Most of us look forward to the excitement that comes with onset of spring, — well, everything except that pesky payment to Uncle Sam. In this episode of How to Win, Kyrk and Rick talk about how to set yourself up for success when it comes to your tax burden. And you know they're gonna sneak in some golf talk, too.
Tax and/or legal advice is not offered by Family Financial Partners. Please consult with your tax professional for additional guidance regarding tax-related matters.
Kyrk Davis is a Registered Representative offering Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Kyrk Davis is an Investment Advisor Representative offering Investment Advisory services through O.N. Investment Management Company. Estate planning services provided in conjunction with your licensed legal professional.
Most of us look forward to the excitement that comes with onset of spring, — well, everything except that pesky payment to Uncle Sam. In this episode of How to Win, Kyrk and Rick talk about how to set yourself up for success when it comes to your tax burden. And you know they're gonna sneak in some golf talk, too.
Tax and/or legal advice is not offered by Family Financial Partners. Please consult with your tax professional for additional guidance regarding tax-related matters.
Kyrk Davis is a Registered Representative offering Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way Cincinnati, Ohio 45242 (513) 794-6794. Kyrk Davis is an Investment Advisor Representative offering Investment Advisory services through O.N. Investment Management Company. Estate planning services provided in conjunction with your licensed legal professional.
Welcome to the How to Win Podcast. I'm Kyrk Davis. And I'm Rick Gregory. Want to know how to win in life and in your finances? Then you're in the right place. On this podcast, we'll be talking about everyday topics and how they relate to your overall financial picture. Welcome back, folks. We've missed you guys. I know you've been listening to the How to Win podcast. Spring is upon us, so we're going to talk about spring and taxes. Kyrk, what do you think about that? I love spring and I hate taxes. Okay, so this is gonna be a great podcast. I hope you guys have listened to some of our other episodes The last one we had was really good with Matt Falcone And we got a lot of good feedback from it and anybody that has feedback Can give that to us or anybody has questions send them in and ask them. We'll see if we can't talk about them So the first thing is what excites you about spring other than financial? Other than finances I really get excited because now is the, we're starting to get into the golf season again. Weather's weather's turning in our favor, sun's shining. Now it's staying light a little bit a little bit later which is always nice. The grass is growing and the course is getting in better condition. I'm I'm excited about all of that. What about the gym? Are you still going to go to the gym or is golf takeover? No, I still go to the gym most days. Sometimes I transition into going to the gym in the morning, so I can actually play golf in the evenings. Fitness is important. Oh yeah, it is. I'm not too fit right now, but that's okay. I'm working on it. So What about things in the springtime financially? Is there something that we do? Does spring calls always for cleaning your garage or cutting grass picking up sticks and limbs? But what about financially? What do we do in the springtime? Anything different other than taxes? So this is a really good time. That you can reflect back on the, on last year. And it's a good time to do it around tax time too just so you get the other piece of the puzzle. But it's a good time just to reflect back, see what worked last year, what kind of changes we need to make this year Maybe we had a really big tax bill because our income increased or maybe we had a child that kind of fell off of our taxes there as a dependent and we had a big tax bill. Now would be a good time to recognize that and maybe adjust some withholdings. So we get to tax time next year and don't have that big surprise again. So it seems like that spring calls maybe for change, and that's why the weather changes, but I think people probably think about their taxes and cutting the grass in the same breath probably because usually you don't like to cut grass. Some people might, but yeah, I don't like to, but, and then also the tax thing. So what do we do to help people with their taxes? A couple things. Throughout the year, throughout all of our planning meetings you've probably noticed that on every planning checklist we, we give our clients, it has a question about, hey, what's your income look like? Is there any changes to that? And that's a big piece because that tells us, one, how much do we need to be withholding from our paycheck? And two there's a, there comes a point where, traditional like IRA and 401k contributions where we're getting a tax deduction on the front end, makes more sense than sometimes than a Roth contribution where we're paying tax on the back end there. So knowing where that income piece is really helps. So that's why we always ask those questions. Then for, maybe our retirees that are, Post, actually contributing to those accounts. Now they're in the phase of life where we're actually taking distributions. We have to be very conscious of where those tax brackets are. For example, maybe we decide that you want to stay in a particular tax bracket. So we may take income from your traditional IRAs or traditional 401ks Up to the top of that particular tax bracket. And then if there's any additional income that you need, that's when we might look to the Roth accounts, where we can get that extra income without having to pay additional taxes. So being conscious of that is another way we help our clients throughout the year. And then, as tax time actually comes around, there's, Life's getting more and more complicated, you're going to get W 2s from your employer. Maybe you have a side hustle that you're getting a 1099 from. Maybe you've also taken some money out of your accounts or put money into your accounts. Or maybe there's a you have a non qualified account that we've made some trades on and that generated another 10. 99. So you can see there's a lot of different documents that are going to be coming out around tax time. We compile anything that's related to family financial partners. We compile that for you and send it over to you. And if you give us authorization, we'll send it over to your CPA as well, just to make sure that nothing gets missed. That's that's coming from family financial partners. So explain to people the difference when they're have, and when they're investing in a 401k, as opposed to an IRA and how that's handled. Because I know that, when you're putting your money in a 401k at your job or whatever, There's different tax completely different tax liabilities. You get a break for putting money in your 401k, and then as opposed to when you have an IRA, how's that different? How's that work as far as the tax, for people's taxes? Yep. So for for a lot of people, it's going to be, it's going to be relatively the same. So a traditional 401k, you you get a tax deduction on the front end whenever you put the money in. So it's, you didn't pay any taxes on the But an IRA, you would pay taxes if you put it in there, if you had it? A Roth IRA, yes. A Roth, okay. A traditional IRA no. The difference is if you're a little bit higher income earner, maybe you can get phased out of being able to take a deduction on an IRA contribution. However, for a 401k, there, that, that phase out doesn't happen. For our, so if we're looking at which do I prioritize the IRA or the 401k if you're looking for a tax deduction, and maybe you're a high income earner, and can't get that deduction within the IRA, then we need to prioritize the 401k. Got you. Okay, so that, that explains a lot. I think a lot of times people don't understand that there is a little difference there and there's some things you can and can't do. So what about spring break? Spring break, people that have kids that are in college or getting ready to go to college, is this a good time to start thinking about that college money? 529, money for your kids to do that with. Yeah, so if you already have money that you put aside, whether it be in a 529 or maybe just some other type of investment account that's earmarked for using for your kid's college periodically, we definitely want to, we definitely want to look at it and, we'll look at the markets with you, we'll look at the upcoming expenses that you're going to have associated with with school, when those payments are going to actually be due, and we'll help you figure out the the right timing to, to withdraw those funds. So maybe we're at a peak in the market, or we've had a really big run up in the market, and we have a bill due in the next couple months. Now might be a good time to take a distribution, or at least pull that money, out of the investments and let it sit in cash for, until that bill's due. And, essentially take the win while we have it. Instead of being subject to the, the rollercoaster that is the market sometimes. So these are things that we deal with every day with our clients. And this is what, the kind of things that we do with every client. If you come in and sit down and we'll say, hey, You got a 401k, you got an IRA, you got a 529 for college. All these things are things that we take into consideration with every client and every client's different. So how do we maximize those? So the way we maximize that if you're a client already, you probably remember before we had our initial meeting, we sent you a big old list of documents to to bring in, a lot of, ask you a lot of questions there. The purpose of all that was trying to paint the picture of your financial life today and also to help you see what your, what the future goals that you have are. So using all that information. Helps us dictate, where do we, where do we put our dollars, whether it be Roth money, whether it be traditional money, maybe it's non qualified money but, or maybe it's, putting money into a 529 for kids, but we maximize it by asking you a lot of questions about your finances. We, we challenge you to really think ahead and think about, where do you want your career to go? How long do you want to work? What do you want your retirement to look like? What other goals do you have along the way? Because the more information that we can have, the better we can build out your plan to be As optimized as reasonably possible. So I'm sure some of you guys will listen to this and we sent this thing out in the email after you, you know, expressed some interest in what we're doing and we sent it out and it's got a list of five million things on it. So do we, do they have to bring every one of those things in when they come? No, and frankly most things on the list aren't going to apply to most people. The reason we send out such a comprehensive list is we just want to make sure that we didn't leave any any stone unturned. I've learned to, to ask people if they own an airplane instead of assuming. Yeah, that's a good idea. I didn't think about that. Instead of assuming that they, instead of assuming that they don't. But, the more stuff you can bring the more of those questions you can answer for us it certainly helps us do our job. Just if you were to go to the doctor, they're going to ask you a whole bunch of questions because they're trying to figure out what's wrong with you and what might be causing it. So we're taking everybody's financial blood pressure. Is that what you're saying? Is that kind of how it works? Yeah Something like that. So if you don't want to bring all those documents in or maybe just have one particular thing you want us to work with you on, We can accommodate that. That's not a, that's not an issue. So don't get overwhelmed with, when you see that email or see that list there. But understand that the more that you, the more you give us, the more that we can give you. All those things, I'm sure, help everybody. But is there a situation to where that when you come in that we can't help you. It was just impossible for us to help. I'm sure there is. I've been with a family financial partners for I guess eight years now, or just about eight years now, and I've not met one person that we've not been able to help in some capacity. Yeah, so no matter what your situation is, if your 401k is small or your 401k is gigantic, or your IRA is whatever, or small or huge or whatever, then we can help. It's not like that we can't. So let's talk about Spring weather, and there's a big golf tournament coming up in Louisville, and I know you're a huge golfer. And I'm not as big a golfer. I used to play a lot, but. We're going to get out and maybe go to the PGA Championship at Valhalla. And, I don't know if any of y'all have ever been, but Valhalla is a beautiful golf course. It's awesome. And I don't know if you like golf or not, but that's one of the things we do in spring. It's because of spring. Again, the grass is green and we're going out. But all of those things that you want to do, whether it's golf or fishing or boating or whatever, all of this stuff pertains to your financial situation and your taxes. Obviously, if you're not making enough money. To go to buy a yacht or something like that, it's going to be a little bit. We're not Jeff Bezos or whatever but all of those things lead to a good financial future when we check on them. And one thing that I always think about. And I know this is crazy, but does the market care whether it's spring or not? Is there, is it spring better than summer, or summer better, do the markets, are they better at any time of the year, or worse at any time of the year? What I'm trying to get at is any time is a good time to come in, I think. Yeah, absolutely. It changes year to year, because the markets can be, the markets can be a little irrational at times. But no, there's no there's no better time to to come than any other time. If you got some, if you have some free time now now's a great time if this is a season in life that's very busy, maybe because you have kids and you're starting to do some vacations and we need to push it down the road a little bit. That's fine too, but but just know that the earlier that you can come in and the earlier we can start building a plan and taking some actions on that plan. Ultimately we, we get to our goals just that much quicker. I think that things are looking good, for everybody's 401k and stuff and that's just my opinion, but if you don't put money in there, you can't take advantage of it. Yeah. So The biggest thing, with, or the biggest predictor of Who retires wealthy and has a very dignified retirement is their contribution rate into their accounts you can find an investment that you know Gives you a hundred percent return every single year Hypothetically, but if you only put a dollar into it, you're probably not going to get very far So making sure you're contributing the most that you actually can It goes a long way. Okay. What about in the spring? Say somebody changes jobs. Okay. And they have a 401k that they left at the, at that other job.. Should they just leave it there or can we take care of that too? Yeah every answer's everybody's gonna be a little bit different. And, sometimes it makes sense to leave it at an old employer oftentimes it makes sense to to roll it over into an IRA or even roll it over into your new employer. So I can't give any kind of specific recommendation other than everybody's going to be different and we'll help you determine which the, which is the right option for you. But I can say that the worst thing you can do is just to keep your head in the sand and, Yeah, not do anything. And not do anything or at least if you're not going to do anything sometimes that's an appropriate and that's the best thing to do. But make sure that's the right situation for it. Yeah. And it doesn't cost anything to ask questions. So now you might think that we're sitting here and trying to get out, get this podcast done fast and get out of here so we can go play golf today and you would probably be correct. But actually I've been having insulation put in my house and I've been on the roof of my house all morning. I really like doing a podcast because it's better than putting insulation in your attic and it's fun. We're getting to where we enjoy this. So if anybody has any questions, you can always get a hold of us. And if you've got suggestions for the podcast, let them rip, email us, say, Hey, can y'all talk about this a little bit? And if we can do it, we'll do it. Kyrk, you want to close? Yeah, as always, I appreciate you everybody giving us a listen. Like Rick said, if you have any if you have any comments or questions or topics for us please shoot us shoot us a message. Thanks. Thanks for listening to the How to Win Podcast. We hope you enjoyed the episode, and if you did, be sure to follow us on your favorite podcast platform so you'll never miss an episode. If you have questions about your finances, visit our website@familyfinancialpartners.com or give us a call at (859) 219-1006.