Latest / Money In Motion with Klaas Financial / Contributing to Your 401k Plan

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Contributing to Your 401k Plan · Money In Motion with Klaas Financial

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Speaker 1: And our phone lines they are open for you right now.
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Speaker 2: If you have questions for our retirement planning professionals from
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Speaker 2: Klass Financial love to get you on the air six
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Speaker 2: oh eight three two one thirteen ten. That's six oh
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Speaker 2: eight three two one thirteen ten. If you've got a
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Speaker 2: question about uh about retirement retirement planning, we've got the
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Speaker 2: go to guys with us this morning. Joined this week
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Speaker 2: by CJ. Closs and Eric Schwartz. As mentioned, they come
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Speaker 2: to us from Class Financial. The website for Coss Financial,
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Speaker 2: it's just that Cossfinancial dot com. That's k l Aasfinancial
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Speaker 2: dot com. Telph number six oh eight four four two
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Speaker 2: five six three seven.
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Speaker 1: No charge for that.
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Speaker 2: Initial gets to know your appointment tech Loss Financial it
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Speaker 2: will be complimentary to you again their number six oh
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Speaker 2: eight four four two five six three seven And to
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Speaker 2: join us this morning on the program. Regular numbers to
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Speaker 2: get on the air six oh eight three two one
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Speaker 2: thirteen ten. That's six oh eight three two one thirteen ten.
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Speaker 2: As mentioned, joining us this morning, c J. Looss and
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Speaker 2: Eric Schwartz.
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Speaker 1: CJ. How you doing this morning?
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Speaker 3: I'm doing great. Happy Thursday, Sean.
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Speaker 1: Happy Thursday. Do you do great? To talk with you. CJ. Eric.
1:00
Speaker 1: How have you been?
1:01
Speaker 4: I'm doing great, Sean?
1:02
Speaker 1: Did you get vacation time? Have you been off the
1:04
Speaker 1: past few weeks? Haven't you? You're lucky.
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Speaker 4: Yeah, I was off last week and you you went
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Speaker 4: on with the show without me, so I guess, I
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Speaker 4: guess it can go.
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Speaker 1: It wasn't the same. It wasn't the same.
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Speaker 2: It's great to have you both along. And we've got
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Speaker 2: a great conversation ahead. As I look at the calendar
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Speaker 2: right now. Yeah, we're mid year and we're gonna be
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Speaker 2: talking near enough to mid year, and we're be talking
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Speaker 2: about midyear tax hacks, and we're gonna get to that
1:25
Speaker 2: just a moment. A couple of great things about the program.
1:27
Speaker 2: I mentioned the phone lines. They are open for you
1:29
Speaker 2: at six eight three two one thirteen ten. That's six
1:32
Speaker 2: eight three two one thirteen ten, if you.
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Speaker 1: Like to join us.
1:34
Speaker 2: Another great feature of the program, it's the Class Quiz
1:37
Speaker 2: Question the week. It's your chance to win a fantastic prize.
1:40
Speaker 2: This week, our friends from Class Financial have provided a
1:42
Speaker 2: twenty five dollars gift card to Texas Roadhouse. Tell you
1:45
Speaker 2: a little bit more later on the program on how
1:47
Speaker 2: you can win that little tip though, listen closer to
1:50
Speaker 2: the program not only get a lot of great information,
1:52
Speaker 2: but oftentimes just about every time both the question and
1:55
Speaker 2: answer come up each week during the program, and before
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Speaker 2: we start talking about midyear taxes and as we kind
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Speaker 2: of work our way down the stretch, let's actually look
2:04
Speaker 2: back at last week's program, get the Closs Quiz question
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Speaker 2: week question and answer there as well.
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Speaker 4: Yes, our question last week was a true or false
2:13
Speaker 4: question and it was Diversification is about spreading your investments
2:18
Speaker 4: across different asset types to reduce risk. Our winner from
2:22
Speaker 4: last week was Jeff from Sun Prairie, who knew that
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Speaker 4: the answer to that was true. So congratulations to Jeff,
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Speaker 4: and thanks to everybody for listening.
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Speaker 2: Great work Jeff, and you two can be like Jeff
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Speaker 2: by simply paying attention to the program and being the
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Speaker 2: first caller.
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Speaker 1: Again. We'll tell you how you can do that a
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Speaker 1: little bit later on in the program.
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Speaker 2: As mentioned, we're going to be talking about taxas and
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Speaker 2: some considerations for the midyear stretch.
2:43
Speaker 1: What do we need to know? CJ.
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Speaker 3: Yeah, So today's show is all about taxes and making
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Speaker 3: sure that you're on track to have a successful tax
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Speaker 3: filing season. Hopefully without too many surprises. As Eric can attest,
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Speaker 3: all too often our clients and general public when we
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Speaker 3: meet with them, wait too long to start asking questions
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Speaker 3: about tax optimization strategies. Often, by the time people start
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Speaker 3: asking questions about these tax mitigation strategies, it's often too
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Speaker 3: late in the calendar year to make any affordable or
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Speaker 3: significant solutions or i should say adjustments. Therefore, since we're
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Speaker 3: nearing the middle of twenty twenty five, which is kind
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Speaker 3: of crazy to say, we thought we should slow down
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Speaker 3: and dedicate a show to some mid year tax strategies
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Speaker 3: and questions you should be asking yourself. So here are
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Speaker 3: some of those questions and strategies. Starting with questions, are
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Speaker 3: you withholding appropriately from your income sources? Have you had
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Speaker 3: any significant life changes or do you anticipate any significant
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Speaker 3: life changes before year end that could impact the amount
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Speaker 3: you should be withholding from your working income. Do you
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Speaker 3: owever get a refund from last year from the Feds
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Speaker 3: or the state? Have you made any adjustments this year
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Speaker 3: to your account for the prior years under or over withholding?
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Speaker 3: So these are just some high level questions for you
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Speaker 3: to be thinking about as it relates to kind of
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Speaker 3: mid year pauses. We often find that individuals or couples
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Speaker 3: are so excited to be done filing their income taxes
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Speaker 3: in March or April that they fail to make any
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Speaker 3: meaningful adjustments the following year to avoid any under or
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Speaker 3: over withholding. So now is a great time to pause
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Speaker 3: and ask yourself if you made any of these adjustments
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Speaker 3: to your withholdings this year to compensate for last year's problems,
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Speaker 3: and if not, you should even if your taxes were
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Speaker 3: perfect last year. So some people go, yeah, yeah, I
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Speaker 3: was fine. I only owed you five hundred dollars or
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Speaker 3: I got one thousand dollars back, so I'm fine, Okay,
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Speaker 3: we'll stick with me. Even if your taxes were perfect
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Speaker 3: last year, you should still ask yourself if there's any
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Speaker 3: significant changes or differences about this year compared to last year.
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Speaker 3: Here's some exam simples of significant changes that you might
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Speaker 3: want to consider. Number one, did you receive a significant
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Speaker 3: pay raise or decline? Are you expecting or have you
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Speaker 3: received a large bonus this year? Are you for the
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Speaker 3: first time vesting some non qualified stock options or restricted
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Speaker 3: stock units? Were there any changes in the ways that
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Speaker 3: you're compensated, like moving from w two to ten ninety
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Speaker 3: nine compensation. Are you starting to generate some income from
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Speaker 3: an online business or like a side hustle. Now, well,
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Speaker 3: this is not certainly not a comprehensive list of these
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Speaker 3: significant changes in income from one year to the next.
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Speaker 3: Hopefully it gets your mind thinking critically about this. If
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Speaker 3: anything I've mentioned makes you think there could be something
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Speaker 3: you need to review, then we would highly suggest working
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Speaker 3: with a good accountant or CPA who can help you
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Speaker 3: decipher what, if anything, needs to be adjusted to avoid
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Speaker 3: any major tax filing surprises in the new year. The
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Speaker 3: good news is that by asking these questions now, you
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Speaker 3: have ample time before the end of the year to
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Speaker 3: make adjustments that hopefully will avoid any major swings in
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Speaker 3: your personal cash flow well.
6:11
Speaker 1: Laid out there from CJ. Closs.
6:12
Speaker 2: Of course CJ Closs and Eric Schwartz, they are our
6:14
Speaker 2: retirement planning professionals from Class Financial. The website coss Financial
6:18
Speaker 2: dot com that's k l aa S Financial dot com
6:21
Speaker 2: have been mentioned to you about checking out the website.
6:23
Speaker 2: Not only can you get to know the team at
6:25
Speaker 2: cows Financial, including CJ and Eric and of course Malia
6:28
Speaker 2: and others at Class Financial. Their bios there and learn
6:30
Speaker 2: about the separate divisions at COSS Financial. You can also
6:33
Speaker 2: sign up for the weekly Market Pulse newsletter. It's a
6:36
Speaker 2: great weekly email comes in your inbox, got a link
6:38
Speaker 2: to the most recent programs podcast. It also has a
6:41
Speaker 2: little snapshot of what's been going on in the market.
6:43
Speaker 2: So again a great, great service, great thing for you
6:46
Speaker 2: to head on over to Clossfinancial dot com. That's Coss
6:49
Speaker 2: k l aa S Financial dot com And they're teleph
6:52
Speaker 2: number six so eight four four two five six three seven.
6:55
Speaker 2: No charge for that at first get to know you
6:57
Speaker 2: appointment at cows Financial, it will be complimentary to you. Again,
7:00
Speaker 2: they're number six oh eight four four to two five
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Speaker 2: six three seven. So Eric, you know what about estimated
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Speaker 2: tax pay payments? I hear, you know, people that are
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Speaker 2: you know, own the small businesses are talking about quarterly
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Speaker 2: estimates and things like that. But people other never, you know,
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Speaker 2: other people have never maybe paid a quarterly estimate in
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Speaker 2: their life.
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Speaker 1: What what's going on there? What's that all about?
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Speaker 4: It's a great question, Sean, And I think when when
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Speaker 4: people are here quarterly estimated tax payments, I think often
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Speaker 4: people associate it with oh I need to pay more
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Speaker 4: taxes than than I would have. But really what you're
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Speaker 4: doing is is pre paying some of the tax that
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Speaker 4: you will owe at tax time. So estimated tax payments.
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Speaker 4: They're basically just a way for individuals and businesses to
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Speaker 4: pay income tax that are going to be due at
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Speaker 4: the end of the year if not if not paid earlier.
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Speaker 4: And this is typically on earnings that are not subject
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Speaker 4: to regular tax what's holding, So think of it this way.
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Speaker 4: After the end of the calendar year, in most circumstances,
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Speaker 4: you're going to owe some federal and state income taxes
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Speaker 4: based upon all of the various sources of income that
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Speaker 4: you've received throughout the year. So let's look at some
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Speaker 4: examples of these income sources. You've probably seen these on
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Speaker 4: your tax return, so cash tips, social Security income, pension income, rental,
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Speaker 4: property lease payments that you receive, gambling winnings. I know
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Speaker 4: everybody's for sure reporting all of that interest income, dividend income,
8:30
Speaker 4: capital gains from selling a stock or other appreciated asset,
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Speaker 4: W two, wages from your employer, and then if you're
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Speaker 4: a contractor, ten ninety nine payments. Now there are many
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Speaker 4: more to add to the list, but these are some
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Speaker 4: of the more common ones that we see, and pretty
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Speaker 4: much all of these sources of income, they have various
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Speaker 4: required federal and or state income tax consequences that you'll
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Speaker 4: need to be accounting for at the end of the
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Speaker 4: year when you go to file your income taxes for
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Speaker 4: the prior year, And the question becomes, then, do all
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Speaker 4: of these income sources, including all of those that I
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Speaker 4: mentioned above and many others, do they automatically pay the
9:13
Speaker 4: federal government and the state where I reside before they
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Speaker 4: actually pay me. Simple answer here is no. So if
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Speaker 4: we think about like a W two for example, that's
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Speaker 4: really straightforward. Your employer is withholding federal and usually state
9:28
Speaker 4: income taxes, and are they are sending those into the
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Speaker 4: I R S or the Department of Revenue in advance, right.
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Speaker 4: But if you have substantial earned income sources or unearned
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Speaker 4: income sources that do not withhold federal and or state
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Speaker 4: income taxes prior to you actually receiving the dollars, you'll
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Speaker 4: probably need to make quarterly estimated tax payments. And you
9:52
Speaker 4: need to do this to avoid any penalties, since it's
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Speaker 4: generally not allowable by states or the federal government to
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Speaker 4: just wait till the end of the year and pay
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Speaker 4: all of your tax that is due. The I R
10:04
Speaker 4: S wants to wants you to pay taxes as you
10:07
Speaker 4: earn the income. They are they are not very patient
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Speaker 4: when it comes to actually getting the tax payments. So
10:14
Speaker 4: how does this work in practice? What you what you
10:17
Speaker 4: would need to do is the first step is you
10:20
Speaker 4: need to basically estimate what you think your annual income
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Speaker 4: will be for the year, and then based on you know,
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Speaker 4: various deductions and things like that, what your actual tax
10:30
Speaker 4: liability will be. Now, this is where you very likely
10:33
Speaker 4: would need to pull in an accountant to help you out,
10:36
Speaker 4: which is why we often see small business owners and
10:40
Speaker 4: folks who have more income sources outside of just like
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Speaker 4: a W two or or even in ten ninety nine.
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Speaker 4: This is where we see them working with accountants to
10:50
Speaker 4: make sure that they're they're doing all of this correctly
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Speaker 4: in advance. But when you after you've done that estimation
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Speaker 4: of income and tax liability, if you estimate that you'll
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Speaker 4: owe more than about one thousand dollars in federal or
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Speaker 4: state taxes, you should generally divide that amount into quarterly
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Speaker 4: payments and make these payment amounts by the quarterly due dates,
11:13
Speaker 4: which are April fifteenth, June fifteenth, September fifteenth, and January fifteenth,
11:20
Speaker 4: and the irs is quite specific about those dates. So
11:24
Speaker 4: if we are if we are a few days late,
11:27
Speaker 4: there can still be some some interest penalties due on
11:31
Speaker 4: those dollars. And I know, Sean, I know, if we
11:34
Speaker 4: have accountants or our CPA is listening, they are probably saying, wow,
11:37
Speaker 4: that is quite an oversimplification of how all of this works.
11:42
Speaker 4: And we hear you. You are you're not wrong about that.
11:45
Speaker 4: But we are here on the radio speaking to the
11:47
Speaker 4: general public. So this gives everybody a general sense of
11:51
Speaker 4: why they might need to make quarterly estimated tax payments,
11:55
Speaker 4: along with when those those payments might be due, and
11:57
Speaker 4: then we'll trust our friends in the accounting profession to
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Speaker 4: implement it all correctly.
12:03
Speaker 2: One of the things I really like about this show
12:05
Speaker 2: is is the way you guys are always able to
12:07
Speaker 2: kind of keep this stuff very good information, but keeping
12:11
Speaker 2: it general enough that you know, we all understand it
12:13
Speaker 2: and at the same time know that you know, maybe
12:15
Speaker 2: I do fit in these box and maybe further exploration.
12:18
Speaker 2: And that's one of the great things that we get
12:19
Speaker 2: a chance to talk with everytirement planning professionals from Class
12:22
Speaker 2: Financial each and every week. And if you miss part
12:24
Speaker 2: of a program, whether it's today's show or you want
12:25
Speaker 2: to listen back to a previous program, Dorfgey, you can
12:28
Speaker 2: always listen at Costsfinancial dot com. That's coss k l
12:31
Speaker 2: a a s Financial dot com. You can listen and
12:34
Speaker 2: subscribe to the podcast right at the website. Of course,
12:36
Speaker 2: you can always give them a call at cost Financially.
12:38
Speaker 2: They love to talk with you six oh eight four
12:39
Speaker 2: four two five six three seven. That first call, that
12:42
Speaker 2: first conversation that gets to know your appointment not going
12:44
Speaker 2: to cost you a thing. It'll be complimentary to you.
12:46
Speaker 2: At Coss Financial again, they're telephone number six oh eight
12:49
Speaker 2: four four two five six three seven. We're going to
12:51
Speaker 2: continue our conversation with c Jen Eric next as Money
12:54
Speaker 2: in Motion with Coss Financial continues right here on thirteen ten.
12:57
Speaker 2: Wuibi joined this morning by our retirement planning professionals from
13:03
Speaker 2: Closs Financial CJ. Closs and Eric Schwartz. You can learn
13:05
Speaker 2: more online thewebsite Closs Financial dot com. That's coss k
13:10
Speaker 2: l as Financial dot com and they're telephone number six
13:13
Speaker 2: so eight four four two five six three seven. Talking
13:17
Speaker 2: this week as we're kind of getting close to midyear,
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Speaker 2: getting you ready for tax season and getting you getting
13:22
Speaker 2: you prepared and things to keep in mind, And had
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Speaker 2: a great rundown in that last segment about estimated tax payments.
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Speaker 1: What about record keeping?
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Speaker 2: I got to guess, keeping good records of your income
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Speaker 2: sources and potential deductions. It's probably pretty important here as well,
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Speaker 2: isn't it.
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Speaker 3: Yeah, absolutely great point. So given that the emphasis emphasis
13:41
Speaker 3: of our show today is around midyear tax hacks and suggestions,
13:45
Speaker 3: we should emphasize how important it is to develop a
13:48
Speaker 3: good record keeping system for all your income sources and
13:51
Speaker 3: your potential expense deductions in any calendar year. So, starting
13:56
Speaker 3: with the basics, you should obviously keep good records of
13:59
Speaker 3: all your income so and tax documents that arrive in
14:02
Speaker 3: the new year for the previous tax year. Some of
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Speaker 3: these income sources will send you a tax document, and
14:08
Speaker 3: some of these income sources will not. Examples of these
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Speaker 3: income sources and tax documents might include a W two
14:15
Speaker 3: ten ninety nine's whether it be ten ninety nine R
14:18
Speaker 3: or div or I, int self employment income, rental income,
14:23
Speaker 3: alimony received, gambling winnings, jury duty pay, etc. Et.
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Speaker 4: Cetera.
14:29
Speaker 3: Beyond your sources of income and the supporting tax documents
14:33
Speaker 3: that might arrive in the new year, you should also
14:35
Speaker 3: keep good records at any possible deductible expenses or contributions.
14:40
Speaker 3: Some of those expenses or contributions you might want to
14:43
Speaker 3: consider documenting and keeping good records of include mileage logs
14:47
Speaker 3: for business miles or charitable travel, donation items or donated
14:53
Speaker 3: item receipts and logs you don't think like goodwill or
14:56
Speaker 3: Saint Vinnie's home office expenses, State and local tax This
15:00
Speaker 3: is like property tax bills, mortgage interest expenses that typically
15:04
Speaker 3: show up on a Form ten ninety eight, charitable contributions,
15:08
Speaker 3: casualty and theft losses, education expenses, retirement account contributions, childcare expenses.
15:16
Speaker 3: Think of a purchase and sale of like a rental property,
15:20
Speaker 3: and then health savings account contributions. So again, while these
15:23
Speaker 3: are not comprehensive lists of income sources or deductible expenses
15:27
Speaker 3: or contributions, this should at least give get you started
15:31
Speaker 3: on the types of items you may need to record
15:34
Speaker 3: in a file for when you eventually go to file
15:36
Speaker 3: your income taxes in the new year. Now, I don't
15:39
Speaker 3: know about you. But when I hear lists like this,
15:43
Speaker 3: I start to clearly understand why people often hire accountants
15:47
Speaker 3: to file their income taxes. Again, maybe it's just me,
15:51
Speaker 3: but by the way, I'm actually formally trained in tax
15:55
Speaker 3: not that I am an enrolled agent or CPA. I
15:57
Speaker 3: don't file income taxes for clients. However, we do have
16:00
Speaker 3: somebody on staff who does that, by the way, for
16:02
Speaker 3: our team, for our clients, but even for me. So again,
16:07
Speaker 3: formally trained in tax we have a person on our
16:09
Speaker 3: team who does this. I mean, I'm reviewing literally hundreds
16:13
Speaker 3: of tax returns a year, so I'm quite competent on
16:15
Speaker 3: how the irs or how the tax code works. And
16:17
Speaker 3: yet do you think I file my own income taxes? Nope, nope.
16:24
Speaker 3: So I'm not saying everyone should have an account and
16:27
Speaker 3: file their taxes, but wow, there is a lot to
16:30
Speaker 3: know and keep track of to make sure you're filing
16:33
Speaker 3: your taxes accurately and with the greatest amount of consideration
16:36
Speaker 3: for possible, you know, reductions and tax liability for deductible
16:40
Speaker 3: expenses or contributions. And listen, it's not just it's not
16:44
Speaker 3: just that there's a lot to this, because again I
16:46
Speaker 3: generally know the things that I need to keep track of.
16:49
Speaker 3: It's more the Okay, it's enough work for me throughout
16:52
Speaker 3: the year just to gather this information. Right, if I
16:56
Speaker 3: install a new furnace that has certain efficiencies for I'll
17:00
Speaker 3: keep a copy of the receipt so I know these
17:02
Speaker 3: kind of hacks and things I should do. But then
17:05
Speaker 3: to take it all curated up to a tax return
17:09
Speaker 3: and be aware of any minor changes in both the
17:11
Speaker 3: documentation and the filing, and then the you know, the
17:15
Speaker 3: the actual submission of that return, I just don't want
17:19
Speaker 3: to do it. So I'm not saying you need to
17:22
Speaker 3: be like me, but what I am saying is do
17:24
Speaker 3: develop some good habits around keeping track of these documents,
17:27
Speaker 3: whether you're going to file it on your own or
17:29
Speaker 3: have somebody do it for you. That the harsh reality
17:32
Speaker 3: is even in the best accountant can't file taxes for
17:38
Speaker 3: somebody who doesn't know what they bought or contributed or
17:41
Speaker 3: sold or what their income was for the year. So
17:43
Speaker 3: make sure you try to keep good records.
17:45
Speaker 1: As we go through this stuff too.
17:46
Speaker 2: It really reinforces the value of having a good financial
17:49
Speaker 2: team around you, and of course people that you have
17:52
Speaker 2: a great relationship with speaking of great relationships and starting
17:54
Speaker 2: that conversation. Great day to pick up phone. Gave a
17:57
Speaker 2: call Class Financial six so eight four four to two
18:00
Speaker 2: x three seven. Don't forget that initial gets to know
18:01
Speaker 2: your appointment at Class Financial. It will not cost you
18:04
Speaker 2: a thing again. Their telephone numbers six oh eight four
18:06
Speaker 2: four two five six three seven. The website coss Financial
18:09
Speaker 2: dot com. That's coss k l aas financial dot com.
18:13
Speaker 2: More of money in motion with Coss Financial, it comes
18:15
Speaker 2: your way next to here on thirteen ten WIBI.
18:22
Speaker 1: Talking this morning with CJ. Closs and Eric Schwartz.
18:25
Speaker 2: They are our retirement planning professionals from Class Financial. The
18:28
Speaker 2: website coss financial dot com. That's coss k l aa
18:32
Speaker 2: s Financial dot com. Telephon number for the office right
18:34
Speaker 2: here in Madison six oh eight four four two five
18:37
Speaker 2: six three seven. Don't forget that first appointment at Coss Financial.
18:40
Speaker 2: It will be complementary to you again their number six
18:42
Speaker 2: oh eight four four two five six three seven. Talk
18:45
Speaker 2: in taxes this morning, and a lot of great points
18:48
Speaker 2: about about certain areas that you may not always think
18:51
Speaker 2: about as far as saving and retaining tax documents.
18:55
Speaker 1: Let's get into kind of the.
18:56
Speaker 2: The realm of retirement account contributions, and of course, as
18:59
Speaker 2: retirement plan planners, you're obviously emphasizing saving into things like
19:03
Speaker 2: four oh one ks and iras or some sort. Is
19:07
Speaker 2: there anything that we should be thinking about relative to
19:10
Speaker 2: our retirement accounts that in tax optimization for the mid year?
19:14
Speaker 4: There? Eric, absolutely, and I think this is one of
19:18
Speaker 4: the simplest ways to reduce your tax liability maximizing contributions
19:22
Speaker 4: to a pre tax retirement account. It's really straightforward, it
19:26
Speaker 4: comes right out of your paycheck, and you don't even
19:29
Speaker 4: need to think about it. And we've talked about this
19:31
Speaker 4: on previous shows, but we typically suggest that people focus
19:35
Speaker 4: on maximizing the contributions through their employer sponsored retirement plan.
19:39
Speaker 4: So I think four oh one K, four oh three B,
19:43
Speaker 4: maybe four fifty seven plan. Max out these contributions first,
19:47
Speaker 4: and then consider additional retirement account contributions thereafter once you've
19:52
Speaker 4: hit that max. But just as a quick reminder, the
19:54
Speaker 4: maximum that you can generally contribute as an individual employee
19:58
Speaker 4: to a four oh one K or a four oh
20:00
Speaker 4: three B or even you know another similar employer sponsored
20:04
Speaker 4: retirement plan for twenty twenty five, that limit is twenty
20:07
Speaker 4: three thousand, five hundred if you are under the age
20:11
Speaker 4: of fifty, or you can contribute thirty one thousand if
20:14
Speaker 4: you are over the age of fifty, or you can
20:18
Speaker 4: contribute thirty four thousand, seven hundred and fifty dollars if
20:21
Speaker 4: you are specifically age sixty, sixty one, sixty two, or
20:26
Speaker 4: sixty three. So, given that we're talking about twenty twenty
20:30
Speaker 4: five mid year tax hacks and reminders here, we highly
20:35
Speaker 4: suggest that you evaluate the amount you are currently contributing
20:38
Speaker 4: to your retirement accounts where you work, and then also
20:42
Speaker 4: consider increasing these contributions to number one, potentially reduce your
20:45
Speaker 4: tax liability for the year and number two saved more
20:49
Speaker 4: for the future.
20:50
Speaker 2: Really great advice this morning, talking with Eric Schwartz and CJ. Closs,
20:53
Speaker 2: our retirement planning professionals from class financial website coss financial
20:57
Speaker 2: dot com that's Coss Klaas Financial.
21:00
Speaker 1: Of course, you can get to know the team at
21:02
Speaker 1: COSS Financial.
21:02
Speaker 2: Also listen back to podcasts and one of the things
21:04
Speaker 2: you'll notice in the podcast health Savings account. We've talked
21:07
Speaker 2: quite a bit about those on previous programs in great depth,
21:10
Speaker 2: and of course you can listen to those shows at Clossfinancial.
21:12
Speaker 1: Dot com and CJ.
21:14
Speaker 2: Speaking of those accounts, there are some tax benefits that
21:17
Speaker 2: are becoming more popular with them these days, isn't there.
21:21
Speaker 3: Yeah, another great reminder, so if you have a high
21:23
Speaker 3: deductible health insurance plan through work or on your own
21:27
Speaker 3: that qualifies as an HSA, you should consider making contributions
21:33
Speaker 3: to the HSA account. These accounts can typically be established
21:37
Speaker 3: at a vendor of your employers choosing, or at your
21:40
Speaker 3: local bank if you can show them you qualify it
21:42
Speaker 3: to establish one of those those types of accounts. And
21:46
Speaker 3: again this is based upon your medical insurance plan and
21:49
Speaker 3: whether or not basically the deductible is high enough. Now
21:53
Speaker 3: there's other tests that they do to make sure it
21:55
Speaker 3: qualifies as an HSA plan, but it's basically our higher deductible.
21:58
Speaker 3: So contribution to these plans. Again, just think I've got
22:02
Speaker 3: this medical insurance plan with a high deductible and basically
22:06
Speaker 3: because that deductible is high enough, the IRS says you
22:08
Speaker 3: qualify for this HSA account kind of thing. Often your
22:12
Speaker 3: employer will will say, oh, that's through fidelity or whoever,
22:15
Speaker 3: and you can just do it through payroll deduction. But
22:17
Speaker 3: other times you have to go set this up at
22:19
Speaker 3: your local bank and contributions again to these plans are
22:22
Speaker 3: tax deductible and they grow tax free and can be
22:25
Speaker 3: used tax free for qualified medical expenses. Furthermore, you aren't
22:31
Speaker 3: typically required to use all of the money within these
22:33
Speaker 3: accounts by the end of the calendar year, so any
22:36
Speaker 3: unused amounts in the account can roll over to future
22:39
Speaker 3: years and help cover medical related expenses. Now, as a reminder,
22:44
Speaker 3: the maximum you can generally contribute to an HSA again
22:47
Speaker 3: health savings account in twenty twenty five is four three
22:52
Speaker 3: hundred dollars for an individual or eight five hundred and
22:56
Speaker 3: fifty dollars for a family. In addition to this, if
22:59
Speaker 3: you are over age fifty five, you can contribute an
23:03
Speaker 3: extra one thousand dollars as a catchup contribution on top
23:07
Speaker 3: of the maximums I just mentioned. Therefore, if you have
23:11
Speaker 3: an HSA eligible medical plan, you should consider if you
23:16
Speaker 3: have an HSA account open for contributions, along with considering
23:21
Speaker 3: trying to max out these contributions in order to reduce
23:24
Speaker 3: your taxable income for the year while having a pot
23:27
Speaker 3: of money available to cover current and or future medical
23:31
Speaker 3: related expenses. So listen, everybody, as it relates to these accounts.
23:35
Speaker 3: These are actually one of the most tax preferred account
23:39
Speaker 3: structures in the entire IRS Code. Let me repeat that
23:45
Speaker 3: HSA accounts are one of the most tax preferred account structures,
23:49
Speaker 3: if not the most, that you can establish fund and
23:55
Speaker 3: use in the entire IRS Code. And here's why. I
23:59
Speaker 3: get a deduction for federal income tax and in many
24:03
Speaker 3: circumstances state income tax. I get a deduction when the
24:06
Speaker 3: money goes in, I get tax free growth while it
24:10
Speaker 3: stays in there, whether it be you know, just earning
24:12
Speaker 3: a little bit of interest or a lot of interest,
24:14
Speaker 3: and then when I pull the money out, it's tax free.
24:17
Speaker 3: I don't pay tax on that. And now the money
24:20
Speaker 3: has to come out for medical related expenses. I can't
24:22
Speaker 3: just generally use it for anything. There are some rules
24:25
Speaker 3: once you get over sixty five that you can pull
24:27
Speaker 3: it out like a retirement account. But that's not the
24:29
Speaker 3: point of our show today. But here's the idea that's
24:33
Speaker 3: that's like unbelievable in the IRS Code. And the reason
24:37
Speaker 3: why is typically in it like an IRA, When I
24:39
Speaker 3: put money into an IRA pre tax and then it
24:42
Speaker 3: grows tax deferred. When I get to retirement and pull
24:44
Speaker 3: the money out.
24:45
Speaker 1: It's taxable.
24:46
Speaker 3: Or conversely, if I do a roth IRA, when I
24:49
Speaker 3: put the money in, it's post tax money. I've already
24:52
Speaker 3: paid tax on the money, I don't get a deduction,
24:54
Speaker 3: and then when I get to retirement it's tax free. Well,
24:57
Speaker 3: if you understand what an HSA is, it's the best
25:00
Speaker 3: of all of that. I both get the deduction, I
25:04
Speaker 3: get the tax free growth, and when I pull it
25:07
Speaker 3: out to pay for medical expenses, there's no tax. Okay,
25:10
Speaker 3: I get too excited about these things.
25:12
Speaker 1: Forgive me for good reason. Yes.
25:15
Speaker 3: Bottom line is, if you are eligible for one of
25:18
Speaker 3: these things, listen. That means you've got a high deductible plan.
25:21
Speaker 3: That means you are going to have expenses that are
25:24
Speaker 3: going to pop up that are deductible related expenses. I
25:27
Speaker 3: don't know about you, but I'd rather use tax free
25:30
Speaker 3: deductible money than post tax money. And the only thing
25:33
Speaker 3: I have to do is just like funnel it through
25:35
Speaker 3: an HSA account. So hopefully everybody gets the idea. HSA's
25:40
Speaker 3: wonderful little you know segment to the of the tax
25:43
Speaker 3: Code highly suggests that you use suggest or that you
25:46
Speaker 3: set up one of those accounts and make sure you're
25:48
Speaker 3: contributing assuming you have an HSA qualifying plan.
25:53
Speaker 1: Pretty phenomenal stuff. As we talked this morning with CJ.
25:55
Speaker 2: Closs and Eric Schwartz, our retirement planning professionals from Class Financial.
25:59
Speaker 1: It's a great data, aren't that conversation? All I gotta
26:01
Speaker 1: do is pick up phone, gimme a.
26:02
Speaker 2: Call six oh eight four four two five six three seven.
26:05
Speaker 2: Don't forget that first apployment, Class Financial. It is complementary
26:08
Speaker 2: to you again their telephone number six oh eight four
26:10
Speaker 2: four two five six three seven, website Cossfinancial dot com.
26:14
Speaker 2: That's Coss k l aas financial dot com. Gave you
26:17
Speaker 2: that telephon nuber because you're gonn want to hold on
26:18
Speaker 2: to it because it's time now for the Class Quiz
26:20
Speaker 2: Question the week. It works like this, just a moment,
26:22
Speaker 2: I'll ask you the Class Quiz question of the week.
26:23
Speaker 2: You'll then have thirty minutes from the and today's program
26:25
Speaker 2: call the Class Financial office right here in Madison at
26:27
Speaker 2: six oh eight four four two five six three seven.
26:30
Speaker 2: If you are the first call with correct answer, you'll
26:32
Speaker 2: win this week's prize, which is a twenty five dollars
26:35
Speaker 2: gift card to Texas Roadhouse. This week's Class Quiz question
26:38
Speaker 2: the week is this, what is the maximum a forty
26:41
Speaker 2: five year old employee can contribute to their four oh
26:44
Speaker 2: one K plan in twenty twenty five, not including any
26:48
Speaker 2: employer contributions. Telephone number six oh eight four four two five,
26:52
Speaker 2: six three seven first call with crieckt Answer one the
26:54
Speaker 2: twenty five dollars gift card to Texas Roadhouse and don't
26:56
Speaker 2: forget as well. That's Class Financial's office right here in Madison.
26:59
Speaker 2: Six oh eight four four two five six three seven CJ.
27:02
Speaker 1: Eric. It's always great chatting with both of you, guys.
27:04
Speaker 1: Enjoy this beautiful day.
27:06
Speaker 4: Thanks Sean.
27:07
Speaker 1: Take care guys.
27:07
Speaker 2: Doctor Marty Greer of check Out Veterinary she comes your
27:10
Speaker 2: way next right here on.
27:11
Speaker 1: Thirteen ten WIBA.
27:13
Speaker 2: This is Money in Motion with COSS Financial Asset Advisors, LLC,
27:17
Speaker 2: a registered investment advisor registered with the SEC. The contents
27:22
Speaker 2: of this show are for informational purposes only and should
27:24
Speaker 2: not be considered individual investment advice. Class Financial does not
27:28
Speaker 2: offer tax or legal advice. Any opinion offered during the
27:31
Speaker 2: course of this show is the opinion of that particular
27:34
Speaker 2: investment advisor representative and not necessarily the opinion of COSS.
27:39
Speaker 2: Financial News comes your way next right here. On thirteen
27:42
Speaker 2: ten Wiba