Mega Backdoor Roths: How They Work, Annual Limits
If you're a high-earner who can't contribute to a Roth IRA, a mega backdoor Roth — particularly if your 401(k) plan allows it — might be a solution.
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Updated · 5 min read
Written by
Lead Writer 
Reviewed by
Certified Financial Planner® 
Edited by
Managing Editor Many investors choose the Roth IRA for a tax break in retirement, but it does have a restriction: income levels. Individuals who earn over the Roth IRA income limit might be locked out of contributing directly.
That’s where the mega backdoor Roth comes in. This strategy could allow you to stash an extra $46,500 in 2025 and then roll it into a mega backdoor Roth. But that “could” is big. You could even call it mega.
AD
How does your
net worth stack up?
See where you stand compared to households like yours, and get steps you could take to grow from here.
NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. Calculator by NerdWallet, Inc., an affiliate, for informational purposes only.
A mega backdoor Roth is specifically for people with a 401(k) plan that allows after-tax contributions. Account owners can put a certain amount of post-tax dollars into their 401(k) plan and then roll it into either a Roth IRA or a Roth 401(k).
The caveat: Creating a mega backdoor Roth is complicated, with many moving parts and the potential to get hit with unexpected tax bills, so consider consulting with a financial advisor or tax pro before trying this at home.
Need to review terms? Jump to an overview of IRAs, Roth IRAs and backdoor Roths .
Mega backdoor Roth limit 2025
The maximum mega backdoor Roth limit is determined by each year's 401(k) contribution limit for employees and employers. Here's how much you can save in a mega backdoor Roth in 2025:
- $70,000 for those under age 50.
- $77,500 for those age 50 and older.
- $81,250 for those age 60 to 63.
How does this add up? Let’s break it down.
Your contribution limit: The regular 401(k) contribution limit is $23,500 in 2025. People aged 50 and older can contribute an extra $7,500 as a catch-up contribution. Due to the Secure 2.0 Act, those aged 60, 61, 62 and 63 get a higher catch-up contribution of $11,250. In 2026, the contribution limit is $24,500, with a catch-up contribution of $8,000. Those aged 60, 61, 62, and 63 will have the same higher catch-up contribution of $11,250 .
The combined limit: Your employer might match a percentage of your contributions. If they do, the combined total contributions made to your 401(k) by both you and your employer can’t exceed $70,000 in 2025 if you’re under age 50 (it’s adjusted if you’re older than 50).
The gap: If your employer contributions don’t put you at the limit — or if you don’t get an employer match — you can contribute up to $46,500 of after-tax dollars into your 401(k) account on or before December 31, 2025.
If you have a Roth 401(k) at work (and the plan allows for the mega option as described below), generally, you can choose whether the final destination of your mega contributions is the Roth 401(k) or a Roth IRA. If your employer offers only a traditional 401(k), then your mega contributions would end up in a Roth IRA.
An overview of IRAs, Roth IRAs and backdoor Roths 🤓
Roth and traditional IRAs are types of individual retirement accounts (IRAs) that offer tax benefits for saving for retirement. While contributions grow tax-free in both traditional and Roth accounts, contributions and withdrawals are taxed differently.
- With a Roth IRA, you contribute after-tax dollars but get to withdraw in retirement tax-free.
- Traditional IRAs, on the other hand, can offer an immediate tax break for contributions, but withdrawals are taxed as income in retirement.
- There's a maximum combined contribution limit for Roth and traditional IRAs of $7,000 in 2025 ($8,000 if age 50 and older).
» Get started: See our picks for the best Roth IRA accounts.
Income limits: Your annual income and filing status are factors that determine what you can do with your IRA contributions each year.
- For Roth IRAs, high earners may be limited in their contribution amounts until the ability to contribute is phased out completely.
- For traditional IRAs, anyone with earned income can contribute, but those who earn over the income limit might not qualify for a tax deduction.
» Learn more: Roth IRA contribution limits.
Backdoor Roth: This is a strategy for people whose income is too high to be eligible for regular Roth IRA contributions. You simply roll money from a traditional IRA to a Roth.
- There are no income or conversion limits. Anyone can convert any amount of money from a traditional to a Roth IRA.
- You risk a hefty tax bill on the rollover if you have pretax money — either contributions you’ve deducted or investment earnings — sitting in any traditional IRAs.
» Read more about that rule in our backdoor Roth IRA guide.
AD
How does your
net worth stack up?
See where you stand compared to households like yours, and get steps you could take to grow from here.
NWWP is an SEC-registered investment adviser. Registration does not imply skill or training. Calculator by NerdWallet, Inc., an affiliate, for informational purposes only.
What’s the point of a mega backdoor Roth?
The point of executing a mega backdoor Roth is to get as much money into the Roth as soon as possible to get as much tax-free growth as soon as possible.
Typically, the strategy is to throw all of your after-tax savings into your after-tax bucket (once you’ve maxed out your regular 401(k) contribution limit). Then, you’d almost immediately get your money out of that bucket and into either a Roth IRA or Roth 401(k) before it starts accruing investment earnings.
The idea is that if you leave your after-tax contributions in the after-tax bucket, which is a tax-deferred bucket, you’re going to eventually owe tax on the earnings. But once that money is in a Roth, it grows tax-free.
If your after-tax contributions accumulate investment earnings, the IRS has said it’s OK to split up that money by rolling your after-tax contributions into a Roth IRA and the investment earnings into a traditional IRA .
That means your contributions can grow tax-free once they've moved out of your 401(k) and into your Roth IRA, and your investment earnings can grow tax-deferred — you’ll pay income taxes when you take them out in retirement.
Mega backdoor Roth considerations
Here’s what you need to have in place for the ideal mega backdoor Roth strategy.
1. Your 401(k) plan allows after-tax contributions
After-tax contributions are a separate bucket of money from your traditional 401(k) contributions. The dollars you put into an after-tax bucket are post-tax, so you've already paid taxes on them. This requirement is pretty straightforward: Either your employer plan allows after-tax contributions, or it doesn’t.
2. Your 401(k) lets you move your after-tax money
Your employer has to either:
- Allow you to take money out of the 401(k) plan and put it into a Roth IRA while you’re still working at the company (called an in-service distribution).
- Allow you to move money from the after-tax portion of your plan into the Roth 401(k) part of the plan.
If you’re not sure whether one of these options is available to you, ask your human resources department or plan administrator.
If your plan doesn’t allow in-service withdrawals to a Roth IRA or in-plan rollovers to a Roth 401(k), then your opportunity to do the mega backdoor Roth is delayed until you leave your job. If that’s the case, you might want to reconsider this strategy.
3. You’ve got money left over for savings
A mega backdoor Roth IRA is a sweet way to get a lot of money into a Roth IRA, but it’s really for people who have a lot of money to put aside for savings. In general, it makes sense to first max out a regular or Roth 401(k) and a Roth IRA if you’re eligible. Here’s why:
- With a regular 401(k), you get an upfront tax break — your taxable income is reduced in the year you make your contributions, and you defer taxes on your investment earnings until you make a withdrawal.
- If you opt for the Roth 401(k), you contribute money that you’ve already paid taxes on. Your tax break is delayed, but your money grows tax-free and you get tax-free income in retirement.
- If you’re below the Roth IRA income limits, it’s easier to simply contribute directly than to jump through all the hoops required for the mega backdoor Roth IRA. If you’re above the Roth IRA income limits, then a backdoor Roth — the non-mega kind — is also an option.
If you’ve maxed out your 401(k) and a Roth IRA, and you still have money to save this year, that’s when you’d consider a mega backdoor Roth.
Need to review terms? Jump to an overview of IRAs, Roth IRAs and backdoor Roths .
Note: On rare occasions, a 401(k) plan may be forced to return your contribution to you. This generally happens only if you're among the highest-paid workers at your company. That's because IRS nondiscrimination tests require that retirement plans don't offer a substantially bigger benefit to high-income employees than to rank-and-file workers. If the highest-paid workers are saving at a much higher rate than other workers, the plan may be forced to return some of that money.
Bottom line
A mega backdoor Roth allows high-earning investors, who otherwise couldn't put money in a Roth account because of income restrictions, to move money from a 401(k) plan to a Roth IRA or Roth 401(k) plan. Although it sounds simple, it’s an involved process that could come with a tax bill, so consulting with a financial advisor or tax professional may be helpful.
The mega backdoor Roth is just one of a few ways to take advantage of the Roth treatment and earn tax-free withdrawals. Here are some others:
- If you’re under the income limits, you can contribute directly to a Roth IRA.
- If you’re over the income limits, you can get in with a backdoor Roth.
- If your employer offers a Roth 401(k), you can contribute to that.
» Are you on track for retirement? Run your numbers through our retirement calculator.
Article sources
NerdWallet writers are subject matter authorities who use primary,
trustworthy sources to inform their work, including peer-reviewed
studies, government websites, academic research and interviews with
industry experts. All content is fact-checked for accuracy, timeliness
and relevance. You can learn more about NerdWallet's high
standards for journalism by reading our
editorial guidelines.
- 1. IRS. Retirement topics - 401(k) and profit-sharing plan contribution limits. Accessed Sep 29, 2025.
- 2. IRS. Rollovers of after-tax contributions in retirement plans. Accessed Sep 29, 2025.
On this page
