Beyond the 401(k): Advanced Strategies for Growing Your Wealth
For many families, saving for retirement starts with the company 401(k). It’s a simple, effective way to build long-term wealth—and for good reason. You get tax advantages, potential employer matching, and automated savings right from your paycheck.
But for high-net-worth families with $250,000 or more in investable assets, the 401(k) is only the beginning. Once you’ve maximized the basics, there are more advanced, strategic tools available to help you build wealth, minimize taxes, and achieve greater flexibility.
At Rockwall Wealth Advisors, we work with clients in Rockwall and across the nation who have already mastered the fundamentals and want to go further. Here are some of the strategies that can help take your wealth-building beyond the 401(k).
1. Max Out Tax-Advantaged Retirement Accounts
Before moving into advanced territory, make sure you’ve fully optimized your existing retirement accounts.
That includes:
401(k) contributions up to the annual limit ($23,000 for 2025, plus $7,500 catch-up if over age 50).
Traditional or Roth IRAs, where eligible. For high earners, this may require a backdoor Roth strategy (we’ll cover that shortly).
Health Savings Accounts (HSAs), which often get overlooked but can be one of the most tax-efficient tools available.
Once you’re hitting these limits, the next question is: Where do I go from here?
2. The Backdoor Roth IRA: Tax-Free Growth for High Earners
For high-income professionals, direct contributions to a Roth IRA may be off the table due to IRS income limits. But that doesn’t mean you can’t access the benefits of a Roth.
A backdoor Roth IRA is a strategy where you:
Make a nondeductible contribution to a Traditional IRA.
Convert that contribution to a Roth IRA.
This allows your money to grow tax-free, with no required minimum distributions (RMDs) later in life. It’s a powerful way to diversify your tax exposure in retirement.
Important note: the rules around Roth conversions can be complex, especially with the “pro-rata rule” if you already have pre-tax IRA assets. This is an area where guidance can help you avoid unnecessary tax bills.
3. Brokerage Accounts: Flexibility Beyond Retirement Accounts
Unlike retirement accounts, a taxable brokerage account has no contribution limits or withdrawal restrictions.
While you don’t get the same upfront tax breaks, you gain flexibility and access to strategies like:
Tax-loss harvesting to offset gains with losses.
Long-term capital gains rates, which are often lower than ordinary income tax rates.
No RMDs, meaning you can choose when and how to access funds.
For many high-net-worth families, the brokerage account becomes the “bridge account” between early retirement and age 59½ when retirement accounts can be tapped without penalty.
4. HSAs: The Triple Tax Advantage
If you’re covered by a high-deductible health plan, an HSA (Health Savings Account) may be one of the most powerful wealth-building tools available:
Contributions are tax-deductible.
Growth is tax-deferred.
Withdrawals for qualified medical expenses are tax-free.
Even better, after age 65, HSA funds can be used for any purpose—without penalty (though non-medical withdrawals are taxable, similar to a Traditional IRA).
Many high-net-worth families use HSAs as a stealth retirement account—investing the funds instead of spending them, then letting them grow for future healthcare needs in retirement.
5. Stock Options, RSUs, and Executive Compensation
If you’re an executive or business owner, your wealth-building may extend beyond traditional accounts. Equity compensation such as stock options or restricted stock units (RSUs) can be a tremendous source of growth—but they also come with complex tax implications.
Key considerations include:
Timing exercises to minimize taxes.
Diversifying concentrated stock positions.
Coordinating with your broader financial plan to balance risk.
Without a plan, stock-based compensation can create tax surprises or an unbalanced portfolio. With the right strategy, it can significantly accelerate wealth.
6. Real Estate as a Diversification Tool
For many high-net-worth families, real estate plays a key role in wealth building. That could mean:
Owning rental properties for income and appreciation.
Investing in commercial properties.
Using 1031 exchanges to defer taxes when selling.
Real estate offers diversification away from the stock market, potential tax advantages (like depreciation), and the chance to generate passive income. But it also requires careful management and planning for liquidity.
7. Tax Diversification: Don’t Put All Your Eggs in One Basket
One of the most overlooked aspects of wealth building is tax diversification.
Most families save primarily in pre-tax accounts (401(k), Traditional IRA). That means when they retire, nearly every dollar is taxed as ordinary income.
A smarter approach is to build a balance across three “buckets”:
Tax-deferred (401(k), IRA)
Tax-free (Roth IRA, HSA)
Taxable (brokerage account)
This flexibility allows you to pull income from the most efficient source depending on market conditions, tax laws, and your needs in retirement.
8. Charitable Giving Strategies
For families with charitable goals, advanced giving strategies can provide both tax efficiency and personal fulfillment.
Options include:
Donor-Advised Funds (DAFs): Make a large, tax-deductible donation in one year, then distribute funds to charities over time.
Gifting appreciated assets: Donate stock instead of cash to avoid capital gains taxes.
Qualified Charitable Distributions (QCDs): Directly transfer RMDs to charity once you’re over 70½, reducing taxable income.
Charitable giving can be both a meaningful legacy tool and a strategic tax planning strategy.
9. Don’t Forget Risk Management
Building wealth is only part of the equation—protecting it matters too.
Consider:
Adequate insurance coverage (life, disability, long-term care).
Estate planning documents (will, trusts, power of attorney).
Asset protection strategies for business owners.
A strong wealth plan looks at the whole picture—not just investments, but protection and transfer as well.
Final Thoughts: Growing Smarter, Not Just Bigger
Going beyond the 401(k) isn’t about chasing complexity—it’s about making smarter choices with the wealth you’ve already built.
For high-net-worth families, the real question isn’t “Am I saving enough?” but rather:
Am I saving in the right places?
Am I minimizing taxes effectively?
Am I aligning my wealth with my goals and values?
That’s where having a comprehensive financial plan—and a trusted advisor—can make all the difference.
📍 Rockwall Wealth Advisors
Helping high-net-worth families grow and protect their wealth with clarity and confidence.
📞 214-923-5237
📧 contactus@rockwallwealthadvisors.com
🌐 www.RockwallWealthAdvisors.com
