How does a mega backdoor Roth differ from a regular backdoor Roth?
They exploit different rules. A regular backdoor Roth moves money into a Roth IRA: you make a nondeductible Traditional IRA contribution (capped at the standard IRA limit) and convert it, sidestepping the Roth income limits. A mega backdoor Roth happens inside a 401(k): you make after-tax (non-Roth) contributions above the normal deferral limit, up to the overall IRS defined-contribution ceiling, then convert those dollars to a Roth 401(k) or roll them to a Roth IRA. The mega version can move far more money, often tens of thousands, but only works if your employer's plan explicitly allows after-tax contributions plus in-plan conversions or in-service withdrawals. Confirm plan features with HR; the IRS sets the overall limit annually.
Educational disclaimer: All content on WealthSerene.com is for educational purposes only and does not constitute investment advice. Projections and calculations are illustrative — actual results will vary based on market conditions, your specific situation, and many factors outside this tool’s scope. Always consult a qualified financial professional for advice specific to your situation. View full disclosures →