If you’ve been blessed with a high income and are contributing the maximum amount to your retirement plan and IRA, you may think you’re maximizing your savings. But there are some little-known strategies that can help you bolster your retirement savings even more. The information below is a starting point for discussions with your financial professional and tax professional based on your situation. This is for informational purposes only and does not constitute tax advice. 

Step 1: Know the Maximum 2026 Contribution Limits for Retirement Plans and Health Savings Accounts

Contribution Limits for 401(k), 403(b), and most 457 plans

• $24,500 (under age 50)

• $32,500 (ages 50-59 and 64+; includes $8,000 catch-up contribution)

• $35,750 (ages 60-63; includes $11,250 catch-up contribution)

• Employers can make a matching contribution or profit sharing contribution up to 25% of compensation up to a maximum of $72,000

• Total employer/employee contributions cannot exceed $72,000; $80,000 for ages 50-59 and 64+; $83,250 for ages 60-63

Contribution Limits for SEP and SIMPLE IRAs

SEP Employee Contributions: N/A

SEP Employer Contributions: Up to 25% of compensation up to a maximum of $72,000

SIMPLE Employee Contributions: Up to $17,000 in salary deferrals; $21,000 if ages 50-59 and 64+; $22,250 for ages 60-63

SIMPLE Employer Contributions: Employers can either make a matching contribution of 1-3% of an employee’s salary OR make a nonelective contribution of 2% of an employee’s compensation for all eligible employees whether or not they make salary reduction contributions.

Contribution Limits for Health Savings Accounts (HSAs)

Employee and Employer Maximum Contributions: $4,400 for individuals; $8,750 for families. People 55 and older can contribute an additional $1,000. To qualify for an HSA, your health insurance policy must have a deductible of at least $1,700 for individuals or $3,400 for family coverage.

Step 2: Know the Maximum 2026 Contribution Limits for IRAs

IRA Contribution Limits (Traditional and Roth)

• $7,500 (under age 50)

• $8,600 (age 50 and older; includes $1,100 catch-up contribution)

Step 3: Know the Roth IRA Income Phaseout Limits for 2026

Income Eligibility Requirements for a Roth IRA 

Step 4: A “Backdoor Roth” Allows High Earners to Qualify for a Roth IRA

If a Roth IRA is appropriate for you but your income exceeds the qualification limits, the backdoor Roth strategy can still make it possible. You would make a nondeductible contribution for the maximum allowable amount into a traditional IRA ($7,500 if you’re younger than 50, $8,600 if you’re 50 or older). Then you would convert your traditional IRA into a Roth IRA. This is generally a taxable event, meaning you’ll owe ordinary income tax on the amount converted to the Roth IRA, but all earnings and growth after the conversion will be tax‑free once the funds have been in the account for five years. In addition, Roth IRA owners aren’t subject to required minimum distributions (RMDs), but their beneficiaries who inherit the Roth IRA will be required to take RMDs.

Backdoor Roth conversions are subject to the pro‑rata rule: If you have any pre‑tax IRA dollars, part of your conversion will be taxable based on the proportion of pre‑tax to after‑tax money in your IRAs.

High-income earners who have traditional IRAs, SEP IRAs, and/or SIMPLE IRAs from a previous employer can also convert these accounts to Roth IRAs. You’ll want to discuss this with your tax professional to see if you want to spread the conversion out over multiple years to avoid a large tax liability in a single year, especially if the conversion could bump you into a higher tax bracket.

Step 5: A “Mega Backdoor Roth” Allows High Earners to Maximize Retirement Plan Contributions

Another lesser-known strategy allows high earners to use after-tax contributions to a 401(k) to fund a Roth IRA. It’s called a mega backdoor Roth because the dollar amounts involved are typically large.

Example: A 50-Year Old Employee Contributes the Maximum to a 401(k) 

How can this individual reach the $80,000 limit for 2026 for employees 50 or older?

The employee can make after-tax contributions to contribute an additional $31,250

Why would someone want to do this?

High-income individuals who otherwise aren’t eligible for a Roth IRA can rollover the after-tax contributions they make in a 401(k) into a Roth IRA.

How does it work?

Call your 401(k) provider and ask if your plan allows after-tax contributions. If it does, ask if the plan permits you to rollover your after-tax contributions into a Roth IRA (i.e., in-service withdrawals or in-plan conversions). More than 70% of 401(k) plans allow in-service withdrawals,¹ so it’s likely your plan offers this feature.

You would then increase your 401(k) contributions so that when your pre-tax contributions are exhausted, all additional contributions would fund your after-tax sources until you hit the maximum allowable limit. Once you have a sufficient amount in after-tax sources, you could roll the after-tax dollars into a Roth IRA.

If you’ve been making after-tax contributions for years and haven’t made any in-service withdrawals, you may have a sizable amount in your after-tax sources. If you choose to roll all or part of this money over to a Roth IRA, the IRS requires your withdrawal to be a combination of your after-tax contributions and the earnings on those contributions.

In fact, your 401(k) provider will likely mail you two separate checks—one for the after-tax contributions and a second one for the after-tax earnings on those contributions. After-tax contributions can be rolled over to a Roth IRA tax-free as long as the check is made payable directly to the firm to which you’re rolling over the assets. After-tax earnings can be rolled over to a traditional IRA tax-free. If you want to move your after-tax earnings into a Roth IRA, that would be a taxable event.

The calendar year after your IRA rollover takes place, your 401(k) provider will report the rollover on Form 1099R in January, and the firm that receives the IRA rollover will report it on Form 5498 by May 31. These tax forms are generated for reporting purposes only.

Who would this strategy be appropriate for?

This strategy may be appropriate for you if your income is high and you’ve already funded your retirement plans, IRAs, and HSAs with the maximum dollar amounts. Once this occurs, you can either invest additional dollars through a nonqualified account if you think you’ll need access to your money prior to age 59½, or you can use the mega backdoor Roth conversion strategy if you’re ready to earmark the money for retirement.

If you decide to implement this strategy, you should consider doing an annual rollover of your after-tax contributions into a Roth IRA to help limit the amount of earnings on your after-tax contributions that will eventually be subject to tax.

Starting in 2026, high‑income employees (those with prior‑year W‑2 Social Security wages of at least $150,000 from the same employer) are no longer permitted to make pre‑tax catch‑up contributions; all catch‑up contributions for this group must now be made on a Roth basis.