I was going to post that you forgot the HSA, but you dropped that one in at the end in the form of a question! I also think a HECM Line of Credit is a great source of tax free income.
100% agree this should be the default for everyone, For high earners, that pay a step tax % today I think we can even optimize a bit more , so lets say that to get to the 25k RMD you need to put 6k of your own money in 401k IRA + get 6K from your employer (this depend of course on your job + age etc, everyone will have different numbers here) and lets say your tax bracket today is 40% (rounded) if you implement the power of zero across all your other courses of income/saving / investment, and you plan to not have any taxable income at retirement apart from that 401k IRA, then with the above situation you will pay zero tax, but further optimization is possible (with a risk) lets decide (each will do its risk calculation) that taxes will double by that time, i.e if I pay 40% now I will pay 80% , and if now taxable income of up to 40k is 12% , then by that time it will be 24% adjusted for inflation (add the impact on social security) then if my current tax bracket is 40% and with an income of 40K (above the 25K from previously) I will only pay 24% (in the extreme situation of taxes double) then I can contribute more to tax differed tools (like 401K IRA if you believe in that tool) up to the point that my RMD will be 40k (+25k ) right ? or am I missing something?
Tax rates will rise because of democrat's infinite spending fantasy. But it is totally possible that they will intoduce new taxes on these previously tax paid retirement investments.
@@Jewtopia79 Muni bonds from your home state should be tax-free. But muni bond ETFs will hold bonds from many states, and your state could tax the income from those bonds from outside of your state. In MUB for example, the first four holdings in weight were from California, New York, Georgia, and Texas. So muni ETF income would be "partially" state tax free. There are state specific muni ETFs. Hope that helps...
Can you talk about the possible penalties on withdrawals from the Roth IRA, given the differences betwwen 1)contributions, 2) conversions, and 3) earnings. Please factor in the holding periods and the age of ROTH IRA owner. Thanks.
Pretty sure all matches have to be in tax deferred account versus a "Roth match". SO your matches by your employer are put in a tax deferred not a tax free match account.
@@scottlouis1064 have some positive news for you, SECURE 2.0 Section 604 - if this bill was indeed passed in 2022, you can find the text here (604 is on pdf p. 18): www.help.senate.gov/imo/media/doc/secure_20sectionbysection.pdf plan sponsor’s discretion to allow post-tax i.e. Roth matching
Not sure exactly what portion of the video you’re referring to but generally I recommend Roth IRAs, Roth 401(k)s, Roth Conversions and cash value life insurance.
The LIRP is my favorite because of the high amounts of premium contributions and protection of principle as well as it’s liquidity and annual lock in & reset features. Truly a unique wealth creation tool.
I was going to post that you forgot the HSA, but you dropped that one in at the end in the form of a question!
I also think a HECM Line of Credit is a great source of tax free income.
Absolutely.
I series and EE series bonds when saving for future educational expenses.
Nice.
I just bought the max I series for my wife an myself. Good call.
100% agree this should be the default for everyone,
For high earners, that pay a step tax % today I think we can even optimize a bit more , so lets say that to get to the 25k RMD you need to put 6k of your own money in 401k IRA + get 6K from your employer (this depend of course on your job + age etc, everyone will have different numbers here) and lets say your tax bracket today is 40% (rounded)
if you implement the power of zero across all your other courses of income/saving / investment, and you plan to not have any taxable income at retirement apart from that 401k IRA, then with the above situation you will pay zero tax, but further optimization is possible (with a risk)
lets decide (each will do its risk calculation) that taxes will double by that time, i.e if I pay 40% now I will pay 80% , and if now taxable income of up to 40k is 12% , then by that time it will be 24% adjusted for inflation (add the impact on social security)
then if my current tax bracket is 40% and with an income of 40K (above the 25K from previously) I will only pay 24% (in the extreme situation of taxes double) then I can contribute more to tax differed tools (like 401K IRA if you believe in that tool) up to the point that my RMD will be 40k (+25k ) right ? or am I missing something?
I think I understand what you’re driving at and if so it’s sound.
One problem with the standard deduction is that it is likely going down in 2026 and beyond.
But they’re bringing back the personal exemptions.
@@DavidMcKnight I agree, I just wouldn't count on $26k or more.
Why don’t these videos have hundreds of thousands of views?! It’s such valuable info!
Thanks Christopher.
Probably people don't know about this site
Tax rates will rise because of democrat's infinite spending fantasy. But it is totally possible that they will intoduce new taxes on these previously tax paid retirement investments.
HSA? Thanks David.
Got it!
HSA! I love this concept of tax-deduction up front, tax-deferred growth, and tax-free withdrawals :)
Yes very solid. Just a few strings attached if spent on non medial expenses.
RMD.. never heard of it please give me more information
Are you trolling?
What about investing in municipal bonds?
It’s ok. It does count as provisional income so could end up causing your SS to be taxed.
@@DavidMcKnight Hi David, is investing in municipal bonds the same as investing in a municipal bond ETF? For example, MUB or VTEB.
@@Jewtopia79 Muni bonds from your home state should be tax-free. But muni bond ETFs will hold bonds from many states, and your state could tax the income from those bonds from outside of your state. In MUB for example, the first four holdings in weight were from California, New York, Georgia, and Texas. So muni ETF income would be "partially" state tax free. There are state specific muni ETFs.
Hope that helps...
Can you talk about the possible penalties on withdrawals from the Roth IRA, given the differences betwwen 1)contributions, 2) conversions, and 3) earnings. Please factor in the holding periods and the age of ROTH IRA owner. Thanks.
I did a video on this a few months back where I break it all down. Check out my channel.
Roth 401(k) with a high dollar-for-dollar Roth match is the best.
I like it!
Pretty sure all matches have to be in tax deferred account versus a "Roth match". SO your matches by your employer are put in a tax deferred not a tax free match account.
@@scottlouis1064 have some positive news for you, SECURE 2.0 Section 604 - if this bill was indeed passed in 2022, you can find the text here (604 is on pdf p. 18): www.help.senate.gov/imo/media/doc/secure_20sectionbysection.pdf plan sponsor’s discretion to allow post-tax i.e. Roth matching
Most people who have saved all their lives into pretax retirement accounts will never be below the standard deduction on RMDs.
Not without doing a Roth conversion.
At the present time, I like the Roth coversion best. I'm hoping to get the RMD tax free soon!
Nice!
Health Savings Account how did you forget that one
I’ve done other videos on it. It has some strings attached and not everyone qualifies.
what is the second tax free income investment with strings attached??
Not sure exactly what portion of the video you’re referring to but generally I recommend Roth IRAs, Roth 401(k)s, Roth Conversions and cash value life insurance.
Can I convert my sep Ira to a Roth ira
Sure can.
Mike beat me to it. Keep up the great work DM!
Thanks!
Is it too late to begin a roth 401k at 55?
Sure isn’t!
@@DavidMcKnight I've been told that I don't have enough time
@@lionmangolf hogwash! You have plenty of time. Plus, tax rates when you retire are likely to be much higher than they are today. That’s what matters.
The LIRP is my favorite because of the high amounts of premium contributions and protection of principle as well as it’s liquidity and annual lock in & reset features. Truly a unique wealth creation tool.
Great points!