How Corporate Executives Stash $100,000+ Into a 401(k) Using the 415(c) Rule Most People Miss
The post How Corporate Executives Stash $100,000+ Into a 401(k) Using the 415(c) Rule Most People Miss appeared first on 24/7 Wall St..
- IRC 415(c) caps total DC plan contributions at $72,000 in 2026, leaving ~$30,000 after-tax headroom for $300K earners.
- Confirm plan allows after-tax contributions and Roth conversions, then stack multiple employer plans to exceed $100,000 annually.
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The corporate VP three years from retirement has been maxing the 401(k) for two decades. The elective deferral cap at $24,500 in 2026, plus an $8,000 catch-up after age 50, only soaks up a fraction of an executive comp package. The move that closes the gap is buried in plan documents under a section number most participants have never read: 415(c).
Internal Revenue Code section 415(c) sets the total ceiling on what can land in one employer’s defined contribution plan in one year. For 2026 that cap rose to $72,000, and it counts everything: the elective deferral, the company match, profit sharing, and after-tax dollars. Subtract a standard deferral and a typical 6% match on a $300,000 base, and there is roughly $30,000 of empty headroom in the plan that nobody is required to tell you about.
Suze Orman flagged the mechanic on a recent podcast. “There is a IRS rule and it’s called 415 C. And it allows you in an employer plan to put in after tax contributions into your 401k and the max because there is a limit. The 415 max is ready, $72,000 per employer or 80,000 per employer if you are 50 or older.” The second step, where the real six-figure deferral becomes possible, goes unmentioned.
How the after-tax bucket gets to six figures
Executives with multiple sources of plan eligibility stack the limit. A senior leader at a parent company who also runs a consulting LLC, or sits on the board of an unrelated business with its own plan, gets a fresh $72,000 ceiling for each unrelated employer’s plan. Two plans, two 415(c) caps, and the after-tax slice alone can push past $100,000 in a single year on top of the elective deferral and any match.
The 60-to-63 window widens the runway further. The super catch-up adds $11,250 in 2026, taking total employee contributions to as much as $35,750 for that four-year stretch. Combine that with the after-tax bucket and a single executive can route close to $50,000 of post-tax dollars into one plan before any side-plan stacking begins.
Why after-tax dollars beat a brokerage account
The trick is what happens the day after the money lands. Plans that allow in-plan Roth conversions, or in-service rollovers to a Roth IRA, let the executive convert those after-tax contributions to Roth almost immediately. Only the growth between deposit and conversion is taxable, and at one-day lag that number is usually zero. The mega backdoor Roth turns ordinary post-tax savings into Roth dollars with no income phase-out and no IRA cap.
For a 58-year-old VP in the 24% bracket, which runs to $201,775 of taxable income for singles and $403,550 for joint filers in 2026, the payoff is the tax cascade you avoid in your 70s. Roth dollars never count toward the income that makes Social Security taxable, never trigger an IRMAA Medicare surcharge under the two-year lookback, and carry no required minimum distribution. A Roth balance compounded for fifteen years is worth more in retirement than the same amount in a traditional 401(k), even before the IRMAA cliffs come into play.
The SECURE 2.0 catch-up rule that took effect this January underlines the direction Congress is pushing. Employees 50 and older who earned more than $150,000 in 2025 must now route their catch-up contributions into the Roth 401(k). The after-tax bucket is the same trade, voluntarily, at a much larger scale.
What to do this quarter
- Pull the summary plan description and search for “after-tax” or “voluntary employee contributions.” If the plan permits them, ask HR for the specific 415(c) headroom left after your projected deferral and match. Plans that lack the feature can sometimes add it if a CFO or HR head asks.
- Confirm the plan offers either in-plan Roth conversions or in-service distributions to a Roth IRA. Without one of those exits, after-tax money compounds into a taxable pocket and the strategy collapses.
- If you also draw income through a consulting entity or board seat, open a solo 401(k) for that employer. Each unrelated plan carries its own $72,000 ceiling, and that stacking is how the $100,000 number actually gets there.
The personal savings rate slid from 6.2% in early 2024 to 3.7% in the first quarter of 2026. For households still capable of saving aggressively, the after-tax 401(k) is the most underused line in the plan document.
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The post How Corporate Executives Stash $100,000+ Into a 401(k) Using the 415(c) Rule Most People Miss appeared first on 24/7 Wall St..
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