The mega backdoor Roth uses a gap in the 401(k) rules. Your own pre-tax or Roth contributions are capped at $24,500 (2026), but the overall limit on everything going into the account, called the 415(c) limit, is $72,000. Some plans let you fill the space between those numbers with after-tax contributions, and then convert that after-tax money to Roth, either inside the plan or by rolling it to a Roth IRA.
The result is Roth savings well beyond what a Roth IRA or Roth 401(k) alone allows. Example: you contribute $24,500 and your employer adds $9,000 in match. That leaves $38,500 of room under $72,000. If the plan allows, you contribute that $38,500 after tax and convert it. You now have $38,500 more growing tax-free every year, on top of the normal limits.
Two plan features are required: after-tax contributions (not the same as Roth contributions) and either in-plan Roth conversion or in-service withdrawals to a Roth IRA. Many large employers offer both; many small plans offer neither. Converting promptly matters, because growth that occurs while the money sits in after-tax status is taxable on conversion.
The common mistake is prioritizing this over things that come first: the full match, an emergency fund, and HSA space. It is a strategy for people who have already maxed the basics and still have money to save. It is also easy to accidentally over-contribute if the plan does not cap after-tax deposits automatically.