For high-earning households, 35 to 50
The early years of a $1M+ balance sheet.
In 2026 a 401(k) can accept $72,000 in total additions, nearly three times the $24,500 employee deferral limit, yet most households never use the space between. We set the order of every dollar early, so the busy years compound in your favor.
The situation
Earning well is not the same as building wealth.
You earn well, save regularly, and still feel as if you are not getting ahead as fast as you should. There are two 401(k)s, an old rollover IRA, 529s for the children, and a brokerage account that mostly holds company stock nobody decided to keep.
Each account was opened for a good reason, but nothing sets the order. Income limits close the direct Roth door, a surtax applies above $250,000, and the mortgage question depends on whether you itemize at all. The choices are small one at a time and large in total.
What decides the outcome is structure: the accounts, the order, and the automation.
Why it’s complex
Five pieces of structure that compound
Roth room without an income cap
Designated Roth contributions inside a 401(k) have no income limit and, since 2024, no lifetime required distributions. Many high earners never check the box.
Read the guideThe backdoor has its own clock
A backdoor Roth is a conversion, and each conversion starts a separate five-year clock. The pro-rata rule also counts every pre-tax IRA you hold.
Read the guideWhere each holding sits
Asset location places tax-inefficient holdings in sheltered accounts and efficient ones in taxable accounts. The choice is quiet, and it compounds for decades.
See the strategyA taxable account built for after-tax
Once sheltered space is full, the brokerage account carries more of the load. Owning individual index holdings lets it harvest losses year by year.
See the strategyCompany stock creeps upward
RSU vests add to the same position every quarter. A sell-at-vest rule and a stated ceiling keep it from becoming the plan by default.
See the strategySources: IRS, 2026 retirement plan limits (IR-2025-111); IRS Notice 2025-67; IRS Rev. Proc. 2025-32; IRC §529(c)(2)(B).
Our approach
The order of operations, then automation
We read the plan documents, map every account, and set a priority for each dollar. Once the order is right, most of it runs automatically, with a small amount of your time each quarter.
Fill the employer plans
Both spouses defer to the $24,500 limit. Where a plan allows after-tax contributions and in-plan conversion, the space up to $72,000 becomes a mega-backdoor Roth. We confirm the plan permits it before counting on it.
Clear the path for the backdoor
A $7,500 non-deductible IRA contribution is converted to Roth, taxed pro rata across all IRA balances (IRC §408(d)(2)). Moving an old rollover IRA into a current 401(k) first usually clears the way.
Place, cap, and fund
Asset location for new money, a ceiling on the company position, and 529s sized to a stated goal. Leftover 529 balances can move up to $35,000 lifetime into the beneficiary’s Roth IRA once the account is fifteen years old (SECURE 2.0 §126).
Answer the mortgage question
With a $32,200 joint standard deduction and a $40,400 SALT cap that phases down above $505,000 of income, many households barely itemize. That fact sets the mortgage’s true after-tax cost.
The work
What you’ll work through with us
- A contribution order across 401(k)s, HSAs, Roth pathways, 529s, and taxable accounts
- Backdoor and mega-backdoor Roth, with plan features and the pro-rata rule checked first
- Consolidation of old rollover IRAs and forgotten plans
- An asset location map for pre-tax, Roth, and taxable accounts
- A sell-at-vest rule and a concentration ceiling for company stock
- RSU withholding gaps covered with estimated payments, planned with your CPA
- 529 funding sized to the goal, including five-year gift elections
- A mortgage-versus-invest comparison on an after-tax basis
Planning for high earners at the firm is led by Theo Halbardier, CFP®, CIMA®, CAIA®, the firm’s founder. We are fee-only: no commissions, no product sales. About Theo
Questions
Common questions from high earners
We are not at $1 million yet. Is it too early?
The structure matters most before the balance is large, because that is when the habits and the account architecture are set. We work with households whose income and savings rate make the balance sheet a question of when, not whether.
What is the difference between the backdoor and the mega-backdoor Roth?
The backdoor Roth is a non-deductible IRA contribution converted to a Roth IRA, limited to the IRA contribution amount. The mega-backdoor uses after-tax contributions inside a 401(k) that permits them, up to the total additions limit, converted in-plan or rolled to a Roth IRA. The second requires specific plan features; the first works cleanly only without other pre-tax IRA balances.
Should we pay down the mortgage or invest?
It depends on the rate, whether you itemize, and the rest of the structure. We compare the after-tax cost of the mortgage against the after-tax return required elsewhere, and in most cases we favor filling tax-advantaged space first.
Can we plan around the 3.8% surtax?
Partly. The net investment income tax applies to investment income once MAGI exceeds $250,000 on a joint return, and that threshold is not indexed (IRC §1411). Asset location and tax-efficient holdings in the taxable account reduce how much income is exposed to it.
Do you help with the company stock too?
Yes. RSU withholding gaps, sell-at-vest rules, and concentration are part of the plan, not a separate conversation.
How much of our time does this take?
Most of the work happens at the start: one conversation, then the plan documents and statements. Once the order is set and automated, our Quarterly Rounds take a small amount of time, scheduled around work and children.
Reviewed by Theo Halbardier, CFP® · Updated September 2026 · Figures current for 2026
Tell us where the income goes.
The first conversation is 30 minutes, scheduled around work and family. No preparation needed.
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