A 52-year-old earning $275,000 annually with $2.5 million in assets is considering a mega backdoor Roth conversion to boost tax-free retirement savings. The couple already maximizes 401(k) contributions and backdoor Roth IRAs but has limited Roth assets at just $35,000 combined. Their current portfolio includes $1.37 million in taxable investments, $868,000 in a 401(k), and $210,000 in their wife's 401(k).

Financial planners say the strategy makes sense only after maxing out traditional 401(k) contributions. The mega backdoor Roth allows high earners to contribute after-tax dollars to a 401(k) and convert them to Roth accounts, bypassing income limits that typically restrict direct Roth contributions. In 2026, individuals can contribute up to $7,500 to IRAs compared with $24,500 for 401(k) plans, making the conversion particularly attractive for those seeking tax-free growth.

However, the strategy requires employer participation, specifically allowing after-tax contributions and either in-plan conversions or in-service withdrawals. The couple's employer currently permits after-tax contributions but lacks in-plan conversion capabilities. While requesting this feature could benefit multiple high-earning colleagues, companies must navigate complex IRS regulations and administrative requirements. Alternative strategies include maximizing Health Savings Accounts for triple tax advantages or maintaining taxable accounts for liquidity, though the couple already contributes $7,000 monthly to such investments.