Maximizing Your 401(k): Advanced Strategies Beyond the Basics

Written By Mike Boroughs, CFA, CPA - President

A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary on a pre-tax or Roth basis. Contributions grow tax-deferred (or tax-free in Roth accounts) and are intended to help build financial security for retirement.

Many corporate professionals participate in these plans, but few maximize their full potential beyond standard contributions. While reaching the annual contribution limit is a strong start, advanced strategies can further enhance retirement savings and long-term financial security. These approaches are especially valuable for high-income earners seeking tax-efficient ways to grow and protect their wealth.

The strategies outlined here focus on optimizing your 401(k) over time—not just through contributions but by leveraging plan features, tax rules, and employer policies. With guidance from a trusted financial advisor, these strategies can strengthen retirement outcomes and align your investment plan with your financial goals.

Strategy #1: Use After-Tax Contributions to Go Beyond Standard Limits

For 2025, the IRS caps employee pre-tax or Roth 401(k) contributions at $23,500 (plus $7,500 in catch-up contributions for those aged 50+). However, some employer plans allow additional after-tax contributions up to the total limit of $70,000. If your plan permits it, contributing after-tax dollars enables you to put more money to work inside your retirement account.

These extra contributions grow tax-deferred and can later be rolled into a Roth IRA for tax-free withdrawals in retirement. According to a Vanguard report, fewer than 15% of eligible participants use after-tax contributions, indicating that many professionals may be overlooking a valuable opportunity for retirement growth.

Strategy #2: Unlock Early Flexibility Through In-Service Withdrawals

Some employer 401(k) plans allow participants to move assets out of the plan while still employed, a feature called in-service withdrawals. This enables professionals to roll funds into an IRA, potentially accessing more investment options or consolidating retirement accounts.

In-service withdrawals can also support tax diversification. By moving funds to a traditional or Roth IRA, investors can better manage taxes over time and prepare for required minimum distributions (RMDs). Review your plan’s rules and discuss the pros and cons with an advisor.

Strategy #3: Leverage the Mega Backdoor Roth for Tax-Free Retirement Growth

The mega backdoor Roth strategy is a powerful tool for high earners. It involves making after-tax contributions to your 401(k) and converting them to a Roth IRA or 401(k). Bypassing Roth IRA income limits, this strategy offers tax-free growth and withdrawals.

Let’s break this down:

Max out your regular 401(k) contributions.
Make additional after-tax contributions (if your plan allows).
Convert those contributions to Roth.

This strategy requires a plan that supports both after-tax contributions and in-plan Roth conversions or rollovers. According to Fidelity, participants leveraging the mega backdoor Roths have contributed tens of thousands more annually than those using traditional methods.

Strategy #4: Maximize Employer Matches the Smart Way

Missing out on employer match contributions is like leaving free money on the table. However, even those receiving full matches may not be optimizing how and when they contribute.

Some plans use a per-pay-period match, meaning if you front-load contributions early in the year, you might miss match dollars later. Others allow true-ups at year-end. Knowing your employer’s rules ensures you receive the full benefit.

While optimizing 401(k) contributions is crucial, match formulas may unintentionally disadvantage lower-paid employees who struggle to contribute consistently. A recent Forbes article highlights how match structures may contribute to inequity in retirement savings plans, particularly when matches are tied closely to contribution percentages rather than fixed dollar amounts. A contribution strategy tailored to your employer’s match policy helps avoid this mistake.

Why Talk to a Financial Advisor?

401(k) strategies can be complex, especially when factoring in after-tax rules, Roth conversions, and employer-specific plan features. A financial advisor can help you determine which strategies apply to your situation and how to implement them while avoiding tax issues.

Fortis Financial Group’s financial and retirement planning services are designed to guide corporate professionals through these decisions. Whether your goal is to increase tax efficiency, consolidate retirement accounts, or optimize employer benefits, expert advice can make a measurable difference.

Here’s how Fortis Financial Group helps professionals take full control of their financial future:

Financial Planning: We offer comprehensive financial planning services beyond budgeting and savings advice. Our approach includes evaluating cash flow, investment strategy, insurance coverage, and tax position. This service provides a complete picture of your financial health and develops a personalized plan that adapts to your goals.
Retirement Planning: We help clients plan for retirement with precision. From choosing the right retirement accounts to forecasting income needs, our retirement planning services include scenario modeling, tax optimization, and strategies for account drawdowns. Our goal is to ensure clients retire with confidence, knowing their savings can sustain their lifestyle.

Take the Next Step Toward Smarter Retirement Planning

Going beyond basic 401(k) contributions isn’t just for financial experts—it’s a practical way for professionals to improve their retirement outlook. You can gain more value from your plan with strategies like after-tax contributions, in-service withdrawals, mega backdoor Roths, and employer match optimization.

Start by reviewing your plan documents, then speak with a financial advisor who can help you map the right approach. The earlier you act, the greater the benefit over time.

Not sure if you’re making the most of your 401(k)? Talk to our financial advisors and unlock strategies to grow your savings faster and smarter.

Fortis Financial Group is a fiduciary wealth management firm based in Bellevue, WA, specializing in comprehensive retirement planning and investment management. We focus on helping our clients reduce stress by knowing when they can securely retire, stop overpaying taxes, and reduce the anxiety of financially navigating life transitions.

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