By David C. D’Albero, Co-Founder, Strata Capital
For high-income earners, saving for retirement is rarely about lack of discipline. It’s usually about finding the right strategy that aligns with tax rules, compensation complexity, and long-term goals. Roth IRAs offer one of the most tax-advantaged paths to grow wealth, but for many executives, the traditional route is closed off due to income limits.
Here’s the good news: there are still several creative, legal, and strategic ways to build tax-free retirement income using Roth IRAs. I broke these down in a recent video, which you can watch here:
Click here to watch the full video
These aren’t fringe strategies or loopholes. They’re often overlooked because they involve a few extra steps and require more coordination than simply checking a box on your 401(k). That’s exactly why they’re powerful.
Let’s walk through the three most effective Roth IRA strategies high-income earners should be considering right now.
Strategy 1: Mega Backdoor Roth via After-Tax 401(k) Contributions
If your employer’s 401(k) plan allows after-tax contributions and in-service rollovers, you’re sitting on one of the most valuable Roth opportunities available today.
Here’s how it works. You start by maxing out your pre-tax 401(k) contributions. In 2026, the limit is $24,500 if you’re under 50, $32,500 if you’re 50 or older, and $35,750 if you’re between ages 60 to 63 due to a special catch-up provision. Once that’s done, some employer-sponsored plans let you contribute additional after-tax dollars above that limit. The total combined contribution cap (employer and employee) is $72,000 for 2026.
New for 2026: Roth Only Catch-Up Contributions for High Earners
If you earned $150,000 or more in the previous year, any catch-up contributions you make (whether you are age 50 or older or eligible for the expanded “super catch-up”) must now go into a Roth account if your plan offers one.
The real magic happens when those after-tax contributions are rolled into a Roth IRA. This move converts future investment growth into tax-free income during retirement. If your employer permits in-service rollovers, you may be able to move the after-tax dollars out of the plan into a Roth IRA on a recurring basis. That prevents those funds from sitting in a taxable account and lets them grow tax-free instead.
For example, if you contribute an extra $20,000 in after-tax funds and roll that into a Roth IRA each year for five years, you’re potentially setting up $100,000 of principal for decades of tax-free compounding. This is especially useful for corporate professionals already maximizing their traditional retirement savings and looking for new ways to build long-term wealth.
Not every plan offers this, so it’s worth checking your employer’s summary plan description or talking with a financial advisor who understands your specific 401(k) rules.
Strategy 2: Backdoor Roth IRA Contributions
If your income is above the IRS limit for Roth IRA contributions, the backdoor Roth strategy remains one of the cleanest ways to contribute. It’s a two-step process.
First, you make a non-deductible contribution to a traditional IRA. In 2026, that’s $7500 if you’re under 50, or $8600 if you’re over 50. Then, you convert that contribution into a Roth IRA. Since the original contribution was made with after-tax dollars, the conversion should have minimal or no tax impact.
There is one caveat. The IRS applies the pro rata rule across all of your IRAs. If you have other traditional, SEP, or SIMPLE IRA balances that include pre-tax dollars, your conversion will be partly taxable. For example, if you have $50,000 of pre-tax money in a traditional IRA, and you try to convert $7500 of after-tax contributions, the IRS will view that $7500 as a mix of pre-tax and after-tax funds. That changes the tax math quickly.
This strategy works best when you don’t already have money in other IRAs, or if you’ve moved those balances into a 401(k) before doing the backdoor conversion. If that sounds complicated, it can be. This is one of those strategies that should be coordinated with a tax advisor or CPA who can help you navigate the reporting correctly.
When done properly, the backdoor Roth contribution is an elegant way to fund tax-free retirement growth, even for those well above the income limits.
Strategy 3: Opening a Roth IRA for Your Child
For many high-income families, legacy planning isn’t just about estate taxes and asset transfers. It’s about giving your children a foundation in financial literacy and long-term wealth building.
One strategy that rarely gets the attention it deserves is opening a Roth IRA for your child. Yes, it’s allowed – as long as your child has earned income.
Earned income can come from traditional jobs like working at a family business or summer employment, or even non-traditional income like babysitting, tutoring, or lawn care, as long as it’s documented. The contribution limit is the lesser of your child’s earned income or the annual IRA limit.
Let’s say your 15-year-old earns $2,000 mowing lawns. That $2,000 can be contributed into a Roth IRA. They may not realize it now, but that one deposit has the potential to grow into more than $100,000 by retirement, assuming a 7 percent annual return. That’s with no further contributions.
If they contribute just $2,000 annually for five years starting at age 15, the long-term tax-free growth potential is extraordinary. You’re helping them build wealth, yes, but you’re also planting seeds of financial education that last a lifetime.
Many parents and grandparents choose to fund these contributions as gifts. That’s completely fine, as long as the child has verifiable earned income to justify the contribution. It can be a powerful way to create generational financial momentum.
Roth Strategies in a Shifting Tax Environment
It’s important to remember that tax rules are not permanent. The Roth IRA income limits, contribution thresholds, and rollover rules are all subject to change. With multiple pieces of tax legislation scheduled to sunset or shift by 2026 and beyond, there is some urgency around making the most of what’s currently available.
These Roth strategies don’t require any speculation or exotic investment vehicles. They require coordination, timing, and a clear understanding of your income structure. That’s where working with a professional advisor makes a difference. For high-income professionals already handling stock compensation, deferred compensation, restricted shares, and other corporate benefits, weaving these Roth tools into your larger planning can produce tremendous value over time.
Getting It Right
None of these strategies are inherently complicated, but the details matter. Pro rata rules, in-service rollover timing, and IRA aggregation rules can all trip up even the most financially savvy individual. The cost of making a mistake may be unexpected taxes, lost opportunity, or unnecessary complexity.
That’s why we place so much emphasis at Strata Capital on education and coordination. These aren’t cookie-cutter solutions. They’re well-designed plays in a broader financial game plan.
If you’re interested in implementing any of these Roth strategies or just want help figuring out what fits best into your plan, we’d be happy to walk through it with you.
Roth accounts are powerful, flexible, and often underused. That doesn’t have to be the case for you.