EP Wealth Senior Vice President, Advisor, Craig McCrory, CFA, shares retirement savings strategies for high-net-worth individuals, from tax-diversified accounts to vehicles designed for business owners and high earners. 

How HNWIs Can Grow Retirement Savings Beyond 401(k)s

From the start of their careers, most people are conditioned to think about retirement as the goal. While retirement planning is certainly important, that singular focus can cause people to overlook the stages that come between now and then—kids, family milestones, caring for loved ones, career transitions, and other financial needs along the way.

At EP Wealth, we think about the planning process as a client journey. It's a series of milestones across different life stages, with retirement as one of them. And one of the most impactful things high-net-worth individuals can do along that journey is build savings across more than one type of account. When all of your resources sit in a single pre-tax 401(k), flexibility narrows significantly by the time retirement arrives. Every withdrawal becomes a taxable event, and the strategies available to manage income and taxes become more limited.

In this blog, I walk through some of the savings vehicles and approaches that may help high earners and business owners build more versatile retirement resources, including:

• Building a cash reserve outside of retirement plans
• Diversifying across taxable, tax-deferred, and tax-free accounts
• Cash balance plans and individual 401(k)s for business owners
• Backdoor Roth and mega-backdoor Roth strategies
• The overlooked flexibility of taxable brokerage accounts
• How pre-retirement savings decisions connect to income planning later

Start With a Cash Reserve Outside of Retirement Accounts

Before thinking about advanced savings vehicles, the foundation is having liquid cash available for planned and unplanned expenses—what we think of as the 'sleep at night' factor. That simply means having enough cash on hand that you're not lying awake wondering how you'd cover an unexpected expense. Having savings to cover roughly six months to a couple of years of expenses, held outside of a retirement plan, can provide a cushion that keeps you from having to tap long-term accounts when something comes up.

This is often something clients haven't considered when we first sit down together. They may have heard the concept, but they haven't thought about what that bucket is actually for or how it fits into their broader plan.

Build Tax-Diversified "Buckets"

Tax diversification means building resources across accounts with different tax treatments. In my experience, this kind of diversification may allow for more flexibility when creating a withdrawal strategy during retirement and across other life stages.

Tax-Deferred Accounts

Traditional 401(k)s and IRAs are where most people accumulate the bulk of their savings, thanks to tax deferral and employer matching. These accounts are valuable—but every dollar withdrawn is taxed as ordinary income. If this is the only bucket you have, each withdrawal in retirement can feel painful, because you're adding a tax bill on top of every purchase or expense.

Tax-Free Accounts

Roth IRAs and Roth 401(k)s offer tax-free growth and tax-free withdrawals. Having a tax-free bucket available in retirement creates an additional source of income that doesn't add to your taxable income for the year. For high-net-worth individuals especially, this bucket can play an important role in a withdrawal strategy.

Taxable Brokerage Accounts

This is one of the most overlooked savings tools, particularly for highly compensated W-2 employees. Once you've maxed out your 401(k), opening a traditional taxable brokerage account and building the discipline of saving on a recurring basis can be one of the most flexible long-term strategies available.

A few reasons this account type is worth considering:

• Investments held for more than a year may qualify for long-term capital gains rates
• Funds can be used for short- and intermediate-term goals without early withdrawal penalties
• Appreciated shares can be gifted to family members or to charity
• Assets held at death may receive a step-up in cost basis for beneficiaries

While it may not have the advantage of pre-tax savings, the flexibility of a taxable account can be a meaningful complement to retirement-specific vehicles.

Three Tax-Diversified Buckets

• Taxable (e.g., Brokerage accounts)
  • Long-term capital gains rates for investments held 1+ year
  • Flexible access without early withdrawal penalties
  • Potential step-up in cost basis for heirs
• Tax-Deferred (e.g., Traditional 401(k), Traditional IRA)
  • Contributions may reduce current taxable income
  • Tax-deferred growth until withdrawal
  • Withdrawals taxed as ordinary income
• Tax-Free (e.g., Roth IRA, Roth 401k) 
  • Tax-free growth and withdrawals
  • Does not add to taxable income in retirement
  • May benefit heirs in estate planning

Savings Vehicles for Business Owners and Self-Employed Individuals

Cash Balance Plans

For business owners with a team of employees, a cash balance plan is typically an add-on to an existing 401(k) that may allow for considerably higher pre-tax contributions than a 401(k) alone. This is one of the vehicles we commonly consider for business owner clients who have the capacity to save more and are looking for ways to do so within the corporate retirement plan structure.

Individual 401(k) Plans

For self-employed individuals, an individual 401(k) plan allows contributions that can go well beyond standard 401(k) limits. For 2026, the total contribution from all sources can be up to $72,000, and up to $83,250 for those eligible for catch-up contributions (the total will vary based on age and the amount of catch-up the participant is able to make).

One feature that's often overlooked: if a spouse earns income from the business, they may also be eligible to participate in the plan. That could potentially double the household's contribution capacity—a significant value for self-employed families.

Backdoor Roth and Mega-Backdoor Roth Strategies

For most of our high-net-worth clients, backdoor Roth IRA contributions are already part of the plan. The primary rationale is straightforward: for high earners, the tax bracket often doesn't change much between working years and retirement. Putting money into the tax-free bucket now allows for long-term tax-free growth, and it gives us an additional source to draw from when building a withdrawal strategy.

The mega-backdoor Roth works through a 401(k) plan and may allow for larger contributions. For high earners who have the interest and capacity to save more toward long-term goals, this strategy can follow the same logic—build the tax-free bucket while you have the income to support it.

When the Timing Might Not Be Right

There are situations where we might suggest pausing on a backdoor Roth. If a client is experiencing a gap in income—a sabbatical, a career transition, or a period of lower compensation—there may be an opportunity to do traditional Roth conversions at a potentially lower tax rate instead. The decision about whether to pursue these strategies is often about timing rather than whether they're appropriate in general.

The Planning Timeline

The earlier you build tax diversification, the more strategies may be available at each stage. 

A Team Approach for Strategies Beyond Traditional Accounts

When conversations move to areas like real estate investments, deferred compensation, or cash value life insurance, we think it's important to take a team approach rather than expect any single advisor to have all the answers. The advisor serves as the quarterback, but we leverage the resources of our internal team here at EP Wealth along with the centers of influence we've built over time—specialists who can bring the right expertise to each client's situation.

Clients deserve that kind of team around them. Each person's circumstances are different, and the process is about evaluating whether a particular opportunity is a good fit, not applying a one-size-fits-all approach.

Common Oversights—and Why Starting Early Can Be Important

The most common oversights we see among high-net-worth clients when it comes to retirement savings tend to be less about picking the wrong account and more about not thinking broadly enough or starting soon enough:

• Treating retirement as the only savings goal, rather than planning across life stages and milestones
• Concentrating all savings in a single pre-tax 401(k), which can limit withdrawal flexibility later
• Overlooking taxable brokerage accounts as a long-term savings tool
• Not considering Roth strategies until the window to benefit from them has narrowed
• Waiting until the final 5 to 10 years before retirement to start financial planning, when the flexibility to deploy certain strategies may already be limited

Some of the clients I've spoken with over the years have said, "I wish I would have heard this 20 years ago—it would have made navigating retirement much easier." The earlier these conversations happen, the more room there is to build flexibility across account types and life stages.

How Tax Bracket Management Works in Retirement

Once you're in retirement, income planning comes down to working with whatever account mix you've built. As we describe it to clients: you're dealt the cards you have.

If your savings are spread across taxable, tax-deferred, and tax-free accounts, there's more room to be strategic about where each year's retirement income comes from. You can pull from different buckets depending on what makes sense for your tax situation that year—drawing from a Roth account in a year when other income is higher, for example, or taking from a taxable account when capital gains rates are more favorable.

If most of your savings sit in a single pre-tax account, those options are more limited. Every dollar of income comes with a tax bill, and there's less room to manage which bracket you land in.

There are sometimes small windows that create flexibility—if a client hasn't yet reached required minimum distribution age, Roth conversion strategies may offer some additional wiggle room. But the market can also force your hand: capital gains events don't always happen on your preferred timeline. The more account diversity you've built heading into retirement, the more capacity you may have to absorb those moments without pushing into a higher bracket.

If you're interested in exploring how these retirement planning strategies might apply to your situation, EP Wealth's financial advisors can help you evaluate your options and build a plan that fits your goals and circumstances. Connect with us today.

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• Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
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