) making after-tax contributions to your 401(k) and (2) then doing a conversion either to a Roth IRA or Roth 401(k). An after-tax 401(k) contribution is different from a Roth 401(k) contribution and different from a pre-tax contribution. You will need to pay taxes on any earnings included in the conversion, but the taxable amount will likely be small, especially if the after-tax contributions get converted soon after the contributions were deposited into the plan. Your pre-tax, Roth, and after-tax 401(k) contributions plus any employer contributions can total $70,000 in 2025 ($77,500 if at least age 50 and $81,250 if age 60-63), so there is potential for sizeable sums to be converted (thus "mega" in the name of the strategy). Whether you can take advantage of this strategy depends not only on your ability to save but on the specifics of your 401(k) - many companies still don't allow it. Keep reading for more details on the interesting planning technique.
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