Blake is a 40-something entrepreneur whose company is thriving. Like many business owners, he’s worked tirelessly to grow his enterprise, reinvest profits, and build something that supports his family and employees. But success comes with a tax bill—and for Blake, that bill was growing faster than his ability to shelter income.

Early on, Blake thought he was “maxing out” his opportunities by contributing the maximum to his 401(k). On paper, it felt like he was doing everything right. In reality, he was just scratching the surface. For entrepreneurs and high-income business owners, a 401(k) is often just the starting line.

Pre-Tax Opportunities Beyond the 401(k)

When Blake came to us, we sat down with his CPA and walked through his income picture in detail. What we found was a mismatch between his tax liability and his savings vehicles. The 401(k) cap—valuable as it is—barely moved the needle relative to his taxable income.

That’s where additional pre-tax opportunities came in:

• Defined Benefit Plan: By establishing a defined benefit plan, Blake could make six-figure contributions that were fully deductible. This gave him the ability to reduce taxable income in the present while rapidly building retirement assets.
• Cash Balance Pension: Layered on top of the 401(k), a cash balance plan allowed even greater contributions with more flexibility. Unlike a traditional pension, Blake could design it to fit his business cash flow while still locking in large deductions.
• Spousal IRA Contributions: Blake’s spouse didn’t work in the business directly, but we coordinated with his CPA to set up deductible IRA contributions in her name. It’s a small piece compared to the pension plans, but the incremental savings added up—and more importantly, it spread retirement assets across both spouses.

With each move, the result wasn’t just a lower current tax bill. It was accelerated wealth building without adding risk. Blake could redirect what would have gone to taxes into assets that compound for his future.

For him, integration meant not leaving opportunities on the table. His CPA handled the compliance and filings; we aligned his long-term growth goals with his business realities.

Asset Location That Works Harder

The second piece of Blake’s strategy was structural. When he first came to us, his investments sat in a single brokerage account. It was simple—but not tax-smart. Every dollar was treated the same, regardless of whether it generated interest, dividends, or long-term gains.

Today, his portfolio looks very different:

• Income-producing bonds and REITs sit inside retirement accounts, where the steady stream of interest is sheltered from current taxation.
• Long-term growth equities live in taxable accounts, where favorable capital gains rates apply and losses can be harvested if markets dip.
• Roth accounts hold the investments with the greatest growth potential, locking in tax-free upside for decades to come.

This is what we call asset location—putting the right assets in the right accounts for maximum after-tax efficiency. It doesn’t change Blake’s overall risk profile or return expectations, but it does change his bottom line. Over decades, that structural alignment translates into significantly higher after-tax wealth.

Why This Matters for Business Owners

Business owners like Blake have a unique advantage: flexibility. Unlike W-2 employees, they control when and how income is realized, how benefits are structured, and how retirement plans are designed. But that flexibility is only valuable if it’s used deliberately.

Without coordination, many owners default to the basics—contribute to a 401(k), maybe fund an IRA, and move on. The problem? They miss out on strategies that could defer hundreds of thousands of dollars in taxes, create balance between pre-tax and Roth assets, and build a more resilient financial foundation for both their family and their business.

By integrating his financial plan with his CPA’s tax expertise, Blake transformed tax planning from a year-end headache into a long-term strategy.

The Next Phase: From Reactive to Proactive

At Members’ Wealth, we believe tax planning should never feel like a one-time event. Yet for many, it still plays out that way: scramble in March, file in April, and move on. For families with significant assets, business ownership, or complex income streams, that approach leaves too much uncertainty—and often too much money on the table.

The truth is, taxes touch nearly every financial decision: how much you save, when you withdraw, where you invest, and even how you structure gifts to the next generation. That’s why we don’t just coordinate with CPAs at year-end; we collaborate throughout the year, aligning strategies so clients like Blake don’t just file returns—they shape outcomes.

For Blake, the payoff has been more than just a smaller tax bill. He’s built a smarter system for saving, investing, and compounding his wealth. His business continues to thrive, but now his personal financial picture is just as intentional as his company’s growth.

That’s the kind of planning that helps entrepreneurs move confidently into their next phase—not just as business owners, but as wealth builders for themselves and their families

Ready to move from reactive to proactive tax planning?
Let’s explore how coordinated strategies can help you reduce taxes and build lasting wealth.

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon.

These examples are for illustrative purposes only and do not represent actual client experiences. Individual results will vary based on personal financial circumstances and tax laws.

About the Author – Stu Caplan, CFP®

Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.

The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.

Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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Investment strategies, including rebalancing, do not guarantee improved performance and involve risk, including potential loss of principal. Past performance does not guarantee future results.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. 

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

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