Is There an Optimal 401k Balance?

More on the topic of 401k saving: Can there be an “optimal amount” to have in a traditional 401k? At the very least, adjustments can be made to get close-to-optimal. And timing wise with the calendar approaching mid-year there is ample time (unless you have already maxed out your 401k) to make meaningful adjustments to your 2019 401k elections and start the optimizing process.

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This topic is especially important for those who take saving seriously and who have at least $400,000 TODAY in a 401k or IRA Rollover accounts combined with a 401k account. (For those with less, these concepts still matter but with less urgency.)

First: How old are you?

  • Age matters because TIME is one of the biggest determinants of how much a 401k balance can potentially grow.
  • If you are younger than 40, these concepts could affect you A LOT as the power of compounding can kick in over multiple decades (this does not mean trading; rather saving, allocating and allowing compounding to do its work).
  • If you are older than 60 and nearer to retirement or selling a business, these concepts matter greatly but the solutions will be slightly different.
  • If you are in your 50’s, a combination of strategies can work – and keep in mind the “catch up” that allows you to save more.

Continue reading “Is There an Optimal 401k Balance?”

How Much is Too Much in a 401k?

Now that the 2018 tax filing season is mostly over it is time to talk the reality of 2019 taxes – and more important, taxes beyond 2019. This leads to the question, “How much is too much in a 401k?”

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This subject requires more than one edition of TGIF 2 Minutes. For starters here are a handful of issues, facts and questions to ponder over the upcoming long weekend: Continue reading “How Much is Too Much in a 401k?”

A Tax Strategy You May Not Know

Talking taxes on a Friday is a lot easier than talking taxes on a Monday (thank you for reading in Winter Haven, FL)! And believe it or not, at this time of year it is good to be talking taxes no matter what. Preparation and planning are the name of the game. *

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Here’s some “good” news when it comes to taxes and tax strategies: the Roth IRARoth IRA conversion and Roth 401k are alive and well. The “good” part is that for nearly ALL of you reading this, you ARE eligible for both the Roth IRA conversion and the Roth 401k (if your company offers a Roth 401k) even if you are in the higher/highest income brackets or own a business! And these strategies can be employed NOW for 2019. Continue reading “A Tax Strategy You May Not Know”

It’s Never too Early to Plan

A couple of planning “gems” to pass along from the plethora of great financial news reporting* on the new Tax Plan.

Tax Planning

  • Use the Roth 401k whenever it is available at your employer or your company (there are NO income limits for a worker to contribute to a Roth 401k, unlike a Roth IRA).
  • For those of you doing Charitable Gifting AND because of the new, higher Standard Deduction that you may consider using instead of itemizing your taxes, consider doing your Charitable Gifting every OTHER year. This, in effect, “bunches” (to use Greg Iacurci’s word) your charitable gifting into LARGER amounts and then you may only need to itemize in years when your charitable gifting plus deductions is MORE THAN $24,000 for married couples ($12,000 for Single filers).

Continue reading “It’s Never too Early to Plan”