Category: Financial Planning

Special Needs Planning: Financial Planning for Long-Term Care – A Guide for Families of Individuals with Special Needs

Importance of long-term financial planning for families with special needs individuals

Financial planning is a critical aspect of every family’s life, but it becomes even more crucial when a family member has special needs. With the additional expenses and complexities of long-term care, families must ensure they have the necessary resources and strategies to support their loved ones throughout their lives. Proper financial planning helps families meet their loved one’s daily needs and helps build a sound financial future.

Challenges faced by families in providing adequate care and support

Families of individuals with special needs often face unique challenges in providing adequate care and support. The cost of specialized therapies, adaptive equipment, educational resources, and housing modifications can be substantial, placing a significant financial burden on families. Additionally, navigating the complex landscape of government assistance programs, insurance options, and legal considerations can be overwhelming for many families.

Overview of the article’s content

This article aims to provide families of special needs individuals with an in-depth guide to financial planning for long-term care. We will discuss various aspects of special needs planning, including understanding long-term care needs, government assistance programs, ABLE accounts, private insurance and funding options, special needs trusts, estate planning considerations, and working with professionals. By equipping families with the necessary knowledge and tools, we aim to empower them to make informed decisions and create a comprehensive financial plan that ensures the well-being of their loved ones with special needs.

Understanding the Long-Term Care Needs of Special Needs Individuals

Types of long-term care Services

Long-term care for individuals with special needs can encompass a wide range of services and support systems, depending on each person’s specific needs and preferences. Some common types of long-term care services include:

  1. In-home care: Personal care, therapy, and support services provided within the individual’s home environment.
  2. Residential care: Group homes or assisted living facilities that cater to individuals with special needs, offering a supportive and structured living environment.
  3. Day programs: Services designed to provide socialization, skill-building, and therapeutic activities during daytime hours.
  4. Respite care: Temporary care and supervision for individuals with special needs, allowing primary caregivers to take a break or attend to other responsibilities.
  5. Medical and therapeutic services: Ongoing medical care, physical therapy, occupational therapy, speech therapy, and other specialized services tailored to the individual’s needs.

Factors affecting the level of care required

The level of care required by individuals with special needs varies greatly depending on several factors, such as:

  1. Severity and type of disability: Different disabilities come with distinct care requirements, and the severity of the disability may also influence the level of support needed.
  2. Age and life stage: As individuals with special needs age, their care needs may evolve, and they may require additional support and services to maintain their quality of life.
  3. Health status: Individuals with chronic health conditions or progressive disabilities may need more intensive care over time.
  4. Family and social support: A strong support network can significantly impact the level of care required by individuals with special needs.

Estimating the costs of long-term care

To effectively plan for long-term care, families must estimate the associated costs, which can be influenced by factors such as the type of care services, geographic location, and inflation. Some resources that can help with cost estimation include:

  1. Local service providers: Contact local agencies and care providers to gather information on their fees and services.
  2. National and regional cost surveys: Research the average costs of various care services in your region to create a baseline for your estimates.
  3. Financial advisors: Consult with a financial advisor experienced in special needs planning to help you create a realistic long-term care budget.
  4. Online cost calculators: Utilize online tools and calculators designed to estimate long-term care costs based on location, age, and care preferences.

Families can develop a comprehensive financial plan that addresses current and future requirements by understanding the long-term care needs of individuals with special needs and estimating the associated costs.

Government Assistance Programs and Benefits

Social Security Disability Insurance (SSDI)

SSDI is a federal insurance program that provides financial assistance to individuals with disabilities who have a sufficient work history and have paid into the Social Security system. SSDI benefits are based on the individual’s earnings record and can provide a monthly income to help cover the costs of living and long-term care.

Supplemental Security Income (SSI)

SSI is a federal program that offers financial assistance to individuals with disabilities who have limited income and resources. SSI benefits help cover basic needs such as food, clothing, and shelter. The eligibility criteria for SSI benefits include the following:

  • Having a qualifying disability.
  • Meeting specific income and asset limits.
  • Being a U.S. citizen or eligible noncitizen.

Medicaid and Medicaid Waiver Programs

Medicaid is a state and federal program that provides healthcare coverage to low-income individuals, including those with disabilities. Medicaid can cover a range of services, such as doctor visits, hospital care, and long-term care services. Medicaid Waiver Programs, also known as Home and Community-Based Services (HCBS) waivers, offer additional services and support to help individuals with disabilities live in their communities rather than institutions.

Other federal and state programs and resources

Various other federal and state programs may provide financial assistance or services to individuals with special needs, including:

  1. Vocational Rehabilitation Programs: These programs help individuals with disabilities prepare for, find, and maintain employment through training, counseling, and job placement services.
  2. Housing Assistance Programs: Programs like the Section 8 Housing Choice Voucher Program can help individuals with special needs secure affordable and accessible housing.
  3. State Developmental Disability Agencies: These agencies provide various services and support for individuals with developmental disabilities and their families, including case management, respite care, and family support services.

Families should research and explore all available government assistance programs and benefits to maximize the financial resources available to support their loved ones with special needs. Applying for these programs can be complex, so seeking guidance from knowledgeable professionals or advocacy organizations is crucial to navigating the application process effectively.

ABLE Accounts

Overview of the ABLE Act and its benefits

The Achieving a Better Life Experience (ABLE) Act, enacted in 2014, created tax-advantaged savings accounts for individuals with disabilities, known as ABLE accounts. These accounts allow people with disabilities and their families to save and invest for current and future expenses without jeopardizing their eligibility for need-based federal assistance programs like Medicaid and Supplemental Security Income (SSI).

Eligibility criteria and contribution limits

  1. Expansion of eligibility under the ABLE Age Adjustment Act: Originally, only individuals who became disabled before the age of 26 were eligible for ABLE accounts. However, the ABLE Age Adjustment Act, included in the omnibus spending bill passed in December, raised the age threshold for the onset of a qualifying disability to 46, expanding eligibility to an estimated six million more people.
  2. Implementation timeline for the new rule: The expanded eligibility will not take effect until January 2026. Families must understand the new rules despite the delay and prepare for implementation.
  3. Contribution limits: Anyone, including family members, friends, and employers, can contribute to an ABLE account up to a maximum of $17,000 for 2023. If a disabled person with an ABLE account works, they can contribute an additional amount from their earnings, up to $13,590 in most states, for an annual total of $30,590.

Investment options and tax advantages

ABLE accounts offer a range of investment options, allowing families to tailor their investment strategies based on their risk tolerance and financial goals. While no federal tax deduction exists for contributing to an ABLE account, earnings and withdrawals for eligible expenses are tax-free. Some states may also offer state tax breaks for contributions.

Tips for preparing for the new eligibility rules in 2026

For those who may qualify for an ABLE account under the new rules, educating themselves about the accounts and how they are used is crucial. While family members cannot save money in the disabled person’s name without jeopardizing government benefits until 2026, they can save independently to contribute the funds once the new rule takes effect. It is also essential to stay informed about any updates or changes in ABLE account regulations.

By understanding the benefits and eligibility criteria of ABLE accounts, families can use this valuable savings tool to secure a more stable financial future for their loved ones with special needs.

Private Insurance and Funding Options

Life Insurance

Life insurance can play a vital role in special needs planning, as it can provide financial support for the care of a special needs individual after the death of a parent or primary caregiver. There are different types of life insurance policies, such as term life and permanent life insurance (including whole life and universal life). Families should consult a financial planner or insurance professional to determine the most suitable policy.

Long-Term Care Insurance

Long-term care insurance can help cover the costs of long-term care services, such as in-home care, assisted living, or nursing home care. These policies can be beneficial for families with special needs members, as they can alleviate the financial burden of care expenses. However, it is essential to note that not all individuals with disabilities will qualify for long-term care insurance, and premiums can be costly. Families should carefully review policy options and weigh the benefits against the costs before purchasing long-term care insurance.

Special Needs Pooled Trusts

Special needs pooled trusts are a type of trust designed specifically for individuals with disabilities, allowing them to pool their resources with others who have similar needs. These trusts are managed by non-profit organizations, which can provide professional trust management and oversight at a lower cost than a traditional special needs trust. Pooled trusts can help preserve eligibility for government benefits while providing additional financial resources for the individual’s care and quality of life.

Education Savings Accounts (ESAs) and 529 College Savings Plans

Education savings accounts and 529 college savings plans can be used to save for a special needs individual’s educational expenses, including tuition, books, and supplies. While these accounts may not directly cover long-term care expenses, they can help reduce the overall financial burden on families by offsetting education costs.

Grants and Financial Assistance Programs

Various non-profit organizations, foundations, and charities offer grants and financial assistance programs for individuals with disabilities and their families. These programs can help cover the costs of medical treatments, therapies, adaptive equipment, and other necessary expenses. Families should research and apply for relevant grants and financial assistance programs to maximize the available financial resources.

By exploring and utilizing a combination of private insurance and funding options, families can create a more comprehensive and robust financial plan for their special needs loved ones, ensuring their long-term care needs are met.

Building a Comprehensive Special Needs Financial Plan

Assemble a team of professionals

When creating a comprehensive special needs financial plan, working with a team of professionals with expertise in various aspects of special needs planning is essential. This team may include the following:

  1. A financial planner with experience in special needs planning
  2. An attorney specializing in special needs trusts and estate planning
  3. An insurance professional familiar with life insurance and long-term care insurance options
  4. A tax advisor to help navigate tax implications and benefits associated with various planning strategies

Assess and prioritize financial goals

Families should work with their team of professionals to assess their financial goals and prioritize them according to their specific needs and circumstances. Some specific financial goals for families with special needs members may include:

  1. Ensuring the long-term care and well-being of the individual with special needs
  2. Saving for educational expenses
  3. Providing financial stability for other family members
  4. Planning for retirement and future financial needs

Develop a customized financial plan

Once the family’s financial goals are identified and prioritized, the professionals can help develop a customized financial plan that addresses current and future needs. This plan should include the following:

  1. An assessment of the family’s current financial situation, including income, expenses, assets, and liabilities
  2. A strategy for funding the long-term care needs of the individual with special needs, utilizing a combination of government assistance programs, insurance products, and private funding options
  3. A comprehensive estate plan, including the creation of a special needs trust, if necessary
  4. Regular reviews and adjustments to the financial plan as the family’s circumstances and needs change over time

Communicate the plan to family members and caregivers

Once the comprehensive special needs financial plan is in place, it is crucial to communicate its details to family members, caregivers, and other relevant individuals. This communication ensures that everyone involved in the care and well-being of the individual with special needs is aware of the financial strategies and can help support the plan’s implementation.

By taking a proactive approach and building a comprehensive special needs financial plan, families can help ensure the long-term care and financial stability of their loved ones with special needs.

Conclusion and Key Takeaways

Creating a comprehensive financial plan for long-term care is crucial for families of special needs individuals. Families can ensure their loved ones receive the necessary care and support by planning and preparing for the future. The key takeaways from this guide include the following:

Understand the unique financial challenges families with special needs members face, including the need for long-term care, government benefits, and preserving eligibility for assistance programs.

Utilize government assistance programs and benefits such as SSDI, SSI, Medicaid, and Medicaid Waiver Programs to maximize available financial resources for long-term care.

Take advantage of ABLE accounts as a valuable savings tool for individuals with disabilities, and be aware of the expanded eligibility rules that will take effect in 2026.

Explore private insurance and funding options, including life insurance, long-term care insurance, special needs pooled trusts, education savings accounts, and grants, to create a more comprehensive financial plan.

Assemble a team of professionals with expertise in special needs planning, assess and prioritize financial goals, and develop a customized financial plan that addresses current and future needs.

Communicate the financial plan to family members and caregivers, ensuring everyone involved in the care and well-being of the individual with special needs is aware of the financial strategies in place.

By following these steps and working with a team of professionals, families can create a robust and comprehensive financial plan for the long-term care needs of their loved ones with special needs.

About Mark Matos

Tax Strategies for Charitable Giving

Charitable giving is an essential aspect of many individuals’ financial plans, and it plays a crucial role in supporting the work of countless non-profit organizations. By approaching charitable giving strategically, donors can make a significant difference in the causes they care about while also enjoying tax advantages that enhance the impact of their generosity. In 2023, several tax-efficient giving methods are worth considering to maximize your charitable contributions.

This article will provide an overview of popular giving vehicles, such as donor-advised funds, charitable remainder trusts, and charitable lead trusts, along with other tax-smart strategies to help you make the most of your charitable giving in 2023. We will also discuss qualified charitable distributions (QCDs) for those looking to leverage their retirement accounts for philanthropy and tax deduction considerations and resources for further guidance. By employing these strategies and vehicles, you can optimize your charitable impact and enjoy the associated tax benefits.

Direct Giving vs. Charitable Tools: Finding the Right Approach for Your Charitable Contributions

When it comes to making charitable contributions, donors have two main options: making direct donations to charitable organizations or utilizing charitable giving tools, such as donor-advised funds, charitable remainder trusts, and charitable lead trusts.

Direct donations to charitable organizations are straightforward and easy to execute. Donors make a cash or non-cash gift directly to the charity of their choice, and the organization can immediately use the funds for its mission. Anyone can make direct donations regardless of income level or net worth. However, direct donations do not offer the same tax benefits as charitable giving tools.

On the other hand, charitable giving tools can provide significant tax benefits for donors while allowing for greater flexibility and control over the timing and amount of charitable contributions. Donor-advised funds, for example, enable donors to make a charitable contribution to a fund, receive an immediate tax deduction, and then recommend grants from the fund to any IRS-qualified public charity. Charitable remainder trusts and charitable lead trusts allow donors to donate appreciated assets while providing for themselves or their heirs.

While utilizing charitable giving tools may offer more significant tax benefits and flexibility, they have drawbacks. For example, fees may be associated with using a charitable giving tool, and the administrative requirements can be more complex than simply making a direct donation. Additionally, some charitable giving tools may limit the types of charities to which donations can be made.

Ultimately, the decision to make direct donations to charitable organizations versus utilizing charitable giving tools depends on various factors, including the donor’s financial situation, philanthropic goals, and tax considerations. Donors should work with their financial, tax, and legal advisors to determine the best approach for their circumstances.

Donor Advised Funds (DAFs)

DAFs are philanthropic accounts established at public charities, such as community foundations or sponsoring organizations. Donors contribute to their DAFs, receive immediate tax benefits if they itemize their deductions, and recommend grants to their chosen charitable organizations over time. This setup allows donors to carefully consider where to allocate their funds without feeling rushed to decide.

One of the key benefits of DAFs is their tax efficiency. By donating appreciated assets held for more than one year, donors can generally eliminate capital gains tax, potentially increasing the amount available for charities by up to 20%. Moreover, the assets within the DAF can be invested for potential tax-free growth, further amplifying the donor’s impact.

The option to make anonymous donations is another attractive feature of DAFs. Donors who value privacy can recommend grants from their DAFs without disclosing their personal information, ensuring their charitable efforts remain discreet.

Charitable remainder trusts (CRTs)

A CRT is an irrevocable trust that provides income to the donor or other beneficiaries for a specified period, with the remaining assets going to a donor chosen and designated charity. The donor receives a partial income tax deduction upon establishing the trust, and the trust’s assets grow tax-free.

CRTs offer several tax benefits, including a partial income tax deduction for the present value of the future charitable gift and avoidance of capital gains taxes on contributed appreciated assets. The trust’s assets also grow tax-free. CRTs provide income to the donor or other beneficiaries and help reduce estate taxes.

CRTs are best suited for donors who want to support a charitable cause while creating an income stream for themselves or other beneficiaries. They are handy for those with appreciated assets that would otherwise generate significant capital gains taxes if sold.

A Charitable Remainder Trust (CRT) coupled with a Donor Advised Fund (DAF) can alleviate hurdles and provide greater flexibility for donors. For example, naming the DAF as the remainder beneficiary takes the pressure off of identifying the ultimate charity at the start of the CRT. The donor’s family can continue to be involved in the donor’s charitable legacy, and the donor’s financial advisor can continue to oversee the investment management of the remaining assets.

Furthermore, naming the DAF as the remainder beneficiary provides flexibility to the donor and advisor if the advisor or donor changes wealth management firms at some point. The donor can also use the DAF as the vehicle for their lifetime charitable giving by funding it through distributions from their CRT.

If a donor wants to accelerate a CRT to give more to charity now or in the near future, they can cash out their income interest or collapse the CRT entirely into a DAF. In this case, the donor may receive a one-time income tax benefit. In short, the DAF enhances the CRT and provides considerable flexibility to the donor to engage in planned giving on terms that are ideal for them.

Charitable lead trusts (CLTs)

A CLT is the inverse of a CRT. It provides income to a designated charity for a specified period, with the remaining assets ultimately passed to the donor’s heirs. CLTs help reduce estate and gift taxes while supporting charitable causes during the donor’s lifetime.

By removing the trust’s assets from the donor’s taxable estate, CLTs offer estate and gift tax benefits. The trust provides a consistent income stream to a designated charity for a specified period, after which the remaining assets pass to the donor’s heirs, often with reduced or eliminated estate or gift taxes.

CLTs are most appropriate for donors who want to support a charity during their lifetime while also preserving wealth for their heirs. They benefit individuals with substantial estates that would otherwise be subject to estate or gift taxes. 

One way to enhance the benefits of a Charitable Lead Trust (CLT) is to combine it with a Donor Advised Fund (DAF). By naming the DAF as the income beneficiary of the CLT, donors and their families can enjoy greater flexibility in directing their charitable giving.

Furthermore, the donor’s financial advisor can continue to manage the investment of the remainder assets.

In essence, a DAF can augment the benefits of a CLT by enabling planned giving during the donor’s lifetime and providing a nest egg for their heirs when the CLT term ends.

Tax Considerations for Charitable Giving

Understanding tax deduction considerations for charitable giving is essential to maximize your tax savings while supporting your favorite causes. This section will provide an overview of deduction limits, itemized vs. standard deductions, and inflation-based adjustments to standard deductions.

Limits on deductions for donations

Charitable contributions must be made to a qualified organization for tax deductions. Starting in 2022, the IRS set the limit for cash contributions at 60% of your AGI, which will remain in effect until 2025. After 2025, cash contributions will be limited to 50% of your AGI. The limit for donating appreciated assets, such as stocks, is 30% of your AGI. Carryover provisions allow you to deduct excess contributions in subsequent years, up to a maximum of five years.

Itemized vs. standard deductions

When filing your taxes, you can either itemize your deductions or take the standard deduction. Itemizing allows you to claim specific deductions, such as mortgage interest, state and local taxes, and charitable contributions. However, if these itemized deductions are less than the standard deduction, it is more beneficial to claim the standard deduction.

Even if you choose not to itemize your deductions, you can still claim a deduction for charitable donations. As of 2023, individual filers can claim a deduction of up to $300 for charitable gifts, while married couples can claim up to $600.

Inflation-based adjustments to standard deductions

The standard deduction is adjusted for inflation each year. For 2023, the standard deduction amounts are as follows:

Filing StatusStandard Deduction 2023
Single; Married Filing Separately$13,850
Married Filing Jointly & Surviving Spouses$27,700
Head of Household$20,800
2023 Standard Deduction Tax Table

Source: IRS.GOV

These amounts may increase in future years to account for inflation. It is essential to consider these adjustments when planning your charitable giving strategy and deciding whether to itemize or take the standard deduction.

For taxpayers over 65, there is an additional standard deduction of $1,850 for tax filing status single or head of household or $1,500 per person when filing married filing jointly. The additional deduction is doubled for those over 65 and blind.

Tax Filing Status, 2023Additional Deduction Per Person
Single or Head of Household
Aged 65 or older OR Blind$1,850
Aged 65 or older AND Blind$3,700
Married Filing Jointly or Separately
Aged 65 or older OR Blind$1,500
Aged 65 or older AND Blind$3,000
2023 Additional Standard Tax Deduction Available to those Aged 65 or Older OR Blind

Source: IRS.GOV

These amounts may increase in future years to account for inflation. It is essential to consider these adjustments and the additional deductions for taxpayers over 65 when planning your charitable giving strategy and deciding whether to itemize or take the standard deduction.

Understanding the tax deduction considerations for charitable giving is crucial to maximizing your impact while enjoying tax benefits. You can make informed decisions about your charitable giving and tax planning strategies by considering the limits on deductions, itemizing vs. taking the standard deduction, and inflation-based adjustments.

Funding charitable giving strategies

With an understanding of the various charitable tools available, it’s time to explore some tax-smart philanthropic giving strategies for 2023. These strategies can help you make the most impact with your donations while minimizing your tax liability.

This section will discuss various approaches to enhance your charitable giving, from donating appreciated assets to leveraging retirement accounts and establishing trusts. By employing these strategies, you can create a well-rounded, tax-efficient charitable plan that aligns with your financial goals and philanthropic passions.

Donate appreciated non-cash assets

Donating appreciated assets, such as stocks or real estate, allows you to claim a tax deduction for the asset’s full market value while avoiding capital gains taxes on the appreciation, subject to limitations. Donations can be made directly to the charity or through various combinations of tools we’ve discussed.

Leave a legacy by naming a charity, DAF, or CRT as a beneficiary of IRA assets

You can name a charity or a Donor-Advised Fund (DAF) associated with the charity as the beneficiary of all or a portion of your IRA or employer-sponsored retirement plan. Since the charity or DAF is tax-exempt, it can withdraw the assets from the account without paying income taxes on the distribution after your death. 

If you name individuals as retirement account beneficiaries, they will be subject to ordinary income taxes on any distributions they receive. It may be more beneficial to name a charity or DAF as the beneficiary of a retirement account and leave other tax-advantaged assets to your loved ones. Additionally, any amount left to a charity at death can result in an estate tax charitable deduction, reducing any applicable federal estate taxes. 

A Charitable Remainder Trust (CRT) can also be named as the beneficiary of an IRA or company retirement plan, which can benefit a charity and a non-spouse family member. The selected individual could receive annual payments for their lifetime or over a fixed period. A Unitrust pays based on a fixed percentage of the CRT balance at the beginning of each year, while an Annuity Trust pays a fixed amount. After the CRT expires, the remaining amount is distributed to a Donor-Advised Fund or charities of your choosing.

The terms of a Charitable Remainder Trust (CRT) involve payments that continue for up to 20 years or the lifetime of one or more beneficiaries. Upon the completion of the payment term, the remaining assets of the trust are passed on to one or more qualified U.S. charitable organizations.

Specific rules dictate the CRT’s operation, such as the minimum percentage of assets charities must receive based on the trust’s beginning balance at termination. A CRT is tax-exempt, similar to a charity, making it a tax-efficient tool. When you name a CRT as the IRA beneficiary, the CRT receives the funds after your death without paying income taxes. The individual selected to receive annual payments will owe income taxes on the amount received, and a partial estate tax deduction is allowed upon the IRA owner’s death. Hiring an attorney is crucial to create it properly due to the complexities of a CRT.

Bunch multiple years of charitable contributions

Charitable giving benefits and strategies include donation bunching, a tax strategy that consolidates your donations for two years or more into a single year to maximize your itemized deduction for that year. Since the Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction through 2025, the high standard deduction means that itemization is not the best way to maximize tax deductions for most Americans. Donation bunching can increase giving budgets, but it requires planning and execution beyond standard giving practices and may distract from the goal of supporting charitable organizations.

Maximizing Your Charitable Impact with Qualified Charitable Distributions (QCDs)

Individual Retirement Accounts (IRAs) provide an excellent tax-advantaged way to save for retirement while offering opportunities to maximize charitable impact and minimize taxes. Two key strategies to achieve this are making Qualified Charitable Distributions (QCDs) and naming charitable beneficiaries. QCDs allow donors aged 70½ and older to instruct an IRA administrator to send up to $100,000 per year—either all or part of their annual RMD—to one or more operating charities. By sending IRA assets directly to charity, donors can avoid reporting QCDs as taxable income and do not owe taxes on the QCD, even if they do not itemize deductions. Sometimes, QCDs may offer more significant tax savings than cash donations with claimed charitable tax deductions. Generally, qualified charitable distributions (QCDs) cannot be directed to donor-advised funds or life-income gifts, such as charitable remainder trusts or gift annuities, although new legislation has changed the rules and allows for a one-time exception.

New Legislation for QCDs

The tax benefits of Qualified Charitable Distributions (QCDs) have been enhanced with the new SECURE 2.0 legislation. Two significant improvements have been made to the QCD benefits.

Firstly, before the new law, the $100,000 limit for QCDs was not indexed for inflation. Starting in 2024, the $100,000 limit will be indexed annually for inflation. This means that you and your spouse can make larger contributions in the future.

Secondly, beginning in 2023, you can include a one-time gift of up to $50,000 to a split-interest equity, such as a charitable remainder trust (CRT) or charitable gift annuity (CGA), in your QCD. The $50,000 limit will also be indexed for inflation starting in 2024.

A Charitable Remainder Annuity Trust (CRAT) or a Charitable Remainder Unitrust (CRUT) can be used for the Charitable Remainder Trust (CRT). A CRAT requires the payment of a fixed amount of at least 5% of the initial value of the trust property, while a CRUT requires the payment of a fixed percentage (not less than 5%) of trust assets. 

A CGA is a similar arrangement where you make a substantial gift to a charity and designate a beneficiary to receive a stream of income during their lifetime, with the donor being the annuity recipient.

More Charitable Gift Funding Planning Ideas

Give private business interests: Donating private business interests to charity can provide significant tax benefits, including a potential income tax deduction and a reduction in estate taxes.

Contribute restricted stock: Donating restricted stock can provide a tax deduction based on the stock’s fair market value on the date of the gift while avoiding capital gains taxes.

Combine charitable giving with investment portfolio rebalancing: Donate appreciated assets as part of your regular portfolio rebalancing, which can help manage your investment risk and provide tax benefits.

Offset tax liability when converting a retirement account to a Roth IRA: You will owe taxes if you convert a traditional IRA to a Roth IRA. You can offset some of the tax liability by making a charitable donation in the same year.

Offset tax liability on a retirement account withdrawal: Making a charitable donation in the same year as taking a taxable retirement account withdrawal can help reduce the tax burden associated with the withdrawal.

Satisfy an IRA Required Minimum Distribution (RMD) through a non-taxable Qualified Charitable Distribution (QCD): If you are 70½ or older, you can make a QCD from your IRA to a qualified charity, which can help satisfy your RMD and avoid taxes on the distribution.

The importance of a well-planned charitable giving strategy

Charitable giving is a complex area with many tax implications, and it’s essential to consult with financial, tax, or legal advisors before making any significant philanthropic contributions. An experienced financial planner, accountant, or estate planning attorney can help you determine the most tax-efficient giving strategies for your unique financial situation and goals. Additionally, these professionals can guide the use of various charitable giving vehicles, such as donor-advised funds, charitable remainder trusts, and charitable lead trusts, and help you evaluate the tax implications of each.

A well-planned charitable giving strategy can maximize the impact of your giving while minimizing your tax liability. By taking advantage of tax-smart giving approaches, you can make a meaningful difference in the causes you care about while benefiting from valuable tax deductions and other incentives.

Maximizing impact while enjoying tax benefits

With some planning and professional guidance, anyone can become a tax-smart philanthropist. By donating to charities that align with your values and leveraging tax-efficient giving strategies, you can maximize the impact of your giving and help create a better world for generations to come.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used or relied on, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Entities or persons distributing this information are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Physician Roth IRA: A Powerful Tool

A Roth IRA for retirement planning can be a great tool for physicians who want to help ensure financial independence in their golden years. However, choosing the right retirement savings vehicle can be a daunting task. In this article, we will introduce the topic of using a Roth IRA for retirement savings and explore its many benefits; however, Roth IRAs are not for everyone and provide some disadvantages as well.

A Roth IRA is a tax-advantaged retirement savings account that allows for tax-free withdrawals in retirement. Unlike traditional IRAs and 401k/403bs, which provide tax deductions on contributions but tax withdrawals in retirement, a Roth IRA allows investors to pay taxes upfront on contributions and enjoy tax-free withdrawals in retirement.

This article will explore the benefits of using a Roth IRA for retirement savings, including tax-free withdrawals, flexibility, education investing, early retirement planning, estate planning, and more. We will also explore why Roth IRAs are an excellent retirement savings vehicle for physicians of all ages, including Gen X, Xennials, Millennials, and Baby Boomer physicians.

Physicians often face phase-outs due to income limitations when contributing to a Roth IRA. However, there is a planning strategy known as a backdoor Roth IRA, which involves contributing to a traditional IRA and then converting it to a Roth IRA. Keep reading to learn more.

By the end of this article, you will understand why Roth IRAs should be a crucial component of your retirement planning strategy as a physician. Let’s dive in.

Maximizing Tax Savings: Understanding the Benefits of Roth IRA as a Tax-Free Source of Retirement Income

Retirement planning can be daunting for anyone, but the stakes are even higher for high-income physicians. One option to consider for retirement savings is a Roth IRA.

A Roth IRA is a retirement account that allows for tax-free withdrawals in retirement. Unlike traditional IRA and 401(k)/403(b) plans, contributions to a Roth IRA are made with after-tax dollars, meaning that you pay taxes on the money before you put it into the account. However, when you withdraw funds from the account in retirement, you don’t have to pay any taxes on the earnings or contributions as long as specific requirements are met.

The benefits of tax-free withdrawals in retirement are significant. First, you can withdraw the money you need without worrying about the tax consequences. This can potentially provide financial stability and flexibility. Second, because the withdrawals are tax-free, you can save significant money in taxes during your retirement.

When comparing Roth IRAs to traditional IRAs and 401(k)/403(b) plans, it’s important to note that traditional plans allow for tax-deductible contributions, meaning that you don’t pay taxes on the money when you contribute it. However, when you withdraw the funds in retirement, you must pay taxes on the contributions and the earnings at your ordinary income tax rate. With Roth IRAs, you pay taxes upfront but can withdraw the money tax-free in retirement. There are consequences and benefits to each type of contribution. Review at least annually to strategize based on your current and future annual marginal tax bracket expectations.

In short, a Roth IRA can be an excellent option for retirement savings, particularly for physicians who expect to be in a higher tax bracket in retirement. By contributing to a Roth IRA, you can take advantage of tax-free withdrawals and potentially save significant taxes during your retirement.

Nest Egg

Maximizing Tax Savings: Contributing to a Roth IRA While in a Lower Tax Bracket

Contributing to a Roth IRA can be an intelligent move for some physicians looking to maximize their retirement savings. By doing so, they can take advantage of a lower tax bracket now, reducing their overall taxable income in the long run. 

For 2023, if your tax filing status is married filing jointly or a qualifying widower and your modified adjusted gross income (MAGI) is less than $218,000, you can contribute up to the limit of $6,500 to a Roth IRA. Those aged 50 or older can make an additional catch-up contribution of $1,000 for a total of $7,500. The contribution is subject to phaseout and goes to zero for those making $228,000 or more. 

For 2023, if your tax filing status is individual or head of household and your modified adjusted gross income (MAGI) is less than $138,000, you can contribute up to the limit of $6,500 to a Roth IRA. Those aged 50 or older can make an additional catch-up contribution of $1,000 for a total of $7,500. The contribution is subject to phaseout and goes to zero for those making $153,000 or more.

If your filing status is…And your modified AGI is…Then you can contribute…
married filing jointly or qualifying widow(er) < $218,000 up to the limit
married filing jointly or qualifying widow(er) ≥ $218,000 but < $228,000 a reduced amount
married filing jointly or qualifying widow(er) ≥  $228,000 zero
single, head of household, or married filing separately, and you did not live with your spouse at any time during the year < $10,000 a reduced amount
married filing separately, and you lived with your spouse at any time during the year≥ $10,000 zero
married filing separately, and you lived with your spouse at any time during the year< $138,000 up to the limit
single, head of household, or married filing separately, and you did not live with your spouse at any time during the year ≥ $138,000 but < $153,000 a reduced amount
single, head of household, or married filing separately and you did not live with your spouse at any time during the year≥ $153,000 zero
The table displays whether the modified AGI, as calculated for Roth IRA purposes, impacts an individual’s contribution to a Roth IRA.

Source: IRS.GOV

Physicians can contribute to a traditional or Roth IRA even if they participate in another retirement plan through their employer or business. However, due to their high income, they may not be able to deduct all of their traditional IRA contributions if they or their spouse participate in another retirement plan at work. Similarly, their Roth IRA contributions might be limited if their income exceeds a certain level, making it necessary to consider a backdoor Roth IRA strategy.

One of the critical benefits of contributing to a Roth IRA is that it allows for tax-free withdrawals in retirement. This is because contributions to a Roth IRA are made with after-tax dollars, so no tax is owed when withdrawing the money later.

Comparatively, traditional IRAs and 401(k)/403(b) plans are funded with pre-tax dollars, meaning that taxes are owed on the withdrawals in retirement. This can be a significant drawback for high-income earners, who may end up paying a higher tax rate in retirement than they do currently.

By contributing to a Roth IRA now, physicians can insulate their retirement investments from the risk of higher taxes in the future. This is because they are paying taxes upfront, ideally at a lower rate than they would be in the future.

To illustrate this point, let’s consider a hypothetical scenario. Say a physician is currently in the 32% tax bracket and expects to be in the same bracket in retirement. If they contribute $6,500 annually to a traditional IRA, they would now save $2,080 in taxes. However, when they withdraw that money in retirement, they will owe taxes at the 32% rate, resulting in a higher tax bill overall.

Alternatively, if they contribute $6,500 per year to a Roth IRA now, they will pay taxes upfront but not owe any taxes when they withdraw it in retirement. This could lead to significant tax savings in the long run, especially if tax rates increase over time due to law or higher income levels subject to higher marginal tax brackets.

Tax RateFor Single FilersFor Married Individuals Filing Joint ReturnsFor Heads of Households
10%$0 to $11,000$0 to $22,000$0 to $15,700
12%$11,000 to $44,725$22,000 to $89,450$15,700 to $59,850
22%$44,725 to $95,375$89,450 to $190,750$59,850 to $95,350
24%$95,375 to $182,100$190,750 to $364,200$95,350 to $182,100
32%$182,100 to $231,250$364,200 to $462,500$182,100 to $231,250
35%$231,250 to $578,125$462,500 to $693,750$231,250 to $578,100
37%$578,125 or more$693,750 or more$578,100 or more
The tax brackets and rates for the 2023 Federal Income Tax have been categorized for Single Filers, Married Couples Filing Jointly, and Heads of Households.

Source: IRS.GOV

Contributing to a Roth IRA can be a wise tax planning strategy for physicians seeking to potentially minimize their retirement tax burden. By taking advantage of a lower tax bracket now, they can set themselves up for a more tax-efficient retirement in the future. 

Due to the complexity of contributions, physicians should work closely with their financial advisors and tax accountants to determine their optimal strategy on a year-to-year basis as they expect their income levels to change over time.

Maximizing Roth IRA Contributions through the Backdoor Method

A backdoor Roth IRA can be a helpful strategy for high earners who cannot contribute to a Roth IRA due to income limitations directly.

In a backdoor Roth IRA, you first make a nondeductible contribution to a traditional IRA with no income limitations. Then, you convert the traditional IRA to a Roth IRA. Since you’ve already paid taxes on the non-deductible contribution, the conversion is tax-free.

This strategy allows high earners to take advantage of the tax-free withdrawals and compounding growth of a Roth IRA, even if they are not eligible to make direct contributions.

It’s important to note that the backdoor Roth IRA strategy can have complications for those with other traditional IRAs with pre-tax contributions, as these contributions will be subject to taxes upon conversion. Additionally, rules surrounding the timing of contributions and conversions should be carefully followed.

Overall, the backdoor Roth IRA can be a powerful tool for high earners looking to maximize their retirement savings and tax benefits. However, consulting with a financial advisor or tax professional is essential to ensure that this strategy is appropriate for your specific situation.

Physician Roth IRA nest egg

Unmatched Flexibility: How Roth IRAs May Offer More Retirement Freedom Than Traditional Accounts

While traditional retirement accounts like 401(k)/403(b) plans and traditional IRAs have strict rules on when and how much you can withdraw, Roth IRAs offer more flexibility in retirement.

One of the primary benefits of Roth IRAs is that there are no required minimum distributions (RMDs) after age 73 (new RMD age for 2023). You can continue growing your Roth IRA account balance during retirement and only withdraw funds when needed. In contrast, traditional IRAs and 401(k)/403(b) plans require you to take RMDs each year, which can force you to withdraw more than you need or want.

It’s important to remember that withdrawing earnings before age 59.5 may result in taxes and penalties. After the age of 59.5, Roth IRA contributions can be withdrawn anytime without penalty or taxes, so if you need to access your retirement funds for an emergency or unexpected expense, you can do so without penalty. In comparison, distributions from traditional IRAs are taxable events. 

Overall, the flexibility offered by Roth IRAs can be an attractive option for those who value having control over their retirement funds and want to avoid penalties or withdrawal restrictions.

Preserving Your Wealth for Future Generations: Roth IRA as an Estate Planning Tool

A Roth IRA can serve as a valuable estate planning tool, allowing physicians to preserve their retirement savings for future generations. Because Roth IRAs have no required minimum distributions (RMDs), individuals can continue to potentially grow their account balance during retirement and only withdraw funds as needed. Moreover, the tax-deferred and compounding growth offered by Roth IRAs can provide tax benefits to account holders.

Additionally, Roth IRA assets avoid probate, which can significantly benefit beneficiaries. By designating beneficiaries for your Roth IRA, you can ensure that your account balance is passed on to your loved ones without being subjected to probate court.

However, it’s important to note that most non-spouse beneficiaries must withdraw the account’s entire balance within ten years of the account holder’s death, thanks to eliminating the Stretch IRA from the Secure Act. This change has significant implications for estate planning, particularly for individuals with sizable retirement accounts.

Despite the new regulations, Roth IRAs remain a helpful tool for many retirees looking to preserve their retirement savings for future generations. By planning and designating beneficiaries, physicians can ensure that their hard-earned retirement savings are passed on to their loved ones as intended.

Group of Smiling Physicians

Unlocking Retirement Benefits: Roth IRAs for Every Generation

A Roth IRA is an attractive retirement savings vehicle for physicians of all generations, but the advantages can vary depending on age and other factors.

Potentially Maximizing Retirement Savings: How Gen X, Xennials, and Millennial Physicians Benefit from Roth IRAs

Physicians in their late 20s to early 50s may find a Roth IRA a valuable retirement savings tool.

One of the primary advantages of contributing to a Roth IRA is that it allows physicians to lock in a present-day tax rate. Post-tax contributions to a Roth IRA can grow tax-free over time, and account holders won’t have to pay taxes on these savings in retirement. This can be especially helpful for higher earners who want to take advantage of low current tax rates. While it is impossible to predict the future, tax rates may increase over time, making Roth IRAs an intelligent choice for long-term retirement planning. For instance, in 1980, the top marginal tax rate was 70%; today, it’s 37%.

Moreover, Gen X, Xennials, and Millenial physicians may mistakenly believe their retirement tax bracket will be lower. While they may no longer be working and earning an income, they will have to rely on other sources of retirement income, such as 401(k)/403(b) plans and IRAs, all of which are subject to taxes on withdrawals. As a result, Roth IRAs can offer tax diversification and flexibility, allowing them to manage their taxable income effectively in retirement.

Potentially Maximizing Retirement Savings: Benefits of Roth IRAs for Baby Boomer Physicians

For Baby Boomer physicians, who are currently in their late 50s to early 70s, the advantages of a Roth IRA may be more complex. However, there are still plenty of benefits to using a Roth IRA strategically.

One of the primary benefits of a Roth IRA for baby boomers is that it can help bypass required minimum distribution (RMD) rules. Once baby boomer physicians turn 72, they must take RMDs from their traditional retirement accounts. But Roth IRAs don’t require RMDs, allowing physicians to grow their savings even after they retire.

Moreover, baby boomer physicians may have a pension and social security income streams and a significant portfolio of assets. In some cases, these retirees may be able to maintain their current lifestyle with funds from their pension and social security income. While they may withdraw money from retirement accounts for a trip or a unique occasion, they may only need to withdraw it occasionally. Using a Roth IRA, they can preserve their retirement savings for future generations and reduce their taxable income in retirement.

Roth IRAs offer a unique and valuable way to save for retirement. With tax-free withdrawals, flexibility, estate planning benefits, and more, Roth IRAs are a powerful tool for physicians of all ages. By understanding the advantages of a Roth IRA and incorporating it into their retirement planning, physicians can plan for their financial futures and enjoy a comfortable retirement.

One good strategy for Boomers could be doing traditional IRA to Roth conversions when the market has a bad year, and prices are low. Another strategy is to do conversions when your tax bracket drops, which may happen during your retirement if you have a lower income or during years with lower tax rates or higher thresholds for tax brackets.

A Roth IRA nest egg

Using Roth IRAs for Education Savings and Family Wealth Transfer

In addition to being a great retirement savings vehicle, Roth IRAs can also be used to save for education expenses for your child(ren).

While 529 plans are more commonly used for education savings, Roth IRAs offer unique tax advantages. Unlike 529 plans, Roth IRA contributions are not tax-deductible. However, withdrawals from a Roth IRA for education expenses are tax-free and penalty-free, making them an attractive option for some families.

The contribution limit is one major limitation of using a Roth IRA for education savings. For 2023, the contribution limit for Roth IRAs is $6,500 for those aged 50 or older and $6,000 for those under 50. There may need to be more to fund a child’s education expenses fully.

However, parents can also consider opening a Roth IRA for their child, assuming the child has earned income. This can be a great way to start building a nest egg for the child and take advantage of the tax-free growth potential of a Roth IRA. Plus, contributions to a child’s Roth IRA can be withdrawn penalty-free anytime, making it a flexible savings option. Earnings, of course, are subject to tax and penalties.

It’s important to note that contributions to a Roth IRA for a child should not come at the expense of saving for retirement. Parents should make sure they are prioritizing their own retirement savings goals before contributing to a child’s Roth IRA. Additionally, it’s essential to consider the impact of a child’s Roth IRA on their eligibility for financial aid when it comes to college expenses.

Roth IRA: Physicians Eyeing Early Retirement

Many physicians dream of retiring early but accessing retirement funds before age 59.5 can take time and effort. Fortunately, a Roth IRA can provide some benefits for early retirees.

Under normal circumstances, accessing retirement funds before age 59.5 would result in a 10% penalty on top of the income tax due on the distribution. However, some exceptions to this rule can make early retirement a possibility.

One exception is the age 55 rule. This rule allows individuals who retire at age 55 or later to access funds from their 401(k) or other qualified retirement plan penalty-free. Note that this rule only applies to the employer’s retirement plan from which you retire at age 55 or later. If you retire before age 55, you must wait until age 59.5 to access retirement funds without penalty.

Another option for accessing retirement funds before age 59.5 is the 72T rule. This rule allows for penalty-free distributions from a retirement account as long as they are taken in substantially equal periodic payments over the account holder’s life expectancy. While this rule can provide a way to access retirement funds before age 59.5, it is essential to note that it is a complicated rule that should be thoroughly researched and understood before implementation.

Using Roth IRA distributions to supplement income in early retirement can also be a helpful strategy. Because contributions to a Roth IRA have already been taxed, they can be withdrawn at any time without penalty or taxes. While leaving enough funds in the Roth IRA to take advantage of tax-free withdrawals in retirement is essential, using Roth IRA distributions to supplement income in the early years of retirement can provide an additional safety net for those who dream of retiring before age 59.5.

In addition to the above strategies, it’s important for early retirees to carefully plan their retirement income streams and expenses to ensure that they can sustain their lifestyle for the long term. A financial advisor can be a valuable resource for early retirees navigating these challenges.

Happy Physicians

Strategies for Avoiding IRMAA and Net Investment Income Tax with Roth IRAs

Retirement planning involves not only saving enough money but also minimizing tax burdens. The Medicare Income-Related Monthly Adjustment Amount (IRMAA) and the Net Investment Income Tax (NIIT) are two taxes that can surprise retirees and eat away at their income.

The IRMAA applies a surcharge on top of the Medicare Part B and Part D premiums for individuals who earn over a certain threshold. For example, in 2023, individuals with an income of over $97,000 or married couples filing jointly with over $194,000 will face an additional IRMAA surcharge. This can significantly increase healthcare costs and make a dent in retirement savings.

The NIIT is a 3.8% tax on investment income for individuals with a modified adjusted gross income (MAGI) above $200,000 or married couples filing jointly with over $250,000 in MAGI. Investment income includes interest, dividends, capital gains, rental and royalty income, and non-qualified annuities. This tax can be incredibly costly for retirees who have saved a lot in taxable accounts and need to withdraw from them to supplement their retirement income.

Proper tax planning can help minimize these tax burdens. One strategy is to use Roth IRA distributions to supplement other income and keep overall income levels low. Since Roth IRA withdrawals are tax-free, they don’t add to MAGI or trigger IRMAA surcharges or NIIT.

Another strategy is to convert traditional IRA or 401(k)/403(b) assets to Roth IRA before reaching age 73 (2023) when required minimum distributions (RMDs) kick in. This can reduce future RMDs and potentially lower IRMAA and NIIT taxes.

By using these strategies, retirees can avoid taxes like IRMAA and NIIT and keep more of their hard-earned retirement savings.

Maximizing Flexibility: Unique Advantages of Roth IRAs

While Roth IRAs offer great flexibility in retirement, they also provide unique flexibility during accumulation. Roth IRA contributions can be withdrawn at any time without taxes or penalties. However, it is essential to note that withdrawing investment earnings before age 59.5 can result in taxes and penalties.

In addition to the flexibility during the accumulation phase, the SECURE Act has expanded the flexibility of Roth IRAs. Under the SECURE Act, Roth IRA funds can be used to cover adoption expenses, birth or adoption of a child, or qualified education expenses.

It is important to remember that while Roth IRAs offer great flexibility, they are primarily designed as retirement accounts. Premature withdrawals or unplanned distributions can result in taxes and penalties. It is always recommended to consult with a financial advisor or tax professional before making significant financial decisions.

Roth IRA Disadvantages

Roth IRA Disadvantages 

Roth IRAs (Individual Retirement Accounts) come with several advantages, but they also have some disadvantages, such as:

Income Limits: Roth IRAs have income eligibility limits. High earners may not be able to contribute directly to a Roth IRA.

Contribution Limits: There are limits on how much you can contribute annually.

No Tax Deduction: Contributions are made with after-tax dollars and are not tax-deductible. 

Limited Investment Options: Roth IRAs may have limited investment options compared to other retirement accounts like 401(k)s.

Early Withdrawal Penalties: While you can withdraw contributions without penalties, earnings may be subject to taxes and penalties if withdrawn before age 59½ and not held for at least five years. 

Required Account Opening Period: Earnings can only be withdrawn tax-free if the account has been open for at least five years. 

No Required Minimum Distributions (RMDs):Unlike Traditional IRAs, Roth IRAs do not have RMDs, which could be a disadvantage for those looking to lower their taxable estate.

Conclusion and Key Takeaways

Retirement planning is a crucial aspect of financial planning for physicians. A Roth IRA for retirement savings is a smart way to potentially maximize tax savings and financial flexibility.

Throughout this article, we discussed the various benefits of Roth IRAs, including tax-free withdrawals, the ability to take advantage of a lower tax bracket now, and more flexibility in retirement. We also explored how Roth IRAs can be used as an estate planning tool, the benefits they offer for different generations of physicians, and how they can provide a safety net for early retirees.

Additionally, we discussed the unique advantages of using Roth IRAs for education savings and avoiding taxes like IRMAA and the net investment income tax. We also touched on the extra flexibility offered by Roth IRAs, including access to contributions at any time and the ability to use funds for additional purposes as allowed by the SECURE Act.

Roth IRAs offer an excellent investment vehicle for physicians seeking retirement. They provide a unique set of benefits that can help you maximize your savings, minimize taxes, and provide financial flexibility throughout retirement. By incorporating Roth IRAs into your retirement planning strategy, you can potentially achieve your retirement goals.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used or relied on, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Entities or persons distributing this information are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

About Mark Matos

457(b) Plan Guide for Physicians

The Ultimate Plan Guide For Your Financial Future

Physicians often need help with unique financial hurdles, such as significant student loan debt and delayed entry into the workforce due to extended education and training. Recognizing and addressing these challenges is vital for a successful retirement strategy.

Early and consistent retirement planning for long-term financial independence is crucial

Starting retirement planning early and remaining consistent in saving and investing can significantly impact a physician’s financial independence in the long run. Taking advantage of compound interest and diversifying investments are essential aspects of a sound retirement plan.

Exploring the Advantages of 457(b) Plans in a Physician’s Retirement Strategy

Assessing the unique features of 457(b) plans that cater to physicians’ needs

457(b) plans offer features that can be particularly beneficial for physicians, such as flexible withdrawal options and the ability to make catch-up contributions. Understanding these unique features can help physicians determine if a 457(b) plan is the right choice for their retirement strategy. 457(b) plans can complement other retirement accounts and enhance overall retirement savings

Incorporating a 457(b) plan into a physician’s retirement strategy can complement other retirement accounts, such as 401(k)s 403(b)s and IRAs. By diversifying investments across various retirement accounts, physicians can potentially optimize their savings and hope to better manage taxable income during retirement.

Disclosure: Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

A Quick Overview of 457(b) Plans

What is a 457(b) plan?

Definition and purpose of a 457(b) plan

 A 457(b) plan is a tax-advantaged deferred compensation retirement plan available primarily to state and local government employees, as well as employees of certain nonprofit organizations. It aims to help eligible employees save and invest for retirement while enjoying tax benefits.

Contribution limits and catch-up provisions

 Like other retirement plans, 457(b) plans have annual contribution limits, subject to periodic adjustments. Additionally, they offer catch-up provisions for participants nearing retirement, enabling them to contribute more to their accounts.

Comparison with other retirement savings options (401(k), 403(b), IRA)

Similarities with 401(k), 403(b), and IRA plans

457(b) plans share some common features with other retirement savings options, such as pre-tax contributions, tax-deferred growth, and annual contribution limits. They also serve as a valuable tool for long-term retirement planning.

Key differences from 401(k), 403(b), and IRA plans

While 457(b) plans have similarities with other retirement accounts, they also possess unique characteristics that set them apart. For instance, 457(b) plans offer more flexible withdrawal options, allowing participants to access their funds upon separation from their employer without incurring early withdrawal penalties. Additionally, 457(b) plans are specifically designed for certain government and nonprofit employees, unlike 401(k), 403(b), and IRA plans, which cater to a broader range of workers.

457(b) Plan Guide for Physicians

Case Study #1: Dr. Smith’s Successful Retirement Strategy with a Governmental 457(b) Plan

Background and retirement objectives

Dr. Smith’s career and financial situation

Dr. Smith, a physician employed by a public hospital, has worked diligently to grow her career and build a robust financial foundation. Her primary objective is to achieve a comfortable retirement by age 65.

Retirement goals and target savings

Dr. Smith aims to maintain her current lifestyle during retirement, requiring an estimated $200,000 in annual income from her investments and retirement accounts.

Contribution strategy and investment choices

Maximizing contributions to the 457(b) plan

Dr. Smith takes advantage of her employer’s governmental 457(b) plan by contributing the maximum allowable amount each year. She also utilizes the catch-up provision as she nears retirement, further boosting her account balance.

Diversified investment portfolio

Dr. Smith carefully selects a mix of investment options within her 457(b) plan, including stocks, bonds, and mutual funds. She periodically reviews and rebalances her portfolio to maintain her desired asset allocation and risk tolerance.

The role of the 457(b) plan in Dr. Smith’s overall retirement plan

Complementing other retirement accounts

In addition to her 457(b) plan, Dr. Smith contributes to a 403(b) plan and a Roth IRA to diversify her retirement savings sources. This multi-pronged approach ensures she has multiple income streams during retirement while benefiting from different tax advantages.

Achieving financial independence and flexibility

The 457(b) plan is crucial in Dr. Smith’s retirement strategy by providing her substantial tax-deferred savings and flexibility in accessing her funds. By incorporating the 457(b) plan alongside her other retirement accounts, Dr. Smith successfully builds a comprehensive and well-rounded retirement plan, allowing her to achieve her retirement goals and enjoy financial independence in her golden years.

Why 457(b) Plans are Particularly Attractive to Physicians

High-income earners and tax-deferral benefits

Reducing taxable income

 Physicians often face significant tax liabilities as high-income earners. By contributing to a 457(b) plan, they can reduce their taxable income, lowering their current tax bill and potentially moving into a more favorable tax bracket.

Tax-deferred growth

Contributions to a 457(b) plan grow tax-deferred, allowing physicians to accumulate wealth more efficiently over time. This feature is particularly valuable for high-income earners, who can benefit from the compound interest on their investments without the drag of taxes on their returns.

Flexibility in withdrawal rules for early retirement or career changes

Early retirement considerations

Physicians may retire early or transition to a less demanding role later in their careers. Unlike other retirement accounts, 457(b) plans do not impose a 10% early withdrawal penalty for distributions before 59½. This flexibility especially appeals to physicians who wish to access their retirement funds earlier than traditional retirement accounts allow.

Career change flexibility

In the event of a career change or termination of employment, physicians can access their 457(b) funds without penalties as long as the plan sponsor no longer employs them. This feature offers greater financial flexibility, enabling physicians to adapt their retirement strategies to evolving career paths or personal circumstances.

Governmental vs. Non-Governmental 457(b) Plans: Know the Difference

Key features and differences

Governmental 457(b) plans

  • Typically offered to state and local government employees, including public hospitals.
  • Funds are held in a trust, providing additional protection
  • It can be rolled over into other retirement accounts like IRAs or 401(k)s
  • Generally viewed as less risky due to government backing

Non-Governmental 457(b) plans

  • Offered to employees of certain nonprofit organizations, such as private hospitals or foundations
  • The employer retains control of the funds, as they are not held in a trust
  • Limited rollover options, with funds only transferable to other non-governmental plans
  • Carry a higher degree of risk, as they are subject to the financial stability of the employer

Evaluating risk factors for non-governmental plans

Financial stability of the employer

Non-governmental 457(b) plans are inherently riskier than their governmental counterparts because they depend on the employer’s financial health. Physicians should assess the stability of their organization before investing heavily in a non-governmental plan.

Creditor claims

Unlike governmental 457(b) plans, non-governmental plans are not protected from employer creditors. In the event of bankruptcy, a physician’s non-governmental 457(b) plan assets may be vulnerable to creditor claims, potentially jeopardizing their retirement savings.

Distribution and rollover limitations

Non-governmental 457(b) plans have restrictions on rollovers and distributions. Physicians must carefully review their plan’s rules to understand the implications of transferring or withdrawing funds upon leaving their employer. In some cases, lump-sum distributions may lead to significant tax liabilities.

Case Study #2: Dr. Johnson’s Experience with a Non-Governmental 457(b) Plan

Background and financial goals

 Dr. Johnson is a cardiologist who works for a private hospital that offers a non-governmental 457(b) plan as part of its retirement savings options. With a high income and a desire to maximize her retirement savings, Dr. Johnson was initially attracted to the plan’s high contribution limits and tax-deferral benefits.

Navigating potential risks and challenges 

Dr. Johnson was aware of the potential risks associated with non-governmental 457(b) plans, including the risk of losing her funds if her employer goes bankrupt. However, after conducting thorough research and consulting with a financial advisor, she felt confident that her employer was financially stable and that the plan’s potential benefits outweighed the risks.

How Dr. Johnson maximized her non-governmental 457(b) plan 

Dr. Johnson decided to contribute the maximum amount allowed yearly to her non-governmental 457(b) plan. She also diversified her investment portfolio and regularly reviewed her plan’s investment options and fees to ensure that she was making informed decisions. Additionally, she clearly understood the plan’s withdrawal rules and associated taxes to avoid any unexpected financial consequences.

While non-governmental 457(b) plans come with certain risks, Dr. Johnson’s experience demonstrates that careful consideration and planning can still be a valuable part of a physician’s retirement savings strategy.

Maximizing Your 457(b) Contributions: A Winning Strategy

Annual contribution limits

Understanding the limits

Knowing the annual contribution limits for 457(b) plans is essential for physicians looking to maximize their retirement savings. In 2023, the standard limit is $22,500, which may be adjusted for inflation in future years. Keep in mind that employer contributions are included in this limit.

Balancing contributions with other retirement accounts

When maximizing your 457(b) contributions, it’s crucial to consider your other retirement accounts, such as 401(k)s, 403(b)s, and IRAs. Physicians should strike a balance between contributing to their 457(b) plan and other retirement savings vehicles to optimize their overall retirement strategy.

Catch-up contributions for physicians nearing retirement

The special rule for 457(b) plans

Physicians within three years of their plan’s specified normal retirement age can take advantage of a unique catch-up provision if the provision is in their specific plan. This rule allows them to contribute up to twice the annual limit ($45,000 in 2023) for each of those three years, enabling them to boost their retirement savings significantly before retiring.

Weighing the benefits

Catch-up contributions can be an excellent way for physicians nearing retirement to accelerate their savings and make up for any underfunded years. However, evaluating the tax implications and considering other financial priorities, such as paying down debt or funding a child’s education, is essential before maximizing catch-up contributions.

Coordination with other catch-up provisions

Physicians should also be aware of catch-up contribution rules for other retirement accounts, such as 401(k)s, 403(b)s, and IRAs. When planning their overall retirement strategy, they should factor in these catch-up provisions to ensure they’re making the most of their available savings opportunities.

Combining 457(b) Plans with Other Retirement Savings Vehicles

Coordinating 457(b) with 401(k), 403(b), and IRAs

Understanding the unique features of each account

To effectively coordinate a 457(b) plan with other retirement savings vehicles, physicians must first understand the unique features of each account type, including their respective contribution limits, tax advantages, and withdrawal rules.

Balancing contributions

Strategically allocating contributions between a 457(b) plan and other retirement accounts, such as 401(k)s 403(b)s, and taxable accounts, can help physicians optimize their overall retirement strategy. This may involve maximizing contributions to employer-sponsored plans that offer matching contributions.

Strategies for potentially maximizing contributions and tax advantages

Utilizing pre-tax and post-tax accounts

A comprehensive retirement savings strategy should consider pre-tax accounts, like traditional 401(k)s, 403(b)s, and taxable accounts. By contributing to both types of accounts, physicians can balance taxable and tax-free income sources in retirement, potentially reducing their overall tax burden.

Taking advantage of employer-sponsored plans

Physicians should always aim to maximize any available employer matching contributions in their 401(k) or 403(b) plans, as these matches are essentially “free money” that can significantly boost their retirement savings.

Managing tax brackets

By strategically contributing to a mix of pre-tax and post-tax retirement accounts, physicians can manage their taxable income in retirement and potentially reduce the likelihood of being pushed into a higher tax bracket. This approach can help them enjoy a more tax-efficient retirement and preserve more of their hard-earned savings.

Consulting a financial professional

Physicians should consult a financial professional to create the most effective retirement savings strategy combining a 457(b) plan with other retirement accounts. A skilled advisor can help them navigate the complexities of retirement planning and ensure they take full advantage of the available savings opportunities and tax advantages.

Case Study #3: Dr. Lee’s Balanced Approach to Retirement Savings

Background and retirement vision

Dr. Lee, a successful cardiologist, has always placed a high priority on retirement planning. 

Her vision for retirement includes the following:

  • Traveling extensively.
  • Dedicating more time to her hobbies.
  • Spending quality time with her family.

She has consistently focused on creating a diversified and balanced retirement savings strategy to achieve this goal.

Utilizing a 457(b) plan alongside other savings vehicles

Dr. Lee’s employer offers a governmental 457(b) plan and a 401(k) plan. Recognizing the unique advantages of each account, Dr. Lee has made strategic contributions to both plans over the years. 

Her approach has been to:

  • Maximize employer matching contributions in her 401(k) plan.
  • Contribute the maximum allowable amount to her 457(b) plan to take advantage of the separate contribution limits.

Lessons learned from Dr. Lee’s experience

Dr. Lee’s balanced approach to retirement savings highlights several key lessons:

Diversification is crucial for long-term financial stability. By contributing to multiple retirement accounts, Dr. Lee has created a mix of taxable and tax-free income sources for her retirement years.

Taking full advantage of employer-sponsored plans is essential. Dr. Lee has consistently maximized her employer’s matching contributions, boosting her retirement savings.

A proactive approach to retirement planning pays off. By starting early and staying disciplined, Dr. Lee has built a substantial nest egg allowing her to pursue her retirement vision.

Consultation with a financial professional can be invaluable. Dr. Lee has worked closely with a financial advisor to create a tailored retirement savings strategy that aligns with her goals and needs.

How to Choose the Right 457(b) Plan for Your Needs

Assessing your employer’s plan offerings

Before deciding whether a 457(b) plan is the right choice for you, it’s crucial to understand what your employer offers. Here are some key factors to consider:

  • Determine if your employer offers a governmental or non-governmental 457(b) plan, as the differences can significantly impact your retirement strategy.
  • Identify if your employer offers other retirement savings options, such as a 401(k) or a 403(b) plan, and consider how these accounts might complement your 457(b) plan.
  • Investigate if your employer provides matching contributions for any available retirement accounts, and factor this into your decision-making process.
  • Review the plan documents, including the Summary Plan Description, to comprehensively understand the 457(b) plan’s terms and conditions.

Evaluating investment options and fees

Once you clearly understand your employer’s 457(b) plan offerings, it’s time to evaluate the plan’s investment options and fees. Consider the following:

  • Investment Options: Assess the range of investment options available within the 457(b) plan, such as mutual funds, index funds, or target-date funds. Look for a diverse selection that aligns with your risk tolerance, investment goals, and timeline.
  • Fees: Investigate the fees associated with the plan, including administrative fees and expense ratios for the investment options. Lower fees can make a significant difference in your long-term returns.
  • Performance: Review the historical performance of the available investment options, keeping in mind that past performance does not guarantee future results. However, this information can provide valuable insights into the investments’ track record and management.
  • Customization: Determine if the plan allows for customization, such as creating a personalized investment mix or adjusting your allocations over time.

By carefully evaluating your employer’s 457(b) plan offerings and considering how they fit into your overall retirement strategy, you can make an informed decision and choose the right plan for your needs.

457(b) Plan Guide for Physicians
457(b) Plan Guide for Physicians

Navigating Potential Pitfalls with Non-Governmental 457(b) Plans

While non-governmental 457(b) plans offer many of the same benefits as their governmental counterparts, they come with some unique risks, particularly in the event of employer bankruptcy. Here are some key points to keep in mind:

  • Non-governmental 457(b) plans are not held in a separate trust, which means the funds are considered part of your employer’s general assets and could be subject to creditors’ claims in case of bankruptcy.
  • In the event of employer bankruptcy, participants in non-governmental 457(b) plans may lose some or all of their account balance, as these funds are not protected by the Employee Retirement Income Security Act (ERISA).
  • To mitigate this risk, carefully assess your employer’s financial stability and consider diversifying your retirement savings among different accounts.

Managing withdrawal rules after separation from employment

Another potential pitfall with non-governmental 457(b) plans is the variation in withdrawal rules after separation from employment. It’s essential to understand and prepare for these rules to avoid potential tax consequences and financial setbacks:

  • Familiarize yourself with the specific withdrawal rules of your non-governmental 457(b) plan, as they can vary from one plan to another.
  • Some plans may require you to take a lump-sum distribution shortly after separating from your employer, which could result in a significant tax burden.
  • Other plans may allow for more flexible withdrawal options, such as rolling over the funds into another non-governmental 457(b) plan or spreading the distributions over a set period.
  • Consult with a financial advisor to develop a strategy for managing withdrawals from your non-governmental 457(b) plan tax-efficiently and minimizing the impact on your overall retirement savings.

By understanding the risks and potential pitfalls associated with non-governmental 457(b) plans, you can make informed decisions and better protect your retirement savings.

Final Thoughts

Emphasizing the Importance of a Comprehensive Retirement Savings Strategy

Retirement planning can be complex and overwhelming, particularly for physicians with unique financial needs. However, the benefits of early and consistent retirement planning cannot be overstated. By taking a holistic approach to retirement savings, physicians can position themselves for long-term financial independence.

Making Informed Decisions About 457(b) Plans

457(b) plans can play a critical role in a physician’s overall retirement savings strategy. The case studies illustrate that a 457(b) plan can provide unique benefits that complement other retirement savings vehicles. However, it’s important for physicians to carefully evaluate their options and understand the potential risks associated with non-governmental plans.

By taking a thoughtful approach to retirement planning and leveraging the advantages of a 457(b) plan, physicians can create a successful retirement strategy that meets their unique financial goals and needs.

About Mark Matos

Financial Planning for Physicians

Maximizing Retirement Savings for Physicians 2023: A Planning Guide for Tax-Advantaged Accounts and Strategies

You’ve spent years training and working hard to build a successful career as a physician. But have you considered your retirement as you continue to climb the ladder of success? Saving for retirement is essential; the earlier you start, the better. With 2023 in full swing, it’s time to revisit your retirement savings plan and take advantage of the available tax-advantaged retirement accounts. In this article post, we’ll explore the different retirement savings accounts available to physicians, including 401k and 403b plans, Health Savings Accounts (HSAs), 457b plans, Backdoor Roth IRAs, and taxable accounts. We’ll provide insights into how each account works, its advantages and disadvantages, and tips to help you maximize your contributions. So, let’s dive in and explore the world of retirement savings accounts for physicians in 2023!

Investing in Your Future: Key Considerations in Financial Planning

Before diving into which retirement accounts to use, there are several key considerations to remember.

First and foremost, knowing your financial goals and how much you need to save to achieve them is essential. With a clear understanding of what you want to accomplish, it will be easier to determine which accounts best suit your needs.

Additionally, it’s essential to consider any outstanding debts, particularly high-interest credit card debt. In most cases, it’s best to focus on paying off debts before worrying about maxing out your retirement accounts. This will help free up more money that can be used for savings.

Finally, creating a budget and cash flow plan is crucial to allocate enough money toward retirement savings. Having a clear picture of where your money is going and how much you can afford to save will help you make informed decisions about investing.

401k and 403b Plans: Maximize Your Retirement Savings with Employer-Sponsored Plans

When it comes to saving for retirement, tax-advantaged accounts are a must-have. These accounts offer tax benefits to encourage saving for retirement. Here are three types of tax-advantaged accounts you should consider:

If you are a physician looking to start saving for retirement, 401k, and 403b plans may be a great starting point. These retirement saving accounts are very similar and offered by employers, including Solo-401k, in which you are the employer. The main difference from the employee’s perspective is that for-profit companies offer 401k plans, while non-profit organizations or government employers provide 403b plans.

These plans come with significant benefits, as many employers offer a match on your contributions to the plan, making it easier to save for retirement. However, it’s essential to understand that employers have different equations for calculating the match. You should contribute at least the amount needed to receive the full match, even if you have other pressing priorities like larger student loans or debts.

Many plans offer the option to invest in a pre-tax or Roth account. While conventional wisdom says you should take advantage of the pre-tax option as a tax planning strategy, you should understand your circumstances and tax situation before deciding.

The maximum employee contribution to these plans is $22,500 ($30,000 for 50+) for 2023, with catch-up provisions available. However, you can also receive employer contributions (and/or make after-tax contributions, if eligible) to bring the total contribution up to $66,000.

Overall, 401k and 403b plans are an intelligent way for physicians to begin saving for retirement. However, making informed decisions and understanding your circumstances are crucial before contributing.

A helpful tip to remember is that SEP-IRAs or SIMPLE IRAs can hinder your ability to use a Backdoor Roth IRA. Ideally, you would use a Solo-K instead of a SEP or SIMPLE.

Tax-Advantaged Accounts: Tax-Savvy Investing: Unlocking the Benefits of HSAs, Backdoor Roth IRAs, and 457b Plans

Maximizing Your Retirement Savings with Health Savings Accounts (HSAs)

The Health Savings Account (HSA) is an unparalleled tool for retirement savings due to its triple-tax advantages. Not only are contributions pre-tax and the funds inside grow tax-deferred, but qualified medical expenses can also be withdrawn tax-free. Dubbed the “Stealth IRA,” the HSA can serve as a retirement savings account by maxing out contributions each year and avoiding withdrawals for medical expenses during working years. However, it’s crucial to have adequate emergency funds to cover out-of-pocket expenses and deductibles. To qualify for an HSA, you must have a high-deductible health plan (HDHP), but it’s crucial not to compromise good health insurance for tax benefits. For those eligible, the 2023 max contribution is $3,850 for self-only plans and $7,750 for family HDHPs, with an additional $1,000 for those aged 55 and above.

457(b) Retirement Plans: Understanding the Key Differences

In addition to 401k and 403b plans, many physicians have access to 457b, employer-sponsored retirement plans. These plans allow for pre-tax contributions, which reduce your taxable income during your peak earning years. Contributions to 457b plans are separate from 401k and 403b plans, allowing you to save even more for retirement. The maximum contribution for 2023 is $22,500 ($30,000 for 50+), which means you can contribute up to $45,000 ($60,000 for 50+) annually if you also contribute to a 401k or 403b plan.

However, it’s essential to note that there are two types of 457b plans: governmental and non-governmental. The primary difference is that the government backs governmental plans, while your employer backs non-governmental plans. If you have a non-governmental 457b plan, your money is not entirely yours until you leave your employer or retire and are paid the money. This means you risk losing your money if your employer gets sued or cannot pay its debts.

Understanding the critical differences between these plans is essential to maximize your retirement savings. In a governmental plan, the funds can be rolled over to other accounts like an IRA or 401k/403b, and the money is held in a trust. In contrast, non-governmental plans may have limitations on transferring funds and are subject to your employer’s creditors, making them more susceptible to risk.

Another significant feature of the 457b plan is that you can withdraw contributions without penalty before age 59 ½, making it a great tool if you retire early. However, it’s crucial to read the fine print and understand your exact options at separation from service, as some plans may require you to take out all the funds within a short window, which could result in a substantial tax issue.

Understanding the differences between these plans is crucial for maximizing your retirement savings while minimizing risks.

The funds in the plan are vulnerable to claims from your employer’s creditors and are not safeguarded by a trust. It’s crucial to review the terms and conditions carefully. Although it’s a fact that you can lose all the money in the account if your employer goes bankrupt, you are more likely to encounter problems with the withdrawal options. Additionally, you can withdraw contributions without penalty before 59 ½, making it an excellent choice if you intend to retire early.

Backdoor Roth IRAs for Physicians: The Secret to Unlocking Tax-Free Retirement Savings

While other tax-advantaged accounts offer tax deductions on contributions, Roth IRAs require after-tax money to fund the account, making it different from other retirement savings accounts. In simpler terms, contributing to this account will not reduce your taxable income. Although Roth IRAs are not for everyone, a Roth IRA could potentially provide significant tax advantages.

Your after-tax contribution to a Roth IRA grows tax-deferred (similar to the other retirement accounts we discussed earlier). However, when you withdraw your money in retirement (assuming it is a qualified withdrawal), you will receive your funds tax-free. Any qualified withdrawals from your Roth IRA in retirement will not increase your taxable income for that year. Diversifying your retirement income through traditional retirement plans (like 401ks and 457 goals) and Roth accounts can provide greater flexibility to meet retirement income needs without paying a large tax bill each year.

Many physicians face the issue of having a high income, making them ineligible to contribute directly to a Roth IRA. This is where the backdoor Roth IRA comes in. To complete a backdoor Roth IRA, you make an after-tax contribution to a traditional IRA and then submit a Roth conversion to move those funds into your Roth IRA. Whether you are doing a backdoor Roth IRA contribution or a direct contribution, the maximum annual contribution is $6,500 ($7,500 for 50+).

Consider taking advantage of after-tax contributions in your 401k/403b plans, especially if they allow in-plan Roth conversions of those contributions.

Roth IRA Disadvantages

Roth IRAs (Individual Retirement Accounts) come with several advantages, but they also have some disadvantages, such as:

Income Limits: Roth IRAs have income eligibility limits. High earners may not be able to contribute directly to a Roth IRA.

Contribution Limits: There are limits on how much you can contribute annually.

No Tax Deduction: Contributions are made with after-tax dollars and are not tax-deductible.

Limited Investment Options: Roth IRAs may have limited investment options compared to other retirement accounts like 401(k)s.

Early Withdrawal Penalties: While you can withdraw contributions without penalties, earnings may be subject to taxes and penalties if withdrawn before age 59½ and not held for at least five years.

Required Account Opening Period: Earnings can only be withdrawn tax-free if the account has been open for at least five years.

No Required Minimum Distributions (RMDs): Unlike Traditional IRAs, Roth IRAs do not have RMDs, which could be a disadvantage for those looking to lower their taxable estate.

Beyond Retirement Accounts: How Physicians Can Potentially Optimize a Taxable Investment Portfolio

When planning for retirement, a taxable account may be a consideration for additional savings after fully funding your tax-advantaged accounts. Although it doesn’t offer tax benefits, there are strategies to minimize its tax impact. Consulting a financial advisor or tax professional is crucial to avoid any adverse effects on your financial plan.

Moreover, taxable accounts offer flexibility, making them ideal for early retirement savings or emergency funds. Proper risk allocation is necessary to avoid any adverse effects. Remember to prioritize retirement savings and take advantage of tax-advantaged accounts. Building good financial habits and controlling emotions can lead to a successful retirement plan.

Building a Solid Retirement Plan: Financial Planning for Physicians

It’s crucial to prioritize retirement savings and take advantage of the various tax-advantaged accounts available. By understanding your financial goals, debt, and cash flow, you can make informed decisions about where to invest. While employer-sponsored plans like 401k, 403b, and 457b are excellent starting points, HSAs, and Backdoor Roth IRAs can provide additional benefits. A taxable account can also be helpful, but working with a professional is essential to minimize the tax impact. Remember to automate savings, build good habits, and control your emotions for a successful retirement plan.

About Mark Matos