Get your free financial scoreSign inYour data on this device
Free to use. No account required.

How does the mega backdoor Roth save on taxes?

The mega backdoor Roth lets high earners move large after-tax dollars into Roth accounts, where future growth and withdrawals are tax-free. It works only if your 401(k) plan allows both after-tax (non-Roth) contributions beyond the $23,500 employee limit and either in-plan Roth conversions or in-service withdrawals to a Roth IRA. The total 2025 cap on all 401(k) contributions (yours, employer match, and after-tax) is $70,000, so the after-tax room is whatever's left after your regular contributions and match. You contribute after-tax dollars, then quickly convert them to Roth so little or no growth is taxed. The tax win isn't upfront, it's decades of tax-free compounding and tax-free retirement withdrawals far beyond the normal Roth limits. Compare account types at wealthserene.com/tools/roth-vs-traditional.

All questionsBrowse the articles
Educational disclaimer. Everything on WealthSerene.com is educational and is not investment advice. Projections and calculations are illustrative; actual results depend on market conditions, your situation and factors outside this tool’s scope. For a decision specific to your situation, consult a qualified financial professional. View full disclosures