Mega Backdoor Roths

The mega backdoor Roth strategy is a great option for high earners at a company that allows After-tax 401(k) contributions. Hear from Commas advisor Katelyn to learn why this may be the right choice for you.

“When you think about saving into a 401(k) plan, you traditionally think of making pre-tax or Roth contributions. But there’s another category called After-tax contributions and, in certain company 401(K) plans, After-tax contributions allow you to save above that limit and then we can convert those dollars into Roth. Roth is one of our favorite types of retirement accounts and so the more dollars we can get in there the better.

Examples of 401k companies that do this would be Google, Netflix, or Microsoft but it’s not exclusive to those large companies. It’s really important to look in your 401k plan document to see if these types of contributions are offered. Granted, we want to make sure that we’re prioritizing short-term goals and long-term goals, but if you have the capability to save more into retirement this is a great option for you.”