The After Tax 401(k) Move That Lets a $250,000 Earner Shelter Up to $47,500 More Per Year in a Roth Account Quick Read – Mega backdoor Roth lets $250K earners funnel $40,000 annually into tax-free Roth using 415(c) plan limits gap – Verify plan allows after-tax contributions and…
nversions; only 25-30% of large employer plans support both features – A 45-year-old software engineer earning $250,000 already maxes the 401(k), captures the full employer match, and quietly funnels another $7,500 through a backdoor Roth IRA. Cash still piles up in a taxable brokerage
The question on the Bogleheads and r/fatFIRE threads is always the same: is there a way to stuff more money into a Roth wrapper without paying capital gains drag for the next two decades? If the employer plan is built right, the answer is yes, and the room is large enough to change the retirement picture entirely. The strategy is the mega backdoor Roth.
It exploits a quirk in how the IRS stacks 401(k) limits, and it is one of the few legal ways a high earner can shovel tens of thousands of additional dollars into tax-free growth each year. Where the $40,000 of hidden room comes from The IRS sets two separate caps on a 401(k). The first is the employee elective deferral limit, which is $24,500 for 2026 under IRS Notice 2025-67.