{"id":74,"date":"2023-11-06T13:00:00","date_gmt":"2023-11-06T13:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/contribute-extra-roth-dollars-mega-backdoor-roth-ira\/"},"modified":"2025-09-04T20:38:51","modified_gmt":"2025-09-04T20:38:51","slug":"contribute-extra-roth-dollars-mega-backdoor-roth-ira","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/contribute-extra-roth-dollars-mega-backdoor-roth-ira\/","title":{"rendered":"How to Contribute Thousands of Extra Roth Dollars Each Year: The Mega Backdoor Roth IRA [2025]"},"content":{"rendered":"
\n

If you\u2019re a high earner in the market for an investment strategy that sounds more like a Transformer than a legitimate wealth-building option, then boy, do I have good news for you: The Mega Backdoor Roth IRA<\/strong> might be a contender for your tax-advantaged lineup.<\/p>\n

Before we talk about the \u201chow,\u201d let\u2019s talk about the \u201cwho.\u201d<\/p>\n

Who might be a good candidate for a Mega Backdoor Roth IRA<\/h2>\n
    \n
  1. \n

    If you\u2019ve already contributed the maximum amount to other tax-advantaged accounts that are a priority to you.<\/p>\n<\/li>\n

  2. \n

    If you feel good about how you\u2019re tracking toward goals that require taxable contributions or money in the \u201cmedium-term.\u201d<\/p>\n<\/li>\n

  3. \n

    And\u2014perhaps obviously, in order for #1 and #2 to be true\u2014a substantial amount of household income or very, very low expenses.<\/p>\n<\/li>\n<\/ol>\n<\/div>\n

    \n
    \n

    How to do the Mega Backdoor Roth IRA<\/h2>\n

    Ironically, the \u201cMega Backdoor Roth IRA\u201d is not a Roth IRA at all: It\u2019s technically an \u201cafter-tax\u201d contribution to your employer-sponsored 401(k) or 403(b) plan, not to be confused with a Roth<\/em> contribution, which is much more boring and akin to going through the \u201cfront door.\u201d <\/p>\n

    Unfortunately, not all 401(k) plans allow for after-tax contributions beyond the standard, employee elective deferral of the $23,500 contribution limit (of the four companies I\u2019ve worked for, only two have allowed it). <\/p>\n

    But in 2025, this strategy allows<\/a> you to get another<\/em> $46,500 of Roth dollars in the bank on top of your regular $23,500 contribution to a 401(k) or 403(b). <\/p>\n

    Bonus, albeit a potentially confusing one: You\u2019re still in the clear to contribute $7,000 per year to a Roth IRA or Backdoor Roth IRA if you want to, as well. Your IRA activity is wholly separate from today\u2019s discussion of juicing your employer plan for all it\u2019s worth.<\/p>\n

    Why? Because the actual<\/em> contribution limit for 401(k)s in 2025 is a whopping $70,000<\/span><\/a>. <\/p>\n

    Here\u2019s how it works:<\/p>\n

      \n
    1. \n

      In your company\u2019s retirement portal, you elect to contribute after-tax dollars above and beyond the $23,500 limit.<\/p>\n<\/li>\n

    2. \n

      Your plan administrator then (a) converts them to Roth in-plan or (b) permits in-service distributions, allowing you to roll over the funds to a Roth IRA.<\/p>\n<\/li>\n<\/ol>\n

      \u2026and that\u2019s about it. I pulled an old screenshot from a former employer\u2019s contribution page so you can get a sense for what this might look like on the back end:<\/p>\n<\/div>\n

      \"\"\/<\/p>\n

      \n

      Since my base pay at the time was $128,000 and I wanted to contribute a pre-tax $22,500 as well as an after-tax<\/em> $6,500 (I basically wanted to mirror a regular Roth IRA limit in 2023), my \u201cpercentages\u201d were 17% and 5%, respectively. You\u2019ll probably see some language around a \u201cRoth In-Plan Conversion\u201d that\u2019ll ask if you want to \u201cconvert after-tax contributions\u201d to Roth, and your answer is a resounding yes<\/em>. <\/p>\n

      Candidly, it might<\/em> be more trouble than it\u2019s worth if you have to manually roll over and convert the after-tax contributions every month, but if your plan converts them to Roth in-plan for you and you can afford it, it\u2019s probably a no-brainer to get a few more tax-advantaged dollars working in your favor.<\/p>\n

      If you are<\/em> faced with the manual-only option, some people like to wait until the end of the year to roll over a full year\u2019s worth of their after-tax dollars to their Roth IRAs\u2014but it\u2019s worth noting you\u2019ll pay additional tax at that point on the growth of those after-tax dollars at the point of conversion (assuming they grew, of course).<\/p>\n

      It\u2019s also worth noting that your employer match counts toward the overall $70,000 limit<\/strong>. If you contribute $23,500 and your employer contributes $10,000 (#goals), your 401(k) bucket technically has $36,500 of \u201croom\u201d left ($70,000 – $23,500 – $10,000 = $36,500).<\/p>\n

      Importantly, there\u2019s no income limit for this (yet!), so people who earn too much to contribute directly to a Roth IRA (or don\u2019t want to bother with a regular Backdoor Roth IRA) may find this a more seamless way to get both pre-tax and after-tax\/Roth exposure in one fell swoop. Now, to find a job with a tech company that offers this Mack Daddy benefit\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

      If you\u2019re a high earner in the market for an investment strategy that sounds more like a Transformer than a legitimate wealth-building option, then boy, do I have good news for you: The Mega Backdoor Roth IRA might be a contender for your tax-advantaged lineup. Before we talk about the \u201chow,\u201d let\u2019s talk about the […]<\/p>\n","protected":false},"author":178814,"featured_media":2403,"comment_status":"closed","ping_status":"open","sticky":false,"template":"si-template-single-post-401-k-s-and-iras.php","format":"standard","meta":{"footnotes":""},"categories":[37,35],"tags":[47,57],"class_list":["post-74","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-independence","category-investing-and-taxes","tag-401ks-and-iras","tag-popular-401ks-and-iras"],"yoast_head":"\nHow to Contribute Thousands of Extra Roth Dollars Each Year: The Mega Backdoor Roth IRA [2025] - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/contribute-extra-roth-dollars-mega-backdoor-roth-ira\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Contribute Thousands of Extra Roth Dollars Each Year: The Mega Backdoor Roth IRA [2025] - Money with Katie\" \/>\n<meta property=\"og:description\" content=\"If you\u2019re a high earner in the market for an investment strategy that sounds more like a Transformer than a legitimate wealth-building option, then boy, do I have good news for you: The Mega Backdoor Roth IRA might be a contender for your tax-advantaged lineup. 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