Case Study:
How Dr. Emily Carter Supercharged Her Tax-Free Retirement Savings with a Mega Backdoor Roth
Dr. Emily Carter, a 38-year-old dentist and thriving business owner, has built a reputable practice and enjoys a healthy income of $400,000 per year. Ambitious and financially savvy, she has her sights set on early retirement—but with one major concern nagging at her:
“Am I really taking advantage of all the tax-free options available for retirement?”
She had already been diligently contributing to her 401(k), but felt frustrated by the IRS contribution limits and the fact that her income made her ineligible for a Roth IRA. Emily wanted more control over her financial future—and less of it going to taxes.
The Challenge: High Income, IRS Limits, and Missed Roth Opportunities
Despite her high income and commitment to saving, Dr. Carter was capped at the $23,000 401(k) employee deferral limit (plus employer contributions). As a high earner, she couldn’t contribute to a Roth IRA, and her traditional tax-deferred accounts limited her tax flexibility in retirement.
She needed a legal, strategic way to boost her tax-free retirement contributions—without changing her income or business structure.
The Solution: Mega Backdoor Roth Strategy
After a deep review of her practice’s 401(k) plan, we discovered something powerful: it allowed after-tax contributions and in-service rollovers—the perfect setup for a Mega Backdoor Roth.
Here’s how we restructured her plan:
✔ Dr. Carter continued contributing $23,500 in pre-tax 401(k) deferrals (plus $6,500 in employer match and profit-sharing)
✔ We added an additional $40,000 in after-tax contributions
✔ We rolled those after-tax contributions into a Roth 401(k) account via in-service conversion—making all future growth and withdrawals 100% tax-free
The Immediate Benefits
$40,000+ per year of Roth contributions, completely legal and compliant
Projected lifetime tax savings of over $500,000
Accelerated financial independence, giving her the flexibility to retire early or scale back at her own pace
No IRS income phase-outs to worry about—this strategy works regardless of her high income
Fast-Forward 20 Years
By age 58, Dr. Carter’s Roth accounts alone could grow to over $1.79 million—all tax-free.
This gives her the freedom to: ✔ Retire early without penalty
✔ Access funds tax-free for future medical or living expenses
✔ Reduce taxable RMDs in retirement
✔ Leave behind a powerful legacy for her family
By the time Dr. Carter retires, her Roth account is projected to grow to approximately $1.79 million (based on $40,000 annual contributions, 7% growth rate). This will allow her to take tax-free distributions of around $144,600 per year for 30 years, giving her a stable, tax-efficient income throughout retirement.
Her Only Regret? Not Starting Sooner.
Like many high earners, Dr. Carter assumed she was “maxing out” her retirement options. Once she saw the potential of the Mega Backdoor Roth strategy, it was a game-changer.
Her story is a powerful reminder that with the right plan design, even solo or small business owners can unlock massive tax-free retirement growth—without needing to change their income or lifestyle.
Disclaimer: This case study is a hypothetical scenario created for illustrative purposes only. While the income figures, tax implications, and retirement strategies discussed have been evaluated for realistic financial accuracy, Dr. Alice is a fictional character and not an actual client. Individual circumstances vary, and this content should not be considered personalized financial, tax, or legal advice. Please consult with a qualified advisor before making any financial decisions.
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