Can someone help me understand how backdoor Roth works in my situation?

I contribute the $19.5K max to a 401K each year. Would backdoor Roth be (A) the ability to roll $6K of that $19.5K into a Roth? or (B) an incremental $6K that I could contribute to a separate IRA then backdoor into a Roth?

Asked another way, does backdoor Roth allow me to actually contribute $25.5K each year, or does it just allow $6K of my $19.5K contribution to build in a Roth?

Thanks!

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To my understanding, once you contribute the max $19.5K allowed in direct contributions to your 401k, you can use the back door Roth to keep contributing up to a limit. This is specific to a 401k plan and not related to other IRAs that you may have. See “Overall limit on contributions” in the IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits

First you have to check if your employer’s 401k plan and the financial entity behind it allows these conversions.
Then you would have to change your contributions to traditional after-tax.
As soon as the new contributions reach the 401K you can do a in-plan Roth conversion. In Merrill Lynch Benefits Online this is super easy and can be done online, (go to the 401K account > click Summary > In-plan Roth Conversion) but not sure of other platforms.

In total the max you can contribute (and this includes the $19.5K and your employer’s match contributions) is also capped. For 2021 is $58K in total.

It's option B resulting in a total of 25.5k/yr

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