More Americans have built up supersize sums in their tax-advantaged retirement accounts. But those with more modest means can also grow their own nest eggs bigger than they might think.

Nearly 12,000 taxpayers had individual retirement accounts with at least $10 million in 2024, the latest year for which figures are available, according to new data prepared by the nonpartisan congressional Joint Committee on Taxation. That's up from 3,625 with similar balances in 2019, the analysis of anonymized tax-return data found.

Meanwhile, most Americans have saved less than $100,000 in their retirement accounts.

Tax benefits boost returns for money stowed in a 401(k) or IRA. They shield investment income and gains on sales from taxation. Around 70% of private-sector employees in the U.S. now have access to a 401(k)-style retirement plan.

A Wall Street Journal article this past week explored how some people amassed retirement-account fortunes by putting shares of startups in them when they were worth peanuts, then watched the share prices multiply many times over. But you don't need access to startup shares to amass significant money in these accounts.

Here's a guide for the everyday saver.

Step 1: Save the maximum

To start, workers can put up to $24,500 into a 401(k) or similar workplace retirement plan this year. People 50 and older can save $8,000 more in "catch-up" contributions, for a total of $32,500. Those ages 60 to 63 can save a total of $35,750. The maximums typically rise each year with inflation.

The same contribution limits apply to both traditional and Roth 401(k) accounts, and if you want to contribute to both you have to divide the $24,500 between the two. In a traditional pretax retirement account, savers don't pay income tax on their contributions, and instead pay the tax when they withdraw the money in retirement. In a Roth account, owners contribute after-tax money, which can generally be withdrawn tax-free, along with investment gains.

It's possible to save even more by contributing up to an additional $7,500 to an IRA, a limit that rises to $8,600 for workers 50 and older. However, some higher earners covered by a retirement plan at work won't be able to deduct their traditional IRA contributions.

Step 2: Go through the back door

Direct Roth IRA contributions are off limits for single filers with modified adjusted gross incomes of $168,000 or more and couples with incomes of $252,000 or more.

But they can still add funds indirectly through a backdoor Roth IRA conversation.

To do this, first put money you already paid income taxes on into a traditional IRA. Then convert it to a Roth IRA. Because you already paid income tax on the contribution, you will only owe tax on the appreciation your investments had earned when you convert the money.

If you have multiple IRAs, there may be tax complications to pursuing this strategy.

Step 3: Do a mega-backdoor Roth 401(k) conversion

The mega-backdoor Roth conversion is available to a growing number of people with 401(k) accounts.

This rests on a little-known fact about 401(k) plans: Employees can really set aside as much as $72,000 in these accounts this year, under Internal Revenue Service rules, rising to as much as $80,000 for those 50 and older and $83,250 for people in their early sixties.

To go beyond the usual $24,500 limit on pretax or Roth 401(k) contributions, a worker might be able to contribute as much as another $47,500 to the 401(k) -- and then convert that money to a Roth 401(k). (Company contributions, including a match, also figure into the $72,000 limit.)

Once the money is in the Roth, it grows tax-free.

To take advantage of the mega-backdoor strategy, you have to work for a company that lets employees make after-tax contributions to the 401(k) plan. Nearly two-thirds of the large 401(k) plans administered by Alight offer after-tax contributions. The vast majority let participants convert after-tax balances to a Roth inside the plan.

Some 401(k) plans will automate the conversions every pay period. And many also allow the conversion of pre-tax savings to a Roth.

Someone who saved the equivalent of today's $72,000 maximum in a 401(k) account every year from 1984 until 2019 -- adding catch-ups once eligible -- would have had $20.6 million by the end of 2024, assuming returns consistent with the S&P 500 index, according to Daniel Hemel, a New York University law professor.

Step 4: Look into a cash balance pension plan

Cash balance plans have taken off in recent years, mainly with smaller businesses.

There were 25,754 employers with cash balance plans in 2023, the most recent data available, up from 1,477 in 2001, according to FuturePlan by Ascensus, a plan administrator.

Cash balance plans aren't available at most companies, but they are a valuable perk for workers with access to them. They aren't subject to the restrictions on annual 401(k) contributions because they are technically pensions, with some features that resemble 401(k)s.

People who save the most in them are typically business owners paid a share of the profits, such as partners in medical and law firms. In some of these plans, older higher-earners can put away as much as $397,000 a year, though younger and lower-paid people have lower limits. In addition to saving in the cash balance plan, the business owners also often save up to the $72,000 annual 401(k) contribution limit.

As with traditional 401(k)s and IRAs, cash balance plans allow users to defer paying income tax on saved income, paying the income tax upon withdrawal. That's an attractive proposition for anyone expecting to be in a lower tax bracket in retirement.

This year, the IRS allows people to accumulate up to about $3.7 million in a cash balance plan by age 62, according to Dan Kravitz, cash balance senior sales director at FuturePlan by Ascensus.

When workers retire or change jobs, they typically roll their cash balance and 401(k) money into IRAs -- creating some of those super-sized accounts.

Write to Anne Tergesen at anne.tergesen@wsj.com and Theo Francis at theo.francis@wsj.com

(END) Dow Jones Newswires

July 25, 2026 20:00 ET (00:00 GMT)

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