Definition
A strategy for getting far more money into Roth accounts than normal limits allow: contribute after-tax (not Roth) dollars to a 401(k) beyond the regular deferral limit, then immediately convert them to the plan's Roth side or roll them into a Roth IRA. It only works if the plan permits both after-tax contributions and in-plan conversions or in-service rollovers.
Why it matters
For high earners who already max everything else, this is the largest remaining door into tax-free growth, potentially tens of thousands of dollars a year. The immediate conversion is the key move: after-tax dollars left unconverted grow taxably.
Example
An engineer maxes their regular 401(k) deferrals, then directs another $20,000 of after-tax pay into the plan and converts it to Roth the same week. The $20,000 was already taxed; every dollar of growth on it is now tax-free in retirement instead of merely tax-deferred.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.