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R etirement planning has long centered on a simple idea: save now, spend later. But for today's affluent and high-net-worth individuals, that equation is more nuanced. It's no longer just about how much you save, it's also about how those savings are taxed when you use them. That is where tax diversification comes in: a strategy built around holding retirement assets across taxable, tax-deferred and tax-free accounts to create greater flexibility later in life. Moving beyond a one-account mindset Historically, many investors concentrated retirement savings in pre- tax vehicles like traditional 401(k)s and IRAs. Those accounts can provide valuable upfront tax benefits during peak earning years, but withdrawals in retirement are generally taxed as ordinary income. Roth accounts sit at the other end of the spectrum: funded with after-tax dollars but designed to provide tax-free growth and withdrawals. 1 Traditional and Roth retirement accounts usually penalize distributions before age 59.5. 2 Taxable investment accounts add a third category, with taxes applied to dividends, interest and realized gains along the way, but no age-based dis- tribution penalties. Taxable accounts can also utilize preferential long-term capital gains rates. 3 Together, those different structures reinforce a simple truth: not all retirement dollars are created equal. "Tax diversification is ultimately about maintaining control," says Ashley Weeks, Wealth Strategist at TD Wealth®. "If all of your assets are concentrated in one tax category, you may have fewer options when it comes to managing income and tax exposure in retirement." Why flexibility matters in retirement For high-net-worth investors, that flexibility can matter in several ways. A mix of taxable, tax-deferred and tax-free Roth accounts can make it easier to manage ordinary income, capital gains, Medicare premium thresholds and other income-sensitive planning decisions. 4 With multiple tax buckets available, retirees can be more deliberate about where income comes from in a given year rather than being forced to accept the tax implications of a single account type. The tradeoffs of tax deferral Tax-deferred accounts remain a cornerstone of retirement plan- ning, but they can also create complexity over time. Required minimum distributions can push taxable income higher whether or not the retiree needs the cash flow. The impact can be even more pronounced for married couples. Many plan around joint filing thresholds, but when one spouse passes away, the surviving spouse often moves into single-filer tax brackets while maintaining similar income levels — sometimes driven by ongoing RMDs. This 'widow's penalty' can lead to a higher effective tax burden at a difficult time. 5 "Having a mix of taxable, tax-deferred and tax-free assets can help investors adapt as their circumstances change," Weeks explains. "It allows for more thoughtful decisions about which accounts to draw from and when — especially during periods of transition." Planning with purpose For affluent investors, retirement is not static. It can span decades and include changing income needs, market conditions and tax policy. Tax diversification supports a more dynamic planning approach by giving investors more options as circumstances evolve. Rather than relying heavily on one account type, investors can position themselves to draw from different sources depending on what makes the most sense at the time. A regional lens: Maine In Maine, tax diversification is less about chasing tax advantages and more about managing income. Those age 65 and older account for nearly one-quarter of Maine's population, underscoring the importance of strategies that help retirees maintain flexibility as their financial needs evolve. 6 For many affluent households across Maine, retirement planning also takes place against a unique economic backdrop. While living costs vary across the state, housing remains a significant consideration, making tax-efficient income strategies increasingly important for retirees seeking to preserve purchasing power over the long term. 7 At the same time, Maine exempts Social Security benefits from state income tax, while other retirement income may still be subject to state and federal taxation. 8 IRS data also show that retirement-related income is widely distributed across Maine communities, reinforcing the value of having multiple sources of retirement assets available. 9 In Maine, tax diversification can help investors navigate changing income needs, manage tax exposure and make more informed decisions about where income is sourced each year. Looking ahead As high-net-worth investors refine their retirement strategies, the focus is shifting beyond accumulation to efficiency. Tax divers- ification offers a way to bring more intention to how wealth is ultimately used — helping investors manage risk, adapt to life changes and preserve more of what they have built. Because in retirement, it's not just what you've saved — it's what you're able to keep. S P O N S O R E D C O N T E N T Why High-Net-Worth Investors Are Rethinking Retirement Taxes TD Wealth® is a business of TD Bank N.A. (TD Bank). Banking, investment management and fiduciary services are available through TD Bank. Securities and investment advisory services are available through TD Private Client Wealth LLC (TDPCW), a US Securities and Exchange Commission registered investment adviser and broker-dealer and member of FINRA/SIPC. Insurance products and services are offered through TD Wealth Management Services Inc., ("TDWMSI"), a licensed insurance provider. TD Bank, TDPCW and TDWMSI are affiliated. TD Bank and its affiliates do not provide legal, tax or accounting advice. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission. All rights reserved. ©2026, TD Bank, N.A and/or its affiliates. All rights reserved. The TD logo and other TD trademarks are owned by The Toronto-Dominion Bank or its affiliates and are used under license. TD Bank, N.A., Member FDIC SOURCES: 1. IRS, "Roth Comparison Chart," https://www.irs.gov/retirement-plans/roth-comparison-chart. 2. IRS, "Retirement Topics: Tax on Early Distributions," https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions. 3. IRS, "Topic No. 409: Capital Gains and Losses," https://www.irs.gov/taxtopics/tc409. 4. Social Security Administration, "IRMAA Sliding Scale Tables," https://secure.ssa.gov/apps10/poms.nsf/lnx/0601101020. 5. Stanford Center on Longevity, "The Widow Tax," https://longevity.stanford.edu/the-widow-tax/. 6. U.S. Census Bureau, "QuickFacts: Maine," https://www.census.gov/quickfacts/fact/table/ME/AGE295224. 7. U.S. Census Bureau, "QuickFacts: Maine," https://www.census.gov/quickfacts/fact/table/ME/AGE295224; Federal Reserve Bank of St. Louis, "Regional Price Parities: All Items for Maine," sourced from U.S. Bureau of Economic Analysis, https://fred.stlouisfed.org/data/MERPPALL. 8. Maine Revenue Services, "Schedule 1S Form 1040ME 2025," https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_1040me_sch_1s_fillable.pdf; Maine Revenue Services, "2026 Individual Income Tax Rates," https://www.maine.gov/revenue/sites/maine.gov.revenue/files/2026-05/ind_tax_rate_sched_2026_rev.pdf. 9. IRS, "SOI Tax Stats - County Data," https://www.irs.gov/statistics/soi-tax-stats-county-data. By Lynn Sullivan, Wealth Market President — New England, TD Wealth ®

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