If you’re a high-income earner, chances are you’ve been told to stick with the traditional 401(k). The logic makes sense on the surface—defer taxes now while you’re in a high bracket, pay them later when you retire. But here’s the thing: that math doesn’t always hold up anymore. And in 2025, it might actually be costing you.
More professionals, executives, and business owners are making the pivot toward Roth 401(k) contributions. Why? Because tax law is shifting, markets are unpredictable, and retirement isn’t always a lower-income phase of life anymore. Many people don’t retire into lower tax brackets—they retire into more complexity. And a traditional 401(k), while useful, doesn’t give you much flexibility once those withdrawals start flowing.
Roth 401(k)s flip the model: you pay taxes on the income now, but all growth and withdrawals come out tax-free in retirement. You also skip required minimum distributions (RMDs) in Roth IRAs—though not yet in Roth 401(k)s, unless you roll them over. Still, the long-term tax savings and withdrawal control can be powerful if you play it right.
According to Morningstar, Roth 401(k)s are gaining popularity across all income levels, but high earners are still hesitant. Many assume they’ll be in a lower bracket later, but with the Tax Cuts and Jobs Act expiring in 2026 and long-term rates likely to rise, that assumption may no longer hold. Roth contributions give you more control over what your future tax picture looks like—and that flexibility can be worth more than the short-term deduction.
What gets overlooked is the concept of “tax diversification.” Morningstar puts Roth assets high on its list of long-term tax-smart tools because they let you choose when (and how) to trigger income. Having both pre-tax and after-tax assets in retirement gives you optionality. That means you can tap the right bucket at the right time—whether you’re covering medical costs, buying a second home, or managing taxable gains from other investments.
This flexibility becomes especially powerful when you face major income events, like selling a business or phasing into part-time work. If your income drops temporarily, Roth conversions or distributions can be made with minimal tax impact. Forbes notes that Roth dollars can be a game-changer in structuring multi-year tax outcomes during large transitions.
At Fortis Wealth Management, we walk clients through these scenarios every week. Should they switch fully to Roth? Split contributions? Plan for conversions later? It depends—on income, liquidity, timing, and whether they’re subject to things like RMDs, Social Security phaseouts, or legacy planning. The right answer isn’t always obvious—but it’s always worth reviewing.
And the clock is ticking. Under SECURE 2.0, beginning in 2026, high earners (those making $145,000+) will be required to make catch-up contributions to Roth 401(k)s. If you’re 50+ and haven’t built Roth into your strategy yet, this change isn’t just coming—it’s baked in. Better to get ahead of it now than react when it’s already law.
If you’re earning strong income and haven’t re-evaluated your contribution mix recently, now’s the time. Talk to Fortis, and we’ll walk you through your numbers—no fluff, no jargon, just real advice built around your situation.