High Income Earner Planning Strategies

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High Income Earner Planning Strategies

Mark Jones


There has been a lot of news lately surrounding the SECURE Act 2.0 and the significant impact it has on the retirement planning landscape. My Partner, Zach Harrington, wrote an article last month on the effect this act has for retirement savers and their ability to use a 401k Catch Up Contribution.  The Act makes it effective that this Catch-Up Contribution can only go in as a Roth 401k contribution, essentially adding up to $7,500 back onto your taxable income.  In years past, this Catch-Up Contribution was decreasing your taxable income for that year by the amount you contributed. 

 If you are a high-income earner and you are asking yourself, “What do I do now?” I believe this article can provide you with two quick planning ideas to consider. 

 For purposes of the SECURE Act 2.0 and for this article, a high wage earner is defined as anyone earning over $145,000 annually in wages1.  

 Planning Strategy #1:

 One area where high income earners are not currently phased out is the ability to make a tax-deductible Health Savings Account (HSA) contribution.  In 2023, a family contribution can be made in the amount of $8,750 ($7,750 and $1,000 catch up for 55+).  While these HSA funds can be used for current medical expenses, the HSA balance can also be carried into retirement and used for retiree health care costs and Medicare Advantage/Supplemental premiums2. The balance of your HSA plan can be invested in the market and accrue value as with any other qualified plan. 

 The next time you are able to analyze your health benefits and your benefit provider has open enrollment consider this planning opportunity. If you are still on a traditional co-pay plan, it may be beneficial to weigh the cost benefit of switching to the High Deductible Plan option and making the full HSA contribution each year.  Between the premium savings among plans and the ability to fully deduct the HSA contribution, this could prove to be a winning solution to reduce your cost outlay and preserving some of the favorable tax treatment you are losing as a result of not being able to deduct your 401k Catch-Up Contributions moving forward.  If cash flow allows you to do so – it is still worthwhile to contribute the full Pre-Tax amount and catchup Roth amount to the 401(k) plan.

 Who should consider this planning option:

  • High wage earners
  • Healthy individuals
  • Minimum out of pocket expenses
  • Partner or spouse is already maxing retirement plans
  • Investor looking to increase savings opportunities


Planning Strategy #2:

 If you and/or your significant other are charitable at heart and act on that by donating money each year, the practice of using a Charitable Donor Advised Fund to complete Charitable Bunching, may benefit you.   Charitable Bunching is the ability to use a Charitable Donor Advised Fund to aggregate future charitable contributions into one tax year, allowing you to be eligible for a tax deduction of up to 60% of your adjusted gross income3.  

 Example4:   Client A and B established a Giving Account. They contributed $25,000 through a wire transfer, which was immediately available for a tax deduction of up to 60% of their adjusted gross income. That contribution is invested, where it has the potential to grow tax-free—possibly increasing the amount of money they’ll ultimately be able to use for grant recommendations to qualified charities.

In the meantime, they’ve set up an automatic grant recommendation from their Giving Account to their church for tithing every month. When their university’s annual fundraiser comes up, or a friend or neighbor asks for support, they simply recommend another grant.

It is important to note that the full Giving Account does not have to be “given” in the same year.   Rather those gifts can be spread out over future years, however, the donor is allowed to recognize the maximum tax benefit in years they are still working and earning a high income.  For someone who is only a few years away from retirement, this may be a tax efficient way to fund your charitable endeavors through retirement; since you are most likely earing your highest wages in your final working years. 

Who should consider this planning option:

  • High wage earners
  • Charitable Families
  • Investors with large SALT tax amount, mortgage interest and other potential itemized deductions
  • Investor who is adequately saved for retirement

As we continue to unpack the SECURE Act 2.0, part of our approach is understanding how the laws have changed and affected clients, but part of our approach is also to find new (or existing) proactive planning ways to help clients navigate this ever-changing landscape. 

As always, if you have any further questions regarding these topics and how they personally pertain to you, please do not hesitate to contact our office.  Thanks for reading!



  1. U.S. Congress, House, Setting Every Community Up for Retirement Enhancement (SECURE Act 2.0) Act of 2022.  117th Cong., introduced in Senate December 2022, www.finance.senate.gov/imo/media/doc/Secure%202.0_Section%20by%20Section%20Summary%2012-19-22%20FINAL.pdf 
  2. Irs.gov 
  3. 3. irs.gov

    4. Donating Cash to Charity. Fidelity Charitable. https://www.fidelitycharitable.org/giving-account/what-you-can-donate/donating-cash.html

    Advisory services offered through Rise Advisors, LLC (“Rise”), a Registered Investment Adviser. This report is being generated as a courtesy and is for informational purposes only. This is meant for educational purposes and not intended to be financial advice.