Tax Strategies

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  • 1.  SECURE Your Future: New Rules, New Opportunities for Savvy Savers

    Posted 12-18-2024 11:36

    Hi Everyone!

    Hope you all are staying warm and getting ready for the holiday season. Investing isn't just about picking the right stocks-it's also about keeping more of what you earn. With tax year 2025 approaching, modest inflation adjustments and the final year under the Tax Cuts and Jobs Act rules offer both opportunities and challenges for individual investors.

    💡 Personal Tax Planning Experience: How do you currently approach your tax planning for investments? What resources or tools have you found most helpful? Share your strategies to maximize tax efficiency and learn from others in the community!

    💬 SECURE 2.0 Act Changes: The new retirement plan catch-up contributions for those aged 60–63 aim to help older savers boost their retirement funds. What are your thoughts on this update? Will it change how you approach contributing to your retirement accounts?

    📖 For those who haven't yet, check out the article in the latest AAII Journal: The Individual Investor's Guide to Personal Tax Planning 2024. It's packed with insights to help you make the most of this transitional tax period and plan effectively for the future. Click here to read the full article!



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    Jenna Brashear
    AAII Community Manager
    Chicago, IL
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  • 2.  RE: SECURE Your Future: New Rules, New Opportunities for Savvy Savers

    Posted 12-19-2024 07:40

    I don't understand the reason for the extra catch up to be only 60 to 63 yet this is our government. If there is such a retirement crisis then let people save as much as they can. Ideally people will take advantage of it yet funds are tight with inflation and rising costs so who knows if people will be able to. I'm too young to take advantage of it. Also don't have a 401k plan anyway. What can I save? 8K as a deduction to an IRA. HAHAHAHAHA. 



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    LEWIS CHRISTMAN
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    Original Message


  • 3.  RE: SECURE Your Future: New Rules, New Opportunities for Savvy Savers

    Posted 12-19-2024 13:37

    Lewis, I agree with you about our "caring" government, but you are NEVER too young to take advantage of the available planning opportunities. I started planning for retirement before I was 20 years old. Since you don't have a 401k, my humble suggestion is to plow everything you can into a Roth IRA. This is an especially good option if you're in a low tax bracket and can't get much out of a Traditional IRA deduction. 

    I contributed what I could to a traditional IRA until the Roth option became available in 1998. I converted my entire IRA to a Roth that year and have continued to max out my Roth contributions since then. Today, I am far wealthier than I ever dreamed of being, and my Roth is a major contributor to that. 

    I started my children early too. Each of them started earning money for yard work around age 14. I prepared tax returns to report their incomes (on which they owed no taxes) and matched their earnings in Roth IRAs. Now in their mid to early 20s, what they currently have in their Roths will grow to millions by the time they're my age. 



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    Rob Adams
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    Original Message


  • 4.  RE: SECURE Your Future: New Rules, New Opportunities for Savvy Savers

    Posted 12-19-2024 14:23
    Edited by ROBERT ADAMS 12-19-2024 14:25

    Jenna, the best tax move I ever made was learning to prepare my own tax returns. I started in my late teens, learning the hard way---by simply doing it while poring through IRS publications. Reading and interpreting IRS publications is an art in itself!

    A few years later, I took a tax preparation course provided by H&R Block. For several years, I even worked part-time as a tax preparer. I remember wanting to help our clients plan better and take advantage of the Code, but I got scolded by my boss for doing it. He said something like, 'we don't have the time and aren't paid enough to give tax advice.' That was one of those lightbulb moments for me. The lesson is that nobody, but NOBODY, is going to look after your financial wellbeing as much as YOU can. That reinforced my lifelong practice of do-it-yourself financial management.

    Doing my own taxes helps me know what records to keep and how to keep them as I go through the tax year. When springtime rolls around, I have all the information compiled and ready to quickly prepare my returns.

    Preparing my own returns also keeps me focused on those things I can do to minimize my tax bill. I do my best to keep my ordinary income below my deductions, so that the only taxed income will be from qualified dividends and long-term capital gains, which for me are taxed at a maximum rate of 15%. 

    A quick internet search can provide a host of online tax-prep courses. Investing the time and expense in taking such a course can pay huge dividends.



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    Rob Adams
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    Original Message