Nearly 12,000 taxpayers now hold retirement accounts of $10 million or more. Not one of them used a rule you cannot use. Four steps, in order, and the five-minute question that decides whether step three exists for you.
This is the page in this week’s paper most likely to change a reader’s life, and it has no tickers in it at all. What separates a $200,000 retirement account from a $20 million one is almost never the fund selection. It is four contribution mechanisms, stacked in order, and whether anyone ever told you they were there.
What each step is, and what each step is worth.
Left column is the mechanism. Right column is what it actually buys you. Three of the four are yours to take today — the third one belongs to your employer, which is the whole problem.
The rules are public. The access is not.
Nearly 12,000 taxpayers had individual retirement accounts with at least $10 million in 2024, the latest year for which figures are available, according to new data prepared by the nonpartisan congressional Joint Committee on Taxation. That is up from 3,625 with similar balances in 2019, the analysis of anonymized tax-return data found. Meanwhile, most Americans have saved less than $100,000 in their retirement accounts.
Around 70% of private-sector employees in the U.S. now have access to a 401(k)-style retirement plan. The gap, in other words, is not primarily a gap in access. It is a gap in instructions.
Compounding is linear in what you put in. $72,000 is 2.9 times $24,500 — so at identical returns, over identical years, the ending balance is 2.9 times larger. Not because of a better fund. Because of a bigger allowed contribution.
That is the whole finding, and it is worth sitting with, because it points the other way from where most people look. The distance between a $3 million retirement and a $20 million one is not alpha, it is not timing, and it is not a manager anybody hired. It is contribution room that somebody else was permitted to use and nobody ever mentioned to you. Seventy percent of private-sector workers have a plan at work. Far fewer have ever been told what the plan is allowed to do.
The front door closes at $168,000. The back door has no lock on it.
Workers can put up to $24,500 into a 401(k) or similar workplace retirement plan this year. People 50 and older can save $8,000 more in catch-up contributions, for a total of $32,500. Those ages 60 to 63 can save a total of $35,750. The maximums typically rise each year with inflation, and the same limits apply to traditional and Roth 401(k) accounts — if you want both, you divide the $24,500 between them. It is possible to save up to an additional $7,500 in an IRA, a limit that rises to $8,600 for workers 50 and older, though some higher earners covered by a plan at work won’t be able to deduct traditional IRA contributions.
Direct Roth IRA contributions are off limits for single filers with modified adjusted gross incomes of $168,000 or more and couples with incomes of $252,000 or more. They can still add funds indirectly through a backdoor Roth IRA conversion: put money you have already paid income taxes on into a traditional IRA, then convert it to a Roth. Because you already paid income tax on the contribution, you will only owe tax on the appreciation your investments earned when you convert. If you have multiple IRAs, there may be tax complications to pursuing this strategy.
The back door has one tripwire, and it is why we ask to see every IRA statement before anyone converts a dollar. The IRS does not let you cherry-pick the after-tax money. If you hold $93,000 of pre-tax IRA balances and add a $7,500 non-deductible contribution, the pre-tax share of the pot is 92.5% — so 92.5% of whatever you convert is taxable, no matter which dollars you believe you moved.
That is the pro-rata rule. It looks across every traditional, SEP and SIMPLE IRA you own on December 31, and it is far and away the most common way this step gets done wrong. The usual fix is to roll the pre-tax IRA into your 401(k) first, which takes it out of the calculation entirely — but that has to happen before the conversion, not after, and after is when most people call us.
One thing this is not: a loophole about to be shut. The income limit on conversions came off in 2010 and has stayed off, and the 2021 proposal to close the back door did not pass. We plan around the rule as it is written, not as somebody predicts it might be rewritten.
“Does our plan allow after-tax contributions?”
The mega-backdoor Roth conversion is available to a growing number of people with 401(k) accounts, and it rests on a little-known fact: employees can really set aside as much as $72,000 in these accounts this year under Internal Revenue Service rules, rising to as much as $80,000 for those 50 and older. To go beyond the usual $24,500 limit on pretax or Roth contributions, a worker might be able to contribute as much as another $47,500 to the 401(k) — and then convert that money to a Roth 401(k), where it grows tax-free. Company contributions, including a match, also figure into the $72,000 limit.
The catch is a question, not a rule. To take advantage of the strategy you have to work for a company that lets employees make after-tax contributions to the 401(k) plan. Nearly two-thirds of the large 401(k) plans administered by Alight offer after-tax contributions, and the vast majority let participants convert after-tax balances to a Roth inside the plan. Some plans will automate the conversions every pay period. Many also allow the conversion of pretax savings to a Roth.
This is the five-minute human-resources question worth six figures over a career, and in our experience most plan documents we open have never had that line used once.
Two conditions have to be true, and nearly everyone only asks about the first. Your plan has to allow after-tax contributions — and it has to give you a way to get them into a Roth, either an in-plan conversion or an in-service withdrawal. One without the other strands the money in an after-tax bucket whose growth is still taxable, which is the worst of both worlds.
Then do the subtraction nobody does. The $72,000 is a ceiling on everything at once — your deferral, your employer's money and your after-tax dollars, combined. On a $200,000 salary with the average 4.7% match, that is $24,500 of yours plus $9,400 from the company, which leaves $38,100 of after-tax room, not $47,500. The headline number is never your number. Bring the plan document and we will do the subtraction with you in a single sitting.
$397,000 a year, and it is technically a pension.
Cash balance plans have taken off in recent years, mainly with smaller businesses. There were 25,754 employers with cash balance plans in 2023, the most recent data available, up from 1,477 in 2001, according to FuturePlan by Ascensus. They aren’t subject to the restrictions on annual 401(k) contributions because they are technically pensions, with some features that resemble 401(k)s. People who save the most in them are typically business owners paid a share of the profits, such as partners in medical and law firms; in some of these plans, older higher-earners can put away as much as $397,000 a year, and they often also save up to the $72,000 annual 401(k) limit on top. This year the IRS allows people to accumulate up to about $3.7 million in a cash balance plan by age 62, according to Dan Kravitz, cash balance senior sales director at FuturePlan by Ascensus.
Now the arithmetic that gives this page its headline. Someone who saved the equivalent of today’s $72,000 maximum in a 401(k) account every year from 1984 until 2019 — adding catch-ups once eligible — would have had $20.6 million by the end of 2024, assuming returns consistent with the S&P 500 index, according to Daniel Hemel, a New York University law professor. No startup shares. No secondary market. No cleverness at all beyond filling out the form.
Now the part the $397,000 headline leaves out. A cash balance plan is a pension, and a pension is a promise — you commit to funding it in the bad years as well as the good ones. It needs an actuary annually, it carries its own filing, and if you have staff you will generally have to cover them too, usually a few percent of payroll. For a practice with lumpy income, those obligations are not a footnote. They are the entire decision.
And $397,000 is the oldest worker's number, not everyone's. The plan funds toward a lump sum by 62, so the fewer years you have left, the larger the annual contribution the IRS permits. A 40-year-old partner does not get that figure. A 58-year-old one might. That asymmetry is exactly why this conversation is urgent at 55 and merely interesting at 40 — and why the people who most want to have it are often the ones with the least room left to use.
Some employers pay 17% whether you contribute or not.
The average company 401(k) match is about 4.7% of eligible salary, according to a Vanguard analysis of the plans it manages, and only 6% of those plans offered a promised matching contribution totaling 7% or above in 2025. A select few employers go well beyond that.
Costco contributes an amount equivalent to 4% of pay for employees with at least a year of service, whether or not they contribute anything themselves; that rises with tenure, so workers with 25 years or more receive a 9% contribution, plus a small match worth up to an additional $500 a year. Southwest Airlines offered a dollar-for-dollar match of up to 9.3% of salaries in 2024; Boeing boasts an even higher one of 10%. Visa will put in $2 for every $1 an employee deposits, up to the first 5% of pay; Mastercard puts in $1.67 for every $1 on the first 6%. Both add up to a 10% total employer contribution — without the employee having to put away as much to get it.
Altria matches employees up to 3%, but add its profit-sharing plan and workers get a 13% to 17% total employer contribution. Aerospace Corp., a nonprofit government contractor, also uses a 3% match but provides a total of 12% for its longest-tenured employees through added nonelective contributions. Unionized workers at Ford and General Motors receive a 10% nonelective contribution as their retirement plan, bumped up from 6.4% as part of contract negotiations in 2023. Publix automatically provides employees with shares of company stock after they have clocked 1,000 hours within a year; Stewart’s Shops, a regional gas and ice-cream chain, runs an ESOP-only program and says its employees have seen retirement contributions of 17% on average in the past five years, with the company putting the number of cashiers who became millionaires through stock ownership at over 200.
One more, because it is new and underused: Boeing is among a growing group of employers that let workers receive matching 401(k) contributions for some of their student-loan payments — a Boeing worker who puts 10% of salary toward a qualified loan gets a matching amount from the company in their 401(k). The program follows the federal Secure 2.0 Act of 2022; Verizon, Chipotle, Comcast, Walgreens and News Corp have adopted versions of it.
No tickers. This is the page in this week’s paper most likely to change a client’s life, and the arithmetic is on our side of the desk. Most readers cannot use a mega-backdoor because they’ve never asked whether their plan allows after-tax contributions. And the companion piece on generous employers names the quiet pattern: Costco (COST) pays 4–9% whether you contribute or not, Boeing matches 10%, and Altria (MO) — yes, the tobacco sleeve’s income name — lands 13% to 17% total. The house wins twice.
Action for clients: bring us your plan document; the cash-balance conversation is the single highest-leverage meeting a practice owner can take this year. That is a planning CTA, and we make no apology for it. Sean’s letter on this runs as The $20.6 Million Janitor Math, and the mechanics live on the planning page.
Strip the language away and a dollar-for-dollar match is a 100% return, in cash, on the day it lands, before the market has done anything at all. Visa's is $2 for every $1 on the first 5% of pay — a 200% return. Nothing in any book we manage competes with that, and it is not close.
Which is why the order of operations is not negotiable. Take the full match first, then the back door, then the after-tax room, and only then anything we do. We are the fourth call, not the first, and an advisor who tells you otherwise is selling you something. It costs us nothing to say so, because by the time those three steps are done properly there is usually a great deal more money for us to look after.
The student-loan match is the underused one. Secure 2.0 lets an employer treat a qualified loan payment as though it were a deferral, so a Boeing worker paying down debt still collects the company's 10%. If you have been choosing between the loan and the plan, at those employers that has been a false choice since 2024.
No tickers. This is the page in this week’s paper most likely to change a client’s life, and the arithmetic is on our side of the desk. Most readers cannot use a mega-backdoor because they’ve never asked whether their plan allows after-tax contributions. And the companion piece on generous employers names the quiet pattern: Costco (COST) pays 4–9% whether you contribute or not, Boeing matches 10%, and Altria (MO) — yes, the tobacco sleeve’s income name — lands 13% to 17% total. The house wins twice.
Action for clients: bring us your plan document; the cash-balance conversation is the single highest-leverage meeting a practice owner can take this year. That is a planning CTA, and we make no apology for it. Sean’s letter on this runs as The $20.6 Million Janitor Math, and the mechanics live on the planning page.
- COST · Costco · 4–9% nonelective, named in the plan data
- BA · Boeing · 10% match plus student-loan match
- MO · Altria · 13–17% total employer contribution
- V · Visa · $2 per $1 to 5% of pay
- MA · Mastercard · $1.67 per $1 to 6% of pay
Bring us your plan document.
We will read it and tell you which of the four steps are actually open to you — and whether step three is switched on. No prep required, and nothing to bring but the PDF from HR.