Too overloaded in company stock. While lower-income workers also can overload their 401(k) plan or other company-sponsored retirement plan with company stock, higher-income executives are especially vulnerable to overloading because of various stock incentives. The recent free-fall of many technology stocks, as well as the stock of some blue chips, is a painful reminder of the risk of putting your retirement future entirely in the hands of employer stock. Consider numerous strategies for diversifying your portfolio beyond company stock, such as using exchange funds or simply selling stock and buying outside stock when the opportunity arises. New Securities and Exchange Commission rules make it easier for inside traders to divest company stock.

Rolling company stock into an IRA. Rolling company stock into an individual retirement account at retirement is a common practice, and sometimes it is the right strategy. However, an often-overlooked stock benefit called net unrealized appreciation sometimes is a better strategy. This involves rolling over any cash and other plan investments into the IRA, but having the company stock distributed directly to you. The advantage is that you will be taxed at ordinary income tax rates at the time of distribution only on the cost basis of the stock when it went into your account, not on its current market value. If you sell the stock now to diversify for retirement, or hold on to it longer, you’ll pay capital gains on the profits earned since the stock was originally issued to you. The result can be a significant tax savings if the stock has appreciated substantially in value.  On the other hand, rolling the stock into an IRA results in paying ordinary income taxes on the entire value of the stock at the time of withdrawal, thus losing the lower capital-gain benefits.

Putting investments in the “wrong” location. Higher-income investors typically maximize annual contributions to their retirement accounts and thus invest remaining retirement funds outside of tax-deferred vehicles. In this situation, conventional wisdom says to put income-generating investments such as bonds inside the tax-deferred vehicles, and stocks and stock mutual funds outside. However, there is some argument for keeping stock mutual funds inside in order to eliminate the tax bite from stock sales by the mutual funds, and use tax-free municipal bonds outside for the fixed-income portion. Munis can be a good choice for investors in high tax brackets.

Overfunding retirement accounts. Some retirement experts are beginning to question whether higher-income workers should heavily fund tax-deferred retirement plans and traditional IRAs. The reason for their concern is that the tax bite at retirement often turns out to be higher than many higher-income retirees might anticipate. One strategy might be to invest in your 401(k) up to the matching limit from your employer, then consider putting funds into nondividend growth stocks or tax-efficient mutual funds, where annual taxes would be low and you’ll pay the much lower long-term capital gains tax at retirement. Talk to an investment tax expert to explore your options.

Withdrawing from the wrong accounts. Standard advice is to withdraw from taxable accounts first to pay for retirement, allowing tax-deferred accounts to continue to grow (until age 70 1/2, when minimum withdrawals must begin). However, this may not always be the best option for higher-income individuals. Perhaps your taxable investments have accumulated large capital gains. You might prefer to leave those assets to your heirs because they’ll receive them with a step-up in basis, which eliminates the capital-gains tax (though not estate taxes).

Depending on a business for retirement. It’s common for small-business owners to depend on the eventual sale or family succession of their business to fund retirement. But this carries the same risk as overloading on company stock. Setting up a company retirement plan where you can invest in outside assets is a good start. Many Certified Financial Planner practitioners also advise small-business owners to diversify investments outside of the same industry and the local real estate market.