How High Earners Can Outsmart the SECURE Act 2.0: Save Your 401(k), IRA & Legacy

Introduction: “Secure” for whom?
When the government labels a law “SECURE,” read it as “secure more revenue”—often from diligent savers at the top end. If you’re a high earner with sizable 401(k) and IRA balances, SECURE 2.0 raises real stakes for both your retirement and your heirs.

Beginning in 2026, workers age 50+ who earned over $145,000 in the prior year must make catch-up contributions on a Roth (after-tax) basis. If your plan doesn’t offer a Roth 401(k), you can’t make catch-up contributions at all until the plan adds it. IRS+1

And for your heirs, the 10-year rule (born in the original SECURE Act) generally forces most non-spouse beneficiaries to drain inherited IRAs/401(k)s within a decade—often during their own peak earning years—accelerating taxes and pushing them into higher brackets. IRS

At Advanced Wealth Management, we don’t accept that as fate. Our Strategic Wealth Alpha GPS™ (SWAG) framework coordinates tax, withdrawal, and legacy moves so more of your money finishes the mission you gave it.

 

The Problem: Why SECURE 2.0 hits high-income savers hardest

1) Roth Catch-Up Mandate (effective 2026)

• Age 50+ and prior-year wages > $145,000? Catch-ups must be Roth.
• If your 401(k) lacks a Roth feature, catch-ups are off the table until your plan adds one.
• Age 60–63 get a bigger “super” catch-up starting in 2025 (e.g., $11,250 instead of $7,500), but higher-income folks still have to make those on a Roth basis the following year. IRS+1

2) The Death of the Stretch IRA

• Most non-spouse heirs now must empty inherited accounts within 10 years.
• Lumpier, accelerated income can trigger bigger tax bills, IRMAA surcharges, and bracket creep—especially if heirs live in high-tax states. In top-bracket scenarios, combined federal (up to 37%) plus 3.8% NIIT and potential state taxes can push effective rates toward the 40–50% range on those withdrawals. Tax Foundation+1

3) RMD Friction—unless you’re Roth

• SECURE 2.0 eliminated lifetime RMDs for Roth 401(k) dollars beginning in 2024 (Roth IRAs never had them). Translation: the more you convert/accumulate in Roth, the fewer forced distributions later. IRS

“You didn’t save for 30 years just so your kids could inherit a giant tax bill.”
— Tony Gomes, CEO, Advanced Wealth Management

 

The Solution: AWM’s SWAG™ Framework for High Earners

1) Strategic Roth Conversions (pay known tax to avoid unknown tax)

• Convert slices of pre-tax IRA/401(k) money to Roth on purpose, filling today’s favorable brackets (e.g., 22%/24%) while avoiding spills into 32%+.
• Conversions shrink future RMDs, help manage IRMAA, and give heirs tax-free dollars under the 10-year clock.
• Key nuance: once you’re subject to RMDs, you must take the RMD first, then convert additional funds. Plan timing matters. IRS

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Illustration: Fred and Wilma used 5–7 years of laddered conversions in the 24% bracket, shifting multi-million pre-tax balances to Roth while Medicare and bracket thresholds were closely managed. Their heirs inherit growth that’s tax-free at distribution, and family-wide lifetime taxes plummet.

2) Mega Backdoor Roth (when your plan allows it)

• Max the regular 401(k) deferral (2025: $23,500; plus catch-up where applicable).
• Then add after-tax contributions up to the §415(c) annual additions limit (2025: $70,000 across employee + employer + after-tax; catch-up is on top).
• Roll after-tax dollars to Roth (in-plan or via in-service to a Roth IRA) to build a large no-RMD pool. Yes, this is the workhorse for owners and high-income pros. IRS+1

3) SWAG™ Legacy Guardrails (so the 10-year rule doesn’t own you)

• Use systematic Roth conversions + trust design where appropriate (e.g., SLATs/CRTs when suitable), asset location, and charitable levers.
• Aim to pre-pay tax at controlled rates so heirs aren’t forced to liquidate into top brackets later.
• Consider that Roth plan/IRA dollars avoid lifetime RMDs and give heirs a clearer 10-year runway with no income tax on distributions if rules are met. IRS

 

Quick Win Checklist (this year)

1. Confirm your 401(k) has a Roth feature (or push HR to add it) so your 2026 catch-ups aren’t blocked. IRS
2. Map a multi-year Roth conversion ladder to fill target brackets before rates or income rise.
3. If eligible, implement Mega Backdoor Roth (plan-document dependent) and set automated in-plan conversions. IRS
4. Coordinate conversions with IRMAA, NIIT, and capital-gains plans to avoid cliff penalties. IRS
5. Update beneficiaries and (with counsel) review trusts so the 10-year rule doesn’t blindside your heirs. IRS

 

Case Study: Mr. Johnson Avoids the “50% Trap”

• Profile: $10M net worth; significant after-tax 401(k) contributions.
• Actions: Added Roth feature to the plan; executed Mega Backdoor Roth; staged IRA conversions pre-RMD; coordinated charitable giving.
• Result: Reduced his heirs’ projected tax drag by hundreds of thousands and created a multi-generational tax-free asset base.

 

FAQs

What is the “10-Year Rule”?
Most non-spouse beneficiaries must empty inherited IRAs/401(k)s by the end of year 10 after death (exceptions exist for “eligible designated beneficiaries”). IRS+1

Can I convert to Roth after RMDs begin?
Yes—but your RMD must come out first. Planning early gives you more runway. IRS

Backdoor vs. Mega Backdoor Roth?

• Backdoor Roth IRA: small, via nondeductible IRA → Roth IRA.
• Mega Backdoor Roth: large, via 401(k) after-tax → Roth (plan permitting). Limits depend on the year and your plan document. IRS

 

Do Roth 401(k)s still have RMDs?
No—beginning in 2024, Roth plan accounts are not subject to lifetime RMDs. Roth IRAs never were. IRS

Don’t Let the IRS Inherit Your Life’s Work

You likely have a 1–2 year window to lock in today’s rules, build tax-free assets, and protect your family. Let’s build your custom SWAG Retirement Roadmap™ and turn policy risk into planning advantage.

Download

• The Complete Mega Backdoor Roth IRA Guide
• Your GPS to Hidden Retirement Tax Secrets

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Final Word from Tomy Gomes, CEO
“What’s at stake isn’t just your retirement—it’s your family’s future. The SECURE Act planted landmines. SWAG gives you the map.”

Important: Educational content only; not tax, legal, or investment advice. Limits, thresholds, and plan features change—verify your current plan documents and the latest IRS guidance before acting. IRS

Sources: IRS and major plan/industry summaries supporting effective dates, limits, and rules cited above. IRS+5IRS+5Federal Register+5

 

Knowledge is Power!

At Advanced Wealth Management, we believe in integrating life and wealth—because your retirement, health, and financial freedom are all connected. Whether you’re navigating retirement decisions, exploring tax strategies, or preparing to pass on your legacy, our Boutique Family Office approach ensures you’re never flying blind.

Let’s transform complexity into clarity and build the future you deserve—one wise decision at a time.

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At AWM, Our Fiduciary Duty Principles™ Define Our Commitment

Our Fiduciary Duty Principles™ reflect our dedication to transparency, ensuring that your goals remain our priority. Knowledge equips you with the tools to make strategic decisions and optimize financial outcomes.

How We Can Help You

At AWM, we provide personalized, comprehensive guidance for individuals and families. Our services offer peace of mind and confidence through every stage of your financial journey:

• Investment Management: Our globally diversified, tax-efficient portfolios are designed for resilience across market conditions.
• Proactive Tax Planning: We focus on tax-efficient strategies for both accumulation and distribution phases, helping you manage liabilities.
• Integrated Goals-Based Planning: Align all life goals into a unified financial plan to navigate transitions strategically.

 

Contact AWM today to schedule a confidential consultation and connect with an advisor who can help you achieve your financial goals. For assistance, reach out to us at Service@awmfl.com.

Thank you for your continued trust and engagement.

Tony Gomes, Author, MBA
CEO and Founder
Advanced Wealth Management

Content Disclosure: The information here is general and educational. It is not a substitute for professional advice and does not constitute a recommendation. Forecasts and opinions are subject to change.