How to Model a Mega Backdoor Roth

A Mega Backdoor Roth is a strategy that lets you contribute large amounts of after-tax money to your workplace 401(k) plan, then convert those funds into a Roth account. This allows you to build greater tax-free retirement savings beyond standard contribution limits.

A Mega Backdoor Roth combines two types of contributions inside a 401(k) plan:

• Regular pre-tax or Roth 401(k) contributions – your normal employee deferrals and any employer match
• After-tax contributions – additional contributions beyond the normal limit, which are automatically converted to Roth each year

The total 401(k) contribution limit (including employee, employer, and after-tax) is $70,000 per year, or $77,500 if age 50 or older, or $81,250 for ages 60–63 under the special catch-up provision (2025 limits).

Setting Up a Mega Backdoor Roth

You’ll need two Cash Flow Priorities set up in the correct order. This ensures normal 401(k) contributions and employer match occur first, and any remaining contribution space is used for after-tax conversions.

Step 1: Add Your Regular 401(k) or Roth 401(k) Cash Flow Priority

This Cash Flow Priority represents your normal 401(k) contributions and employer match:

• Choose 401(k) or Roth 401(k)
• Include your contribution and any employer match
• Make sure this Cash Flow Priority appears above the Mega Backdoor Roth in the Cash Flow Priority list

Step 2: Add a Second Cash Flow Priority for the Mega Backdoor Roth

Add another Roth 401(k)/403(b) Cash Flow Priority directly below the first one:

• Set the contribution type to Mega Backdoor Roth
• Choose an amount:
  • Maximize Remaining Space
  • % of Income
  • Specific Amount
• Choose your conversion destination:
  • In-plan conversion → converts to Roth 401(k)
  • Rollover conversion → rolls over to Roth IRA
• This Cash Flow Priority will use any remaining 401(k) contribution space after your normal contributions and match