Quick Read – $39,000 annual after-tax 401(k) contribution plus in-plan Roth conversion creates $1.3M tax-free wealth in 18 years. – Verify plan’s SPD permits after-tax contributions and in-plan Roth conversions, then automate same-day conversions to avoid taxable earnings. – The…
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A 47-year-old dual-income couple pulling $400,000 in W-2 wages has already done the obvious: both spouses max their employee deferrals at $24,500 each. The next dollar of retirement savings is where most high earners stop and route everything to a taxable brokerage. That decision can leave roughly $39,000 a year of Roth space sitting untouched inside one spouse’s 401(k) plan document.
The mechanic is the after-tax bucket plus an in-plan Roth conversion, often called the mega backdoor Roth. It only works if the plan’s Summary Plan Description permits both pieces. When it does, the math is hard to ignore.