Why do some companies offer mega backdoor Roth and others don’t?

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The main reason is tax code rules about Highly Compensated Employees (those earning over $160k)
Allowing MBD almost always means the company must pay large matching or fixed contributions, which they might not want to.


HCE rules require 401k contribution percentage for HCE’s to be about the same as non HCE’s
Allowing Megabackdoor creates a big problem here, because it’s used almost exclusively by HCE’s to supercharge their contributions.

The only way companies can then pass the tests is to make significant matching contributions and possibly also fixed contributions to lower earners.
Thats why you’ll often see, for example:
- Employees earning below $100k get a fixed $4k contribution
- Matching for HCE’s is phased out or lower.

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Yeah — I’m probably venting a bit. I get the logic and agree Safe Harbor helps in practice, but that feels more like a workaround than a fix.
At a core level, the logic still feels flawed — tying one person’s ability to save to others’ participation doesn’t really address the root issue, it just shifts the constraint.
Feels like IRS limits should be the guardrails, and beyond that, individual saving decisions should stand on their own.

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Some are financially illiterate or use cheap 401k providers that don't offer the feature

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401k providers want to keep money in the plan to earn fees so they limit in-service distributions

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No. They allow in service conversion now, so MBD means more money in the plan,
The issue is HCE requirements.

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