Backdoor & Mega Backdoor Roth

Why you'd need this

Roth IRAs have an income limit — once you earn too much, the IRS won't let you contribute directly. The 'backdoor' is a legal, well-established workaround that gets money into a Roth anyway.

The regular backdoor Roth

Contribute to a Traditional IRA (there's no income limit on contributions, only on whether they're tax-deductible), then convert that balance to a Roth IRA. You only owe tax on any growth between the contribution and the conversion — do it quickly to keep that near zero.

Watch for the pro-rata rule: if you already hold other pre-tax IRA money, the IRS treats the conversion as a proportional mix of pre-tax and after-tax dollars, which can create an unexpected tax bill. This is the part worth double-checking with a tax professional before doing it.

The mega backdoor Roth

This one only works if your 401(k) plan specifically allows after-tax contributions beyond the standard employee limit, plus either in-plan Roth conversions or in-service withdrawals. Where available, it can let you funnel tens of thousands of extra dollars a year into Roth space.

Not every employer plan supports this — check your plan documents or ask HR/your plan administrator directly.

Is this you?

This only matters once you're already maxing your regular 401(k) and IRA and still have money left to invest, and you earn too much for a direct Roth contribution. Most people reading this site aren't there yet — and that's completely fine.