Think you maxed out your 401(k)? The real limit is actually almost $50,000 higher.
MarketWatch
β’Sat, 05 Sep 2026 18:59:00 GMT
π° What Happened
MarketWatch reported that retirement savers who think they have maxed out their 401(k) may actually be able to contribute almost $50,000 more per year. Beyond the standard elective deferral limit on salary contributions, employees can save additional money through employer matches, after-tax contributions and 'mega backdoor' Roth conversions, up to the IRS's total contribution cap, which is much higher than the deferral limit alone.
π The Backstory
The IRS sets two separate limits on 401(k) plans: the elective deferral cap on what employees contribute from their paychecks, and a much larger total cap that also counts employer contributions and after-tax employee contributions. Savvy savers use the gap between them, especially after-tax contributions converted to Roth accounts through the mega backdoor Roth, to build up tax-free retirement funds.
π― Why It Matters
For higher earners and disciplined savers, the extra capacity can mean tens of thousands of additional tax-advantaged dollars every year, compounding into a significantly larger retirement nest egg. Most people are unaware the headroom exists, which is exactly the practical value of the reporting.
MarketWatch reported that retirement savers who think they have maxed out their 401(k) may actually be able to contribute almost $50,000 more per year. Beyond the standard elective deferral limit on salary contributions, employees can save additional money through employer matches, after-tax contributions and 'mega backdoor' Roth conversions, up to the IRS's total contribution cap, which is much higher than the deferral limit alone.
The IRS sets two separate limits on 401(k) plans: the elective deferral cap on what employees contribute from their paychecks, and a much larger total cap that also counts employer contributions and after-tax employee contributions. Savvy savers use the gap between them, especially after-tax contributions converted to Roth accounts through the mega backdoor Roth, to build up tax-free retirement funds.
For higher earners and disciplined savers, the extra capacity can mean tens of thousands of additional tax-advantaged dollars every year, compounding into a significantly larger retirement nest egg. Most people are unaware the headroom exists, which is exactly the practical value of the reporting.