Non-qualified deferred compensation plans allow highly compensated employees to defer a portion of salary or bonus to a future date, deferring income taxes until distribution.
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Book A Free Strategy Call to UnlockRestricted Stock Units vest as ordinary income. Strategic timing of sales, pairing with charitable contributions, and tax-loss harvesting can significantly reduce the tax impact.
An employee with $300,000 in RSU income who donates $50,000 of appreciated shares to a DAF avoids $11,500 in capital gains and gets a $50,000 deduction — saving $30,000 total.
Consider the 83(b) election for restricted stock (not RSUs). Pair RSU income years with large deductions. Sell immediately at vesting to avoid double taxation risk.
A UNK client — a senior software engineer at a public tech company — had $120,000 in RSUs vesting in 2026. Her company automatically withheld shares to cover taxes at the 22% supplemental rate, but her actual marginal rate was 35%. Uncle Kam identified the underwithholding issue and helped her make estimated tax payments to avoid penalties. More importantly, he modeled the optimal selling strategy: sell shares immediately at vesting to avoid concentration risk and lock in the ordinary income tax basis, then use tax-loss harvesting in her brokerage account to offset the RSU income.
RSUs vesting this year? The default withholding is almost always wrong. Book a call before your next vest date.
Be the Next Win — Book a CallRSUs are taxed as ordinary income at vesting. The fair market value of the shares on the vesting date is included in your W-2 as compensation income, subject to federal income tax, Social Security tax (up to the wage base), and Medicare tax (including the 0.9% Additional Medicare Tax if applicable). Your cost basis in the shares equals the amount included in your W-2.
Most employers withhold at the IRS supplemental wage rate of 22% (or 37% for amounts above $1 million). If your actual marginal tax rate is higher than 22% — which is common for tech workers with significant RSU income — you will owe additional taxes at filing. To avoid underpayment penalties, you should either increase withholding on your regular paycheck or make quarterly estimated tax payments.
From a tax and risk management perspective, selling immediately after vesting is often the right choice. Your cost basis equals the vesting-date value, so there is no tax benefit to holding (you have already paid ordinary income tax on the full value). Holding concentrates your financial exposure to your employer — the same company that employs you. If you want to hold for long-term capital gains treatment, hold for more than 1 year after vesting.
If you hold RSU shares for more than 1 year after vesting, they become long-term capital gain property and can be donated to a charity or DAF at fair market value, avoiding capital gains tax on the appreciation since vesting. If you donate within 1 year of vesting, the deduction is limited to your cost basis (the vesting-date value). Planning the timing of donations around the 1-year holding period can maximize the charitable deduction.
RSUs are a promise to deliver shares at a future date (vesting date) and are taxed as ordinary income at vesting with no upfront cost to the employee. Stock options (ISOs and NSOs) give you the right to purchase shares at a fixed price (the exercise price) and have more complex tax treatment. RSUs are simpler and always have value (as long as the stock price is above zero); options only have value if the stock price exceeds the exercise price.
High-income earners above the Roth IRA income limit (approximately $165,000 single / $246,000 MFJ in 2026) can make a non-deductible traditional IRA contribution and immediately convert it to a Roth IRA.
Contributing $7,000/year to a backdoor Roth starting at age 40 grows to $560,000+ tax-free by retirement at 7% annual return.
The pro-rata rule applies if you have other pre-tax IRA balances — roll them into your employer 401(k) first. File Form 8606 every year.
A UNK client and his spouse both earned W-2 income totaling $420,000 — well above the Roth IRA income limit. They had assumed Roth IRAs were off-limits forever. Uncle Kam introduced the backdoor Roth: each spouse contributed $7,000 to a non-deductible Traditional IRA and immediately converted to a Roth IRA. No tax was due on the conversion (since the contribution was after-tax), and the $14,000 combined contribution will grow completely tax-free for decades.
Think you earn too much for a Roth IRA? Think again. Book a call to set up your backdoor Roth before year-end.
Be the Next Win — Book a CallA backdoor Roth IRA is a two-step process: (1) contribute to a non-deductible Traditional IRA (no income limit), then (2) immediately convert the Traditional IRA to a Roth IRA. Since the contribution was made with after-tax dollars, the conversion is tax-free. This allows high earners to access Roth IRA benefits regardless of income.
Anyone with earned income can use the backdoor Roth strategy, but it is most valuable for individuals who exceed the Roth IRA income limits: approximately $165,000 (single) or $246,000 (married filing jointly) in 2026. Below these limits, you can contribute directly to a Roth IRA without the backdoor process.
Yes. The backdoor Roth IRA is a legal strategy explicitly acknowledged by Congress and the IRS. It has been available since 2010 when income limits on Roth conversions were eliminated. The strategy remains fully available in 2026.
The pro-rata rule requires you to calculate the taxable portion of a Roth conversion based on the ratio of pre-tax IRA funds to total IRA funds. If you have existing pre-tax Traditional IRA money, converting only the non-deductible contribution will trigger taxes on a proportional share. The cleanest backdoor Roth requires having no pre-tax IRA funds.
The backdoor Roth contribution limit is the same as the regular IRA limit: $7,500 per person in 2026 ($8,500 if age 50 or older). A married couple can each do a backdoor Roth for a combined $15,000/year in tax-free contributions.
Executives and highly compensated employees can defer a portion of their compensation to future years, deferring income tax until the funds are received — typically in lower-income retirement years.
Deferring $200,000 in bonus income from a 37% bracket to retirement at a 24% bracket saves $26,000 in taxes on that deferral.
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Book A Free Strategy Call to UnlockIncentive Stock Options qualify for long-term capital gains rates if held correctly, but the spread at exercise is an AMT preference item. Strategic exercise timing minimizes total tax.
An executive with $1M in ISO spread who exercises in a low-income year and holds for 12 months pays 20% long-term rates vs. 37% ordinary income — saving $170,000.
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Book A Free Strategy Call to UnlockQualify as a Real Estate Professional to treat all rental losses as non-passive, allowing unlimited deduction against any income including W-2 wages. Requires 750+ hours per year in real estate activities.
A physician earning $400,000 W-2 whose spouse qualifies as a REPS can deduct $200,000 in rental losses, saving $74,000 in federal taxes.
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Book A Free Strategy Call to UnlockA defined benefit plan allows high-income self-employed individuals and business owners to contribute $200,000–$300,000 per year based on actuarial calculations, far exceeding 401(k) limits.
A physician earning $500,000 contributes $265,000 to a defined benefit plan, saving $98,050 in taxes at a 37% rate — far exceeding the $69,000 Solo 401(k) limit.
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Book A Free Strategy Call to UnlockContribute after-tax dollars to a 401(k) plan (up to the ~$70,000 total 2026 limit minus pre-tax contributions) and convert them to Roth, creating tax-free growth on a much larger balance.
Contributing $46,000 in after-tax 401(k) and converting to Roth annually for 20 years at 7% growth = $1.9M in tax-free retirement assets.
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Book A Free Strategy Call to UnlockMost taxpayers leave the QBI deduction unclaimed — it reduces taxable income by up to 23% starting 2026 under the OBBBA.
HSA contributions offer a triple tax advantage — deductible, tax-free growth, tax-free withdrawals.
Charitable donations of appreciated stock avoid capital gains AND generate a full fair-market-value deduction.
