https://www.bankrate.com/retirement/backdoor-roth-ira-vs-mega-backdoor-roth-ira/
What is a mega backdoor Roth?
The backdoor Roth is a good way to grow wealth without paying taxes on earnings, but the pro-rata rule makes it infeasible for some. In that case, the mega backdoor Roth might be a viable alternative.
The mega backdoor Roth works a little differently. With this strategy, you usually contribute the maximum amount to a 401(k), which is $22,500 in 2023 ($30,000 for those 50 and over). Then, you contribute an additional $43,500 in after-tax dollars to your 401(k), assuming no employer match. Finally, you convert the money to a mega backdoor Roth, which can be either a Roth IRA or Roth 401(k), if your plan allows.
The reason for the $43,500 limit is this plus either $22,500 or $30,000 puts you at the maximum total contribution for the year. You must deduct that from the $43,500 if your employer offers matching contributions.
To pursue this strategy, your employer’s plan must allow after-tax contributions to their 401(k). It must also allow either in-service distributions or let you move money from an after-tax part of your plan to the Roth 401(k) part of your plan.
While this strategy is more complex than the backdoor Roth, it can be worth it for those who earn a lot — and whose employers’ plans have the characteristics necessary to enable the mega backdoor Roth.
