2024 Update: Here's a Mega Strategy to Turbo-Charge Your Retirement Savings


The Mega Backdoor Roth Contribution

Many of us are familiar with the benefits of saving for retirement using 401(k) and IRA contributions to build that retirement nest egg - but if you think it stops at $23,000 into your 401(k) and $7,000 into your IRA, then you may be in for a pleasant surprise. Here's how to turbo-charge your retirement savings using IRS-approved strategies, which are widely available to, but under-utilized by, millions of people saving for retirement.

The Basics: 401(k) and IRA Contributions

In 2024, you can contribute up to $23,000 on a pre-tax (i.e., tax-deductible) basis into your 401(k) and another $7,000 into either a Roth or Traditional IRA. If you are age 50 or older, you can contribute an additional $7,500 into your 401(k) and an additional $1,000 into your IRA. Employers often provide you with a match on a portion of your 401(k) contributions. However, there are limitations.

  • You cannot contribute directly to a Roth IRA where your Adjusted Gross Income (AGI) exceeds $161,000 (Single) or $240,000 (MFJ) in 2023.
  • You will not get a tax deduction for your Traditional IRA contributions where you participate in a company plan, such as a 401(k), and your AGI exceeds $87,000 (Single) or $143,000 (MFJ).
  • If your spouse participates in a company plan, and you do not, you won’t get a deduction for a Traditional IRA contribution where joint AGI exceeds $240,000.

Roth Accounts – R is for Rolls-Royce

Roth accounts are often viewed as the Rolls-Royce of retirement accounts because they provide not only tax-free accumulation and compounding over time, but they are also tax-free upon withdrawal in retirement. Add in the fact that the IRS will never require you to take a Required Minimum Distribution (RMD) on a Roth account, and you have a very powerful “tax-free forever” vehicle to build wealth.

The limitation with Roth accounts is that they are not easy to get funded with substantial amounts of cash due to the $7,000 per year direct contribution limit and the prohibition on direct contributions where income exceeds $161,000 (Single) and $240,000 (MFJ). However, there are strategies to circumvent these restrictions. The two best-known strategies are:

  1. Making post-tax contributions to a Traditional IRA and then immediately converting these contributions to a Roth IRA account without tax consequences – this strategy is often referred to as the “Backdoor Roth Contribution” technique (not to be confused with a “Mega Backdoor Roth Contribution”). It is a good strategy, but it only gets $7,000 annually into your Roth - $8,000 if you are over 50.
  1. Converting an existing Traditional IRA to a Roth IRA – there is no limit on the amount you can convert, but it will generate a hefty tax bill at your top marginal tax bracket on the amount converted.

There is, however, a third and much more powerful strategy for funding your Roth account without the annual $7,000 limitation or the need to subject the converted amount to your top marginal tax rate. It is known as the Mega Backdoor Roth Contribution technique.

Key Benefits of the Mega Backdoor Roth Contribution Strategy

This powerful, but rarely utilized, benefit is only available as part of your employer 401(k). It allows employees to first make very large post-tax contributions into the 401(k) plan and then convert these after-tax 401(k) contributions to a Roth account.

  • The Mega Backdoor Roth can provide tax-advantaged retirement accumulation greater than all the other tax-advantaged savings plans combined -- not only will your contributions and earnings grow tax-free, but your withdrawals will also be "tax-free forever" in retirement.
  • You have the ability to put more into retirement savings via the Mega strategy-- up to $76,500 per year vs. $23,500 for a regular 401(k) contribution strategy.
  • It uses established 401(k) plans and carries no risk of challenge from the IRS.



You might be sitting on a retirement savings goldmine with your 401(k) and not even realize it. To learn more about the full benefits of the Mega Backdoor Roth Contribution Strategy and how it works, download our full white paper, Create Mega Value Using Your 401(k): How to Put Up to $72,500 per Year Into Retirement.


Which Companies Provide the Mega Backdoor Roth Option?

Here is just a sample of those companies that facilitate the Mega Backdoor Roth strategy.

Companies Offering Mega Backdoor Roth Strategy as of 2023

Akamai GitHub Palo Alto Networks Stripe
Amazon Google PayPal Target
Apple HBO Pitney Bowes Tenable
Asana Humana Puppet Teradata
AstraZeneca IBM Qualcomm The Clorox Company
AT&T Intel Qualtrics The Trade Desk
Autodesk Intuit QuantumBlack Thomson Reuters
Blend John Hancock Raymond James Title365
Boeing Johnson & Johnson Roblox Two Sigma
Carta L’Oreal Roku Uber
Cisco LabCorp Salesforce UiPath
Coupa Software LinkedIn Samsung VMware
Coupang Mastercard Sandia National Labs Waymo
Coursera McKinsey ServiceNow Wells Fargo
Cruise Microsoft SmartNews Workday
Dell Technologies NBCUniversal Snap Xander
DocuSign Netflix Spectrum Yahoo
Envestnet Nevro Splunk Zillow
Exelon Optiver Square Zoom
Facebook Oracle Squarespace Zynga
Fannie Mae Palantir 2023


If you see your company in the list, we can help you implement the Mega strategy. If you don’t see your company, we can help advise you if your company does or doesn’t offer the strategy – our list is by no means definitive. Note that the exact features for 401(k) plans can be very plan-specific – because every 401(k) plan will have different rules, the plan documents must be thoroughly reviewed in order to maximize the Mega Backdoor Roth benefits.

Contact BakerAvenue to review your 401(k) documents, advise on optimal contribution levels, and help you implement your Mega strategy every step of the way.