Marc Killian 0:39
There you go. Well, we’re gonna have a download to give away this week on the show. So go to the tax bomb.com and then you’ll be able to go to the to the Roth guy or the Resources tab there, and you’ll be able to scroll down. We’ll put a link in there for you, but we’re gonna have important tax numbers, 2025 PDF for you guys to download and check out. And we’re gonna talk about that a little bit on the show as well today. So we’ll run through some of that stuff, but go check that out if you guys need that. And again, we’ll have that in the show links. So I guess, buddy. Let’s just start with a recap of last year. I just saw numbers that popped up that said that the the s, p, finished at 20 plus percent for the second year in a row, two years in a row. Last time we had that happen was right before the.com burst goes, Jesus. Now I know right? 99 and two, 2000 was like the last time we saw that. So what’s your thoughts? Look

Jude Wilson 1:26
the last two years, there’s no doubt, it’s just been incredible for investors and and I feel bad for some people who you know, during the COVID years, they became very conservative and they didn’t have a financial advisor to guide them through proper allocation. And this is why we stress so much the bucket plan, making sure your assets are allocated correctly in the three different buckets, but also your investment allocation. Because, as you said, this doesn’t happen all the time, and if you miss the run up, man, your overall returns dropped to mass dramatically. So, yeah, those of our clients that are well invested, I think they’re very happy, people who maybe missed the rally. You know, people tend to buy in at the high and then so at the low. Yeah, we all want to

Marc Killian 2:15
get in on it when we see it’s been doing well for a while. And then, well, you know, you know, you’re, you’re gonna be a little short in yourself, a little bit. You’re still taking some action, which is good, but you know, at the same time, you got to have some some understanding of what’s going on and some proper expectations. So some lessons learned from the recap of last year. June, market performance, we just said, was great, you know. So we were all wondering what’s going to happen with the tax laws, right? So what, you know, once we got the, you know, the election over with, and we’ll be getting the new administration here pretty soon. The time we’re taping this, the administration won’t have yet taken over, but we think again, nobody knows for yet another week or two to find out what we think they’re going to try to at least extend the tcja, which would not make a huge amount of changes to the tax law, again, they could make some new ripples. We’ll see. But for the most part, what do you think about keeping the tax rates the way they are?

Jude Wilson 3:07
Yeah, I think it’s highly probable. Now, one of my old professors at FSU used to say there’s a difference between probability and possibility. Anything is possible. Your job is to figure out how probable It is okay. I think it’s very probable that the current tax rates will stay or extend past, at least, yeah, yeah, past the the deadline where they were set to expire. But, but that still gives us a lot of urgency around looking at people’s total allocation as far as the tax efficiency of their accounts. You know, should we be doing Roth conversions? Should we put it be putting more money in the Roth side versus the traditional side? Just because it’s extended doesn’t mean the math on the deficit hasn’t changed. We were trying to get proactive instead of being reactive.

Marc Killian 4:01
Well, that’s a good point, right? Because they were going to end, or they still could again. We could be we could be wrong. But with them having control of everything, with the Republicans having control everything, the likelihood of them and doing some form of extension is pretty good. Yeah, it’s pretty high now, because they were going to sunset, we’ve talked about a million times at the end of 2025, so if you were thinking about Roth conversions, your window got really short. But if they do extend it for whatever it is, let’s say it’s three years, or five years, or four years, or whatever it does give you time now to start rothing Over time, which could be a very valuable piece. However, like you said, don’t wait and then something changes, right? So just because they extend it doesn’t mean Well, good. I bought myself another two years before I start this, just get started.

Jude Wilson 4:42
Well, this goes perfectly into what we wanted to talk about today, being proactive, learning some lessons from last year. And how can we start the year being proactive in our own financial planning. So, yeah, man, what a segue. You must do this for a living,

Marc Killian 4:57
something like that. Let’s run it down, right. So we got some key financial tips to start the new year. Give us number one. Let’s break them down. Well,

Jude Wilson 5:04
first of all, let’s look at your investment portfolios, and I break it down into two segments. You can look at your retirement accounts, and you know, your retirement accounts are tax sheltered. So we’re going to set that aside for a second, your non retirement accounts, your brokerage accounts, your savings accounts, your CDs, all those type of things that you’re going to get a 1099 for at the end of the year, you should be receiving that in the next few weeks. You really need to take a look at that. And here’s the reason why any investment that you get a 1099 for could be adding unnecessarily to your tax burden. You’ll see in the 1099 how much was paid in capital gains, how much was paid in dividends, and how much was paid in interest. And oftentimes I meet clients who they’re not living off of their portfolio. They don’t need their portfolio currently to provide income, right? But when I look at their tax returns, I see they’ve got a lot of dividends and interest that were paid, and this is money, if it was allocated differently, would not contribute to additional tax burden they have to pay. So I strongly recommend definitely take a look at your 1099, yeah, and that

Marc Killian 6:20
could you can find some areas to maybe reduce taxable gains, right? Portfolio turnover. Those are some things that we could certainly think about. And speaking of portfolio turnover, Jude, what’s some things to think about there? Right? So the ratio on that, right? Yeah. And again,

Jude Wilson 6:34
we’re talking about your non retirement accounts, because if you’re a tax shelter, you don’t have to worry about that. But in your non retirement accounts. Often people are in mutual funds, or they have a portfolio manager, or they may be doing their own investments, and they don’t realize that every time I sell a security, if I’ve made a gain on that, that could cause additional tax burden. And so in the industry, we have something called portfolio turnover, and a portfolio turnover of one means that basically, you’ve turned over that portfolio one full cycle. You’ve sold everything in there. And so if you’re trying to be tax efficient, you definitely don’t want something over one. You need to check with your mutual fund companies. There’s usually a report where you can see your portfolio turnover, and it’s all about being tax efficient, because at the end of the day, it’s great to get 20% returns, but it’s what about, is what you keep that really makes a difference. Yeah,

Marc Killian 7:30
yeah, that’s that’s a good point, too, and some good information in there for folks to think about. So Right? So we want to think about the portfolio turnover, keeping those costs down, being tax efficient and all of that. So New Year contribution limits, you know, are we bumping these up? Where are we sitting? What are we doing, especially if we’re still working right? So what are we doing as far as socking some money away for the future?

Jude Wilson 7:53
Yeah, New Year. And that’s why it’s important to go to the resource tab and download important tax numbers for 2025 uh, previously, you could contribute up to 23,000 in 2024 it’s been bumped up to 23 five, and there’s been some other changes that that have been made. So you really want to set your savings goal for this year to match the opportunities and the changes that have been made. And you could double check that by looking at the PDF that we have

Marc Killian 8:21
and Yeah, and again, we can get that downloaded. So what are some of the what are some of the key takeaways? Just a couple quick things to highlight for folks. Yeah,

Jude Wilson 8:28
one, one other thing people may take a look at, whether you’re in retirement or have parents that are in retirement, is RMDs required minimum distributions. They are calculated based on the balance of of your retirement accounts on December 31 in that in the PDF, it shows you how to calculate that based on your life expectancy in the IRS tables. And the really big thing is qualified charitable distributions, QCD, a lot of people don’t know that your RMDs, of course, is taxable income, but if you’re charitably inclined and over the age of 73 you can send some of your R and D money directly to the charity and avoid taxable income. And the reason we bring this up now is because sometimes people make a mistake and they take their RMDs, they want to claim QCD, but they claim it after they’ve already taken their RMDs, and that’s a big mistake. You’ll miss out on the opportunity.

Marc Killian 9:27
Yeah? And, you know, so there’s, that’s an opportunity to do. You’ve got the whole year. There’s the max limit of what, like 100,000 or something, exactly. Yeah. So you know if, depending on your, you know how charitably inclined you are and how much your RMDs need to be, and you know what you if you need the money or don’t need the money, right? So people, because it’s so funny, how many people are like, I gotta take I was just talking to somebody the other day, Jude, and they were like, I can’t stand the fact that my advisor makes me take these, these distributions. And I said, Well, you might, you might want to pump the brakes on the fact that your advisor makes you, it’s, it’s your uncle that makes you, yeah. Okay, makes you Yeah, they’re just trying to keep you from having penalties and paying extra issues. Yeah, you got to do those things for sure. So that’s some good stuff. What’s some other savings opportunities? How can we maximize some stuff? Or June, what’s some other things

Jude Wilson 10:15
to think about? Yeah, we definitely want to think about the balance between, if you’re still working and contributing to a 401 K or some type of retirement account. I’ve got clients all the time that say, Oh, I’m maxing out the Roth side of my 401 K, and I say, wait a minute, you may want to figure out how much should be on the traditional side, because you get a tax deduction for that versus how much should be on the Roth side. It’s like baking a cake. You got to have the right amount on each side to to get the biggest bang for your buck. And most people don’t, don’t know that. Let me ask

Marc Killian 10:48
you about that, because, like, depending on your earnings income, right? So some people are like, Hey, I know we talked with a Roth guy. And so naturally it would be like, Well, shouldn’t I just go all Roth, but if you need the the income adjustments, right? Because you want to kind of bring down your taxable income. Maybe the traditional is, is important as well, right? Is that, is that, that balance you’re talking

Jude Wilson 11:08
about, that’s exactly the balance. And we’ve talked about this in previous episodes. We use something we call the tax efficient funnels. It shows how much money should be in pre tax, post tax and versus tax advantage, and we can calculate for individuals exactly how much should be in that pre tax dollars. Because remember, when you retire and start taking income, you’ll still have deductions to claim against that income, and so why not get a tax deduction today and plan for some of that income to be socked up by your deductions. You know, when you retire, that’s the balance. There’s a there’s a sweet spot there, and it’s different for everybody. Yeah, and

Marc Killian 11:50
so, just as a reminder and that we’ve got those limits, we got that information in that PDF. You want to check that out. But, you know, so single, it’s what 150,000 to 165,000 married filing jointly, 236, to 246, so depending on your income levels, and it’s easy to especially do for a married couple, you know, if you’re making decent money, to hit these numbers, it may be worthwhile to look at also HSA Jude, that could be a good place for people to think about being tax efficient as well as it’s just a it’s a great tool,

Jude Wilson 12:18
absolutely, the only triple threat in tax advantage, you get a tax deduction for the contribution. It’s tax sheltered, and it comes out tax free. So that’s something we often talk about. When we look at the tax efficient funnels, that’s the third funnel, the tax advantage funnel. That’s something we often talk about,

Marc Killian 12:36
yeah. So if you’ve got a player you know, on your football team, that’s that true triple threat, you know, like, maybe they’re great running back and they’re also a great receiver out of the backfield, and they block really well, right? So they do all three of the things really well. There’s not many that can do all that good that stuff at an elite level, and the HSA is kind of like that. So yeah, wish

Jude Wilson 12:55
we had that guy at FSU, but that’s a whole nother story.

Marc Killian 13:00
I hear you there. All right, what’s some other tips to think about? You know, as we’re starting the year again, that’s the point of the podcast this time. Things to kick off tweak out. You know, this this month of January, you know, when it’s a little chillier and maybe you’re not doing as much stuff, go ahead and get some of this stuff knocked out. Get it handled so when the warm weather comes in, you can start rocking and rolling with the fun stuff. Insurance review,

Jude Wilson 13:20
yeah, looking at, you know, what life changes, have you had and and are your insurance policies reflecting those life changes? And looking at your estate plan? A lot of people don’t have an estate plan, and some that do have never executed the estate plan. So it’s not almost like not having one. So I think I would wind out this conversation by saying there’s a lot of things that you should be talking about, whether you’re doing your financial planning on your own, whether you have another advisor, or you’re working with us, we want you to be proactive, and now’s the time to set the pace early in the year. Create the benchmarks, create the goals. Just like everything else that we do, a new around, you know, new year planning and all of the habits we want to change, the finances should be near the top of the list. Yeah. I mean, think

Marc Killian 14:13
about most people are doing New year, new me, right, when the new year starts and they’re trying to lose weight or quit smoking, or, you know, whatever it is. So financially, usually is on that list as well as I want to get right financially. So create an action plan. So we got forced a couple of steps here for you to create a national plan for 2025 set clear, measurable financial goals, right? Jude, that’s a good one, increase retirement savings. Another one, reduce taxable income and optimize charitable giving. So there’s four great ones right there. And then you can even do you can break them into like subgroups if you need to, right, but write it down. Get some steps going.

Jude Wilson 14:49
That’s that’s for sure. And we’re here to help in any way that we can. Well,

Marc Killian 14:54
don’t forget that if you need some do need some help again, reach out to Jude and the team. We have links in the show notes. In the description below. Obviously, we always thank you guys for checking out the podcast. We’ve had some great numbers on some of the recent episodes. So thank you so much. Don’t forget to hit the subscribe button on YouTube. That way you catch new episodes when they come out. Ring the bell for notifications. Give a little thumbs up and leave a comment if there’s something you’d like us to talk about in the future. Episodes, we’re just getting rolling. I think this is episode nine or 10. So we’re just getting things going. We got the whole year, and there’s gonna be a lot, dude, right? So future, you know, the first 100 days that Trump, when it gets in, he’s gonna start writing some different things, some executive orders. They got a lot of plans, so there’ll be plenty to talk about. Economically, I’m quite sure,

Jude Wilson 15:37
for sure, we won’t run out of topics, no for sure.

Marc Killian 15:41
And if you need again, if you do need some help, don’t forget about that download we got this week again, check the show notes. We got links in there for you. Get that free, important tax numbers, 2025, PDF. We’ll have a link for you to go to, to the tax bomb.com so you can click on that. And I think that’ll do it, my friends. So have a great week. We’ll see you next time here on the Roth guy with Joe Wilson.

Walter Storholt 16:07
Financial Planning and advisory services are offered through prosperity Capital Advisors, PCA and sec, registered investment advisor with its principal place of business in the state of Ohio, centrist financial strategies and PCA are separate, non affiliated entities. PCA does not provide tax or legal advice. Insurance and tax services offered through centrist financial strategies are not affiliated with PCA. Information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors, including, but not limited to age, health, product insurance carrier and product design, you should consult the insurance carrier website and policy for detailed information, for information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website, www.advisorinfo.sec.gov, pfizerinfo.sec.gov, for additional information about PCA, including fees and services send for our disclosure statement as set forth on Form ADV from PCA using the contact information herein, please read the disclosure statement carefully before you invest or send money you

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