For many Amazon employees, the company’s 401(k) plan offers one of the most powerful — and often underutilized — retirement savings opportunities available: the Mega Backdoor Roth. This advanced strategy allows high-income earners to contribute significantly more to Roth accounts than standard limits would otherwise permit, creating an opportunity for substantial tax-free growth over time.

Whether you’re a mid- to late-career professional at Amazon, or simply looking to optimize your savings strategy, understanding how the Mega Backdoor Roth works within the Amazon 401(k) plan (administered by Fidelity) could make a meaningful difference in your long-term financial plan.

What is the Amazon 401(k)?

Amazon’s 401(k) plan is managed through Fidelity, one of the nation’s largest retirement plan administrators. Like most employer-sponsored retirement plans, Amazon’s 401(k) allows employees to make pre-tax or Roth contributions, receive an employer match, and invest for the future in a tax-advantaged way.

Below are the contribution limits for 2026:

Employee elective deferrals: Up to $24,500 for those under age 50.

Catch-up contributions: An additional $8,000 (total of $32,500) for those aged 50 and older.

“Super” Catch-Up: An additional $11,250 (total of $35,750) for those age 60-63, if plan permits

Total annual contribution limit (including employee, employer, and after-tax contributions): $72,000 under age 50, or $80,000 for those 50 and older, or $83,250 for Super Catch Up.

These limits open the door for additional after-tax contributions — the key component that enables the Mega Backdoor Roth strategy.

Amazon’s Employer Match

Amazon provides a matching contribution on employee deferrals (often 50% on the first 4% of eligible pay, though this should be verified as match formulas can change). These matching dollars are made on a pre-tax basis and count toward the total IRS annual contribution cap.

This means your combined employee, employer, and after-tax contributions cannot exceed the total annual limit ($72,000 or $80,00). Understanding this interaction is critical when planning how much room remains for after-tax contributions.

How the Mega Backdoor Roth Works at Amazon

The Mega Backdoor Roth is a unique strategy that takes advantage of after-tax contributions within a 401(k) plan. Not all employers allow this — but Amazon does, and Fidelity facilitates the process seamlessly.

Here’s how it works step-by-step:

Max out your standard 401(k) contributions.
You first contribute the full IRS limit ($24,500 or $32,500, or $35,750) to your pre-tax or Roth 401(k).
Receive the employer match.
Amazon adds its matching contribution to your pre-tax account.
Make after-tax contributions.
You can then contribute additional after-tax dollars up to the overall $72,000/$80,000/$83,250 limit.
Convert those after-tax contributions to Roth.
These after-tax funds can be converted either:

In-plan to the Roth 401(k) at Fidelity, or

Rolled out to a Roth IRA.

Once converted, all future growth on these funds is tax-free, as long as Roth distribution rules are met.

This strategy effectively allows you to “supercharge” your Roth savings far beyond the normal IRA limits ($7,000 or $8,000 with catch-up in 2025).

The Impact of SECURE 2.0 on Roth Contributions

The SECURE 2.0 Act, passed in 2022, introduced several updates that influence Roth savings strategies.

No income limits on Mega Backdoor Roths: Unlike traditional Roth IRA contributions, the Mega Backdoor Roth conversion has no income restrictions, making it ideal for high earners who otherwise wouldn’t qualify.
Catch-up contributions for high-income earners: Starting in 2026, employees earning more than $145,000 will be required to make catch-up contributions to the Roth side of their 401(k) rather than pre-tax.
Streamlined in-plan conversions: Fidelity’s platform allows near-immediate conversions of after-tax contributions, reducing tax complexity.

In other words, SECURE 2.0 has made the Roth landscape more flexible — but also more nuanced. Knowing which contributions are eligible and when to convert can help you avoid unnecessary taxes or missed opportunities.

Example: How an Amazon Employee Could Maximize Savings

Let’s look at an example.

Employee age: 45
Salary: $200,000
Standard deferral: $24,500 (Roth or pre-tax)
Amazon match: $4,000 (pre-tax)
Remaining contribution capacity: $72,000 – $28,500 = $43,500 available for after-tax contributions

This employee could contribute up to $43,500 after-tax and immediately convert it to Roth, either in-plan or to a Roth IRA. Assuming 20 years of tax-free growth at a 7% average return, that single year’s contribution could grow to roughly $162,000 — entirely tax-free in retirement.

Tax Implications and the Pro-Rata Rule

Whenever you move money from a traditional or after-tax account to a Roth, you may trigger taxes — depending on how the funds are allocated between pre-tax and after-tax dollars.

The Pro-Rata Rule Explained

The IRS requires that Roth conversions reflect a proportional mix of pre-tax and after-tax funds in your 401(k). For example, if your account is 80% pre-tax and 20% after-tax, then 80% of any conversion would be taxable.

However, the Amazon 401(k) plan (through Fidelity) typically keeps after-tax contributions tracked separately, which allows for “clean” conversions. That means you can convert the after-tax portion without triggering significant taxes. Still, it’s critical to double-check with Fidelity before processing any rollover or conversion.

Important Considerations and Pitfalls to Avoid

While the Mega Backdoor Roth is powerful, it requires careful coordination:

Confirm plan features: Make sure your plan allows after-tax contributions and in-plan Roth conversions.
Avoid timing mismatches: Convert soon after contributing to minimize taxable earnings.
Coordinate with your overall tax plan: Especially if you’re self-employed, own a business, or have multiple income sources.
Mind other savings priorities: Don’t neglect emergency reserves, HSA contributions, or debt reduction.

Because this strategy crosses tax and investment planning, professional guidance is strongly recommended.

Is the Mega Backdoor Roth Right for You?

The Mega Backdoor Roth can be an excellent strategy for:

High-income earners who already max out their 401(k) and IRA.
Those expecting higher tax rates in retirement.
Investors focused on long-term, tax-free wealth building.

However, it’s not a one-size-fits-all solution. Every investor’s tax situation, cash flow, and time horizon is unique — and small missteps can have unintended consequences.

Final Thoughts

The Amazon Mega Backdoor Roth offers one of the most efficient ways to build significant tax-free wealth, especially for high earners who want to make the most of their 401(k) benefits. But as with any advanced tax strategy, the details matter.

If you’re an Amazon employee or high-income professional wondering whether this approach fits your financial goals, our team at Clear Insight Wealth Management can help you design a strategy that aligns with your retirement plan and long-term tax efficiency.

Ready to optimize your Amazon 401(k)?

Schedule a call with a fiduciary advisor today to explore whether the Mega Backdoor Roth fits into your comprehensive financial plan.

How Amazon Employees Can Maximize Their 401(k) with the Mega Backdoor Roth Strategy