Retirees can strategically convert their traditional retirement accounts to Roths, paying the income tax at their own, likely lower, rate. This allows their high-earning children to inherit the funds completely tax-free, avoiding a larger tax bill that would have been calculated at the children's peak-earnings tax rate.

For high earners, strategic tax mitigation is a primary wealth-building tool, not just a way to save money. The capital saved from taxes represents a guaranteed, passive investment return. This reframes tax planning from a compliance chore to a core financial growth strategy.

The conventional wisdom to always max out a 401(k) is questionable. After fees, the net benefit over a taxable brokerage account can be as low as 40 basis points per year. For high earners or those aiming for early retirement, this small advantage may not justify locking up capital until age 59.5, sacrificing valuable liquidity and flexibility.

To preserve your ability to make tax-deductible retirement contributions for the current year, you only need to *open* the account before December 31. You can then wait until you know your final tax liability (up until the April tax deadline) to decide the exact amount to contribute.

When converting a pre-tax 401(k) to a Roth IRA, you owe income tax on the entire amount. To preserve your principal, pay this tax bill from a separate savings account. Using the retirement funds to pay the tax permanently reduces the base for future compounding.

Many investors focus on diversifying assets (stocks, bonds) but overlook diversifying their accounts by tax treatment (pre-tax 401k, after-tax brokerage, tax-free Roth). This 'tax diversification' provides crucial flexibility in retirement, preventing a situation where every withdrawn dollar is taxable.

The US tax system disproportionately penalizes high-income 'workhorses' (e.g., doctors, lawyers) who earn from labor. In contrast, the super-rich, who derive wealth from capital gains and have mobility, benefit from loopholes that result in dramatically lower effective tax rates.

The standard 401(k) is filled with daily-liquid assets, despite having a time horizon of decades. This structural mismatch unnecessarily limits potential returns. This is the core argument for allowing more access to less-liquid private market investments within retirement plans.

Contrary to popular belief, spending money just for a year-end tax write-off can be a poor financial move. If your income is on a sharp upward trajectory, delaying the expense to the next year could result in a larger tax saving, as you'll likely be in a higher tax bracket.