Login | August 14, 2026
Is a Backdoor Roth 401(k) for You?
JULIE JASON
Published: August 13, 2026
Individuals eager to increase their tax-advantaged retirement savings are considering "mega backdoor Roth 401(k) conversions" -- should you?
Let's start with some basic rules.
Most people are familiar with Roth IRAs that individuals set up on their own. I'm talking about something different: Some, but not all, employer 401(k) plans offer a Roth 401(k) option. Like a Roth IRA, a Roth 401(k) has long-term advantages because qualified withdrawals -- including both contributions and investment earnings -- are tax-free.
However, Roth 401(k) contribution limits are much higher than IRA contribution limits, and there is no income cap that prevents higher earners from contributing to a Roth 401(k). That makes employer plans an important alternative for people whose income is too high to contribute directly to a Roth IRA.
Roth IRA limits: In 2026, you can contribute up to $7,500 to a Roth IRA, or $8,600 if you are age 50 or older. But not everyone is eligible to contribute directly. For 2026, single filers can make a full Roth IRA contribution only if their modified adjusted gross income (MAGI) is below $153,000, with eligibility phasing out completely at $168,000. Married couples filing jointly can make a full Roth IRA contribution if their MAGI is below $242,000, with eligibility phasing out completely at $252,000. If your income is above those ranges, you are locked out of making a direct Roth IRA contribution.
Roth 401(k) limits: In 2026, a worker can contribute up to $24,500 to a company 401(k). A worker who is age 50 or older can make an additional $8,000 catch-up contribution, increasing the maximum employee contribution to $32,500. Workers ages 60 through 63 whose employer's plan offers the enhanced catch-up contribution may contribute a total catch-up amount of $11,250 in 2026, bringing the maximum employee contribution to $35,750.
An important note: Beginning in 2026, participants in plans that offer Roth contributions who earned more than $150,000 in prior-year wages from the plan sponsor generally must make any catch-up contributions on a Roth basis (see the IRS webpage on "Catch-up contributions" at tinyurl.com/yeaf67yy).
There is another limit for 401(k) plans: the annual additions limit under Internal Revenue Code Section 415(c). This limit includes employee elective deferrals, employer matching and profit-sharing contributions, and employee after-tax contributions that are not Roth contributions. For 2026, the annual additions limit is $72,000, excluding catch-up contributions. For participants age 50 and older, the catch-up contribution is added, bringing the total possible limit to $80,000; for participants ages 60 through 63, the total possible limit is $83,250.
For example, if you are 40 years old and contribute the maximum $24,500 to your pre-tax or Roth 401(k), and your employer matches 50 cents on the dollar with a $12,250 contribution, your total annual additions would be $36,750. That is still well below the $72,000 overall limit, leaving $35,250 of remaining room that can potentially be filled with after-tax contributions.
Those after-tax contributions are different from Roth 401(k) contributions, and using them can create an opportunity for a mega backdoor Roth conversion. In other words, even after you have maxed your regular 401(k) contributions, there may still be room to move significant additional dollars into a Roth account, where future qualified withdrawals can be tax-free.
Whether you can use this strategy depends on your plan's rules. In general, you need to confirm that your plan offers a Roth 401(k), permits after-tax employee contributions separate from Roth contributions, and allows those after-tax contributions to be converted in-plan to a Roth 401(k) or withdrawn in-service for rollover to a Roth IRA.
You will also want to involve your tax adviser in all this to review potential tax implications. The after-tax nature of the contribution itself should be tax-free on conversion, but earnings will likely be taxable.
My advice: This strategy could dramatically help secure your future in a tax-efficient way, so it's worth doing the homework. As with all retirement investing ideas, it depends on your personal situation. Go to the experts for help
Seasoned investment counsel (tinyurl.com/52nus8hz) and award-winning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, "The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)" (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at readers@juliejason.com. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.
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