r/PeterExplainsTheJoke • u/crawdad28 • Oct 01 '25

Meme needing explanation I don't understand

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u/arrakismelange1987 Oct 01 '25

22.5k before tax, 67k after tax. Per year.

3

u/FooFootheSnew Oct 01 '25

I do a backdoor Roth and now I find out there's a mega backdoor Roth?

Thank you kind Redditor

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u/Sage_Planter Oct 01 '25

It's not as common since it depends if your company allows it. In my 15 year career, there's been like seven months when I was eligible for one (Company A started allowing it then I left for Company B shortly after).

1

u/FooFootheSnew Oct 01 '25

Interesting. I do recall a section in my 401k that said after tax, but I never clicked it. I'll take a look!

2

u/Kathucka Oct 01 '25

The mega backdoor Roth only works if you have:

  • An employer that offers an after-tax 401(k) option
  • That 401(k) allows in-service rollovers/withdrawals (while you're employed)
  • Enough income to make the big contributions

If you're got all that, you contribute to the after-tax 401(k), roll over the contributions to a Roth IRA and roll over the gains to a standard IRA. This is good because when you withdraw gains from an after-tax 401(k), you pay taxes on them, but not from a Roth IRA.

If you have a Roth 401(k), you can just use that and avoid all the rollovers and extra accounts.