The After Tax 401(k) Move That Lets a $250,000 Earner Shelter Up to $47,500 More Per Year in a Roth Account

Mega backdoor Roth targets unused 401(k) annual addition capacity by combining employee elective deferrals, employer matching, and after-tax employee contributions. The IRS applies separate limits: an employee elective deferral cap and a higher 415(c) total annual addition cap that includes deferrals, employer contributions, and after-tax contributions. With full deferral and employer match, a high earner can leave substantial remaining room, which the plan may accept as after-tax (non-Roth) contributions. Those after-tax amounts are then converted to Roth inside the plan or rolled over to a Roth IRA soon after contribution, aiming to minimize taxable earnings. If executed promptly and supported by the employer plan, additional Roth-bound growth can be large each year.

"The IRS sets two separate caps on a 401(k). The first is the employee elective deferral limit, which is $24,500 for 2026 under IRS Notice 2025-67. The second, less famous one is the 415(c) total annual addition limit, which covers employee deferrals, employer contributions, and after-tax employee contributions combined. For 2026 that ceiling is $72,000."

"Deferring the full $24,500 and collecting a 3% employer match worth $7,500 uses $32,000 of the $72,000 cap. That leaves $40,000 of unused space. The plan, if it permits, will accept that $40,000 as after-tax (non-Roth) employee contributions. At age 50, the standard catch-up adds $8,000, which pushes the combined after-tax plus catch-up shelter close to $48,000 of additional Roth-bound money each year."

"After-tax dollars sitting in a 401(k) grow tax-deferred, but the earnings are taxable on withdrawal. The point of the maneuver is the second step: an in-plan Roth conversion or an in-service rollover to a Roth IRA, executed as quickly as possible after the contribution lands. Move the money the same pay period if the plan allows it."

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