Amazon employees can invest more towards retirement using the Amazon Mega Backdoor Roth Conversion, also known as the after-tax contribution to your 401(k) plan.

We want to help you understand why this is such an amazing benefit Amazon employees should consider taking advantage of. In this video, we explain what this benefit is and how it can help you invest more towards your retirement while reducing some of your future tax liabilities.

The numbers behind the Mega Backdoor Roth Conversion

You probably know that within your Amazon 401(k) you can contribute up to $19,500 per year if you’re under 50, and an extra $6,500 per year if you’re over 50.

Let’s walk thru an example of someone who is under 50 years old, making the max Amazon salary, $160,000 and maxing out their 401(k) contribution, $19,500

If you max out your 401(k) with a $19,500 contribution, Amazon is going to provide you with a 50% match on your first 4% contributed, meaning that they will contribute 2% of your base salary to your 401(k). If you’re making the max Amazon base salary ($160,000) and you put $19,500 into your 401(k), then Amazon is going to contribute $3,200 as a match (2% of your base salary).

What you may not know, is that the Federal limit for total dollars going into a 401(k) in 2021 is $58,000.

This is where the Mega Backdoor Roth comes into play. Amazon now allows you to contribute up to 10% of your base salary to the after-tax portion of your 401(k) and subsequently convert it to Roth. If you’re making $160,000 base, Amazon will let you put in $16,000 over the course of the year. (Now that doesn’t technically mean that you can put in $16,000 no matter when you start. You’ll be allowed to put in up to 10% of your salary each respective paycheck.)

New in 2021!! Once you contribute your after-tax dollars, you have the option within your 401I(k) to request that Fidelity continue to automatically convert them to Roth. This feature makes your after-tax contributions easier to manage — the automatic Roth conversion will continue throughout the year.

For those of you who want to take advantage of this benefit, the sooner in the year that you start making these after-tax contributions the more you’ll be able to contribute.


Many of you reading this are saving money above and beyond your 401(k) and more than likely you’re saving into a brokerage account (individual account, joint account, etc.). Within these accounts you hold investments, which inevitably over time kick off interest income, dividends, and capital gains. All of these events are taxable within brokerage accounts. Over the long-run, this taxation can create a substantial tax drag on performance.

Within a Roth you could hold the exact same investments, but the same interest income, dividends, and capital gains would all be tax-free now and when you retire!

Additionally, when you do retire, having additional money in a Roth account enables you to manage your retirement distributions and give you more control over your taxable income, which could allow you to save even more from a tax perspective.

Bottomline. If you’re an Amazon Employee saving outside your 401(k) for the long term – the Mega Backdoor Roth is a benefit you should take advantage of.

Needless to say, the long-term benefits of increasing your retirement savings, particularly by utilizing the Amazon Mega Backdoor Roth Conversion strategy, could make a massive positive impact on what your retirement looks like.

Questions about the Amazon Mega Backdoor Roth Conversion?

If you want to start taking advantage of the Amazon Mega Backdoor Roth Conversion, or any of the other benefits offered in the Amazon employee benefits plan, please schedule some time to discuss your questions.
Access our calendar here.