Mega Backdoor Roth Contribution Rules – Can I Make A Mega Backdoor Roth Contribution? (2026)

2026 · CAN I MAKE A MEGA BACKDOOR ROTH CONTRIBUTION?
Have you made a maximum salary deferral contribution of $24,500 ($32,500 if age 50 or over) to your 401(k) this year?The amount you can contribute equals $72,000 minus all employer and employee contributions (excluding catch-up contributions).To optimize the strategy, convert as soon as permissible within the plan. This will minimize the tax costs and maximize duration of favorable Roth treatment.This feature will allow you to roll over only your after-tax subaccount, and you can manage your pre-tax subaccount separately.If you act promptly, you can minimize the earnings that accrue in the after-tax subaccount (which will have pre-tax character) and move the funds into your Roth IRA for tax-free growth and distributions.In most cases, you should max out these contributions before proceeding with a Mega Backdoor Roth contribution.Is there room under the ACP test for you to make additional contributions? (The answer can be found by consulting with the plan sponsor.)Is the sum total of all contributions made this year (employer and employee, excluding any catch-up contributions) less than $72,000?You can convert your non-Roth, after-tax contributions, but must also convert any earnings thereon, which will be a taxable conversion.You must wait until you leave your employer to roll over your account, and all growth will accrue as pre-tax dollars.If you can afford to pay the tax and want to maximize your Roth savings, you can roll these funds into your Roth IRA, making a taxable conversion.All pre-tax contributions and all earnings (including those on non-Roth, after-tax contributions) are taxable, but can be rolled to a traditional IRA to delay a taxable event.Upon separation from your employer, you can roll the non-Roth, after-tax contributions to a Roth IRA.All distributions from your account must be funded proportionately with pre-tax and after-tax dollars, per the Pro Rata Rule.Will the 401(k) plan allow you to make non-Roth, after-tax contributions? (The answer can be found in the Summary Plan Description.)Sorry, you cannot make a Mega Backdoor Roth contribution. Does the 401(k) plan allow for in-service (non- hardship) distributions?Does the 401(k) plan allow in-plan Roth conversions?Does the 401(k) plan maintain separate subaccounts for pre-tax and after-tax contributions?NoYesYesNoYesNoYesNoNoYesYesNoNoYesYou can roll the non-Roth, after-tax contributions to a Roth IRA.START HERE
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Joanne Burke, CFP®, CPA/PFS
705 Birch ST SW Vienna, VA 22180-6308
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