Most people know about Traditional and Roth 401(k) contributions.
But there’s a third, lesser-known option hiding in plain sight: after-tax contributions to a traditional 401(k) — and it can open the door to a powerful strategy called the Mega Backdoor Roth.
Here’s how it works in plain English:
✅ Traditional 401(k) = Pre-tax money goes in, you pay taxes later
✅ Roth 401(k) = Post-tax money goes in, grows tax-free, and comes out tax-free
✅ After-tax (non-Roth) 401(k) = Also post-tax, BUT not the same as Roth!
The key difference? After-tax contributions can be rolled into a Roth IRA or Roth 401(k), allowing you to go beyond the annual Roth limit and supercharge your tax-free retirement savings.
🗓️For 2025:
You can contribute $23,500 in pre-tax or Roth 401(k) deferrals (IRS)
If you're 50+, add $7,500, or $11,250 if you're 60–63
Total contributions (employee + employer + after-tax) can reach:
$70,000 if you're under 50
$77,500 if you're 50+
$81,250 if you're age 60–63
(IRS Notice 2024-80, Thomson Reuters)
But here’s the catch…
➡️ Many people don’t realize their plan allows after-tax contributions
➡️ Even fewer are using in-plan Roth conversions or Roth IRA rollovers
➡️ And lots of folks mistakenly think after-tax 401(k) = Roth (it’s not!)
If you’re a high earner or nearing retirement, this is a game-changer. And if you’re newly retired, it’s still worth exploring — especially for tax diversification.
Want to explore if this fits your strategy?
📤Email: bpaluso@hpkprovident.com
📞 Call: (724) 463-1331
🖥️www.hpkprovident.com