RTX Employees: Is a Mega Backdoor Roth Right for You?

Are you a high-income earner at RTX (Raytheon Technologies) maximizing your pre-tax or Roth contributions to your RTX 401(k) over and above that valuable employer match? Great! However, did you know RTX is one of the employers that offers a unique opportunity for a mega backdoor Roth? RTX employees can use this significant benefit to boost their retirement savings, especially if they have excess cash and are already maximizing the $23,500 employee contribution amount if they are under age 50 and between $31,000 and $34,750 if age 50+.

As financial advisors in San Diego, we regularly advise employees of RTX located here, as well as other business units nationwide. With a deep understanding of the RTX 401(k) plan and RTX benefits, we’re here to guide you through the ins and outs of a mega backdoor Roth and implement the strategy in your retirement plan if you wish.

What is a Mega Backdoor Roth IRA?

A mega backdoor Roth IRA is a strategy individuals can use to save over and above the annual pre-tax or Roth 401(k) contribution limits. It allows employees to put additional savings in a Roth when they are no longer eligible to contribute due to higher income levels. You will pay taxes on any earned growth when you convert after-tax contributions to a Roth IRA; however, once the funds have been converted to a Roth account, you will enjoy tax-free growth afterward. Other benefits include:

• Roth account withdrawals are tax-free.
• There are no required minimum distributions (RMDs) to take in your 70s, such as those on pre-tax 401(k) contributions, which are fully taxable — but be aware future legislation may affect this option.
• The strategy provides a legal workaround for high-income earners who have reached income and contribution limits to save more in a Roth IRA.
• For those of you thinking of legacy planning, Roth IRA’s are much better to inherit as they are tax-free vs. inheriting tax-deferred assets and having to take taxable withdrawals over 10 years, based on current laws.

What are the annual contribution limits?

In 2025, the annual contribution limit of defined contribution plans like a 401(k), including employee contributions and employer match, is:

• $70,000 for those under 50
• $77,500 for those over age 50
• $81,250 for those aged 60, 61, 62, and 63

Employees can use a mega backdoor Roth to bridge the gap between the amounts they are currently contributing plus receiving an employer match and $70,000, $77,500, or $81,250. See the graphic below. 

*2025 IRS Limits

Who Should Use a Mega Backdoor Roth IRA Strategy?

A mega backdoor Roth IRA strategy is an effective savings opportunity if you have excess cash flow, can contribute beyond the standard 401(k) limits, and want to optimize tax-free growth. Consider a mega backdoor Roth if you’re a:

• High-Income Earner: Your income exceeds the Roth IRA income limits, making you ineligible for Roth IRA contributions. In 2025, if you earn more than $165,000 as a single filer and $246,000 as a married couple, you are no longer eligible to contribute to a Roth IRA.
• Young Professional: You’re a high-income earner early in your career and want to allow your contributions more time to compound and grow, setting you on a path to a strong retirement.
• Near-Retirement Professional: You want to catch up on your retirement savings and boost your retirement income.

In addition to the significant savings opportunity a mega backdoor Roth offers, leveraging the strategy helps create a balanced and diversified retirement income plan. We recommend every employee strive for a mix of financial buckets they can draw upon in retirement, including cash, taxable investment accounts, tax-deferred accounts like a 401(k), and tax-free accounts like a Roth, which can be accessed both through an IRA and 401(k). 

How Does a Mega Backdoor Roth IRA Work?

A mega backdoor Roth may be available when you reach your annual 401(k) contribution limit and if your employer permits it. As of 2025, the option is available for RTX and its affiliated business units like Collins Aerospace and legacy Raytheon employees. The strategy allows you to make after-tax contributions beyond the standard limit noted above.

How to Convert Your After-Tax Contributions

A crucial step, often overlooked, is requesting the conversion. Without this step, you may be leaving money on the table or missing an opportunity to save more for retirement. There is now an option to convert your after-tax contributions with every paycheck.  This is a new feature and you may want to discuss whether this option is right for you.  Otherwise, you can choose to manually convert using the “Convert to Roth” feature in Your Gateway or contact your benefits provider at 800-243-8135.. It is important to note that you only want to convert “after-tax” balances in your 401(k) and if you make a mistake, it is irreversible and could be costly.  Please note you will pay taxes on the growth upon converting so it will be good to be well-informed on how this may impact your taxes in a given year. We suggest you talk to your financial planner or tax advisor before taking this step or selecting the toggle to auto-convert.

When Should I Do a Mega Backdoor Roth?

Ideally, we recommend implementing the strategy sooner rather than later in the year. This allows you to plan your contributions, track your savings, and ensure you’ve reached your savings target by year-end more evenly throughout the year. However, if you have excess cash flow and are on track for a solid retirement, you can initiate a mega backdoor Roth anytime during the year. We also suggest starting earlier in the year to balance more aggressive retirement savings with other priorities and to ensure enough net pay to satisfy your ongoing living expenses.

If you’re uncertain about the timing or the intricacies of completing a mega backdoor Roth, consider consulting with a financial planner to discuss your options and make the most of this opportunity.

How Much Can I Contribute to a Mega Backdoor Roth?

The first step is determining how much additional contributions you can make, as the limit combines employee contributions and employer matches. Each individual’s contribution amount is dependent on various factors, such as the percentage of salary, which may fluctuate. Let’s review the annual employee and employer contribution limits of the RTX 401(k).

What Are the RTX 401(k) Annual Employee Contribution Limits?

In 2025, RTX employees may contribute as follows:

• Employees under 50: $23,500
• Employees over 50: $31,000 (includes the $7,500 catchup amount)

Also, RTX offers employees a 4% employer match for maximum contributions (at least 6% of their salary) and employees receive an additional age-based employer match that ranges from 3% to 7%: 

The RTX 401(k) retirement plan introduces some complexity when calculating your mega backdoor Roth number, especially for high-income earners or those in a high tax bracket. 

We recommend working with a financial advisor who can review your paycheck, bonuses and other compensation, and circumstances to outline a customized contribution amount. A professional can also help you stay updated on new tax laws and legislation affecting contribution and employer match amounts.  Please note, it is not an all-or-nothing approach and you can slowly start adding more to your 401(k) contributions anytime.

CCMI Understands the RTX Retirement and Benefits Plan

We’re uniquely positioned to help RTX employees, which includes Collins Aerospace, legacy Raytheon employees, and other business units, navigate their RTX retirement and benefits. Kim Benson, a former RTX employee, is familiar with the RTX 401(k) plan and thus often advises former colleagues and shares her insights into common 401(k) situations employees may face. She also helps executives coordinate this option with other deferred compensation plans they receive.  Additionally, having seen clients through various phases of their lives, she has seen how adopting strategies early on can pay off in the long run.

Everyone’s financial situation is different, and you may not fit the RTX employee type we’ve described. If you are not quite at the point of being able to fully maximize your 401(k), you may check out this blog post with other scenarios: RTX (Raytheon Technologies) 401(K): 3 Scenarios Employees Should Consider – CCMI Creative Capital Management Investments (myccmi.com). Perhaps you have market concerns, are strained for cash flow, or have other specific needs or priorities. We can help review your situation to develop a custom action plan that addresses your circumstances. Our goal is to use our insights to help you avoid costly mistakes and make informed decisions. Here are some other ways we can help:

• Managing and exercising stock options, including RSUs, PSUs, and SARs
• Exploring tax-efficient strategies
• Reassessing your risk tolerance
• Diversification and asset allocation
• Integrating your RTX retirement and benefits into your overall financial plan
• Identifying the best use of surplus cash flow based on your priorities

We invite you to have a complimentary conversation with our team of financial planning professionals to discuss your 401(k) options from RTX or another employer. Let us assist you in developing a comprehensive plan that considers all aspects of your financial life. Contact our team today to get started.

PLEASE SEE IMPORTANT DISCLOSURE INFORMATION at https://myccmi.com/important-disclosures/