Taking advantage of the mega backdoor Roth IRA can accelerate any employee’s retirement savings.
- For a typical employee with a company 401k plan, the maximum amount they can put into their retirement account is $22,500 for 2023 ($30,000 if you’re over 50).
- If they were to contribute to a Roth IRA, the contribution limit is just $6,500 for 2023 ($7,500 if you’re over 50).
- With a mega backdoor Roth IRA, you can supersize your contribution limit up to $66,000 in 2023 ($73,500 if you’re over 50 years old), and the entire amount can go into a Roth account.
However, not all employees are able to take advantage of this option. It entirely depends on how your company’s 401k plan is set up.
In order for a company’s employees to be able to get a mega backdoor Roth IRA, it needs to offer two specific things:
- The company 401k plan must allow after-tax contributions.
- The company 401k plan must allow Roth conversions on after-tax conversions.
Some companies realize how big of a tax-advantage the mega backdoor Roth IRA can be, and have set up their company plans to provide the option for their employees.
Here’s a list of 50 notable companies that offer the mega backdoor Roth IRA option.
Companies that provide the mega backdoor Roth IRA
- Johnson & Johnson
- John Hancock
- The Trade Desk
- Wells Fargo
Alternative option if your company does not offer the mega Backdoor Roth IRA
If your company does not provide this option, you have an alternative method that can be even better: The mega backdoor Roth solo 401k. If you have any sort of self-employment income, and have no full-time employees under your business operation, you could open a solo 401k and use it for executing the mega backdoor Roth strategy with a solo 401k.