It's been a great week so far. Olivia and I celebrated our fifth wedding anniversary over the weekend with a backpacking trip in the Red River Gorge. If you've never been, I highly recommend a visit.
Speaking of iconic Kentucky locations, Keeneland opens up later this week. While I'm not going for opening weekend, I am excited for a behind-the-scenes tour that I'm hosting on October 24th. We'll be watching the morning workout, then we'll visit a few barns and see the horses up close. There's a good chance we'll be speaking with a well-known trainer too, but I don't want to jinx that. Oh, and Bill Evans Meng of Cross Gate Gallery will be showing us the art available in the upcoming Sporting Art Auction.
With that, I'll jump into the articles that made me think this week.
Let's talk taxes in retirement. With many retirees leaving the workforce in their early 60's, there's an opportunity for tax planning in the years prior to beginning required minimum distributions, and particularly prior to beginning Social Security. Many retirees live on withdrawals from non-qualified (non-IRA) money during this time and have low taxable income. The opportunity here is twofold. If a retiree has significant capital gains, they have the ability to fill up their lower tax brackets (up to $80,800 in taxable income) and potentially pay no capital gains taxes on realized gains. The other option here is to convert accounts from Traditional IRA's to Roth IRA's, essentially locking in a low tax rate on the conversion amount and allowing for tax-free future growth. This can be particularly valuable for retirees who expect to have significant required minimum distributions in the future.
If you're like most of us, you give to charity. Maybe you give at the end of the year, when request envelopes begin filtering in, or maybe you give on a regular basis. My question to you is how intentional are you with your giving?
Charitable giving is one of my favorite topics to discuss. (I talk about it quite a bit in my videos) One of the biggest issues I see made is shotgun giving, which is my term for giving small amounts to anyone who asks. It feels good, at least it feels better than saying no, but shotgun giving lowers the impact of your gifts. It's more effective to focus on the quality of your donations rather than the number of the donations you make. Focus on your why, then find an organization or two to support. Focus on giving both time and money if you're able. This will magnify your gifts and increase the change you're able to influence.
The end of the year brings open enrollment, during which we all scratch our heads and try to estimate which healthcare plan will be the best value for us in the coming year. I'll never forget the first time I looked at various healthcare plans, HMO vs PPO, and tried to make sense of it. I had been in finance for a few years and it still gave me a headache. This piece does a great job of highlighting the different options.
The most overlooked benefit I see is the mega-backdoor IRA. Many employees with 401(k) plans have the option to contribute significant ($30k+) amounts to their 401k, then immediately roll those funds into a Roth IRA. The benefit here is that there are no income limits, like with regular Roth IRA's, and the contribution limit is significantly higher. It can be a very cool opportunity.
If you have any questions about these topics or just want to chat, let's set up a call.
Have a great week!
Jeb
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