High earners often hit the 401(k) deferral limit early in the year—and then wonder: what’s next? In this episode, Cullen Martin, CFP® breaks down a powerful (and commonly missed) opportunity inside some employer retirement plans: after-tax 401(k) contributions that can be converted to Roth for long-term, tax-free growth (a strategy often called the Mega Backdoor Roth).

If your plan allows it, this strategy can help you move tens of thousands of additional dollars per year into Roth status—and over a career, that can add up to millions in potential tax-free compounding.

Key Takeaways

• Two key limits matter in your workplace plan:
  • The employee deferral limit (what you personally can defer from salary)
  • The annual additions limit (the total that can go into the plan from all sources)
• Many high earners max the first limit—but never take advantage of the second.
• After-tax contributions can fill the gap between what’s already gone into the plan (your deferrals + employer match) and the annual limit. This is the first step toward utilizing the Mega Backdoor Roth strategy.
• The real “unlock” is the conversion step: after-tax dollars can be converted to Roth, allowing future growth to be tax-free.
• Missing this strategy can mean leaving tens of thousands per year on the table.

If you want help confirming what your specific plan allows and building a simple process to maximize it each year, connect with Cullen Martin, CFP® at Presilium Private Wealth.

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Connect With Cullen: Cullen Martin, CFP®

Financial Planner, Presilium Private Wealth

Email: [email protected]

LinkedIn: https://www.linkedin.com/in/cullen-martin-cfp%C2%AE-81218ab2/ Meet Cullen: https://www.presiliumpw.com/team_member/cullen-martin-cfp/

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This Video is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product or services.

The content of this Video is provided solely for your personal use and shall not be deemed to provide access to any particular transaction or investment opportunity. Presilium Private Wealth does not intend the information in this Video to be investment advice, and the information presented in this Presentation should not be relied upon to make an investment decision.

Any third-party information contained herein was prepared by sources deemed to be reliable but is not guaranteed. Investment advisory services are offered through Presilium Private Wealth, a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser or investment adviser representative has attained a particular level of skill or ability. Additional information about Presilium Private Wealth is also available on the SEC’s website at www.adviserinfo.sec.gov.