This is an honest-to-goodness note to my future self.

Backdoor Roth IRA

Definition: Making non-deductible contributions to a traditional IRA, then converting to Roth IRA.

Mechanics: Contribute up to $7,000 ($8,000 if 50+) to a traditional IRA without taking the tax deduction. Then convert this money to a Roth IRA. No additional taxes owed since the contribution was already made with after-tax dollars.

When it can be done: Any time, but primarily useful when your income exceeds direct Roth IRA contribution limits ($153k-$161k for 2025).

Notes: Works best with empty traditional IRA accounts to avoid pro-rata rule complications.

Mega-backdoor Roth IRA

Definition: Converting after-tax 401k contributions to Roth IRA money.

Mechanics: Make after-tax contributions to your 401k beyond the pre-tax/Roth limits. Then either convert directly to Roth IRA (if plan allows) or roll to a rollover IRA first, then convert to Roth IRA. No additional taxes since money was already taxed.

When it can be done: Whenever your 401k plan allows after-tax contributions and in-service distributions or conversions.

Notes: Total 401k contributions (pre-tax + Roth + after-tax) are limited to $71,000 for 2025 ($78,500 if 50+). Not all 401k plans offer this option.