Christine’s enterprise is struggling. She wants extra revenue. If she provides a full-time distant job to her plate, how will her retirement and funds change?
Rob loved a banner yr in 2023. He revamped $1 million. However the sting of revenue tax has him making strikes that violate his funding technique. Is his tax tail wagging the canine?
Gena is worked up to benefit from enterprise deductions. Can she contribute one hundred pc of her wages to a 401k and have the corporate match that?
Christina is uninterested in residing like a pauper within the title of pupil mortgage reimbursement. Is Public Service Mortgage Forgiveness the reply?
Former monetary planner Joe Saul-Sehy and I deal with these 4 questions in right now’s episode.
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P.S. Received a query? Go away it right here.
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Christine asks (at 02:11 minutes): I run my very own enterprise, however I’ve had a downturn in purchasers just lately.
My buddy instructed I get a full-time distant gig whereas nonetheless operating my enterprise. I’ve loads of further time every week and I feel I may do each.
This leads me to questions on funding my retirement accounts:
- Would I be eligible to max out my Solo 401k if I’m contributing to a different employer-sponsored retirement program? What would the tax implications be?
- Would I be capable of contribute to my Roth IRA if my general Modified Adjusted Gross Revenue (MAGI) is just too excessive?
- Would this set off a backdoor Roth state of affairs?
I began investing late at age 38 with a $70,000 portfolio.
Right now I’m 43 and I’ve grown my portfolio to $285,000. After I fund my accounts with $46,000 on the finish of the yr, my portfolio will probably be value $335,000.
How ought to I feel by means of this resolution past an revenue perspective?
Rob asks (at 12:28 minutes): 2023 was a file yr for me. My revenue was considerably greater than $900,000 and my passive revenue from actual property investments was greater than $250,000.
I’ve a web value of over $10 million, comprised of trip leases, flats by the seaside in San Diego, and Vanguard Complete Inventory Market ETFs (VTI).
My goal asset allocation is 50 % shares and 50 % actual property. I labored arduous to attain that stability between 2017 and 2020.
However when the 2017 Tax Minimize Jobs Act launched one hundred pc bonus depreciation for full-time actual property professionals, I expanded my actual property portfolio considerably in 2020 and 2021.
Moreover, my excessive revenue this yr compelled me to search for extra tax financial savings by shopping for one other condominium constructing for bonus depreciation offset revenue.
I need to get again to a 50-50 break up. As an alternative, my newest buy will swing me additional away from that objective. To pay money for the condominium constructing, I must dump $2.1 million in VTI.
What are your ideas on shifting away from my goal technique for the sake of tax financial savings?
The property is positioned in a chief coastal neighborhood near the ocean in San Diego. It presents over $700,000 in upside after reworking.
It’s a belief sale that’s being bought considerably beneath market worth with a chance so as to add Accent Dwelling Items (ADUs) for added revenue.
The acquisition aligns with my skilled experience and presents substantial tax advantages, which I would like with my revenue this yr.
Would you make the identical resolution in my sneakers? Or would you prioritize sustaining the 50-50 asset allocation and pay the taxes?
A follow-up remark in response to Knoxville’s query:
Kris asks (at 28:29 minutes): Relating to Episode 467 concerning the HELOC mortgage and the 401k mortgage, one factor that I feel was presumably missed was the danger of getting a 401k mortgage.
If she separates from service or will get fired, for a lot of plans, that mortgage must receives a commission again instantly. And if not, then it’s distributed as strange revenue.
So then she’s going to should pay strange revenue tax on that charge. So I used to be interested in your ideas so far as together with that as a danger on a 401k mortgage.
Christina asks (at 30:36 minutes): I just lately known as about my mortgage reimbursement plan. On the time I used to be planning to throw as a lot cash in the direction of my loans as attainable upon commencement.
My plans have modified since then as a result of I’m uninterested in residing in squalor.
I’ve determined to pursue Public Service Mortgage Forgiveness (PSLF) utilizing the Saving on a Invaluable Schooling (SAVE) Plan.
I simply graduated from faculty as a doctor assistant and I’ll begin work in March making $100,000 a yr.
What I ought to do throughout the grace interval if SAVE doesn’t begin till June of subsequent yr? Is it value consolidating and skipping the grace interval or ought to I wait six months?
Do you suppose this plan is a good suggestion in any respect?
Gena asks (at 43:10 minutes): Is there a most restrict that my enterprise is allowed to contribute to a 401k match?
My partner is constructing a consulting enterprise, and I’m going to assist with workplace administration and billing on the aspect.
As a part of the marketing strategy, I’m deciding how a lot to incorporate for my wages as a 401k self-employed retirement contribution and firm match.
I’ve learn that I may contribute as a lot as one hundred pc of my wages, however I haven’t discovered a selected restrict so far as the corporate match.
It is a part-time job for me whereas I’m in legislation faculty, so I don’t anticipate reaching the $22,500 cap for private contribution.
However this appears like a good way to scale back our tax legal responsibility whereas additional constructing our retirement.
What ought to I take note of? Are there particulars to fret about, or different essential suggestions I ought to contemplate?
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