One of the biggest misconceptions in retirement planning is the idea that high earners are locked out of Roth IRAs forever.

They’re not.

In this episode of The Divorce the IRS Podcast, we break down one of the most powerful advanced Roth strategies available today: the Mega Backdoor Roth.

This strategy allows certain investors to move significantly larger amounts of money into Roth accounts through their employer-sponsored retirement plans, even if they earn too much to contribute directly to a Roth IRA.

We explain how the Mega Backdoor Roth works inside many 401(k) and 403(b) plans, including the role of after-tax contributions, Roth 401(k) salary deferrals, employer matching contributions, and IRS total contribution limits.

You’ll learn how some retirement plans allow participants to contribute far beyond the standard employee contribution limits and why understanding your specific plan provisions is critical before implementing this strategy.

We also walk through a detailed example showing how investors may be able to move tens of thousands of additional dollars into Roth accounts each year through after-tax contributions and Roth conversions.

If your goal is to build more tax-free retirement income and maximize long-term tax flexibility, understanding the Mega Backdoor Roth strategy could be an important piece of your retirement plan.

In This Episode

• What the Mega Backdoor Roth strategy is
• How Roth 401(k) contributions differ from Roth IRAs
• Why high earners may still have powerful Roth opportunities
• Understanding total 401(k) contribution limits
• How employer matching and profit sharing factor into the calculation
• What after-tax 401(k) contributions are
• How after-tax contributions may later convert into Roth assets
• Why some plans allow in-service Roth conversions
• A real-world Mega Backdoor Roth example explained step-by-step
• Important planning considerations before implementing the strategy

What’s Coming Next

• Roth conversion strategies explained
• How retirees may create more tax-free retirement income
• Tax planning opportunities involving pre-tax retirement accounts
• Advanced Roth planning concepts for long-term retirement flexibility

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