If your income is too high to contribute directly to a Roth IRA in 2026, you may still have a workaround through a backdoor or mega backdoor Roth contribution. These strategies are designed to help high earners enjoy the long-term benefits of tax-free growth and tax-free withdrawals in retirement, even if their income exceeds IRS limits.
What’s the difference between a backdoor Roth and a mega backdoor Roth?
A backdoor Roth IRA is a strategy for high earners to contribute to a Roth IRA despite exceeding income limits. A mega backdoor Roth leverages after-tax contributions within a 401(k) to achieve similar tax-free growth and potentially larger contributions.
Let’s break down how each strategy works, who it’s for, and how the rules apply in 2026.
2026 Roth IRA income limits
- For 2026, single filers must have a modified adjusted gross income (MAGI) of less than $153,000, and joint filers less than $242,000, to make a full contribution.
- Whether or not you can make the maximum Roth IRA contribution (for 2026, $7,500 annually, or $8,600 if you’re age 50 or older) depends on your tax filing status and your MAGI.
What is a backdoor Roth IRA?
A backdoor Roth IRA enables individuals with income exceeding Roth IRA contribution limits to fund their accounts. There are two ways to set up a backdoor Roth IRA:
- You can initiate a backdoor Roth IRA by contributing to a traditional IRA and then rolling over the money to a Roth IRA. The traditional IRA should ideally have a zero balance before contributing, otherwise, you may face tax implications under the IRS pro rata rule.
After contributing, you must wait for any required holding period. Then, you’ll convert the account to a Roth IRA. Any investment gains during that time may be taxed. This type of contribution is classified as nondeductible, and you’ll need to report it on IRS Form 8606 when filing your taxes. Just keep in mind that there is no tax benefit for the year you establish a backdoor Roth IRA. - Depending on the provisions of your workplace 401(k) retirement plan, you may be able to do a mega backdoor Roth conversion. Some plans permit automatic Roth conversions, allowing you to make after-tax contributions that automatically convert to Roth within the account. Check with your plan administrator to see if this option is available.
This method is useful in 2026 if your Modified Adjusted Gross Income (MAGI) exceeds:
- $168,000 (single filers)
- $252,000 (married filing jointly)
Above these thresholds, you’re no longer eligible to contribute directly to a Roth IRA, but the backdoor route remains open.
Things to know about a backdoor Roth in 2026
- The contribution limit for IRAs in 2026 is $7,500 (or $8,600 if you’re age 50+).
- Earnings accrued before conversion are taxable, so it’s best to convert quickly.
- Be aware of the pro rata rule, which affects how conversions are taxed if you have other IRA balances. This strategy is used most effectively if you do not already have a rollover IRA.
- You must file IRS Form 8606 to report the nondeductible contribution and conversion.
What is a mega backdoor Roth?
A mega backdoor Roth is specifically for people with a 401(k) plan that allows after-tax contributions. Account owners can put a certain amount of post-tax dollars into their 401(k) plan and then roll it into either a Roth IRA or a Roth 401(k).
It’s important to note that the mega backdoor Roth strategy can be complex and involves several steps that can lead to unforeseen tax consequences if not executed properly. It’s a good idea to speak with a financial advisor and inquire with your 401(k) plan manager to determine eligibility.
2026 mega backdoor Roth limit
The maximum mega backdoor Roth limit is determined by each year’s 401(k) contribution limit for employees and employers, as shown in the chart below. Here’s how much you can save in a mega backdoor Roth in 2026:
- $72,000 for those under age 50
- $80,000 for those aged 50 and older
- $83,250 for those aged 60 to 63
2026 401(k) contribution limits
| 2026 401(k) contribution limit | Catch-up contribution limit | Maximum employer contribution | Total maximum 401(K) contribution | |
|---|---|---|---|---|
| Under the age of 50 | $24,500 | Not eligible | $47,500 | $72,000* |
| Ages 50 to 59 | $32,500 | $8,000 | $47,500 | $80,000* |
| Ages 60 to 63 | $35,750 | $11,250 | $47,500 | $83,250* |
| Age 64 and older | $24,500 | $8,000 | $47,500 | $80,000* |
*or 100% of employee compensation, whichever is less |
||||
Here’s how it adds up
For those aged 50 and older, the regular 401(k) contribution for 2026 is $24,500 or $32,500. If you’re aged 60 to 63, you can contribute up to $35,750, thanks to changes ushered in by the Secure 2.0 Act, which allows people to supercharge their catch-up contribution.
On or before December 31, 2026, you can put an additional $47,500 of after-tax dollars into your 401(k) account, assuming you didn’t get an employer match. If you received an employer match, you need to deduct your employer contributions from the $47,500.
If you have a Roth 401(k) at work (and the plan allows for the mega option), generally, you can choose whether the destination of your mega contributions is the Roth 401(k) or a Roth IRA. If your employer offers only a traditional 401(k), your mega contributions will go into a Roth IRA.
Some plans offer automatic conversions of after-tax contributions to Roth accounts, making the process even smoother.
Is it worth it?
Both backdoor Roth strategies can be great tools for high earners who want tax-free retirement income. Roth IRAs can also be a strategic legacy tool because your descendants can grow the account value tax-free for an additional 10 years after your passing. But these accounts aren’t for everyone.
Consider these factors:
- Your current and future tax brackets
- How much you’re already saving
- Your retirement timeline
- The complexity and administrative requirements
- Whether your plan allows the necessary conversions
If you’ve outgrown the direct Roth IRA due to income limits, the backdoor and mega backdoor Roth strategies can be viable options to consider. Make sure to understand the rules, get the right plan features in place, and consult a tax professional before proceeding.
Tax laws and contribution limits change, so staying up to date is key to maximizing your retirement strategy.
For more information, contact your wealth advisor. Not a Mercer Advisors client?
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. Links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Mercer Advisors of any of the products, services or opinions of the corporations or organizations or individuals represented in the links. Mercer Advisors bears no responsibility for the accuracy, legality or content of the external sites or for that of subsequent links. Contact the external site for answers to questions regarding its content.
