How to manage high income retirement funds

The low-income earners find it relatively easy to plan their retirement as they are provided with a lot of options by the government. It is the high-income earners who find it relatively difficult to plan their retirement. Individuals earning over $132,000 and couples earning over $194,000 are not allowed to invest in a Roth IRA. For 401k, the contribution limit of $18,000 per year isn’t enough for the high-income earners who made around $250,000 every year while they were working. So $18,000 won’t be sufficient for a person with much higher income level. To continue to maintain a similar living standard in the future, they must consider investing in high income retirement funds.

So the main focus of the high-income earners should be to save enough so that they are not required to change their methods and lifestyle. Here are a few potential options for saving high income retirement funds.

  • Taxable brokerage account (TBA)

The key feature of a taxable brokerage account is that no matter how many times the tax rates may change from year to year or from government to government, the one thing that remains fixed is that there isn’t any contribution limit. Hence, it is legal for you to contribute according to your income and then invest the huge amount of distribution money when you retire.

  • Backdoor to Roth IRA

Since 2010, any person can convert IRA into Roth IRA. In several cases, you are legally eligible to make the conversion without any tax. If you have IRA rollover or if you are converting a traditional IRA, you are likely to be exempted from any tax implications.

  • Know about the After-Tax 401k and plan about it

It is necessary to take the opinion of a tax consultant for financial advice and suggestions according to your situation. But don’t forget to keep in mind that while converting after-tax contributions to Roth 401k or Roth IRA, some additional contributions to 401k is definitely a smart move.

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