A “mega backdoor Roth” is a different and much larger strategy than the standard backdoor Roth IRA, and it only works if your employer’s 401(k) plan specifically allows after-tax contributions (beyond the regular pre-tax/Roth deferral) and in-service withdrawals or in-plan Roth conversions. Not all plans offer this – you have to check your plan document or ask your plan administrator.

Here is the mechanism: the 2026 employee elective deferral limit for 401(k) plans is $24,500 (IRS Notice 2025-67), but the overall limit on total contributions to a defined contribution plan from all sources – employee, employer match, and after-tax – is significantly higher (the IRS set this “415(c) limit” at $70,000 for 2025, and it adjusts for inflation each year). The gap between your regular deferrals plus employer match and that overall limit is the room available for after-tax contributions, which can then be converted to Roth.

Once the after-tax money is in the plan, you convert it to Roth (either an in-plan Roth 401(k) conversion or a rollover to a Roth IRA) as soon as possible, since any earnings on the after-tax money before conversion are taxable. This is a legitimate, IRS-recognized use of existing 401(k) plan provisions – it depends entirely on your specific plan’s design, which is why not everyone can use it.

FAQ

Is a mega backdoor Roth the same as a backdoor Roth IRA? No. The backdoor Roth IRA uses a Traditional IRA; the mega backdoor Roth uses after-tax contributions inside a 401(k) plan and can move much larger amounts.

How do I know if my plan allows it? Ask your HR or plan administrator whether the plan permits after-tax (non-Roth) contributions and in-service distributions or in-plan Roth conversions.