What is a MEGA BACKDOOR ROTH IRA contribution?

This video explains in detail what the Mega Backdoor Roth IRA contribution is: a way to bypass the contribution limit on Roth IRAs (which is $6,000 in year 2021) and stash even more of your cash away in a tax advantaged account. It makes use of a special type of 401(k) contribution, called "after-tax" contribution (I always clarify it is "after tax, non-Roth" to distinguish it from a Roth 401(k)).

These after-tax contributions are not subject to the normal contribution limit ($19,500 in 2021). In fact, you are allowed to contribute up to $58,000 using this special type! Then to perform the mega backdoor Roth maneuver, you take an in-service distribution of your after-tax 401(k) money and convert it to a Roth IRA.

The Mega Backdoor Roth Ira is a way to bypass the CONTRIBUTION limit of a Roth IRA

The (regular) Backdoor Roth IRA is a way to bypass the INCOME limit of a Roth IRA, which I explain here. I compare the two in this video:    • Backdoor vs Mega Backdoor Roth - Comparison  

UPDATED 2021: Although all the information in this video is still accurate, I've created a new video with some more information on the Mega Backdoor Strategy! Check it out here:    • Mega Backdoor Roth Improved - In Plan Conv...