I have received more inquiries about after-tax voluntary contributions in the past two weeks than in the last 20 years. Why? Well, a lot of people are reading up on these Mega Backdoor Roth articles online.

A mega backdoor Roth is designed specifically for those with a 401(k) plan. According to these articles, participants can put up to $46,000 of post-tax dollars in 2024 into their 401(k) plan and then roll it into a mega backdoor Roth, which is either a Roth IRA or Roth 401(k). The article will mention caveats as if they’re nothing, but 99.99% of the time it won’t work. That’s because the mega backdoor Roth feature in a 401(k) plan will subject those after-tax contributions to an ACP test and since people who would use this feature are highly compensated employees, it’s not going to work, even if the plan is a Safe Harbor 401(k).