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Turn Your HSA Into a 6 or 7-Figure Retirement Boost

By Carmine Coppola, Co-Founder, Strata Capital

For many high-income professionals, building and protecting wealth is not just about income. It’s about strategy. That means making smart use of every financial lever available, especially the ones most people overlook.

One of the most underutilized and misunderstood financial tools is the Health Savings Account, or HSA. The name makes it sound like it’s just a place to cover doctor visits and prescriptions. In reality, when used strategically, an HSA can become a long-term, tax-efficient investment vehicle that supports your retirement goals.

Let’s take a closer look at how to transform your HSA into a 6 figure retirement account.

Watch the full breakdown on YouTube here

The HSA’s Triple Tax Advantage

An HSA is the only investment account that delivers a triple tax benefit.

Contributions are tax-deductible.
Investments grow tax-free.
Withdrawals for qualified medical expenses are also tax-free.

This kind of tax treatment is rare. Traditional 401(k)s and IRAs offer tax-deferred growth, but you’ll pay taxes when you withdraw. Roth IRAs give you tax-free withdrawals, but you contribute after-tax dollars and face income limits. The HSA combines the best of both worlds. When used correctly, it may be the most efficient tool in your financial toolkit.

Where Most People Get It Wrong

Most HSA holders swipe the card the moment they get a medical bill. The money leaves the account. The opportunity for compounding disappears. The account becomes more of a spending tool than an investment vehicle.

The smarter move is to pay those medical bills out of pocket and leave the HSA invested. Let the money grow tax-free for as long as possible. When you need it later, reimburse yourself using the receipts you saved.

You can pay yourself back for qualified medical expenses any time in the future. Even if it’s 10, 20, or 30 years later. As long as you have the documentation, the IRS allows you to withdraw those funds tax-free.

In effect, your HSA becomes a tax-free reimbursement vault.

How Big Can It Get?

Let’s run the numbers.

If you’re 35 years old and contribute the maximum to a family HSA plan every year, plus take advantage of a $1,000 spousal catch-up contribution when you and your spouse reach 55, and invest that balance with a 7 percent average annual return, your HSA could grow to nearly $1 million by the time you reach age 65.

Here are the 2025 contribution limits:

$4,300 for individuals
$8,550 for families
$1,000 catch-up per spouse age 55 or older

One opportunity many couples miss is the spousal catch-up after age 55. Your spouse can open a separate HSA to make their own $1,000 contribution, even if you’re already contributing the family maximum through your employer. Over time, this can add up to tens of thousands in additional tax-free growth.

The key is to treat your HSA like an investment account. Max it out, invest it wisely, and give it time to grow.

Important Note for Residents of California and New Jersey

While HSAs offer generous tax advantages at the federal level, not every state treats them the same way. In California and New Jersey, HSA earnings are taxed at the state level. These states also don’t allow a deduction for HSA contributions on your state return.

That doesn’t mean the HSA isn’t still a valuable tool. The federal tax advantages remain. However, it’s a detail you should be aware of when building your overall strategy.

What You Can Use Your HSA For Later in Life

Once you reach retirement age, your HSA becomes even more valuable. You can use it tax-free for a wide range of healthcare-related expenses, including:

Medicare premiums (Parts B, C, and D)
Long-term care insurance premiums
Dental and vision care
Hearing aids
In-home assistance
Medical equipment
Prescription medications

After age 65, if you use HSA funds for non-medical expenses, there is no penalty. You’ll simply pay ordinary income tax, similar to a traditional IRA.

This flexibility makes the HSA a powerful addition to your retirement income plan. It can serve as a dedicated health fund, a source of tax-free reimbursements, and a smart cash-flow buffer in retirement.

The Smartest Way to Use Your HSA

Here’s the four-part strategy we recommend for corporate professionals:

Max out your HSA contributions every year.
Treat it like you would your 401(k). Include it in your annual savings plan.
Invest the balance.
Don’t let it sit in cash. Choose a long-term investment allocation that fits your goals.
Pay current medical expenses out of pocket.
Keep digital records or scanned receipts. These are your future reimbursement opportunities.
Reimburse yourself later.
Use those receipts in retirement or at a strategic time to withdraw funds tax-free.

This approach gives you control, tax efficiency, and long-term growth. Few other accounts offer this much flexibility.

Why This Strategy Matters

Corporate professionals face unique financial complexity. Between equity comp, deferred bonuses, rising tax exposure, and increasing healthcare costs, choosing the right savings vehicle matters.

The HSA is often overlooked. That’s a mistake. Most corporate professionals already max out their 401(k)s and often use backdoor Roth strategies. Once those options are full, the HSA becomes one of the few remaining accounts that can grow tax-free.

This is also one of the only ways to prepare for retirement healthcare costs without adding new tax burdens. Used properly, the HSA can help you protect your income today and reduce your expenses in retirement.

Is Your HSA Working for You?

There’s a difference between having an HSA and using it well. If your HSA is sitting in cash or being spent year after year, you’re not maximizing its potential.

A well-managed HSA can be one of the most effective parts of your retirement income plan. It can also reduce your taxable income and give you access to future tax-free income when you may need it most.

At Strata Capital, we specialize in helping high-level professionals look beyond the surface. Our clients don’t settle for standard advice. They expect thoughtful, proactive strategies that match the complexity of their financial lives. That includes a smarter approach to accounts like the HSA.

If you’re unsure whether your HSA strategy is aligned with your long-term goals, let’s talk.

Disclosures & Compliance Notes

This content is provided for educational purposes only and should not be construed as investment, tax, or legal advice. All investments carry risk, and past performance is not indicative of future results. The examples provided are hypothetical and do not guarantee any specific outcome. Before making any financial decision, please consult with a licensed professional who understands your unique financial situation.

Stop Leaving Money on the Table: The High-Income Executive’s Guide to Open Enrollment

By David C. D’Albero, Co-Founder, Strata Capital

Each fall, thousands of corporate professionals breeze through their open enrollment packets with all the enthusiasm of someone renewing a software license. Click, confirm, move on.

This is understandable. The process can feel like a bureaucratic blur of HR-speak, fine print, and boxes to check. Still, within that window lies an extraordinary opportunity to shape your financial future. For corporate professionals with complex compensation structures and high incomes, open enrollment is not just administrative. It is strategic.

To walk through this step by step, watch the full video here

Once that window closes, your decisions are locked in for the year. So it is worth slowing down, asking the right questions, and aligning each choice with a bigger picture.

At Strata Capital, we help corporate professionals navigate the nuanced world of company benefits every day. Here is a closer look at how to make open enrollment work harder for you.

Rethinking Your Health Insurance Strategy

For most people, health insurance is the first decision on the list. Not all plans are created equal, and the best choice often comes down to more than just monthly premiums.

PPOs, or Preferred Provider Organizations, tend to be the most flexible, allowing access to specialists without referrals and out-of-network coverage. They are often best for families who frequently access healthcare and want options without roadblocks, although that flexibility comes at a higher premium.

HMOs, or Health Maintenance Organizations, generally offer the lowest monthly costs, but with tighter rules around provider networks and referrals. They can work well for individuals who prefer a streamlined system and do not need broad access.

High Deductible Health Plans are growing in popularity, especially for those with strong cash flow and minimal expected medical needs. The main draw is access to a Health Savings Account, which allows for triple tax advantages: deductible contributions, tax-deferred growth, and tax-free withdrawals for medical expenses.

For those focused on long-term planning, the HSA can quietly become a stealth retirement asset. After age 65, withdrawals can be used for any purpose and taxed like a traditional IRA.

EPOs and POS plans offer hybrid models with varying levels of flexibility and coverage. These deserve a closer look if neither the PPO nor HMO options feel like the right fit.

The Underappreciated Power of the HSA

HSAs often get overlooked, which is unfortunate considering how versatile they are. In addition to the triple tax benefits, HSAs are portable, rollover annually, and do not expire. For high earners already maxing out retirement accounts, an HSA provides another avenue for tax-advantaged growth.

This strategy tends to work best for those who are relatively healthy, have a financial buffer to cover the higher deductible, and are comfortable viewing the HSA not just as a spending account but as a long-term investment vehicle.

Going Beyond the Basic 401(k)

Most corporate executives are familiar with the traditional pre-tax 401(k) and Roth 401(k) options. The former offers a tax deduction today with taxable withdrawals in retirement. The latter provides no upfront tax break, but future withdrawals come out tax-free.

The third option, often hidden in plain sight, is the after-tax contribution bucket. While it does not reduce current taxable income, it unlocks one of the most valuable wealth-building strategies available to high earners: the Mega Backdoor Roth.

If your plan allows for after-tax contributions and in-service conversions, this approach lets you contribute significantly more than the standard limit and roll those funds into a Roth account. This creates a sizable pool of tax-free income in the future. It requires careful implementation and coordination with your employer’s plan rules, but for those who qualify, it is a strategy worth exploring.

Be Intentional About How Your 401(k) is Invested

Too many executives default into a target-date fund and never revisit the allocation again. While these funds are simple and hands-off, they are built for the average investor. High-income professionals with equity compensation and large brokerage accounts may need a more tailored approach.

In early career stages, heavier stock allocations may be appropriate, provided the volatility is something you can manage. More importantly, executives need to be mindful of how much exposure they already have to their company’s performance. Between salary, bonuses, RSUs, and options, it is easy to become over-concentrated.

When evaluating investment options, look closely at underlying fees. Many plans offer low-cost index funds right alongside more expensive actively managed ones. While both types of funds can serve different purposes, the difference in fees over time can quietly erode performance.

Deferred Compensation: Misunderstood and Incredibly Valuable

If your company offers a non-qualified deferred compensation plan, it is worth understanding how it works. These plans allow you to defer a portion of your salary or bonus into future years. This reduces current taxable income and allows you to time distributions in lower-income years, such as retirement.

Deferred compensation is not without risk. These funds remain tied to your employer’s balance sheet, and payouts are subject to the company’s financial health. You will also need to be strategic about how and when you take distributions, and how those payments coordinate with your other retirement income streams.

Done well, deferred compensation plans can help smooth your income and tax liability over time. They should be integrated into your broader tax, investment, and estate plan to maximize the benefit.

Stock Compensation: Payout Elections Carry Weight

Restricted Stock Units are a central part of many executive packages. When RSUs vest, the value becomes taxable as ordinary income. This happens whether the shares are sold or not, which can create surprise tax liabilities for the unprepared.

Companies usually give several payout options: take the shares, take cash, or opt for a blend. The right choice depends on your goals, liquidity needs, and existing exposure to company stock.

Too often, RSU elections are set and forgotten, only to create problems when someone retires and discovers their company’s plan does not allow share payouts post-employment. Aligning these elections with your broader financial plan can help avoid costly mistakes.

Life Insurance: Coverage Gaps Are Common

Most executives carry group life insurance through their employer, but that coverage often caps out at a multiple of salary. For high earners with families to support, mortgages to cover, or legacy goals, this may not be sufficient.

Supplemental private coverage, such as a term life policy, is usually affordable and portable. Rather than relying solely on employer coverage, consider building a plan that aligns with your full financial picture and is not reliant on your employment at your company.

Disability Insurance: The Overlooked Weak Spot

Disability insurance often gets less attention than life insurance, yet the risk of becoming unable to work due to illness or injury is greater than many realize. Group plans typically cover 40 to 60 percent of income, often excluding bonuses or equity compensation. Worse, benefits are taxable when the employer pays the premium.

Some companies offer supplemental disability coverage where the employee pays the premium with after-tax dollars. In this case, benefits received would be tax-free. This small change can significantly increase the value of the protection.

High-income professionals should also be aware of policy caps. A disability plan that replaces 40 percent of income may sound acceptable until it stops at a fifteen thousand dollar monthly benefit while income exceeds seven hundred fifty thousand annually. Make sure to check your plan’s cap. Addressing this gap early can make all the difference.

Supplemental Benefits: A Little Cushion Can Go a Long Way

Optional benefits like critical illness and hospital indemnity coverage may seem unnecessary at first glance. For the right individual, though, they can offer added financial protection during difficult moments.

Critical illness policies pay a lump sum upon diagnosis of a covered condition, which can help with deductibles, out-of-network care, or everyday expenses. Hospital indemnity policies provide cash for each day of hospital admission. These are not a substitute for health insurance, but they can soften the financial blow during a major event.

Some employers also offer legal services plans that cover basic estate planning. For those who have not updated their will or need a healthcare proxy, this benefit is worth revisiting.

Do Not Forget the Final Steps

Before wrapping up enrollment, take a few minutes to review beneficiary designations across retirement plans, insurance policies, and deferred compensation. Changes in marital status, children aging out of coverage, or the passing of a loved one are all reasons to review your elections.

Missing the open enrollment deadline locks in your choices for another year unless a qualifying life event occurs. That means whatever decisions are made now will echo through your finances for the next twelve months and potentially longer.

Open Enrollment Deserves More Than a Quick Click

For busy executives, it is easy to treat open enrollment as another checkbox. That approach may come with significant cost through missed tax opportunities, underutilized investment strategies, or unnecessary risk.

This is one of the few windows each year to realign your benefits with your broader financial goals. A thoughtful review now can save taxes later, create flexibility in retirement, and reduce stress for your family in the future.

At Strata Capital, we help high-income professionals turn complex compensation structures into coordinated strategies. Our goal is to create a higher standard of financial service so executives like you can stop guessing and start optimizing.

Disclosures & Compliance Notes

The Secret Retirement Ally Hiding in Your Health Plan

By David C. D’Albero

There are few things more frustrating for high-income professionals than knowing you are paying more in taxes than necessary while feeling unsure if you are truly maximizing your benefits. You are likely well-versed in 401(k)s, IRAs, restricted stock, and perhaps even deferred compensation. You know the alphabet soup of executive finance. Yet, one of the most powerful tax-advantaged tools available today continues to fly under the radar for many professionals earning at the top of their field.

It is the Health Savings Account. The HSA.

To most, this account is simply a place to stash a few pre-tax dollars to pay for prescriptions or copays. To those in the know, it is one of the most underappreciated wealth-building tools available. When used strategically, an HSA has the potential to be your stealth retirement ally – quietly compounding in the background while remaining untouched by current taxes.

If you are a high earner looking for every edge to reduce your tax burden, grow wealth more efficiently, and build flexibility into your retirement strategy, it may be time to take a second look at the HSA.

Click here to watch the full Youtube Video

What Makes the HSA So Unique?

The HSA offers something few other accounts can match: a triple tax benefit. It allows you to deduct contributions from your taxable income, grow the funds without annual taxation, and withdraw the money tax-free when used for qualified medical expenses.

This structure is rare. Most accounts offer two tax benefits at best. The Roth IRA gives you tax-free growth and tax-free withdrawals, but no deduction on contributions. A traditional IRA gives you an upfront deduction and tax-deferred growth, but distributions are taxed as income. The HSA, however, offers all three. That combination makes it uniquely valuable, particularly for professionals in higher tax brackets.

The key is understanding how to use the account strategically – not just to pay for this year’s doctor visits, but as a long-term asset that complements your broader financial picture.

The Misstep Most Professionals Make

For many households, the HSA becomes a convenient debit card for medical expenses. Swipe, pay, move on. That is understandable. You are busy. There are already too many decisions to make in a given week. Convenience matters.

The challenge is that this short-term approach leaves significant long-term value on the table.

Instead of using HSA funds to pay for immediate out-of-pocket costs, a more strategic approach is to pay those expenses from your checking account and allow your HSA to remain untouched and invested. Doing so preserves the account’s ability to compound over decades – free from taxation, while preserving the ability to reimburse yourself for those expenses in the future.

There is no deadline to reimburse yourself for qualified expenses, provided they were incurred after the HSA was established and you have proper documentation. This means you can keep a digital folder of receipts and treat your HSA as a long-term reimbursement fund. You maintain control over when you access the funds and allow the account to grow in the meantime.

This strategy is simple to implement, highly effective, and rarely discussed.

Contribution Limits Are More Flexible Than You Think

The IRS allows fairly generous contribution limits to HSAs each year. For 2025, individuals can contribute $4,300, while families can contribute $8,550. Those age 55 or older can contribute an additional $1,000 as a catch-up contribution.

Here is a detail often overlooked. If you are on a family plan and your spouse is 55 or older, they can also contribute an extra $1,000 – but only if they open a separate HSA in their own name. This allows a household to contribute up to $10,550 annually in total, assuming both spouses are eligible.

That extra $1,000 may not seem like much on the surface. Over time, however, it creates more tax deduction space, more compounding opportunity, and more flexibility in the long run.

For those looking to fine-tune their tax strategy, details like this matter.

State Rules Can Be a Curveball

Federal tax law provides the framework for HSA advantages. Most states follow suit. However, there are a few exceptions that could catch you off guard if you are not paying attention.

For example, California and New Jersey do not conform to federal HSA rules. These states tax your HSA earnings annually, which means interest, dividends, and capital gains are subject to state income tax. Contributions to an HSA are also not deductible from state income tax in those jurisdictions.

This does not mean the HSA becomes useless in those states. The federal tax benefits still apply and often outweigh the state-level friction. However, it does mean you should be aware of the differences and account for them in your planning.

Most financial professionals will not mention this unless asked directly. It is one more reason why working with a team who understands both the nuance and the strategy is essential.

A Case for Long-Term Investment Within Your HSA

Most people think of their HSA as a savings account – and for good reason. The name suggests it. Many providers default to holding your contributions in cash.

This is fine if you plan to use the money in the short term. If your intent is to allow the HSA to grow over decades, however, cash will not get you there.

Many HSA providers offer investment options such as mutual funds or exchange-traded funds. Often, these options become available once your account balance reaches a certain threshold, typically a few thousand dollars.

Let us assume you begin investing your HSA balance and earn an average annual return of 7 percent over 30 years. If you contribute the family maximum each year and leave the funds invested, your HSA could grow to nearly $1 million. Every dollar of that growth could be accessed tax-free, provided it is used for qualified medical expenses.

This is where the HSA begins to resemble a secret retirement account – growing behind the scenes, with tax-free access available when you need it most.

Strategic Uses in Retirement

In retirement, healthcare often becomes one of the largest expenses. The HSA provides flexibility to address these costs in a tax-efficient way.

You can use HSA funds tax-free to pay for Medicare premiums, dental and vision care, long-term care services, and a wide range of qualified expenses. After age 65, even if you withdraw HSA funds for non-medical purposes, you will only owe ordinary income tax – similar to a traditional IRA – with no penalty.

This flexibility makes the HSA a useful complement to your other retirement accounts. It provides a dedicated funding source for healthcare while also giving you the option to access funds more broadly if needed.

You do not have to choose between using your HSA for healthcare or retirement. It can serve both.

A Quiet but Powerful Addition to Your Strategy

Financial planning for high-income professionals requires more than good investment returns. It requires intentional design, tax awareness, and the ability to coordinate multiple moving parts into a cohesive strategy.

The HSA is one of those parts.

It is not flashy. It is not the subject of cocktail party conversations. It is often overlooked entirely in favor of more familiar vehicles. Yet it has the potential to deliver meaningful long-term value, particularly when integrated with your broader financial picture.

At Strata Capital, our role is to help you uncover opportunities like this – not just to save you money, but to create greater clarity and confidence in how your financial life is structured.

If you are earning at a high level and navigating complex benefits, you owe it to yourself to understand the full landscape. Sometimes, the difference between a good strategy and a great one comes down to the decisions most people ignore.

This is one of them.

Start now. Max it out. Let it grow. The HSA might be your most powerful untapped resource.

Need Help Reviewing Your Investment Strategy?

At Strata Capital, we offer concierge-level financial planning designed specifically for high-income professionals. If you’re navigating stock options, deferred compensation, or just trying to cut through the noise of conflicting financial advice – we’re here to help.

Reach out for a consultation, and let’s explore a more efficient path forward.

Disclosures & Compliance Notes

The Mega Backdoor Roth: A Smarter Strategy for High Earners to Keep More of What They Earn

By Carmine Coppola

Why High Earners Feel Stuck

If you are in your peak earning years, you know the drill. Every raise, every bonus, every stock vesting feels like a win until tax season arrives. For many executives, the frustration is real. You are working harder, achieving more, yet a significant portion of what you earn is gone before it even reaches your account.

At the same time, you probably want the peace of mind that comes with building tax free income for retirement. The Roth IRA has that appeal with tax free growth and tax free withdrawals. Then you discover that income limits shut you out of direct Roth contributions. It feels like a door slammed shut.

Here is the good news. There is a way to use your 401k to create meaningful Roth dollars without breaking the rules. It is called the mega backdoor Roth, and while the name sounds like something only accountants whisper about, the concept is surprisingly straightforward once explained.

Start with the Basics: Your Pre Tax 401k

The first step is one you may already know well. Contribute to your 401k. For 2025, you can put away up to $23,500 on a pre tax basis. If you are 50 or older, add another $7,500. If you are between 60 and 63, new legislation allows an expanded catch up of $11,250.

This is important for two reasons. One, you are saving for your future. Two, those contributions reduce your taxable income today. Many professionals stop here, thinking they have maxed out their opportunities. That is where the strategy takes an interesting turn.

The Often Overlooked Step: After Tax Contributions

Some 401k plans allow you to put in additional after tax contributions once you have hit your pre tax limit. These are different from Roth contributions. They are dollars you put in after taxes have already been paid.

Here is why this matters. The total 401k contribution limit for 2025 is $70,000. With catch ups, it can be $77,500 or more. That means that even after maxing your pre tax contributions, there is still room to put in significant additional dollars.

Many executives do not even realize this is possible. It is not a secret, but it is not something HR departments often highlight either. For those who qualify, this opens the door to a powerful next step.

Turning After Tax into Roth: The Mega Backdoor

Once you have after tax dollars in your 401k, the strategy is to move them into a Roth IRA or Roth 401k. Some plans allow this in plan, others require a rollover. Either way, this is what is known as the mega backdoor Roth.

The benefit is clear. Those after tax contributions now sit in a Roth account where growth is tax free and qualified withdrawals in retirement are also tax free. You have effectively created a large Roth balance without worrying about income restrictions while still preserving the tax deduction provided by your pretax contributions.

For high earners, this is one of the most effective ways to build tax free wealth at scale.

Why This Matters More Than Ever

Executives and professionals often feel boxed in. They want to save aggressively, but income restrictions or tax rules make it feel like there are no good options. The mega backdoor Roth changes that.

Think about the dual benefit. You reduce taxable income today through pre tax contributions, and you build a substantial Roth bucket for the future. That is flexibility. That is choice. It is one of the rare times in financial planning where you really can have both.

An Example in Action

Consider a 52 year old executive in New York. They contribute $23,500 pre tax plus $7,500 as a catch up. Their plan allows after tax contributions to reach the $70,000 annual limit. That means tens of thousands in additional savings are eligible to be rolled into a Roth account.

The result is meaningful tax savings today plus the creation of a Roth balance that can grow for decades. This is not about chasing returns. It is about understanding the rules and using them intentionally.

Important Caveats

Not every plan allows for after tax contributions or in plan Roth conversions. Some companies offer limited flexibility. Others require specific procedures. The details matter.

This is why you should always start by reviewing your plan documents. Talk with your HR or benefits team. Confirm what is allowed and what is not. It is also wise to coordinate with your CPA or tax advisor before making any moves.

Done correctly, this strategy is completely above board. Done carelessly, it could create confusion or unintended tax consequences.

Why Most People Have Never Heard of It

Despite being allowed under the rules, the mega backdoor Roth is not widely advertised. Most plan participants never hear about it. Many financial professionals do not bring it up either because it requires a bit more work and coordination.

That is a missed opportunity. When used thoughtfully, this strategy can change the way high earners approach retirement savings. It is an example of how small shifts in understanding can create outsized results.

Bringing Levity to the Complexity

I understand this can sound like alphabet soup. 401k, IRA, Roth, catch up. It is easy to feel like you need a finance degree just to navigate your own benefits. That is where I come in.

My role is to simplify. To translate this from jargon into something that makes sense. To show you the difference between what is theoretically possible and what is practical in your specific situation.

You do not need to know every line of tax law. You just need to understand enough to make smart decisions, then have someone you trust coordinate the details on your behalf.

Why This Strategy Resonates with My Clients

Most of the executives I work with are not looking for the next hot investment trend. They want peace of mind. They want to know they are not leaving money on the table. They want to feel like they are playing the same game as their peers, if not one step ahead.

The mega backdoor Roth fits that mindset. It is not about being flashy. It is about being intentional. It is about taking advantage of opportunities that others overlook.

The Bigger Picture

Retirement planning is not one dimensional. Income matters, yes. Investments matter. Taxes matter. What really matters is how all of it fits together.

The mega backdoor Roth is just one tool. It becomes powerful when combined with strategies around equity compensation, deferred income, and estate planning. The real advantage comes from integration and making sure all the moving parts are aligned.

Looking Ahead with Intention

If you are earning at a high level and feel like taxes are eating away at your progress, know that there are strategies designed for you. The mega backdoor Roth is one of the most compelling. It lets you take control, balance today’s tax relief with tomorrow’s flexibility, and create a retirement plan that reflects the complexity of your career.

This is not about doing more for the sake of doing more. It is about being intentional with the resources available to you. That is how you stop leaving money on the table and start building a plan that supports both your future lifestyle and your legacy.

Are Certificates of Deposit Really “Safe”? A Closer Look for High-Income Earners

By David D’Albero

We’ve all heard the pitch before: Certificates of Deposit (CDs) are the go-to for safety-conscious investors. Fixed returns, FDIC insurance, no market volatility – what’s not to love?

Well… it depends who you are.

For many investors, CDs do offer a sense of predictability. But for high-income earners – especially those living in high-tax states like New York, New Jersey, or California – the numbers may tell a very different story.

And as I often tell clients at Strata Capital: just because something feels “safe” doesn’t mean it’s actually smart.

In this post, we’ll break down what CDs really deliver after taxes, why they might be quietly costing you more than you realize, and what alternatives may offer more strategic, tax-conscious value.

Want to watch the full video breakdown? You can view it here:
👉 Watch on YouTube

Why CDs Seem So Popular

Let’s start with the appeal. For many investors, especially those in retirement or looking for simplicity, CDs have long been considered a financial comfort food — low maintenance and predictable.

Here are a few reasons CDs are still widely used:

Guaranteed Returns – Your principal is secure, and you receive a fixed interest rate over a set period.
No Market Risk – Unlike equities or bonds, CDs are not impacted by market fluctuations.
Set-It-and-Forget-It Simplicity – No ongoing decisions, rebalancing, or second-guessing.

For someone in a lower tax bracket, that all sounds pretty appealing – and in certain cases, CDs still make sense. But if you’re a high-income professional with a six- or seven-figure income, here’s the piece that often gets missed:

CDs are taxed as ordinary income – not capital gains – which could cut your returns nearly in half.

Let’s Do the Math: A CD’s True Return

Let’s take a simple example.

Say you invest $100,000 in a CD earning 5% interest annually. That’s a $5,000 return in gross income.

Now, let’s assume you live in New York and you’re in the top tax bracket.

Here’s how that interest income might be taxed:

Federal Income Tax (37%) = $1,850
State Income Tax (~6%) = $300
Net Investment Income Tax (NIIT, 3.8%) = $190
Total Tax = $2,340

So, what’s your real return?

$5,000 – $2,340 = $2,660 net, or just 2.66%.

And if you live in New York City, where local taxes tack on another layer, your effective return could drop to 2.5% or less.

The Hidden Tax Trap of CDs for High Earners

To be clear, CDs aren’t bad – they’re just often not efficient for high earners. The issue isn’t the product itself; it’s how it fits (or doesn’t) within your larger financial picture.

CDs can be deceptively simple. But what they offer in peace of mind, they often take back in lost after-tax performance – particularly when you have a higher income, more complex tax exposure, and access to more efficient options.

This is especially true when other strategies exist that allow you to retain more of what you earn without taking on undue risk.

Smarter Alternatives: Municipal Bonds & U.S. Treasuries

If capital preservation and income are your goals – and tax efficiency is a concern (it should be) – it may be worth considering:

1. Municipal Bonds (Munis)

Municipal bonds are issued by state and local governments, and they offer one major advantage: interest income is generally exempt from federal income tax.

And if you purchase muni bonds issued by your state of residence? You may avoid state and local taxes as well.

Let’s compare:

A CD yielding 5% may net you 2.5%–3% after taxes.
A municipal bond yielding 3.5% tax-free is often equivalent to a 5.5%–6% taxable return for high earners.

That’s a significant difference – especially when compounded over time.

Important Note: Municipal bonds aren’t risk-free. Their performance can be impacted by the financial health of the issuing municipality, interest rate changes, and other market factors. It’s important to evaluate the credit quality and duration of any bond you consider. At Strata Capital, we help clients assess this as part of a broader, diversified fixed-income strategy.

2. U.S. Treasuries

Another strong option for conservative, tax-conscious investors: U.S. Treasury securities.

Treasuries are:

Backed by the U.S. government (arguably the safest credit risk available)
Exempt from state and local income taxes
Frequently competitive with CD yields

In high-tax states, this state tax exemption can have a meaningful impact on your net return – again, especially for top earners.

So, Who Should Still Consider CDs?

CDs can still serve a purpose for certain investors. For example:

Those in lower tax brackets
Individuals with very short-term savings goals
Investors with a low risk tolerance who want full FDIC protection
People who need a specific cash flow ladder and value principal guarantees

But if you’re reading this and you’re a corporate executive, business owner, or high-income professional in a high-tax environment, you likely have better options.

The Bottom Line: Efficiency Matters More Than “Safety”

The financial world is full of products that seem safe but don’t actually serve your goals when viewed through a tax-aware, comprehensive lens. CDs fall squarely into that category for many affluent investors.

At Strata Capital, we specialize in helping high-income earners make better financial decisions – not just based on yield or risk, but on how each piece of your financial puzzle fits together. That includes evaluating the tax impact, coordinating with your CPA, and crafting investment strategies that align with your lifestyle and goals.

Because at the end of the day, it’s not about chasing the highest number – it’s about keeping more of what you earn and simplifying your financial life with smart, intentional choices.

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Disclosures & Compliance Notes

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3 Creative Ways to Use a Roth IRA in 2025 to Strengthen Your Financial Future

By David C. D’Albero II

If you’re like many successful executives today, you know that real wealth management isn’t about following the crowd — it’s about finding smart, strategic moves that set you apart. One of the most overlooked opportunities? The Roth IRA.

Even if you’re a high earner and have phased out of making direct Roth contributions, there are still creative ways to take advantage of what may be the most powerful tool in long-term, tax-free wealth building.

At Strata Capital, we believe in pulling back the curtain on strategies that most traditional advisors don’t talk about — and in creating a higher standard for how wealth should be managed. Here are three Roth strategies worth paying attention to as we head into 2025.

Using After-Tax Contributions From Your 401(k)

Most people think once they hit the regular 401(k) limit — $23,500 if you’re under 50 or $31,000 if you’re over 50 — they’re done. But for those with the right kind of 401(k) plan, that’s just the beginning.

If your company’s 401(k) allows after-tax contributions, you can go above and beyond the standard limits. Even better, those after-tax dollars can often be rolled into a Roth IRA, sometimes immediately. Think of it as a turbocharged Roth contribution — significantly more powerful than the standard route.

For example, let’s say you max out your pretax 401(k) contributions and your plan allows an additional $20,000 in after-tax contributions. Rather than leaving that money inside the 401(k), where future withdrawals might be taxed, you could roll it into a Roth IRA each year, setting yourself up for decades of tax-free growth.

Not every plan offers this feature, so it’s important to review your 401(k) options carefully. Done properly, this strategy can create a major boost in future tax-free income.

The Backdoor Roth Contribution

For high-income earners, direct Roth contributions are often off the table. But the Backdoor Roth strategy offers a smart, perfectly legal workaround.

The process is simple. First, you make a non-deductible contribution to a traditional IRA — up to $7,000 if you’re under 50 or $8,000 if you’re over 50. Then, you immediately convert those funds into a Roth IRA.

If you don’t already have a large balance in traditional IRAs, this process can be relatively seamless. However, if you do have significant pretax dollars sitting in traditional IRAs, you’ll need to watch out for the pro-rata rule, which can create a partial tax bill when converting. This is where planning ahead — and potentially consolidating accounts or making strategic moves — can make a big difference.

The beauty of the Backdoor Roth is that it allows high earners to continue building Roth assets even when income limits would otherwise stand in the way. Over time, having a tax-free pool of assets to draw from in retirement can give you enormous flexibility — especially if tax rates rise in the future.

Opening a Roth IRA for Your Child

When people think about Roth IRAs, they often think about retirement planning for themselves. But opening a Roth IRA for your child is one of the most powerful legacy-building moves you can make.

The rules are straightforward: if your child has earned income from a job — mowing lawns, babysitting, tutoring, or part-time work — they’re eligible to contribute to a Roth IRA. The contribution limit is the lesser of their earned income or the standard IRA contribution limit.

Imagine your teenager earns $2,000 over the summer. You can help them contribute that $2,000 into a Roth IRA. Left untouched, that one contribution could potentially grow into over $100,000 by the time they reach retirement age, assuming a modest average annual return. And if they contribute for a few more years during high school or college? The compounding potential is enormous.

Besides the financial benefit, this strategy plants the seeds of smart financial behavior early. It teaches the value of saving, investing, and thinking long-term — skills that will serve them for a lifetime.

Why Timing Matters

All of these strategies are available today, but they may not be available forever. Tax laws change. Political priorities shift. Windows of opportunity close.

Taking action now can position you — and your family — to capture the full benefits of tax-free growth while it’s still possible. These moves aren’t about taking risks. They’re about using the rules strategically to strengthen your long-term financial foundation.

Of course, no one’s financial situation is exactly the same. That’s why at Strata Capital, we don’t believe in one-size-fits-all advice. We work with each client to design a plan that fits their career stage, their wealth goals, and their vision for the future — coordinating retirement planning, investment strategy, tax planning, and legacy building into one seamless, personalized experience.

If you’d like to explore how these Roth strategies could fit into your overall plan, we’re here to help.

Strata Capital is a wealth management firm serving corporate executives, professionals, and entrepreneurs in the New York Tri-State Area, focusing on corporate benefits and executive compensation. Co-founded by David D’Albero and Carmine Coppola, the firm specializes in making the complex simple to ensure clients feel confident in their financial decisions. They can be reached by phone at (212) 367-2855, via email at carmine@stratacapital.co, or by visiting their website at stratacapital.co.

Cornerstone Planning Group, Inc., (“CSPG”) is an SEC registered investment advisory firm. The information contained herein should not be construed as personalized investment advice and should not be considered as a solicitation for investment advisory service. The information (e.g., tax ) provided is believed to be accurate however CSPG does not guarantee or otherwise warrant such information. For more information regarding CSPG you can refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov) and review our Form ADV Brochure and other disclosures.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.