Most people think their 401(k) has one limit. In 2026, they'd tell you it's $24,500. They're describing a real number — but not the one they think they are. And the gap between the number they know and the number that actually exists is where one of the most powerful (and least-used) wealth moves lives.

The 401(k) actually has two separate ceilings.

The one everyone knows is the employee deferral limit: $24,500 in 2026 (plus catch-up contributions if you're 50 or older). That's the most you can put in from your paycheck as traditional or Roth.

The one almost nobody knows is the total additions limit — the IRS cap on everything that can go into your 401(k) in a year, from all sources combined: your deferral, your employer's match, and after-tax contributions. In 2026, that ceiling is $72,000.

Look at the space between those two numbers. Your $24,500, plus say a few thousand in employer match, might total $30,000 — against a $72,000 ceiling. That leaves a large gap, potentially up to roughly $47,500, that the IRS will let you fill with after-tax contributions.

The Mega Backdoor Roth is simply this: fill part of that gap with after-tax dollars, then convert those dollars to Roth — where they grow, and can eventually be withdrawn, tax-free. It's a way to get far more money into Roth than the standard Roth IRA limit ($7,500 in 2026) would ever allow.

And to address the question every finance-aware reader is asking: yes, it's legal. There have been political attempts to shut it down over the years. As of 2026, none have become law, and the 2025 tax package left it intact.

Here's why this isn't in every headline: it's completely dependent on your specific plan. Two conditions have to be true. Your 401(k) has to allow after-tax contributions (separate from Roth and traditional), and it has to allow either in-plan Roth conversions or in-service distributions so you can actually move that money into Roth. Many plans allow it. Many don't. And your HR portal usually won't spell it out.

So the entire action step is one question, in general terms — not advice on your situation: contact your plan administrator or HR and ask, "Does our 401(k) allow after-tax contributions beyond the regular limit, and does it allow in-plan Roth conversions or in-service withdrawals?" If yes, you've just found a door most of your coworkers don't know is there. If no, you've lost nothing but two minutes.

Roth space is one of the most valuable things in the tax code, because growth inside it is never taxed again. Ordinary Roth contributions are capped low. This is one of the few legal ways to pour serious money through that door — for the people whose plans happen to allow it. The only way to know if you're one of them is to ask.

That's enough for one week.

— Mario

P.S. Know a high earner maxing their 401(k) who's never heard of this? Forward it. Free to subscribe at macwithintent.com/subscribe.

Educational only — not personalized tax or financial advice. Availability, limits, and tax treatment depend on your specific plan and situation and can change; confirm with your plan administrator and a qualified professional. Mario Cabral is a CERTIFIED FINANCIAL PLANNER™ professional. To unsubscribe, click here. MacwithIntent | [physical address] | © 2026.