CPA EXPLAINS: Optimal Order Of Investing For High Income Earners

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[@sskkant]

HSA is only 8300x1 ( for full family ) .. it can’t be x2 as described … right?

[@jdudleyh]

The thing that wasn't obvious to me 20 years ago about ROTH IRAs: The investment growth (earnings) in a ROTH are tax-free! So if your investments grow 10x, 100x, 1000x - you won't pay a dime in taxes on that growth. You pay taxes only on what you put it initially - and you pay it then. And of course the other big advantage with ROTH IRAs is you are never required to take minimum distributions from them; whereas the government will require you to withdraw a percentage from other retirement accounts after age 72. Having the options to choose what, when and how much you pull out is very important to minimizing tax payments.

[@QuasisLogic007]

The HSA is only up to the family contribution limit, correct? Since the taxpayer and spouse are treated as one unit as per IRS, its only $8,300. NOT $8300 x2?

[@stankemp6333]

Correct - I believe they spoke to quickly there

[@KingParzival00]

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[@E-XODIA]

I love the HSA !!!! A lot of people has the lack of knowledge about the power of this account !!! I just began transferring all my raise from last year to the HSA account I have with my employer and open another HSA with my private brokerage Fidelity and transfer from my old account the money I had saved matching the total amount I would get from my raise and boom now that raise has earning 79% rate of return thanks to NVDIA and PLTR plus the 22% saved from taxes I should paid if I would not have had that great play !!

[@daoau2981]

Thank you so much! Very clear and well explained 👍 After hearing all of this, I want to start earning more and saving more

[@mikebarnes2294]

HSA qualified expenses include the Medicare Part B premium - So if like most people you will end up on Medicare you will have at least some qualified expenses to reimburse yourself from your HSA during your retirement.

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Completely unrelated…please make an app for your customers. I do a lot from my phone and your portal isn’t phone friendly. Thank you! Love the show!

[@PeaceandQuiet4]

I think of you're just starting out, the priority is different. So if you're starting out with lower income, and your employer doesn't have a match. 1. HSA 2. Roth IRA 3. Deterred 401k.

[@hitechrr]

I'm already retired and 69 years old. I take in $130000 a year but I don't work. I have been moving from my IRA to my Roth. I get hit with taxes.

[@SeanJohns-ze8ie]

I've been trying to maximize my retirement contributions, but I'm not sure if I'm doing it efficiently.

[@lhpeterparker]

Many of these don't apply to federal employees in the TSP.

[@dshep832]

Great information and thanks for sharing. Does the Employee Aftertax Contribution apply to civilian government employees?

[@tomnovs1031]

When guys like Matt say you need $2.5M to retire is that for a single person and therefore 1.5x or 2x that amount for a married couple?

[@jdudleyh]

I forget where they came up with that number. It really depends on each household's situation - like monthly costs throughout retirement, income sources, when you retire, what kinds of retirement accounts you have, how well your investments perform, what the economy is doing throughout retirement, how good your health is, ... so many factors. I would think for an average or median estimation that is extremely high. Most recommendations are 6-8 times your annual salary for age 50+, 6-11 times your annual salary for 60+. So $2.5M is 10x $250k household salary. The median household income in 2023 was $80k.

[@vasunseeker]

I’m right on the fence with hitting the phase out for Roth contributions. How do I estimate MAGI in advance so I can contribute to my Roth in Jan (and enjoy compounding all year), instead of waiting til end of year?

[@douglashardiman594]

How does this work if you are retired 54 yrs old out on disability with a pension. On Medicare and my wife a realtor on 1099 income. How does Roth and HSA work? My wife is on my health insurance my job provides, in addition my health insurance is considered my secondary insurance

[@MattFreeman-s5c]

What happened to the after tax brokerage account ?

[@theincredibleediblekrausewich]

If you make after tax contributions to a 401K, won't you get taxed on that money again when withdrawing?

[@NYC1025]

On that money and the growth

[@hornbaker]

Any money you put in After-tax can be withdrawn at any time tax-free. The gains are tax-deferred and incurred a penalty for early withdrawal. The key is… After-tax contributions to 401k are eligible for immediate conversion to Roth, which is a non-taxable event and makes the gains tax-free forever. You want to do this step promptly.

[@MattFreeman-s5c]

Unless it’s a Roth 401k, there is no advantage in contributing to an employee after tax retirement account vs doing an after tax brokerage account. Both are after tax contributions, which means no tax on the contributions, and any growth will be taxed at withdrawals. Only difference is there is no restriction on when you can withdraw in a brokerage account.

[@hornbaker]

@@MattFreeman-s5c You contribute to After-tax 401k precisely *because* you can immediately convert it to Roth and make the gains tax-free.

[@mikebarnes2294]

@@hornbaker or at the very least when you leave the company - and you expect to be doing that within the next few years.

[@bobby_ewan]

Sweet spot, spousal back door Roth lol

[@72tfox]

HSA has income caps too and my employer healthcare is below the high deductible plan. Is there anyway to get around these?

[@mikebarnes2294]

HSA does NOT have income caps, but you have to have the right deductible level on your health insurance in order to be eligible.

[@KidCity1985]

Real estate