Tax planning done once and filed away doesn’t hold up for long — brackets change, limits change, and what worked at a $250K income often stops being the right move at $500K. The strategies below aren’t fringe. They’re the four that matter most, revisited the way they should be: every year, not just the year you first heard about them.
Maximize Your Tax-Advantaged Accounts; the High-Earner Version
Contributing to a 401(k) still reduces taxable income the same way it always has, and if there’s an employer match, that’s the easiest money you’ll turn down by not claiming it. But the account that actually changes for high earners is the Roth IRA — because past a certain income, you’re phased out of contributing to one directly. That’s where a backdoor Roth IRA comes in: a legal, well-established path that lets high earners fund a Roth anyway, using a non-deductible Traditional IRA contribution converted shortly after. It’s not a loophole. It’s the standard route for anyone whose income rules out the direct path.
Give Strategically, Not Just Generously
Charitable giving and tax efficiency aren’t in conflict, but they only line up when the giving is structured. If you itemize, contributions reduce taxable income directly. If you’re over 70½ and taking required minimum distributions, a qualified charitable distribution lets you send money from an IRA straight to charity — satisfying the RMD without ever counting it as taxable income, which a check written from your own account can’t do. And annual gift exclusions let you move money to family, tax-free, chipping away at the size of a taxable estate over time rather than all at once. Structured well, giving and tax efficiency both win. Structured casually, you’re often leaving one of the two on the table.
Put Your HSA to Work as a Second Retirement Account
If you’re on a high-deductible health plan, an HSA is one of the only accounts that gives you a tax deduction going in, tax-free growth, and tax-free withdrawals — all three, not just one or two. Unlike an FSA, the balance rolls over indefinitely and can be invested for long-term growth rather than spent down every December. After 65, non-medical withdrawals are taxed like ordinary income instead of penalized, which quietly makes an HSA function as a second retirement account for anyone who doesn’t need to tap it for current medical expenses.
Use Tax-Loss Harvesting without Tripping the Wash-Sale Rule
Selling an underperforming position to offset gains elsewhere is a legitimate, useful strategy, and one high earners with concentrated or complex portfolios use constantly. Short-term gains are taxed at a higher rate than long-term ones, so the harvesting decision often depends on timing as much as performance. Losses that exceed gains can offset a limited amount of ordinary income, and anything left over carries forward to future years. The part people get wrong is the wash-sale rule: buy back the same security (or something the IRS considers substantially identical) too soon after selling, and the loss doesn’t count. The rule is simple. The way people accidentally trip it – through automatic dividend reinvestment, for instance – usually isn’t.
None of these four strategies are complicated on their own. What’s easy to miss is how they interact; a backdoor Roth conversion done in the wrong year, or a QCD taken after an IRA has already been partially converted, can undo the benefit of the other. That’s the part worth a second set of eyes on, every year, not just once.
Frequently Asked Questions
What is a backdoor Roth IRA and who needs one?
A backdoor Roth IRA is a two-step process — a non-deductible Traditional IRA contribution, converted shortly after to a Roth — used by high earners whose income is too high to contribute to a Roth IRA directly. It’s a standard, IRS-recognized strategy, not a loophole.
What is a qualified charitable distribution (QCD)?
A QCD lets someone over 70½ send funds directly from an IRA to a qualified charity. It can satisfy a required minimum distribution without the amount counting as taxable income — different from donating cash and claiming a deduction afterward.
How does an HSA work as a retirement account?
An HSA offers a tax deduction on contributions, tax-free growth, and tax-free withdrawals for medical expenses. After age 65, non-medical withdrawals are taxed as ordinary income rather than penalized, which lets unused HSA funds function similarly to a retirement account.
What is the wash-sale rule and how does it affect tax-loss harvesting?
The wash-sale rule disallows a tax loss if you repurchase the same or a substantially identical security within 30 days before or after the sale. It commonly catches people through automatic dividend reinvestment plans, not just deliberate repurchases.
Not sure which of these apply to your situation?
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