Americans receive new warning on 401(k)s, IRAs

Millions of Americans default to a single retirement account at their day job and never rethink the strategy as their income grows. For most of their working years, the plan stays roughly the same: contribute to the workplace 401(k), capture some or all of the employer match, and call it good.

But that approach can start to break down once income crosses six figures. Tax exposure changes, savings capacity changes, and the menu of tax-advantaged accounts available to higher earners expands dramatically. Many workers, though, keep running the same playbook at $140,000 that they used at $40,000.

That gap is what CPA, tax attorney, and small business advocate Mark Kohler is warning Americans about in a recent video. His message is aimed squarely at workers earning over $100,000 a year, and he says the most common mistake at that income level isn't failing to save, it's piling everything into one account and never building out from there.

"One of the biggest mistakes I see high earners make is over-concentrating in a single retirement bucket," Kohler said on Tuesday. "They find one that makes sense and then just go all in."

Retirement account mistake Americans are making

Kohler calls it the "one account trap," and he says it's the pattern he sees most often among workers who have crossed into six-figure territory. The mechanics are familiar: a worker gets auto-enrolled in a workplace 401(k), contributes enough to capture some or all of the employer match, and never revisits the strategy as their income climbs. What worked at $40,000 a year quietly becomes the only retirement plan they have at $140,000.

The deeper layer of the problem, according to Kohler, is that a meaningful share of workers don't even capture the match in the first place. He cites estimates that up to 25% of working Americans leave their employer match on the table, calling it "the closest thing to free money in the tax code" and an automatic 100% return on the matched portion of their contributions.

"If you're leaving the match on the table, you are voluntarily taking a pay cut," Kohler said. "25% of Americans don't do it."

That sets up the rest of his hierarchy. Kohler describes his approach as "match and out" - contribute enough to the workplace 401(k) to capture the full match, then route the next savings dollar somewhere with more control.

For most high earners, he says, that next dollar should go into a Roth IRA funded outside the workplace plan, where the worker chooses the investments and the growth compounds tax-free.

More on retirement and personal finance:

• Major 401(k) opportunity Americans don't know about
• AARP sounds alarm on major Social Security problem
• Dave Ramsey bluntly warns Americans on 401(k)s

The IRA side of the warning is just as direct. Kohler says many high earners are wrongly told by their own accountants that they make too much money to contribute to a Roth IRA, and most never bother to verify it. The result, he says, is that one of the most powerful tax-advantaged accounts available to Americans goes untouched by the people who would benefit from it most.

After the Roth IRA, Kohler points to a health savings account as the next bucket, and only then does he circle back to additional pre-tax 401(k) contributions for the tax deduction. The warning isn't that any single account is bad, it's that treating one as the entire plan is the mistake.

"Multiple ways of investing and strategies and accounts will actually make you more powerful and more successful," Kohler said.

2026 contribution limits for HSAs, 401(k)s, Roth IRAs

It's important to reiterate that Kohler's warning isn't about the viability of 401(k)s, which have a contribution limit of $24,500 in 2026, it's about flexibility many Americans are not taking advantage of. Concentrating retirement savings in a single bucket, he argues, strips away the ability to manage taxes later, pull from different accounts in different situations, and optimize growth beyond what an employer may offer.

Kohler says good retirement planning at higher income levels means spreading savings across multiple account types - pre-tax, Roth, HSA, taxable brokerage, and assets outside retirement accounts entirely.

The 2026 Roth IRA contribution limit sits at $7,500 per person, with an additional $1,100 catch-up for those over 50. Money goes in after tax, grows tax-free, and comes out tax-free in retirement. Contributions (not growth) can also be pulled out penalty-free at any age.

The health savings account is where Kohler's framing gets less conventional. He calls the HSA "a Roth on steroids" because of its triple tax advantage: a deduction on the way in, tax-free growth, and tax-free withdrawals for qualified medical expenses. The 2026 family HSA contribution limit is $8,750, with a $1,000 catch-up for those 55 and over.

"Good retirement planning at higher income levels is about balance," Kohler said. "It's about how efficient you can access all this money later in different ways or in different situations."

The foundation, Kohler notes, doesn't change with income. Emergency fund, working out of debt, and consistent monthly saving still apply at $140,000 the same way they apply at $40,000. The shift at six figures is about layering account types on top of that foundation, which becomes a lot more doable as income increases.

Key takeaways for Americans weighing retirement account decisions

• One-account trap is the central warning: Kohler tells high earners that concentrating retirement savings in a single account - usually the workplace 401(k) - is the most common mistake he sees once income crosses $100,000.
• An estimated one in four workers leave employer match on the table: Kohler calls the match "the closest thing to free money in the tax code" and an automatic 100% return on the matched portion of contributions. Skipping it, he says, is the equivalent of voluntarily taking a pay cut.
• Roth IRA earns the next contribution dollar: After capturing the full match, Kohler routes savings into a Roth IRA funded outside the workplace plan. The 2026 contribution limit is $7,500 per person, with a $1,100 catch-up for those 50 and older. Contributions can be pulled out penalty-free at any age if needed.
• HSA functions as a third tax-advantaged bucket: Kohler frames the health savings account as "a Roth on steroids" because of its triple tax advantage. The 2026 family HSA limit is $8,750, with a $1,000 catch-up for those 55 and over.
• Foundation doesn't change with income: Emergency fund, working out of debt, and consistent monthly saving still apply at higher income levels. Kohler says the shift at six figures is about layering account types on top of the basics, not replacing them.

Related: Major 401(k) opportunity Americans don't know about

The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

This story was originally published May 15, 2026 at 3:16 PM.