Nearly 12,000 taxpayers now hold retirement accounts worth $10 million or more, up from 3,625 in 2019. Not one of them used a rule you cannot use. Meanwhile, most Americans have saved less than $100,000 for retirement.
About 70% of private-sector workers now have access to a 401(k)-style plan. So the gap is not access. The gap is instructions.
The four steps
Step one: max the plan. Workers can put $24,500 into a 401(k) this year. At 50-plus the total rises to $32,500, and in the 60–63 window it reaches $35,750. Almost everyone stops here.
Before even that: take the full company match, which averages 4.7% of pay. A dollar-for-dollar match is a 100% return before the market opens. Nothing we manage competes with that.
Step two: the backdoor Roth. Direct Roth IRA contributions are off limits above $168,000 of income for single filers. But you can put $7,500 of already-taxed money into a traditional IRA and convert it to a Roth — the account where growth is tax-free.
One tripwire: the pro-rata rule — the IRS taxes conversions in proportion to all your IRA money, not just the new dollars. Hold $93,000 of pretax IRA money, and 92.5% of any conversion is taxable. The usual fix is rolling the pretax IRA into your 401(k) first.
The five-minute question
Step three is the big one, and your employer controls it. Under IRS rules, total 401(k) contributions can reach $72,000 this year — $80,000 at 50-plus. Beyond your $24,500, you may be able to add up to another $47,500 in after-tax dollars, then convert them to a Roth. That is the mega-backdoor.
The catch is a question, not a rule: does your plan allow after-tax contributions, and can you convert them? Nearly two-thirds of large plans run by Alight allow it. Ask HR, and get the answer in writing.
Then do the subtraction nobody does. The $72,000 ceiling covers everything at once — your deferral, the company money, and the after-tax dollars. On a $200,000 salary with the average match, that is $24,500 plus $9,400, leaving $38,100 of after-tax room. The headline number is never your number.
Step four is for owners and partners: the cash balance plan — technically a pension that reads like an account. There were 25,754 employers running them in 2023, up from 1,477 in 2001. Older high earners can put away as much as $397,000 a year on top of the $72,000, and accumulate about $3.7 million by age 62.
Who already pays
Now the headline math. Someone who saved today’s equivalent of the $72,000 maximum every year from 1984 to 2019, at S&P 500 returns, had $20.6 million by the end of 2024. That is per NYU law professor Daniel Hemel. No startup shares. No cleverness. Just the form.
Some employers quietly help more than others. Costco contributes 4% of pay after one year — rising to 9% at 25 years — whether you contribute or not. Boeing matches 10%, and even matches student-loan payments. Visa puts in $2 for every $1 on the first 5% of pay. Altria lands 13% to 17% all-in with profit sharing.
Against an average match of 4.7%, the plan you work for can be worth more than the fund you pick.
The order of operations is not negotiable. Take the match, use the backdoor, ask the after-tax question, and owners should price the pension. The $72,000 is 2.9 times $24,500 — same funds, same years, 2.9 times the money.