NO WAY You'll Be In A Lower Tax Bracket If You Keep Funding 401Ks & IRAs
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- čas přidán 8. 07. 2024
- Let me ask you a question: if I was holding a pie that represented all of your wealth and I handed you a knife and with this knife, you get to carve the slice that goes to the Internal Revenue Service. How big would you make that slice?
I hope you said some form of "I wouldn't give them sh*t!"
If so, then are you currently set up that way? Do you have control of the darn knife? Yes or no?
If not, why?
Consider a teeter-totter. On this is sitting one kid...on one side. It's pointless. That kid wants someone to come along and apply a little pressure to the other side.
Your assets are no different. I'm willing to bet that all of your assets are sitting on one side of the teeter-totter that allows the government control of the knife. How much will you pay in taxes on those funds? What are the rules? When will you have to pay them? Can they change those rules? Can they change the tax amount?
You have no control.
The strategic move is to adjust some of your assets so that you have pressure on the other side...the tax-exempt side. The side where you completely control the knife.
It's really simple. It comes down to a 20-minute conversation to learn exactly how it's possible and how it relates to you.
Go to www.financialcaffeine.com for your free audiobook, a free video presentation, and the ability to schedule a private 1-on-1 with me.
#money #taxes #401k #ira
Luckily, my company gives us a Roth 401K option.
Same.
As someone working and living in California, who will be retiring in Texas, you are wrong sir.
@@King_Lewyy thanks for the comment. I have a client who lives in California with a spendable income of $420k and pays zero federal income tax and zero state income tax and even qualifies for California food stamps. So, where I appreciate your words, I’m not wrong. It sounds like your plan is to move in order to be in a lower tax bracket. That’s fine and a good strategy but it’s not necessary if certain steps were taken.
Tax harvesting from retirement accounts, especially during Required Minimum Distributions (RMDs), can feel like a heavy burden. After living a middle-class lifestyle and investing pretax dollars for 40 years, I understand the benefits of tax deferral and the exponential growth it brought. While the tax implications are significant, the true challenge lies in my children's inheritance. They must empty these accounts within ten years, leading to substantial tax liabilities. Instead of a steady income for life, they'll face a decade of high income and much higher taxes. Of course, my children are maximizing their Roth IRAs too, which will hopefully provide them with tax-free growth and withdrawals to offset some of the tax burdens from the inherited accounts. Though it's not ideal, the overall growth and planning still brought substantial financial security.
Thanks for the comment. Congratulations on your successful retirement! I agree with you, I’d like to add that if these accounts were truly designed for your benefit then all those rules wouldn’t be in place to ensure the government remains in total control. They ALWAYS get more than they allowed you to defer. But again, there are benefits and that’s what’s enticing.
What are you suggesting? I heard a lot about future taxes and nothing about hiw to change it lol?
Tax-exempt is key. It’s the only way to ensure you aren’t tax-harvested. Roths and insurance contracts are the only two assets permitted in all of tax code that create tax-exempt use and also no means testing. There are two systems of taxation in our country: one for the informed and one for the uninformed. Those who are informed don’t just build a diverse portfolio but they also build a diverse tax portfolio to ensure they have more control.
@@FinancialCaffeine ah ok your an insurance salesman, got it.
@@coreyburke3493 who cares what they call it if it provides the results you want? It's the tax man who controls your shit or its' you...your choice.
@@coreyburke3493 I was just going to say the same thing. Guy must be selling insurance. And, there it is.
@@freedomring3022 thanks for the comment but I’m surprised by people who are more concerned about the name of the product than they are about what it can do for them. I had to have a “360 Spinal Fusion”, I could give two shits what the surgeon called it, I just wanted to be fixed!
Yes way
The goal shouldn’t be to be in a lower tax bracket 😂😂😂
@@Playingwithproxies that’s exactly right! But, most people have all their money positioned in such a way that will allow the government to harvest them exactly as they say they will.
I hate titles like this. Most/ Many 401k plans have a Roth savings plan and All people can open at Roth IRA. Roth= 0% tax rates
@@mikehenkes thanks for your comment. Sorry my title isn’t something you prefer. You’re right about 0% tax on a Roth; however, there are very few people, if any, who have all of their money sitting on the 0% tax side. If one invests in accounts that government owns and controls then the government owns and controls the distribution.
@@FinancialCaffeine "If one invests in accounts that government owns and controls then the government owns and controls the distribution." This could be said for any investment plan. The can change/ update the tax and withdrawal rules for any type of an account...
@@mikehenkes contract law is a little different than tax law. But, you’re right as a whole; however, could you imagine if they made loans taxable? That’s not going to happen and that’s how you protect against their control.
Roth accounts are exempt from RMDs.
Correct. Distributions from a Roth do generate a 1099R though which I believe will eventually be used against you to means test your Social Security like the others.
@@FinancialCaffeine Means testing will never happen. It’s political suicide and old folks vote.
@@FinancialCaffeine that’s only speculation right now.
@@ShawnPatton-rm2hv That's true. But, the government owns and controls ALL the rules with a Roth. For now, they're pretty good, but that can change. It is interesting to me though that they put an income limit and a contribution limit on them. If you think about it, they don't want you to have "too much" money in the tax-free bucket. What if you couldn't contribute $500,000 a year into a Roth? That would be good, right? Anyway, I believe control is the key and if we have control then we can navigate the tax system more efficiently.
@@FinancialCaffeine If Social Security is a meaningful part of your retirement plan you didn't save enough in your Roth IRA, spousal Roth IRA, and Roth 401k starting at age 20 or so.