"For 2026, single filers with a modified adjusted gross income above $153,000 are phased out of direct Roth IRA contributions entirely. However, a growing number are routing tens of thousands of dollars into Roth accounts using the Mega Backdoor Roth strategy."
"The core decision for high earners is whether to fill the gap between the total contribution limit and what has already been contributed with after-tax dollars, which can then be converted to Roth status inside the plan."
"For a tech executive contributing $36,000 in after-tax dollars annually, that money has already been taxed. Once converted to Roth inside the plan, it grows without any further federal tax obligation."
Tech executives earning over $400,000 are increasingly using the Mega Backdoor Roth strategy to bypass Roth IRA contribution limits. This strategy allows high earners to contribute after-tax dollars to their 401(k) plans and convert them to Roth status. The total contribution limit for 401(k) plans in 2026 is $72,000, which includes employee deferrals and employer matches. By contributing after-tax dollars and converting them, executives can grow their investments tax-free, making it a favorable option for those in higher tax brackets.
Read at 24/7 Wall St.
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