Amazon Mega Backdoor Roth Conversion
The Mega Backdoor Roth is a provision within your 401(k).
It allows you to contribute after-tax dollars to your 401(k), up to the IRS federal limit, and convert those dollars to Roth. We think this is one of best benefits available to Amazon employees.
Mega Backdoor Roth Example
To illustrate how you can contribute thousands in after-tax contributions, let’s walk through an example:
Employee Under 50 Years Old
Our example Amazon employee is under 50, earns a base salary of $345,000, and maxes out their 401(k) contributions:
- 401(k) contribution: $23,000
- Amazon match (2% of salary): $6,900
Employee pre-tax contributions and the Amazon match equal $29,900, but the employee is still able to contribute another $39,100 in after-tax dollars and immediately convert those dollars to Roth within the 401(k).
Convert After-Tax Dollars to Roth
The Amazon Mega Backdoor Roth 401(k) allows you to fill the gap between your regular contributions and the Federal limit using after-tax dollars.
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