The Fine Print on Mega Backdoor Roth Conversions

High earners: Don't miss this mega backdoor Roth strategy

Here's what you need to know:

Your 401k plan MUST allow after-tax contributions AND either in-service withdrawals or in-plan Roth conversions. Most plans don't offer both—check with your plan administrator first.

Timing is everything. Any earnings on after-tax dollars are taxable when you convert. If you contribute $10,000 and it grows to $10,500 before converting, that $500 gets taxed as ordinary income.

The solution? Convert as quickly as possible after each contribution—ideally the same day. Some plans even automate this process so you avoid building up taxable gains entirely.

For 2026, you can potentially move up to $47,500 into a Roth through this strategy if you're under 50—but only if your plan supports it.

This is one of the most powerful tax strategies available to high earners, but the devil is in the details.