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There’s no alert for a missed tax planning opportunity.
No letter. No push notification. No double-urgent email in your inbox.
The opportunity just passes by.
A physician in her peak earning years skips funding her HSA for a decade because she’s too busy managing a practice. That’s tens of thousands of dollars in tax-advantaged contributions she can’t reclaim. A business owner takes salary instead of engineering his compensation for capital gains treatment. Over five years, that’s a mid-six-figure differential that never shows up as a line item on any statement.
It happens constantly. To capable people. Who just didn’t know the window was open. That’s the problem with tax planning for high earners — what you don’t do can be costly, too.
By the time most people realize there was a window, it’s already closed. Simply because preparation and planning were conflated.
If you’re earning $300,000 or more annually and you’re not sure whether you’re leaving money on the table, there’s a good chance you are.
Why Peak Earning Years Are Your Most Valuable Tax Planning Window
There’s a certain irony to managing taxes. The years when tax planning strategies would deliver the highest returns are the years when you have the least bandwidth for it.
The same forces driving your income to its peak are also creating your richest planning opportunities. Business growth, career advancement, and liquidity events all open doors that simply won’t exist post-exit or post-retirement.
During this stretch, you can take advantage of several impactful strategies:
- Defined benefit or cash balance plans for business owners
- Backdoor and mega backdoor Roth contributions
- Health Savings Accounts (HSAs) with meaningful funding capacity
- Donor-advised fund “bunching” during income spikes
- Qualified Small Business Stock (QSBS) positioning
- Entity restructuring to optimize income treatment
- Managing Incentive Stock Options (ISOs) to minimize Alternative Minimum Tax (AMT) exposure
- Using interest tracing strategies to offset taxable investment income
Many of these strategies must be implemented years before a liquidity event or retirement to work as intended. Waiting until after the fact can mean settling for less efficient alternatives.
In our experience, clients don’t fully appreciate how fleeting this window is until we model it over a 15- or 20-year horizon. Expired deductions, missed contribution windows, and bypassed opportunities don’t roll forward. You can’t retroactively contribute to the years you missed.
That’s why coordination matters.
Without a central quarterback, it’s easy for well-intentioned advisors to operate in silos — the CPA files accurately, the investment advisor manages portfolios, the attorney drafts documents — but no one engineers how those decisions interact over decades.
The Hidden Costs: What “Doing Nothing” Can Cost You
Inaction has a cost. It’s just harder to see than an error on a tax return.
Overlooking Entity Structure Decisions That Determine Exit Tax Treatment
Business owners who operate as LLCs or partnerships may face less favorable tax treatment at exit. Even when structured as a sale of membership interests, IRS rules typically require a portion of proceeds to be taxed as ordinary income — inventory, receivables, and depreciation recapture are common culprits.
Ordinary income tax rates can exceed 37% at the federal level, not to mention state taxes. Long-term capital gains tax rates run 15% to 20%. On a $5 million exit, that difference can mean $750,000 or more in additional taxes.
C-corps and S-corps make clean stock sales easier to negotiate and defend, which is why entity structure matters long before you’re ready to sell.
Qualified Small Business Stock (QSBS) goes even further, potentially excluding up to $10 million in gains entirely. But that’s only if you’re structured as a C-corp and hold the stock for at least five years. By the time many founders realize this caveat, the clock has already run out.
Leaving Tax-Advantaged Accounts Unfunded
Many high earners dutifully max out their 401(k), but they aren’t the only accounts with tax benefits at your disposal.
HSAs, for example, are uniquely powerful. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. Over a decade, missing HSA contributions can mean bypassing $80,000 to $100,000 in tax-advantaged savings for healthcare costs in retirement — plus the annual tax deductions and years of compounding tax-free growth.
Letting Appreciated Assets Sit Without a Plan
Concentrated stock positions, business equity, and real estate can each trigger massive tax events if handled reactively.
Strategic tax-loss harvesting, charitable giving of appreciated assets, and installment sales can all reduce the overall tax liability, so long as these tactics are executed in advance.
Underplanning for State Tax Implications
For high-income households in high-tax states like New York or New Jersey, it’s imperative to factor state taxes into your plan.
The timing of a move, proper domicile establishment, income sourcing rules, and the year a liquidity event occurs all carry implications. A poorly executed relocation can leave you exposed to multiple states asserting tax claims.
Ignoring Estate and Medicare Surcharge Thresholds
Medicare IRMAA surcharges, the 3.8% Net Investment Income Tax, and federal estate tax exposure all hinge on income or asset levels that high earners often don’t track closely enough.
IRMAA is based on income from two years prior, meaning today’s earnings may affect Medicare premiums down the road. NIIT applies when current income crosses certain thresholds. Federal estate tax becomes a concern as total wealth approaches $15 million per person.
Without proactive financial planning (e.g., Roth conversions, charitable strategies), these surcharges can appear suddenly and cost far more than necessary.
The Proactive Tax Playbook: What High Earners Should Be Doing Now
1. Maximize Every Tax-Advantaged Dollar
Review your strategy annually for:
- Backdoor Roth IRAs for those above the adjusted gross income limits (phase-out begins at $153,000 for single filers, $242,000 for married couples in 2026)
- Mega backdoor Roth contributions that far exceed the $7,500 IRA limit, if your plan allows. Qualifying plans can make after-tax contributions up to $72,000 total ($80,000 if 50 or older) in 2026¹
- HSA contributions for qualifying high-deductible health plans and investing those funds for long-term growth rather than spending them immediately
- Defined benefit plans for business owners and self-employed professionals can shelter dramatically more than a 401(k) — sometimes $200,000 or more, depending on age and income.
2. Engineer Your Income Mix
Not all income is taxed the same, and high earners often have more flexibility here than they realize.
Salary, business distributions, equity compensation, dividends, and long-term capital gains each carry different tax treatments. For business owners, entity structure (such as an S Corp vs. an LLC) can affect self-employment taxes. For executives and founders, the timing and structure of equity sales can determine whether income is taxed at ordinary rates or more favorable capital gains rates.
The long-term objective is to design how and when income is recognized so you’re not unintentionally paying premium rates on dollars that could have been treated more efficiently.
3. Integrate Charitable Giving With Tax Strategy
If philanthropy is part of your family’s values, align it with your tax plan.
Donating appreciated stock instead of cash allows you to avoid capital gains while still receiving a full charitable deduction. Donor-advised funds let you front-load deductions during high-income years and distribute to charities over time.
Later in life, qualified charitable distributions (QCDs) from IRAs (available beginning at age 70 ½) can be directed straight to charities and counted toward satisfying required minimum distributions, subject to IRS limits and rules. If executed properly, they reduce taxable income while fulfilling philanthropic goals.
4. Harvest Tax Losses and Rebalance Tax-Efficiently
High earners tend to accumulate concentrated stock positions — RSUs that vested over years, founder shares, inherited stock. Selling is a tax event. Tax-loss harvesting in other parts of the portfolio can offset those gains, allowing you to diversify without the full tax burden.
If, for instance, you’re sitting on $500,000 in unrealized gains in one position and want to de-risk, harvesting $50,000 in losses elsewhere means you could potentially sell $50,000 of the concentrated position tax-free. Done systematically, it compounds.
5. Keep an Eye on Thresholds
If you’re hovering near AGI thresholds, it’s important to monitor these triggers to ensure you stay on the right side of the cliff. Bunching deductions, deferring income across tax years, and timing large transactions are all strategies that can be leveraged to keep you optimized.
The Window Is Easy to Miss
It happens all the time. To capable people running successful businesses, managing complex careers, building wealth. They didn’t know the window was open. Or they knew, but assumed they’d handle it later.
By the time “later” arrives, the strategies that would have helped create substantial tax savings are no longer available. Peak earning years don’t last forever. Neither do the opportunities they create.
If you’re a high-income earner and you’re not sure whether you’re leaving money on the table, let’s talk. At Simon Quick Advisors, we help business owners, executives, and professionals engineer tax-efficient wealth strategies — before it’s too late. Schedule a consultation today.
Disclaimer
This material is provided for informational and educational purposes only and should not be construed as investment, legal, accounting, or tax advice, or as an offer to sell or solicitation of an offer to purchase any security or investment advisory service. Any references to planning strategies, investment opportunities, or market conditions are general in nature and may not be appropriate for your individual circumstances.
Simon Quick Advisors & Co., LLC (“Simon Quick”) and its representatives do not provide legal or tax advice and are not a law firm or certified public accounting firm. Simon Quick does not prepare tax returns. Clients and prospective clients should consult their attorney, accountant, or other qualified professional regarding their specific legal, tax, and financial circumstances before implementing any strategy discussed herein. Insurance products and services are not offered through Simon Quick.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results, and there can be no assurance that any investment strategy will achieve its intended objectives. Alternative and illiquid investments involve additional risks and may not be suitable for all investors. Diversification and asset allocation strategies do not guarantee profit or protect against loss.
Certain statements contained herein may constitute forward-looking statements, which are based on current expectations, estimates, and assumptions that are inherently subject to change and uncertainty. Actual results may differ materially from those anticipated.
Information contained herein has been obtained from sources believed to be reliable; however, Simon Quick does not independently verify and makes no representation or warranty as to the accuracy or completeness of such information.
Simon Quick Advisors & Co., LLC is an SEC-registered investment adviser headquartered in Morristown, New Jersey. Registration does not imply any level of skill or training. Additional information about Simon Quick, including its Form ADV Part 2A, is available upon request or through the SEC’s Investment Adviser Public Disclosure website.
