Betterment Aims to Make ‘Mega Backdoor Roths’ Easier for Advisors 

It’s almost always easier to use the front door, but in some cases it pays to go around the back.

But advisors working with retirement savers know about backdoor Roth strategies. Clients make a traditional IRA or 401(k) contribution and quickly follow it up with a Roth conversion, circumventing income limits for funding Roth accounts directly. But there’s a supercharged version of the strategy available to clients who own a solo 401(k). Betterment is making the “mega backdoor Roth” technique available for financial advisors using its Advisor Solutions, sparking renewed discussion about the strategy’s pros and cons. 

“This is welcome news,” said Michael Hollis, principal at TapestryFP, who doesn’t work with Betterment but said he is intrigued. “When I’ve looked into adding this feature to a solo 401(k), it has seemed overly complicated, having to get both a [third-party administrator] and custodian involved. Anything that simplifies the setup and management for a small business client is a huge value add.”

Enter Through the Back 

For 2026, married couples can make Roth contributions directly if their combined income is under $242,000, with reduced contributions available for those making up to $252,000. For single filers or heads of households, those numbers are $153,000 and $168,000, respectively. Many clients who earn more still want to enjoy the benefits of Roth accounts, which aren’t subject to required minimum distributions or federal inheritance taxes. Roth withdrawals likewise do not inflate retirees’ marginal tax brackets, trigger Medicare surcharges or increase the taxation of Social Security benefits.

Solo 401(k)s are attractive in this context because the account owner can contribute as both an employee and an employer:

• Employee contributions are capped at $24,500 for 2026, just like a standard 401(k), with higher catch-up contributions available to older savers.
• Employer contributions are capped at roughly 20% of net self-employment income if the client is a sole proprietor, or 25% of compensation if they’re an Scorp or Ccorp.

Adding in voluntary after-tax contributions, clients can put up to $72,000 into a Roth 401(k) each year (double that for married couples) — even more if they’re older savers eligible for catch-up contributions. 

“Solo 401(k)s can be an extremely powerful tool for solo business owners,” said Brian Abatemarco, CEO at CedarStream Wealth. “The income deferral and ability to get money into an after-tax bucket can be extremely compelling.”

Complexity Corner. Ensuring ease of use was a major goal for Betterment as it crafted the new offering, said Edward Gottfried, the company’s vice president of product. But there’s no denying that backdoor Roth funding strategies still bring complexity. “It is a complicated planning device,” he said. “There’s a really nice role for advisors to play here and help their entrepreneurial clients make the most of this strategy.”