Pages

Blogs and Insights

News

People

  • Our Services
    Individuals & Families Corporations Nonprofits
    Back

    Who We Serve

    • Individuals & Families
        • Wealth Management
          • Investment Solutions
          • Estate and Gift Planning
          • Financial Planning
          • Insurance Planning & Risk Management
          • Tax Planning & Preparation
          • Marital Financial Planning
          • Cross-Border
          • Trust Services
          • Wealth for Women
        • Business Owner Advisory
          • Business Owner Financial Planning
          • Practice Owner Financial Planning
          • CFO & Accounting Services
        • Family Office
    • Corporations
        • Workplace Solutions
          • Executive Financial Counseling
          • Beneficiary Financial Counseling
        • Retirement Plan Consulting
          • Defined Benefit Plans
          • Defined Contribution Services
        • Corporate Venture Capital
          • For Corporations
          • For Entrepreneurs & Investors
    • Nonprofits
        • Advisory for Nonprofits
        • Cerity Partners OCIO
  • About Us
    Our Team Locations Careers Awards & Accolades Join Our Partnership Contact
    Back

    About Us

    Our advisors utilize their experience and expertise and that of their colleagues to develop the best solutions for your complex personal and professional financial situations.

    • Our Team
    • Locations
        • Arizona
        • California
        • Colorado
        • Florida
        • Georgia
        • Illinois
        • Indiana
        • Kentucky
        • Maryland
        • Massachusetts
        • Michigan
        • New Jersey
        • New York
        • North Carolina
        • Ohio
        • Pennsylvania
        • Texas
        • Virginia
        • Wyoming
    • Careers
    • Awards & Accolades
    • Join Our Partnership
    • Contact
  • Insights
    Back

    Insights & Resources

    Actionable planning strategies to inform and guide your decision-making.

    • Insights
    • News
    • Upcoming Webinars
  • Login
    Back

    Login

    • Addepar
    • Orion
    • Black Diamond
    • eMoney
    • Cerity Partners Cash Management
    • MoneyGuide Pro
    • ShareFile
    • Box | Login
    • Secure Email
Login
  • Addepar
  • Orion
  • Black Diamond
  • eMoney
  • Cerity Partners Cash Management
  • MoneyGuide Pro
  • ShareFile
  • Box | Login
  • Secure Email
Request an Intro
  • Login
    Back

    Login

      Howdy

    • Addepar
    • Orion
    • Black Diamond
    • eMoney
    • Cerity Partners Cash Management
    • MoneyGuide Pro
    • ShareFile
    • Box | Login
    • Secure Email
  • Legal

Why the Mega Backdoor Roth Conversion Should Be on HR’s Radar in 2025

Let the experts at Cerity Partners help you elevate your organization's benefits offerings and support employee financial wellness.

As we look toward 2025, the competition to attract and retain top talent continues to intensify. Companies are evaluating every aspect of their Total Rewards programs to ensure they deliver meaningful value to employees. One feature that is quietly gaining attention—but deserves more spotlight—is the Mega Backdoor options in Retirement Plans. This sophisticated retirement savings tool is not just a benefit for employees; it’s also a strategic differentiator for HR teams looking to strengthen their plan design.

Here’s what you need to know about the Mega Backdoor Roth Conversion, why it matters to your role, and how it benefits employees.

1

What is the Mega Backdoor Roth Conversion?

The Mega Backdoor Roth Conversion is a sophisticated savings strategy that allows employees to contribute after-tax dollars to their 401(k) accounts beyond the standard limits for pre-tax or Roth contributions. After these after-tax contributions are made, employees can convert the funds into a Roth account—either within the 401(k) plan or by rolling them into a Roth IRA. The key advantage of this approach is the ability to achieve tax-free growth on both contributions and earnings, provided certain IRS rules are followed.

This strategy is particularly valuable for high-income earners who are often restricted from contributing directly to a Roth IRA due to income limits. For example, in the 2024 tax year, single taxpayers earning $161,000 or more and married taxpayers filing jointly with incomes over $240,000 are ineligible to contribute directly to a Roth IRA. The Mega Backdoor Roth feature provides a workaround, enabling these individuals to leverage after-tax contributions in their workplace retirement plan to access Roth savings and create a significant tax-free growth opportunity for the future.

To break it down, the Mega Backdoor Roth strategy generally involves two key steps:

  1. Making After-Tax Contributions: This starts with a specific type of contribution—after-tax 401(k) contributions, which differ from both Roth 401(k) and pre-tax contributions. After-tax contributions allow employees to exceed the annual deferral limits for pre-tax and Roth contributions, up to the total IRS-defined contribution limit, which includes employer contributions. For 2024, this limit is $66,000 (or $73,500 for those age 50 and older with catch-up contributions).
  2. Converting Contributions to a Roth Account: Once after-tax contributions are made, employees can convert these funds into a Roth IRA or Roth 401(k). The conversion ensures that future earnings grow tax-free, a major benefit for those planning for retirement.

Not all 401(k) plans offer the Mega Backdoor Roth feature, as it requires the plan to accommodate both after-tax contributions and in-plan Roth conversions or rollovers to a Roth IRA. As an HR leader, it’s essential to evaluate your plan design and determine if this option can be implemented. By ensuring the necessary plan features are in place, you can offer this benefit to employees who may find it valuable for their financial goals.

The Mega Backdoor Roth strategy is especially advantageous for individuals looking to maximize their retirement savings and overcome the limitations of traditional Roth or pre-tax contribution options. By combining the benefits of after-tax contributions with the tax-free growth potential of a Roth account, this feature helps high-income earners strategically build wealth and secure a more financially robust retirement.

2

Why HR Professionals Should Care

Total Rewards leaders have a lot on their plate, from staying compliant with regulations to designing benefits programs that align with employee needs while balancing business objectives and budget constraints. Ensuring a modern plan design that meets the expectations of today’s workforce is key to attracting and retaining top talent. Adding the Mega Backdoor Roth Conversion to your benefits toolkit can help you excel in several ways.

In a competitive market for top talent, offering differentiated benefits like the Mega Backdoor Roth Conversion demonstrates your company’s commitment to supporting employees’ financial well-being, particularly for high-income earners and executives, who often base their decisions about joining or staying with an organization on the quality and competitiveness of its benefits.

This advanced feature not only addresses financial stress—a known productivity killer—by helping employees maximize savings and achieve long-term security, but it also aligns with strategic HR priorities by delivering high perceived value at relatively low cost. By incorporating this innovative benefit, you position your organization as a leader in Total Rewards, enhancing employee engagement and retention while achieving your broader goals.

3

How It Helps Employees

While the Mega Backdoor Roth feature may sound technical, its benefits for employees are straightforward and compelling:

  1. Maximizes Savings Potential

Employees can contribute significantly more toward their retirement—up to the annual IRS-defined contribution limit, which includes employer contributions. For high-income earners who are ineligible to contribute directly to a Roth IRA, this strategy provides a valuable opportunity to save tens of thousands of additional dollars each year in a tax-advantaged way.

  1. Delivers Tax-Free Growth

Unlike traditional 401(k) contributions, funds in a Roth account grow tax-free and can be withdrawn tax-free in retirement, offering significant tax advantages over time.

  1. Provides a Strategic Advantage

High-income employees who have maxed out their standard 401(k) contributions often have limited options for additional tax-advantaged savings. The Mega Backdoor Roth provides a way to continue building wealth efficiently and strategically.

4

What HR Leaders Need to Know About Implementation

Before rolling out the Mega Backdoor Roth feature, it’s essential to understand its mechanics and ensure your organization is prepared to support it effectively. Start by evaluating your 401(k) plan design, as not all plans allow for after-tax contributions or in-plan Roth conversions.

Educating employees about how the Mega Backdoor Roth works and who benefits from it is equally critical. Rather than relying solely on your retirement plan provider, consider engaging financial planning experts like Cerity Partners. We specialize in delivering tailored education sessions that help employees see how this feature fits into their overall financial strategy. For those who determine it’s the right fit, our advisors provide personalized guidance to seamlessly integrate the Mega Backdoor Roth into their financial plans.

Lastly, ensure compliance with IRS regulations and contribution limits. Cerity Partners can help your organization establish clear communication and oversight processes, minimizing the risk of costly errors while maximizing the impact of this innovative benefit.

Looking Ahead

The Mega Backdoor Roth feature isn’t just a niche financial tool—it’s a strategic asset for HR teams looking to elevate their benefits offerings and support employee financial wellness. By making this feature available and educating employees about its advantages, you can enhance your Total Rewards strategy, strengthen retention, and position your organization as a leader in innovation.

As you plan for 2025, consider how the Mega Backdoor Roth feature can fit into your broader benefits goals. In an era where every detail counts, this feature has the potential to make a meaningful impact for both your workforce and your company.

Meet Katie Pfeifer

Katie is a Partner and the Head of Workplace Solutions in the Louisville office where she is responsible for developing strategy for onboarding new...Read more

Meet Katie
Katie Pfeifer

Please read important disclosures here.

Related Reading

blog image background

Meg Rowley

Partner & Practice Leader

Individuals and Families

All-Weather Advisor

June 18, 2020 - Effective wealth management requires the assistance of an all-weather advisor—someone who embraces their role during both bull and bear markets to help you achieve your…

blog image background

Paul D’Elia

Partner

Corporations

Why Financial Planning Belongs as a Workplace Perk

July 28, 2022 - Competing for top talent in a global marketplace requires giving the best candidates a compensation and benefit package that covers their needs and protects their…

Katie Pfeifer

Book a 30 minute, no-obligation meeting.

Share your company’s financial landscape with us—no cost, no obligation. We’ll listen and tailor our insights to meet your team’s unique needs and goals.

Request an Introduction

Curious about learning more? Let's talk.

Discover Customized Financial Solutions for Your Workforce

Tell us about your company's financial landscape at no cost or obligation. We’re here not just to offer solutions, but to listen, learn, and tailor our insights to meet the distinct needs of your workforce. Together, we can build a strategy that resonates with your team and aligns with your organizational goals.

Eric Purdy's headshot

Eric Purdy

Partner

Discover Customized Financial Solutions for Your Workforce

Tell us about your company's financial landscape at no cost or obligation.

Book Time Online Now:

This field is required.

This field is required.

Please enter a valid email address.

Please enter a valid phone number.

This field is required.

This field is required.

Book your meeting

This 30-minute call with me is designed to better understand your company’s goals and match you with the advisor most well suited to help.

Looking forward to
speaking with you!

Eric Purdy

Partner

Eric Purdy's headshot

Thank you for booking a meeting with us!

We look forward to connecting with you soon.

Here are some valuable insights to read before your meeting

blog image background

Paul Chmielewski

Partner

Estate Planning

2024 Gift, Estate, and GST Tax Changes

December 4, 2023 - Partner Paul Chmielewski highlights the gift, estate and GST tax changes for 2024.

blog image background

Stephen Klingler

Principal

Individuals and Families

5 Things to Do in a Down Market

March 23, 2023 - Volatile markets can shake the confidence of even the most committed long-term investors.  Starting with a comprehensive financial plan, understanding just how much risk you…

  • General inquiries: click here
  • Individuals and families: click here
  • Institutions and non-profits: click here

Learn about our Privacy Policy

By submitting the form, you acknowledge that we collect your name, email address and phone number to respond to your inquiries and provide you information about our products and services in accordance with our Privacy Policy. If you are a California resident, please see our CCPA Notice to California Residents.

Disclosures

Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with office locations throughout the United States. Registration of an Investment Advisor does not imply any level of skill or training. The foregoing is limited to general information about Cerity Partners’ services, which may not be suitable for everyone. You should not construe the information contained herein as personalized investment, tax, or legal advice. Outcomes of any case studies described herein do not guarantee results of future services we may provide nor intended to represent a testimonial by any client. There is no guarantee that the views and opinions expressed in this brochure will come to pass. Before making any decision or taking any action that may affect your finances or your company’s finances, you should consult a qualified professional adviser. The information presented is subject to change without notice and is deemed reliable but is not guaranteed. For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Cerity Partners, including fees, conflicts of interest, and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2 using the contact information herein. Please read the disclosure statement carefully before you invest or send money.

* Source: BrightPlan 2023 Wellness Barometer Survey Report

Get insights in your inbox.

By clicking “Submit”, you acknowledge that we collect your name, email address and phone number to respond to your inquiries and provide you information about our products and services in accordance with our Privacy Policy. If you are a California resident, please see our CCPA Notice to California Residents.

Logo

Your source for comprehensive financial advice and oversight.

  • Individuals & Families
  • Wealth Management
    • Investment Solutions
    • Estate and Gift Planning
    • Financial Planning
    • Insurance Planning & Risk Management
    • Tax Planning & Preparation
    • Marital Financial Planning
    • Cross-Border
    • Trust Services
    • Wealth for Women
  • Business Owner Advisory
    • Business Owner Financial Planning
    • Practice Owner Financial Planning
    • CFO & Accounting Services
  • Family Office
  • Corporations
  • Workplace Solutions
    • Executive Financial Counseling
    • Beneficiary Financial Counseling
  • Retirement Plan Consulting
    • Defined Benefit Plans
    • Defined Contribution Services
  • Corporate Venture Capital
    • For Corporations
    • For Entrepreneurs & Investors
  • Nonprofit Organizations
  • Advisory for Nonprofits
  • Cerity Partners OCIO
  • About Us
  • Our Team
  • Locations
  • Careers
  • Join Our Partnership
  • Awards & Accolades
  • Contact
  • Insights & Resources
  • Insights
  • Webinars
  • News
  • LOCATIONS
  • Arizona
  • California
  • Colorado
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Kentucky
  • Maryland
  • Massachusetts
  • Michigan
  • New Jersey
  • New York
  • North Carolina
  • Ohio
  • Pennsylvania
  • Texas
  • Virginia
  • Wyoming
  • © 2025 Cerity Partners
  • Client Relationship Summary
  • Terms And Conditions
  • Privacy Policy
  • CCPA Notice
  • Accessibility Statement
  • Cookie Preferences
Cerity footer logo-background

Curious about learning more? Let's talk.

Discover Customized Financial Solutions for Your Workforce

Tell us about your company's financial landscape at no cost or obligation. We’re here not just to offer solutions, but to listen, learn, and tailor our insights to meet the distinct needs of your workforce. Together, we can build a strategy that resonates with your team and aligns with your organizational goals.

Eric Purdy's headshot

Eric Purdy

Partner

Discover Customized Financial Solutions for Your Workforce

Tell us about your company's financial landscape at no cost or obligation.

Book Time Online Now:

This field is required.

This field is required.

Please enter a valid email address.

Please enter a valid phone number.

This field is required.

This field is required.

  • General inquiries: click here
  • Individuals and families: click here
  • Institutions and non-profits: click here

Learn about our Privacy Policy

By submitting the form, you acknowledge that we collect your name, email address and phone number to respond to your inquiries and provide you information about our products and services in accordance with our Privacy Policy. If you are a California resident, please see our CCPA Notice to California Residents.

Book your meeting

This 30-minute call with me is designed to better understand your company’s goals and match you with the advisor most well suited to help.

Looking forward to
speaking with you!

Eric Purdy

Partner

Eric Purdy's headshot

Thank you for booking a meeting with us!

We look forward to connecting with you soon.

Here are some valuable insights to read before your meeting

blog image background

Paul Chmielewski

Partner

Estate Planning

2024 Gift, Estate, and GST Tax Changes

December 4, 2023 - Partner Paul Chmielewski highlights the gift, estate and GST tax changes for 2024.

blog image background

Stephen Klingler

Principal

Individuals and Families

5 Things to Do in a Down Market

March 23, 2023 - Volatile markets can shake the confidence of even the most committed long-term investors.  Starting with a comprehensive financial plan, understanding just how much risk you…