After-tax 401(k) contribution
Also: after-tax 401k contribution, after-tax contribution, voluntary after-tax contribution, employee after-tax
Non-Roth, non-deductible employee contributions to a 401(k), made after income tax, that fill the gap between the elective deferral limit ($23,500 in 2025) and the all-sources limit ($70,000 in 2025).
After-tax 401(k) contributions are a third deposit category, separate from traditional pre-tax and Roth elective deferrals. They are voluntary employee contributions that do not reduce wages and whose earnings grow tax-deferred. They only exist if the plan document permits them. The main value is providing the raw material for the mega backdoor Roth: contributions above the $23,500 elective cap, up to the $70,000 all-sources cap for 2025, converted into Roth space.
Example: a senior engineer’s plan allows after-tax contributions. She contributes $23,500 pre-tax, receives $15,000 of employer match, and contributes $31,500 after-tax. The $31,500 plus small earnings are converted in-plan to Roth throughout the year, producing $31,500 of fresh Roth principal.
Common mistake: leaving after-tax contributions in the account for years without converting. Earnings on after-tax principal become taxable at withdrawal, and pro-rata rules apply at conversion if earnings accrue before the transfer.
After-tax 401(k) contributions matter at plans that allow them, at cash-flow-rich years, and at any stage where the mega backdoor Roth is the primary vehicle for additional Roth space.