Is Your 401(k) Setting You Up for a Tax Bomb?

A Guide for Affluent Professionals

Imagine your friend Emily, a successful doctor in her mid-50s who’s always prided herself on maxing out her 401(k). Everything seemed straightforward—contribute pre-tax, reduce today’s taxable income, and watch her nest egg grow. Fast-forward to a casual lunch where she’s confiding in you about how her retirement projections now show massive required minimum distributions (RMDs) down the road. And these forced withdrawals? They could shove her into a higher tax bracket than she’s ever paid before. Meanwhile, your neighbor Dan, a thriving entrepreneur, recently found himself stunned by the tax estimates on his future IRA balance.

What Emily and Dan are discovering is that, for some high earners, it might make sense to rethink the traditional “pre-tax at all costs” approach. By considering how taxes, RMDs, and future income streams interplay, they aim to control their retirement finances rather than letting hefty withdrawals and tax surprises run the show.

This article shows how a strateg…