• If you want to boost retirement savings, your 401(k) could offer after-tax contributions on top of the employee deferral limits.
• However, future growth is tax-deferred, so you'll need to convert to Roth accounts periodically.
• Typically, you should focus on regular deferrals first to capture your employer's matching contribution, experts say.

If you're eager to , a lesser-known could significantly boost your nest egg, financial advisors say. 

For 2025, you can into your 401(k), plus an extra $7,500 in "catch-up contributions" if you're age 50 and older. That catch-up contribution for investors age 60 to 63.

Some plans offer on top of those caps. For 2025, the max 401(k) limit is $70,000, which includes employee deferrals, after-tax contributions, , profit-sharing and other deposits.

If you can afford to do this, "it's an amazing outcome," said certified financial planner Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts.    

"Sometimes, people don't believe it's real," he said, because you can automatically contribute and then convert the funds to "turn it into tax-free income."

However, many plans still don't offer the feature. In 2023, only 22% of employer plans offered , according to the latest data from Vanguard's How America Saves report. It's most common in larger plans.

Even when it's available, employee participation remains low. Only 9% of investors with access leveraged the feature in 2023, the same Vanguard report found. That's down slightly from 10% in 2022.

How to start tax-free growth

After-tax and Roth contributions both begin with after-tax 401(k) deposits. But there's a key difference: the taxes on future growth.

Roth money grows tax-free, which means future withdrawals aren't subject to taxes. To compare, after-tax deposits grow tax-deferred, meaning your returns incur regular income taxes when withdrawn.

That's why it's important to convert after-tax funds to Roth periodically, experts say.

"The longer you leave those after-tax dollars in there, the more tax liability there will be," Galli said. But the conversion process is "unique to each plan."

Often, you'll need to request the transfer, which could be limited to monthly or quarterly transactions, whereas the best plans convert to Roth automatically, he said.

Focus on regular 401(k) deferrals first

Before making after-tax 401(k) contributions, you should focus on maxing out regular pretax or Roth 401(k) deferrals to capture your employer match, said CFP Ashton Lawrence at Mariner Wealth Advisors in Greenville, South Carolina.

After that, cash flow permitting, you could "start filling up the after-tax bucket," depending on your goals, he said. "In my opinion, every dollar needs to find a home." 

In 2023, only 14% of employees maxed out their 401(k) plan, according to the Vanguard report. For plans offering catch-up contributions, only 15% of employees participated.