The After-Tax 401(k) Move That Lets High Earners Shelter $36,250 More in a Roth Every Year in 2026
High earners can funnel an extra $36,250 annually into a Roth by filling unused 415(c) plan space with after-tax contributions and converting immediately. Contributing $36,250 yearly from age 45 to 65 moves roughly $725,000 of principal into a tax-free account, shielding withdra
High earners can funnel an extra $36,250 annually into a Roth by filling unused 415(c) plan space with after-tax contributions and converting immediately.
Contributing $36,250 yearly from age 45 to 65 moves roughly $725,000 of principal into a tax-free account, shielding withdrawals from IRMAA surcharges and Social Security taxes.
Only 36% of plans offered Roth in-plan conversions in 2024, so workers must confirm their plan document permits both after-tax contributions and in-service conversions before acting.
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A 45-year-old software engineer earning $250,000 walks into open enrollment having already done the obvious things. The full $24,500 pre-tax deferral is going in. The employer match (assumed here at $11,250, or roughly 4.5% of salary) is captured. A direct Roth IRA is off the table because single-filer income blew past the $153,000 to $168,000 phase-out years ago. That is where most high earners stop. It is also where the biggest legal Roth funding lever in the U.S. tax code is sitting unused on their plan document.
The 401(k) employee deferral cap gets all the press. The IRS Section 415(c) cap, which governs total annual additions to a defined contribution plan, gets almost none. For 2026 the 415(c) limit is $72,000 for participants under 50, and it includes employee deferrals, employer match, and any after-tax employee contributions stacked on top.
Run the subtraction in the scenario above. Start at $72,000. Take out the $24,500 pre-tax deferral. Take out the $11,250 employer match. What is left is $36,250 of unused space inside the plan. If the plan document permits after-tax employee contributions and in-service Roth conversions, that $36,250 can be funded with after-tax dollars and immediately rolled to the Roth side of the 401(k) or to a Roth IRA. The earnings then grow tax-free forever.
That is the mega backdoor Roth, and the binding constraint sits with the employer's plan administrator, who must turn both switches on.
