How to Do a Mega Backdoor Roth at Amazon

Key Points

• A mega backdoor Roth lets Amazon employees use after-tax 401(k) contributions and Roth conversions to move far more money into a tax-free retirement account than a traditional Roth IRA allows.
• Amazon’s 401(k) supports this strategy by allowing after-tax contributions and automatic in-plan Roth conversions through Fidelity.
• To use it effectively, employees must calculate their available after-tax capacity, set contribution percentages in NetBenefits, and enable automatic Roth conversion.
• Ongoing monitoring is essential to avoid exceeding annual limits and to ensure conversions process correctly throughout the year.

For Amazon employees who want to maximize their retirement savings, the mega backdoor Roth can be a powerful tool. Amazon’s 401(k), administered through Fidelity, supports this strategy by allowing after-tax contributions and automatic in-plan Roth conversions, two features that make the process surprisingly accessible once you understand the steps.

Here’s a clear breakdown of what a mega backdoor Roth is, why it’s useful, and how to set it up inside your Amazon 401(k).

What Is a Backdoor Roth?

Roth IRAs come with strict income limits. In 2025, single filers must have a modified adjusted gross income (MAGI) below $150,000 to contribute the maximum to a Roth ($7,000, or $8,000 for those 50 and older), while joint filers must have a MAGI under $236,000. Once income exceeds those thresholds, eligibility phases out and high earners lose access to direct Roth IRA contributions entirely.

That restriction is what led to the creation of the “backdoor” Roth strategy. Instead of contributing directly to a Roth IRA, you make a non-deductible contribution to a traditional IRA and then convert it to a Roth IRA.

Since Roth conversions have no income limits, this two-step process effectively bypasses the restrictions and lets high earners move money into a Roth environment each year.

How Does a Mega Backdoor Roth Work?

A mega backdoor Roth applies the same basic idea as a Roth conversion but inside a 401(k) and at a dramatically larger scale. Here’s how it works:

• Your 401(k) lets you contribute after-tax dollars on top of your regular pre-tax or Roth deferrals, up to the annual “all-in” 401(k) limit. For 2025, that limit becomes $70,000 for those under age 50, $77,500 for those 50+, and $81,250 for those age 60-63.
• Those after-tax dollars can then be converted into Roth, either inside the plan (an “in-plan conversion”) or by rolling them out to a Roth IRA. Amazon’s plan lets Fidelity automatically convert those after-tax dollars into Roth inside the plan.
• Because these contributions are made with money you’ve already paid tax on, the conversion itself is largely tax-free, as long as it happens before any meaningful earnings accumulate.

Benefits of a Mega Backdoor Roth

A mega backdoor Roth gives high-earning Amazon employees a rare opportunity to move a significant amount of money into a Roth account, where growth and withdrawals can be completely tax-free in retirement.

Here are the key benefits:

• You can move far more into Roth than an IRA allows. A Roth IRA limits you to a small annual contribution. A mega backdoor Roth leverages the much higher 401(k) “all-in” limit, letting you potentially contribute tens of thousands of dollars each year.
• You get tax-free growth for decades. Once your after-tax contributions are converted to Roth, all future growth and qualifying withdrawals can be tax-free. For younger or mid-career professionals with long time horizons, that compounding can be especially meaningful.
• You build valuable tax diversification. Most high earners accumulate heavily in pre-tax accounts. A mega backdoor Roth helps balance this by creating a tax-free bucket to draw from in retirement, which can reduce taxable income and increase flexibility later in life.
• It can reduce the impact of future tax increases. If you expect to be in a similar or higher tax bracket in retirement, or simply want to hedge against rising tax rates, moving more money into Roth can be a smart long-term move.
• It offers a structured way to save more. For people who want to save aggressively, this strategy expands the amount you can shelter in a tax-advantaged account each year.

When Amazon Employees Might Consider This Strategy

A mega backdoor Roth tends to be an effective strategy if you:

• Are already contributing enough to get the full Amazon match
• Can comfortably max out the 401(k) employee deferral limit
• Want to save more than the standard limit allows
• Have the cash flow to support higher savings
• Expect higher taxes in retirement, or simply want tax diversification

On the other hand, the strategy may be less appealing for Amazon employees who are in a very low tax bracket now, prioritizing short-term cash flow, or planning to use funds in the near term rather than for retirement.

How to Set Up a Mega Backdoor Roth at Amazon

Amazon’s Fidelity-administered 401(k) makes the Mega Backdoor Roth possible through two key features: after-tax contributions and automatic in-plan Roth conversion. Below is the step-by-step process.

Step 1: Confirm Eligibility and Your Strategy

First, make sure the features are available in your plan. Amazon’s 401(k) currently supports:

• After-tax contributions above your regular deferral limit
• Automatic conversion of after-tax dollars to Roth inside the plan (“Roth in-plan conversion”)

Next, clarify how you want to prioritize contributions:

• Contribute at least enough pre-tax or Roth to get the full Amazon match (50% of the first 4% of eligible pay, capped at $7,000 in 2025).
• Decide whether you want to max your regular deferrals first or run pre-tax/Roth and after-tax contributions simultaneously.

Before you move forward, it’s important to coordinate with your financial planner or tax advisor, especially if you’re also using a separate backdoor Roth IRA strategy.

Step 2: Calculate Your After-Tax Contribution Room

The IRS caps total annual 401(k) contributions at $70,000 in 2025 (under age 50). This includes:

• Your pre-tax/Roth deferrals
• Amazon’s match
• Any catch-up contributions (for ages 50+)
• Your after-tax contributions

To estimate your Mega Backdoor capacity in 2025:

After-tax maximum ≈ $70,000 – employee deferrals – Amazon match – any catch-up contributions

So, if you’re under 50, max out your pre-tax/Roth deferral at $23,500, and receive an employer match of $7,000, you could contribute up to $39,500 in after-tax dollars before hitting the 2025 cap.

Keep in mind that after-tax contributions may also be capped as a percentage of base salary (historically around 10%). Always double-check your Summary Plan Description or NetBenefits contribution screen.

Step 3: Set Up Contributions in Fidelity NetBenefits

Log in to NetBenefits → Amazon 401(k) → “Contributions” or “Contribution Amount.”

1. Set regular pre-tax/Roth deferrals. Choose a percentage that lets you hit your desired annual total, making sure you’re contributing at least enough to receive the full match.
2. Add after-tax contributions. On the same screen, you’ll see a field for “After-Tax” contributions. Add the percentage that aligns with your calculated maximum.

A few notes:

• If your compensation includes RSUs, bonuses, or variable pay, check in mid-year to make sure your contribution percentages still make sense.
• Try to avoid hitting limits too early, which can reduce matching contributions or violate annual testing limits.

Step 4: Turn On Automatic Roth In-Plan Conversion

This is the key step that actually creates the mega backdoor Roth.

Within the contribution menu, locate the setting tied to your after-tax contributions. It usually defaults to “Don’t convert my after-tax to Roth.”

Change this setting to:

“Convert my after-tax to Roth” (or the closest equivalent phrasing within NetBenefits)

If you can’t locate the option, Fidelity can enable this over the phone. Just ask for help turning on Automatic Roth In-Plan Conversion.

What to expect:

• Fidelity typically converts after-tax contributions to Roth very quickly (often daily).
• Quick conversions minimize earnings, which means minimal taxable income during conversion.
• The converted amount will appear as a separate source such as “Roth In-Plan Conversion.”

Step 5: Monitor Your Contributions Throughout the Year

Once everything is set up, keep an eye on your progress by reviewing your 401(k) sources after each pay cycle.

You should now see:

• Regular pre-tax or Roth contributions
• After-tax contributions (briefly)
• A “Roth conversion” source showing the converted amounts

Be sure to confirm that automatic conversions are happening on schedule. You’ll also want to track your year-to-date totals to avoid exceeding the $70,000 limit (plus catch-up, if applicable), since salary changes, promotions, RSU vesting, or bonuses can affect your pacing.

Finally, check for plan updates annually. Contribution limits change each year, and Amazon may adjust match rules or after-tax caps.

Making the Most of an Amazon Mega Backdoor Roth

A mega backdoor Roth is one of the strongest tax-advantaged strategies available to Amazon employees who want to save more, build long-term wealth, and take advantage of the plan’s generous structure. With after-tax contributions and automatic in-plan conversions, Amazon’s 401(k) makes it possible to move a significant amount of money into a Roth environment each year, something that’s hard to replicate elsewhere.

Given the complexity of this strategy, it’s wise to review it with your financial planner or tax advisor so you fully understand how the tax rules apply to your situation. At Simplicity Wealth Management, we regularly help Amazon employees evaluate whether a mega backdoor Roth aligns with their goals and create a plan that uses this benefit in a thoughtful, strategic way.

If you’d like support determining whether this strategy belongs in your overall financial plan, we’ll walk you through the numbers and show you how to make the most of Amazon’s retirement program. Book a complimentary Simplicity Session to get started.