As a fiduciary financial advisor in Harrisburg, Holland Capital helps high-earning households decide where to save once they have filled their 401(k)s and earn too much for a direct Roth IRA. We work with clients in Harrisburg by video and phone, and meet in person by appointment at the Regus center in Charlotte’s University area.
The usual places to save fill up fast at a higher income.
Census figures put the median household income in Harrisburg near $148,000.
For a two-career couple, both 401(k)s may already be at the limit. Income may also be too high to contribute to a Roth IRA the usual way. The next dollar still needs a home, and the choice affects taxes for decades.
There are more options than a regular brokerage account, but each has rules.
The Backdoor Roth IRA
When income is above the Roth IRA limit, you can still contribute to a traditional IRA without a deduction and then convert it to a Roth. This is often called a backdoor Roth.
The catch is any pre-tax money you already hold in a traditional, SEP, SIMPLE or rollover IRA. The IRS generally combines your traditional, SEP and SIMPLE IRAs when it figures the taxable part of a conversion. A large pre-tax IRA balance can make most of the conversion taxable.
Moving that pre-tax IRA money into a workplace plan, if the plan accepts it, can clear the way. We check before anything is converted.
After-Tax 401(k) Money and an HSA
Some workplace plans allow after-tax contributions above the regular 401(k) limit. If the plan also allows those dollars to be converted to Roth, much more can go into Roth accounts each year. Our guide on the mega backdoor Roth explains how it works.
If your family is on a qualifying high-deductible health plan, a health savings account can be a strong place to save. Contributions go in before tax or are deductible, and withdrawals for qualified medical costs are tax-free. Invested and left alone, it can become a long-term account for health costs in retirement.
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The Order Matters
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What Goes in the Taxable Account
After the tax-advantaged accounts are full, the rest goes into a regular brokerage account. Which investments sit there, and which sit in the 401(k)s and Roth accounts, changes the tax you pay each year.
Our guide on asset location walks through the idea.
A written investment policy statement covers every account the household owns. It sets the overall mix, then assigns each type of investment to the account where it is taxed the least.
At Holland Capital, investment management for a high-income household includes placing each investment in the right account.
How We Work with Clients in Harrisburg
Holland Capital Management is an independent registered investment adviser and a fiduciary. M. Chad Holland, CFA, CFP® works directly with clients and is responsible for the planning and advice.
Bring both spouses’ pay stubs, your latest tax return, the plan summary for each workplace 401(k) and each retirement account statement, including old IRAs.
We identify which of these options your plans allow, the order to use them and any IRA balances that need attention first.
The first conversation is free. If there is work worth doing after that, we will define the scope and cost before you decide whether to move forward.
Holland Capital is based in Charlotte. If you are looking for a fiduciary financial advisor in Harrisburg, we meet by appointment at the Regus center at University Executive Park, 301 McCullough Drive in Charlotte’s University area, about 14 minutes from Harrisburg, and handle shorter check-ins by video or phone. Holland Capital does not maintain a branch office in Harrisburg.
We work with clients throughout North Carolina. You can see the other North Carolina communities we serve here.
Our what we do page explains how a planning engagement works.
RETIREMENT ENGINEERING™
The Order Matters
Five retirement decisions and why timing matters.
Frequently Asked Questions
How Does a Fiduciary Financial Advisor Help High Earners Save More?
Holland Capital acts as a fiduciary when providing financial planning and investment advice. For a high-income household, that means choosing the right account for each dollar and keeping the tax rules straight.
Some of these steps may move money into an account we manage, which would raise our fee. We explain that before recommending it.
Does a Backdoor Roth Still Work?
It can, but existing pre-tax IRA balances can make part of the conversion taxable. The tax reporting also has to be filed correctly.
We work through the steps with you and your CPA each year.
Where Do Harrisburg Clients Meet with Us?
In Charlotte’s University area, about 14 minutes from Harrisburg. We book a meeting room at the Regus business center there.
Most follow-up work can be done by video or phone.
Photo: James Willamor / Wikimedia Commons / CC BY-SA 3.0, cropped.
