Mega Backdoor Roth Advantage Calculator

Project how much more wealth a mega backdoor Roth conversion can retain compared with leaving after-tax 401(k) contributions invested in a taxable brokerage. Input the annual contribution, assumed tax drag on taxable returns, expected growth rate, and time horizon to see the compounded Roth balance, taxable balance, and the advantage gap in dollars.

Annual after-tax dollars you can funnel into in-plan conversions.
Blended annual tax drag applied to the taxable alternative.
Long-term growth rate assumed for both Roth and taxable portfolios.
How long the conversion remains invested before withdrawals begin.

Calculations assume steady returns and tax drag. Confirm plan rules and consult a fiduciary before executing conversions.

Examples

  • $38,000 contribution, 32% tax drag, 7% return, 20 years ⇒ Roth balance reaches $147,048.01 versus $96,314.88 in taxable. That leaves $50,733.13 more kept inside the Roth wrapper after two decades.
  • $15,000 contribution, 24% tax drag, 5% return, 8 years ⇒ Roth balance grows to $22,161.83 while taxable lands at $20,214.83. The Roth path keeps $1,947.00 extra for future withdrawals.

FAQ

Can I change the assumed tax drag mid-horizon?

Adjust the marginal tax drag input to reflect your best estimate for annual taxable friction, combining dividend taxes and capital gains harvesting.

How do employer match limits impact this model?

The calculator isolates after-tax contributions eligible for mega backdoor conversions. Ensure your plan still allows regular deferrals and employer matches within IRS limits before adding after-tax dollars.

What if my returns are lower in the first few years?

Test conservative return assumptions or shorter holding periods. Lower growth compresses the advantage, but the Roth still shields gains from annual taxes.

Additional Information

  • Model assumes after-tax contributions convert to Roth immediately, avoiding additional conversion taxes.
  • Tax drag reduces the taxable account's effective annual return each year rather than applying only at liquidation.
  • Use a lower tax drag to approximate qualified dividend and long-term capital gains treatment if applicable.
  • Run shorter horizons to understand break-even timelines before tapping retirement funds.

Related calculators