High Income Earners turn Tax Credit into $277,416 tax free retirement plan

High Income Earners turn Tax Credit into $277,416 tax-free retirement plan.

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Our financial planning process is an ongoing relationship because as you grow, your financial plan grows with you. At Sickle Hunter Financial Advisors, we believe that saving and making sound financial decisions will help improve your life’s changing needs and objectives. Retirement, college planning, wealth building, social security, and career benefit packets are only a few of the financial decisions that you may face in your lifetime and we’re here to help guide you.

TRAVIS T SICKLE, CFP®, EA®, AAMS®, CRPC®, RICP®
CERTIFIED FINANCIAL PLANNER™

twitter: @travissickle

Sickle Hunter Financial Advisors
1646 W Snow Ave.
Suite 144
Tampa, FL 33606
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Information in this video is for educational and entertainment purposes only.
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#travissickle

[keithmachado-ppfv]

I am confused. You can’t max out a 401k pre tax and contribute to a Roth 401k as well. You can convert it but tax is payable in the year of conversion so the only benefit I see compared to just contributing to the Roth would be a possible 1 year timing difference by doing the conversions in January of the following year. In that case in year one you would have a $40k tax deduction. Then in year 2 and each subsequent year you get a $40k deduction that is offset by the tax paid to convert, so the $40k is a one time only benefit and likely not a decision factor. Since this example were in the 35% tax bracket they would need to be in 35% or higher in retirement to make the Roth come out ahead. There are other factors such as IRMAA surcharges, the widow trap, and your heirs tax rates to consider, thus it is not one size fits all.

[Nkrmancr]

Hi Travis, excellent tip. What software are you using to run the different scenarios?

[SebRenon]

Hi, interesting video!
However, I have a hard time understanding exactly how it works...
The couple max out their traditional 401k (pre-tax) and then do a backdoor Roth IRA to contribute to their Roth?
Thank you.

[TheVp]

Hey Travis, but since its pre tax 401k, wouldn't you pay taxes later down the line anyways?