Your 401(k) may have a feature hiding in plain sight that could allow you to move tens of thousands of additional dollars into Roth savings each year.

Check out the full article here: https://www.surehorizonretirement.com/mega-backdoor-roth-high-earners

It’s called the Mega Backdoor Roth — an unfortunately complicated name for a strategy that is actually pretty straightforward once you understand how it works.

In this episode of Retire Free, Jeff Kikel breaks down the Mega Backdoor Roth in plain English and explains why your 401(k) actually has two different contribution limits.

For 2026, most employees can defer $24,500 from their paycheck into a 401(k). But there is also a much larger $72,000 total contribution limit from all sources, before applicable catch-up contributions.

That difference can potentially create a significant amount of unused retirement savings room.

Jeff walks through the three basic steps:

1. Make an after-tax contribution to your 401(k)

2. Convert those dollars to Roth

3. Convert promptly to minimize taxable earnings

But there’s an important catch: not every 401(k) allows it.

Your employer's plan needs to permit after-tax employee contributions and provide a way to convert those dollars to Roth. Jeff explains exactly what to look for in your Summary Plan Description and what to ask your 401(k) recordkeeper.

You'll also hear why having access to a Mega Backdoor Roth doesn't necessarily mean it should be your next financial move.

Before committing additional money to retirement accounts, you may need to address your emergency reserves, accessible savings, other tax-advantaged accounts, and any significant concentration in company stock.

That's why Jeff considers the Mega Backdoor Roth a surplus-savings strategy — the last bucket you fill, not the first.

In this episode:

• The two 401(k) contribution limits most people don't know about
• How much additional 401(k) room you could potentially have
• How after-tax 401(k) contributions work
• How those contributions get converted to Roth
• Why the timing of your conversion matters
• The two plan features required for the strategy
• How to find out whether your employer's plan allows it
• The potential long-term value of Roth retirement income
• The liquidity trade-off you shouldn't overlook
• Where the Mega Backdoor Roth fits in your overall savings priorities

Learn more and read the complete article at Freedom Day Wealth Management.

Jeff Kikel

President / Chief Investment Officer

Freedom Day Wealth Management LLC

More Than A Finish Line.

Build Wealth. Protect What Matters. Live Free.

This episode is for educational purposes only and is not individualized investment or tax advice. Tax rules and retirement-plan provisions can change and vary by plan. Consult a qualified professional regarding your individual circumstances.

There is

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Probably a feature sitting inside

your 401right now that you can

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move up to $30,000 a year into a

tax-free retirement savings, and

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most people would scroll right past

it because it has a terrible name.

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It's called a mega backdoor Roth.

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Let me show you what this actually is and

whether the plan allows it, and honestly,

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whether it's even worth doing for you

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Cedric: This is Exit Rich,

Retire Free, with Jeff Kickel.If

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you have built something worth protecting,

a business, a career, a portfolio, this

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is where you figure out how to keep it,

and how to walk away on your own terms.

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No hype.

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No hot takes.

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Just the numbers, where they

came from, and what they

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actually mean for your money.

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Build wealth.

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Exit rich.

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Retire free.

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Here's Jeff.

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Jeff Kikel: So inside of your 401,

there's a piece that almost nobody knows.

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Your 401has two limits, not one.

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The first one is the one you know about.

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In twenty twenty-six, you can defer

twenty-four thousand five hundred

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dollars out of your own paycheck.

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If you're if you're fifty or older, you

can add eight thousand more, and if you

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happen to be sixty through sixty-three,

eleven thousand three hundred and fifty.

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The second limit is much bigger.

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The tax code caps everything that goes

into your 401from every source, your

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deferrals, plus company match, plus profit

sharing at seventy-two thousand dollars.

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And catch-up sits on top

of that, not inside of it.

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So do the math.

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You put in twenty-four five.

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Your employer puts in,

say, twelve thousand.

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That's thirty-five thousand five hundred.

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Of 72,000.

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You've got $35,000 of

unused room in your 401.

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So how do you fill it?

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The mega backdoor Roth just

fills that room in three steps.

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So step one, you make an after-tax

contribution to your 401.

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Now, this is not Roth, it's not pre-tax.

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It does come from payroll

contributor from payroll.

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You can't just write a check and put

it in there, and that's a separate

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bucket called after tax inside your plan

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Those do not count against

the twenty four five.

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They count against the

seventy-two thousand.

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Step two, you convert these dollars

to Roth, either inside the plan

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or by rolling them to a Roth

IRA while you're still working.

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You already paid tax on that money, so the

conversion generally costs you nothing.

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Step three, and this is the one

that people blow, you do it fast.

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Any earnings that pile up in the

after-tax bucket before you convert

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are taxable when you convert them.

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If your plan has an automatic

conversion feature to it that

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goes every pay period, turn it on.

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If you have a req- or if you have

to request it, then do it monthly,

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but don't wait until December.

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Now, here's the one big caveat to This is

not something you can elect on your own.

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Your employer has to have it built, or

both pieces built into the plan, after-tax

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contributions and a way to convert them.

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If you only have one of

those, this is not gonna work.

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About half of large employers or large

employer plans have this, and it's

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a lot more common in the tech field.

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Open your summary plan description and

search for the words after-tax, then

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search for in-plan Roth, or call your

record keeper and ask those two feature

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or ask for those two features by name.

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Do not ask if they offer

a mega backdoor Roth.

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They're not gonna know what it is.

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Half the time the person on the

phone has never even heard the term

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So is it worth doing this?

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Usually yes, with one real catch.

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The upside's genuine.

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That money grows tax-free instead of

throwing off taxable dividends every

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year in a taxable outside account.

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And Roth dollars give you something

else later, retirement income

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that does not show up as income.

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That matters when your required

distributions start pushing your

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bracket up and when Medicare is

setting your premiums on, or setting

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premiums off of your tax return.

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But the cost is liquidity.

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Once it goes in, it's retirement money,

so you need to fund your cash reserve

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first, make sure you have a little bit of

money in a taxable account that you can

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actually reach, fund your HSA account,

make sure you're doing your regular

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IRA contributions and maxing that out,

make sure that you are dealing with any

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concentrated company stock, and then put

the surplus in the mega backdoor Roth.

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So the last item on the

list, not the first.

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Now, if you want to work out whether

your plan has the room and whether

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the next dollar belongs here or some-

somewhere else, this is the kind of

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thing we map out at Freedom Day Wealth.

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There's a full write-up on the blog,

and it'll be included in the show

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notes page with the 2026 numbers.

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Come find us at freedomdaywealth.com.

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I'm Jeff Kikel, Exit Rich Retire Free.

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Now, this is for education,

not investment or tax advice.

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Talk to a qualified professional

about your own situation, and

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I'll see you here the next time.

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Cedric: If you are interested in

learning more about this check out the

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blog article that is in the show notes.