Contributed by: Logan Dimitrie, CFP®
Is the Mega Backdoor Roth Worth Considering?
At Center for Financial Planning, Inc., I’m often asked how high earners can save more for retirement in a tax‑efficient way. One strategy that sometimes makes sense is the Mega Backdoor Roth. It kind of sounds like a cheat code from a 90s video game, but it’s actually a powerful tool if your employer plan allows it.
What It Is
A Mega Backdoor Roth lets you put far more into Roth savings than the normal IRA limit by using after‑tax contributions inside your 401(k) or 403(b).
How It Works
Max out your regular 401(k)/403(b)
($24,500 if under 50 & $32,500 if 50+ for tax year 2026 limits)Add after‑tax contributions
Some plans let you contribute beyond the normal limit, up to the overall $72,000 total plan limit for 2026.Convert those after‑tax dollars to a Roth IRA
Your plan needs to allow in‑service rollovers for this step.
Once converted, those dollars can grow tax‑free in a Roth IRA.
Why People Use It
You can save much more into Roth than usual.
Tax‑free growth and tax‑free withdrawals in retirement.
No required minimum distributions from Roth IRAs.
Before You Jump In
This strategy isn’t available, or appropriate, for everyone. You’ll want to confirm:
Your employer plan allows after‑tax contributions and in‑service rollovers
You’re already maxing out regular retirement contributions
You’re comfortable with a bit of extra complexity
Is It Right for You?
For some clients, the Mega Backdoor Roth becomes a key part of long‑term tax planning. For others, simpler strategies work just as well. If you’re curious about whether this could fit into your plan, I’m happy to walk through it with you.
Logan Dimitrie, CFP® is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Logan specializes in Financial Independence, Early Retirement, Financial Planning for caregivers and Longevity Planning. Logan has been featured on the Caffeinated Conversations podcast.
Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Generally, if you take a distribution from a 401k prior to age 59 ½, you may be subject to ordinary income tax and a 10% penalty on the amount that you withdraw, in addition to any relevant state income tax. Contributions to a Donor Advised Fund are irrevocable. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
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