Core Insights - Roth IRAs are beneficial for individuals expecting to be in high tax brackets during retirement due to tax-free distributions, contrasting with traditional IRAs where withdrawals are taxed [1] - The mega backdoor Roth strategy allows high earners to contribute after-tax dollars to a 401(k) and convert them to a Roth IRA, bypassing income limits for direct Roth IRA contributions [2][8] - The SECURE 2.0 Act increases contribution limits for retirement accounts, allowing higher contributions to 401(k) plans compared to IRAs [6] Contribution Limits - In 2026, single filers can fully contribute to a Roth IRA if their income is below $153,000, with a phase-out starting at $168,000; for married couples filing jointly, the limits are $242,000 and $252,000 respectively [2] - Individuals can contribute up to $7,500 to IRAs (or $8,600 if aged 50 or older) compared to $24,500 to 401(k) plans, with an additional catch-up contribution of $8,000 for those aged 50 and above [6] Tax Implications - Mega backdoor Roth conversions are attractive for investors seeking tax-free growth but require upfront tax payments on converted amounts, which can be significant for high earners [7][11] - Conversions are treated as ordinary income, potentially increasing short-term tax liabilities [11] Employer Considerations - The effectiveness of the mega backdoor Roth strategy depends on whether employers allow after-tax contributions and in-plan conversions [12] - Companies must navigate complex regulations and responsibilities when managing retirement plans, which may affect the feasibility of implementing in-plan conversions [15] Alternative Strategies - If mega backdoor Roth conversions are not an option, individuals can consider other investment vehicles, such as Health Savings Accounts, which offer tax advantages [16] - Maintaining liquidity through taxable investment accounts may be preferable for those prioritizing flexibility over the next few years [17]