Episode Transcript
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Speaker 1 (00:00):
This is straight talk from the house with certified financial
planner Tracy Aton right here thirteen ten double you IB.
Speaker 2 (00:05):
You can learn more about Tracy and the team.
Speaker 1 (00:07):
All on the website Tanton Investment House dot com. That's
t A N T O N investment House dot com.
A lot of great information about Tracy, also in the team,
and also there's links to podcasts, some articles, other fantastic information.
Speaker 2 (00:21):
Also a place to uh to.
Speaker 1 (00:23):
If you want to set up a meeting and appointment Tracy,
you can do that online Tanton Investment House dot com
or call the office six oh eight five zero one
fifteen forty nine. That's six oh eight five zero one
fifteen forty nine. Of course, t Anton Investment House a
fee only fiduciary and joining us this morning is certified
financial planner Tracy Andton.
Speaker 2 (00:40):
Tracy, how you doing this week?
Speaker 3 (00:42):
I'm doing great, Sean, how about you?
Speaker 1 (00:43):
Doing really good? And we've got a fantastic as always.
I feel like people are sometimes wondering, is this is
this new or is this recorded? Because I always see
this and I think this is a great topic. What
are we talking about this week?
Speaker 2 (00:55):
Tracy?
Speaker 4 (00:56):
I know I'm always trying to hit the ones, and
I think what are the most important things we can
talk about, right, So today we're going to talk about
health savings accounts and why they make a difference.
Speaker 3 (01:06):
But then we're going to.
Speaker 4 (01:06):
Switch halfway through the show and talk about tax planning
and just how to make a difference there. And it's
more than what you think. There's a lot to tax
planning and how just small moves can make a big difference.
Speaker 2 (01:20):
That is awesome.
Speaker 1 (01:21):
And I know we talked a couple of weeks ago
just touched on hsas and some of those benefits, and
let's talk about some of some of those main purposes
when it comes to an HSA as well as some
of those tax benefits.
Speaker 4 (01:34):
Yeah, so health savings account or hsas, as you mentioned,
our useful way really to save for retirement, especially when
you combine them with employer sponsored retirement plans. So obviously,
healthcare costs continue to rise. We know that they've increased
about three hundred and seventy four percent since nineteen ninety and.
Speaker 3 (01:53):
More employers are offering.
Speaker 4 (01:55):
What they call high deductible health plans to lower their
monthly premiums because premiums so expensive. So again, these pair
these plans are often paired with hsas to help cover
those out of pocket medical expenses. So you pretty much
you need a high deductible plan in order to do
a health savings account. And again, what's the advantage along
(02:17):
the way you can contribute to an HSA and take
it and take money out for medical expenses and not
pay any tax.
Speaker 1 (02:25):
That is really really good, as we talk certified financial
planner Tracy Anton right here, thirteen ten WI BA the
website Tanton investment House dot com. That's t A N
t O N investment House dot com tel for number
six So eight five zero one fifteen forty nine. That's
six eight five zero one fifteen forty nine. And Tracy,
I think sometimes folks get I hear about fsays and
(02:47):
those type of things. Now HSA is more flexible or
what's what's kind of the guidance there?
Speaker 2 (02:52):
Right?
Speaker 4 (02:53):
So hsas well, they were first created sean to help
people save on healthcare costs. But I want to just
read that many employers now see them as just a
great way to boost retirement savings along with traditional retirement accounts.
But HSA is they have three big tax benefits. Okay,
So contributions are tax deductible or pre tax the same
(03:15):
terminology really, and earnings grow tax free, and the withdrawals
for qualified medical expenses are all tax free. So you
got a triple whammy here. You know, three big tax advantages.
So you can deduct contributions to your HSA from your
taxable income. You can do this either through payroll deductions
or by claiming them as a deduction.
Speaker 3 (03:36):
On your tax return.
Speaker 4 (03:38):
And any earnings or investments that grow any your HSA
are not subject of federal income tax. And then when
you withdraw the money from your HSA to pay for
qualified medical expenses, those withdrawals are tax free.
Speaker 3 (03:52):
Whether you do it now or in retirement doesn't matter.
Speaker 4 (03:54):
If it's qualified medical expenses, you pay zero tax. So,
unlike the flexible savings account that you just mentioned, unused
HSA funds roll over each year with no limit, so
allowing the balance to grow over time. Whereas employees can
also invest their HSA money in things like stocks and bonds,
(04:15):
making it really a huge valuable tool for you know,
healthcare savings. And while there are no annual contribution limits,
there is no limit on how much can be saved
and invested in the account over time.
Speaker 3 (04:28):
That's that's not exactly true.
Speaker 4 (04:30):
I mean, there is a certain amount that you can
contribute to the HSA, and we can get into that.
But long term, what's really nice is the difference between
the FSA is you've got to use that before December
thirty first or lose it, where this it just keeps
rolling over. So yes, you can have a bigger and
bigger balance in your health savings account and you can
(04:52):
invest that now.
Speaker 3 (04:53):
So what some people do is they also, you.
Speaker 4 (04:56):
Know, they will leave maybe a year out for current
expenses that they might need along the way, and they
won't invest that portion, but the rest of it gets
invested because you have market volatility with investing those dollars.
But again, I think hsas they're much better than FSAs
because you don't have to use it or lose it,
and you can invest it.
Speaker 3 (05:17):
The other cool thing.
Speaker 4 (05:18):
Sean, is that hsas can also be a valuable tool
for retirement savings and you can accumulate for future healthcare expenses.
So after age sixty five, you can withdraw money from
your HSA really for any reason without paying a tax penalty,
although you'll still owe income tax on the withdrawal if
(05:39):
the money is used for non medical expenses. So let's
say you know you were just a healthy person and
you didn't need the money, and now you're retired and
you're thinking, I got a pretty good balance in this
and I doubt I'll use it or not use all
of it.
Speaker 3 (05:53):
Well, you can take out money.
Speaker 4 (05:54):
You just have to pay income tax, but you don't
have to pay any kind of penalty.
Speaker 3 (06:00):
So it's important to know that.
Speaker 4 (06:02):
And then HSA funds are portable, which means your HSA
funds stay with you if you change jobs or health
plans and when you retire, So again another another big advantage.
Speaker 2 (06:12):
There a lot of great benefits.
Speaker 1 (06:14):
We talked this morning with certified financial planner Tracy Anton
right here on thirteen ten wi BA. Don't forget you
get to know Tracy in the team at t Anton
Investment House. The website tantoninvestment House dot com. That's t
A N t O N investment House dot com. The
telephone number six so eight five zero one, fifteen forty nine.
That's six eight five zero one, fifteen forty nine. Talking
(06:35):
this week with Tracy about HSA's and we're also going
to be talking about some tax planning stuff a little
bit later on the program. But right now, as we're
talking about those HSA's, let's.
Speaker 2 (06:45):
Talk about their growth. How are they growing?
Speaker 4 (06:48):
Yeah, So HSA accounts are continuing to grow, with thirty
eight million accounts holding about one hundred and thirty seven
billion in assets as of mid twenty twenty four, which
is a large increase of five percent accounts and eighteen
percent in total assets from the previous year. Why because
markets went up, right, So more people are also choosing
to invest their HSA funds, with three point two million
(07:11):
accounts now including investments. Over the years, HSA assets have
steadily increased, growing from three point four billion in twenty
seven to one hundred and twenty three point three billion
in twenty twenty three, with projection projections estimating one hundred
and forty two billion in twenty twenty four. So people
are onto it right, People are saying, yeah, hsas are
a great way to invest not only for my healthcare
(07:33):
needs but retirement long term. So again, you know, a
great approach would be, you know, put money into your
four to one K obviously you want to get your
employer match if they match, and then saving an HSA
to cover at least you know that year's deduction and
then investing any extra funds after that. So that's that's
(07:54):
what I'd recommend.
Speaker 1 (07:55):
The great guidance is learning from certified financial planner Tracy
Anton here at thirteen ten wib A. Tracy, I think
a lot of folks wonder and I have this question
as well, kind of the differences in how hsas are
and defined contributions, how those plans are different.
Speaker 4 (08:09):
Well, n HSA grows. Employers are structuring investment options like
for one ks to help individuals manage healthcare costs in retirement.
Just like a defined contribution plan, HSA holders can choose
really from a mix of investment options based on their
risk tolerance and financial goals. So some employers mirror four
(08:30):
one K investment menus, like they can do a target
date fund or provide a range of stable and growth
focused strategies. So investment strategies, you know, they often change
as your career changes, So younger employees may invest aggressively
and mid career individuals balance contributions.
Speaker 3 (08:49):
With growing expenses.
Speaker 4 (08:50):
So you know, these are the things is how do
I invest? Well, you can change that along the way.
You know, higher earners may focus on preserving funds and
retirees part as liquid liquidity for healthcare and use, so
you don't have to invest all all the dollars in healthcare.
But you know, just I think the health the HSAS
is nice because there's no tax. Really if you're using
(09:13):
it for medical expenses, there's just no tax. You know,
both hsas and for one ks they offer the tax advantages.
But hsas provide that like unique triple tax benefit, right,
so tax recontributions, growth and withdrawals for medical expenses, you know,
whereas the fore one K.
Speaker 3 (09:30):
Hsas have no.
Speaker 4 (09:31):
Require minimum distributions.
Speaker 3 (09:33):
They can be accessed any time for healthcare costs.
Speaker 4 (09:37):
And but I think you know you can dovetail these, right,
you can put your regular form and K in with
your HSA, and you know that just helps your retirement
security and also helps your medical expenses along the way.
And it doesn't also pigeon you either, Like you know,
you worry about how much you're contributing to certain kinds
of plans, you know, often college accounts too. It's like, well,
(10:00):
how mu should I put in for my kid? Because
what if they don't they don't go to college, you know,
and stuff like that so it's like but with HSA,
it's it's nice because well, you can use it in
you know, even if your health is great and you
don't need it for healthcare expenses, you can use it
in retirement.
Speaker 3 (10:17):
It's taxable, but there's no penalty.
Speaker 1 (10:20):
Such a great tool, as we talked this morning with
certified financial planner Tracy Anton right here on thirteen ten
WI B A. Got questions about HSA and other things.
Of course, great resource to learn more the website Tanton
Investment House dot com. That's t A N t O
N investment House dot com. Also, if you missed any
part of today's program, you can always listen back to
the podcast right online at Tanton Investment House dot com.
(10:43):
Double number six oh eight five zero one fifteen forty nine.
That's six oh eight five zero one fifteen four nine.
We're gonna shift gears a bit in the next segment
talk about some tax planning and the importance of that.
We will do that with certified financial planner Tracing Anton.
Next to Straight Talk from the House continues right here
on thirteen ten double U I B A. This is
(11:04):
straight Talk from the House with certified Financial Planner Tracy Anton.
Here on thirteen ten, double U, I B A. Of course,
Tracy comes to us from t Anton Investment House, a
fee only fiduciary. The website Tanton investment House dot com.
That's t A N t O N investment House dot com,
dolpha number six oh eight five zero one, fifteen forty nine.
That's six oh eight five zero one, fifteen forty nine.
(11:26):
And Tracy, typically I would say, we're talking this week
about HSA's. We did talk about HSA's and if you
missed any part of that, you can listen back to
the podcast at Tanton Investment House dot com.
Speaker 2 (11:34):
But we're going to be switching gears. What are we
going to discuss next? Tracy, Well, what we're going.
Speaker 4 (11:38):
To talk about is something called proactive tax management. And
again came across a really good article at via ed
Slot's website. We have a subscription to his newsletter, and
you know, I love the things that he's talking about
because there are things in there. For example, this article
talking about strategic being proactive with your tax planning, and
(12:02):
it's more than what you think. It's not just about
following the tax laws or even making tax efficient withdrawals
and retirement. Really tax management should be a key part
of your financial planning, and it should help minimize the
tax burden, grow your wealth, and secure your financial future.
And he just he goes into some basic things to.
Speaker 3 (12:23):
That, you know, kind of a checklist.
Speaker 4 (12:25):
So I thought, oh, this is really good to talk
about because we don't really talk enough about how to
manage your investments from a perspective of taxes. And I
always think, you know, performance first, but taxes are almost
as equally important.
Speaker 1 (12:44):
Talking this morning was certified financial planner Tracy and Don
here on thirteen ten Wuiba, you think about things that
can erod a portfolio when you know you want to
make sure that those taxes paying what you're obligated to
but more than you're out to do. Let's talk then,
Tracy about how assets kind of when it comes to
comes to tax planning well.
Speaker 4 (13:04):
Retirement planning is used to rely on basically three main sources.
So you have your personal savings, social security, and pension. However,
since pensions have mostly kind of disappeared in the private sector,
the way people save for retirement has changed. So today
retirement savings typically fall into three main categories. You have
the pre tax accounts, right, including traditional form one ks
(13:26):
and iras where contributions are tax deductible. And then you
have post tax accounts that are funded with money that
has already been taxed.
Speaker 3 (13:34):
And you have tax advantaged.
Speaker 4 (13:36):
Accounts which include WROTH irays and health savings accounts which
again offer special benefits there and then managing those withdrawals
from these three kinds of accounts smartly. If you do
it smartly, you can really help maximize your savings and
reduce taxes in retirement. And we just did a show
on brokerage accounts and why are brokerage accounts so important?
(13:59):
So if you miss that, as Sean would tell you,
go back because we talk a lot about brokerage accounts.
So that's like, you know, the three legged stool. You've
got the pre tax, the post tax, and then the
brokerage account which is after tax money and why those
are advantages. But those three things together, managing those things
and when to take the money from them is a
huge component and really should be accentuated. I think people
(14:23):
don't think about that enough.
Speaker 2 (14:24):
One of the cool things too.
Speaker 1 (14:25):
Not only can you listen back to the podcast at
Tanton investment House dot com, you can also share the
podcast with people in your life as well.
Speaker 2 (14:32):
I love to have you do that. Again.
Speaker 1 (14:34):
Great, it's a nice little gift you can share with somebody.
I've had at a number of people over the years
that I've I've turned down to the program and they
absolutely love it. And there's a lot of great information
and all the shows are getting. Can access all of
those at Tanton Investment House dot com. That's t A
N t O N Investment House dot com. Let's talk strategy, Tracy,
how can you strategize tax brackets?
Speaker 4 (14:56):
Well, again, not all assets are created equal when it
comes to taxation, So strategically managing those tax brackets by
converting traditional retirement accounts to WROTH accounts or even realizing
capital gains in low tax years can help minimize overall
tax overall taxes over your whole lifetime. So again, WROTH
(15:18):
conversions may seem costly upfront, since the converted amount is
tax that year, but they can lead to major tax
savings in the long run. So by paying taxes when
you're in a lower bracket, and then future growth in
the WROTH account can be withdrawn tax free, reducing your
total lifetime tax liability is just huge. So again, the
(15:39):
shift and focus from short term tax costs to long
term savings really is a key part of smart tax management.
I mean, nobody likes to pay taxes, and I find
that a lot of tax preparers they're like, oh, you know,
they kind of kick the can.
Speaker 3 (15:52):
They don't do this kind of planning.
Speaker 4 (15:54):
And that's because it's our jobs, it's investment advisor job.
Speaker 3 (15:58):
But then there's.
Speaker 4 (15:59):
Always ken you a conflict here between Oh, shouldn't I
just put the money in pre tax I get a
tax savings today. You might not want to do that.
You might want to do the wrath fore go that
tax break today because you're in such a low bracket.
Speaker 3 (16:12):
I mean, I've had some pretty.
Speaker 4 (16:14):
Strong discussions with people saying no, no, no, look the
long term, this is what's happening. This is what's happening.
You know, ultimately it'll be the investor's decision. But I
find focus sometimes isn't the wrong place for tax preparers.
I love them, and I know they know so much
more about tax taxes than I.
Speaker 3 (16:32):
Do, and I'm grateful for that.
Speaker 4 (16:34):
But when it comes to this kind of investment planning
and related to taxes, you've got to look at your
financial plan that's the key place. It's not today's taxes always,
it's long term planning. So again I went on a
tangent there. Well, I think it's just so important.
Speaker 2 (16:52):
I love it, and Tracy, I know.
Speaker 1 (16:54):
One of the things too, that that folks may not
be aware of is avoiding marginal tax traps. That's important stuff,
isn't it.
Speaker 4 (17:00):
Yes, it's really an important tactic. You have to avoid
marginal tax traps. So what that means is many investors, annoyingly,
they end up paying higher taxes in ways they don't expect,
like they're having more of their Social Security benefits being
tax and they face higher Medicare premiums as their income rises,
or they're dealing with increased capital gains taxes. So basically understanding,
(17:24):
there these hidden tax issues that can help really avoid
unpleasant surprises. Sometimes you can't be avoided, but other times,
you know, by changing how you take your distributions or
when you take your distributions or from what kind of account,
that can make a huge difference. And you know, people
will be like, oh, my Medicare premiums. You know, I
don't want to do that. It makes sense, that's what
(17:46):
you should be looking at. And also social security benefits.
You know a lot of times people are working part time,
and you know, avoiding taking money or avoiding a WROTH
conversion in that year makes sense to So again thinking
about all these all these things is so important. But
you know also placing tax sensitive assets properly. So what
(18:06):
that means, Sean, is is where you place your investments.
So which type of investment vehicle for example, you know,
is it your brokerage account, is it your IRA, or
is it your wroth IRA. It's basically just as important
as what you choose for your allocation between equity and
fixed investments. So let me go in so you understand
what as I go around and around. For example, let's
(18:29):
say you're putting high yield tax bonds in a tax
deferred account like an IRA. That makes more sense because
you you know, a high yield taxable bond account creates
a lot of income. Well, you don't want to put
that in your brokerage account, per se, because that's going
to create along the way the brokerage account has the
tax implications every single year. Where's your IRA. It's all deferred, deferred, deferred.
(18:54):
So what would makes more sense is put more growthier
stocks in the taxable account because they're not created income,
they're not creating dividend income, they're not creating this interest.
And so placing your the right kind of investments into
the right vehicle also makes sense, and it also can
make a big difference in your after tax returns.
Speaker 3 (19:16):
But I would have to say that you can't go
can't go overboard on some of this.
Speaker 4 (19:21):
So you know, these are good ideas, but you know,
let's save a brokerage account. You in your plan is
to use the money between five and seven years from now. Well,
you don't want to have all growth stocks because what
if that sector, you know, because it's overpriced. You know,
maybe it falls right or maybe it has less returns
than the value stacks. So you know, you want to
(19:43):
take a healthy approach to these kinds of things. But
in general, you know, if you if you're investing, you do.
Speaker 3 (19:50):
Want to lean toward things.
Speaker 4 (19:51):
You want to lean toward having more income and more
conservative accounts in your IRA and more aggressive, less less
income producing investments in your broker to account.
Speaker 1 (20:04):
Great illustration, and it's it's great too. We talk about
kind of get an explanation. I think sometimes people wonder
and that's some of the great stuff. And we get
the chance to talk with Tracy each and every week
right here on thirteen ten wi b A kind of
getting the why of these things. And a lot of
times you'll hear this stuff and you'll say, well, why
is that. The great thing about Tracy is she'll let
you know exactly why that is that way, and that's
a great thing too, as we talk with certified financial
(20:24):
planner Tracy Anton here on thirteen ten Wi B A
and getting more information. The website is a great resource.
T Anton investment House dot com. That's t A N
T O N investment House dot com. You can listen
back to this in previous shows podcast. You can also
get to know Tracy in her team again, all on
the website Tanton Investment House dot com. Tracy, before we
wrap this week, I know there's more. I always feel
(20:46):
like there's a little bit more to our cons.
Speaker 4 (20:48):
We always have to leave something out, I know, but
them keep.
Speaker 1 (20:53):
Coming back exactly exactly. And there are other tax strategies here,
aren't there.
Speaker 4 (20:59):
Well, you know, mass during some gifting strategies is also
can be really nice. So those people that are interested
in charities are transferring wealth learning what those dollars are.
So basically, options like donor advice funds are available, Charitable
remainder trusts, or giving within the family can help make
gifts more tax efficient.
Speaker 3 (21:18):
For example, in twenty twenty five.
Speaker 4 (21:20):
Individuals can give up to nineteen thousand dollars or thirty
eight thousand for married couples to any number of recipients
without paying any taxes on the gifts or even having
to do a gift tax return. So that's a really
great option. Another option, Sean is deciding whether to pay
taxes now or later. That's an important decision. So while
many investors try to delay taxes, like we talked about
(21:43):
as long as possible, that's not always the best choice.
Speaker 3 (21:46):
So in some cases.
Speaker 4 (21:47):
Paying tax is now through roth conversions or again when
you're in these lower tax brackets, or taking advantage of
long term capital gains you know, if you have them.
Maybe realizing a long term loss can also be helpful,
so you can save more taxes in the long run.
So again, sometimes it's best to pay taxes now than later,
(22:08):
and then also that the money grows tax free.
Speaker 3 (22:11):
That's another huge thing, you know, in the wrath, So
we'll talk about that later.
Speaker 4 (22:14):
And then again, managing your tax bracket is really an
ongoing process. So again, tax laws change, personal situations shift,
and financial markets they do very so staying on top
of the taxes it really does require ongoing adjustments. It's
not just like one time, Okay, set it and forget
it type thing.
Speaker 3 (22:33):
It's not.
Speaker 4 (22:34):
It's like you continuously look for options, you know, choices
that are available as your life changes. You know what's
now available to you that wasn't before, or what makes sense.
Speaker 3 (22:45):
You know.
Speaker 4 (22:46):
It's it's it's it's a continuous dynamic change and it's
it's just it makes it kind of fun, but it
also makes it that you have to stay engaged.
Speaker 1 (22:55):
A lot of great information on this week's program, a
lot of great information on all the shows, don't forget.
Subscribe and listen back as well as the podcast all
online Tanton investment House dot com. That's t A N
t O N investment House dot com. Great place to
learn more about tracyn the team, and again listen back
to the podcast there at the website Tanton Investment House
dot com. Delphy number six oh eight five zero one
(23:16):
fifteen forty nine, that's six oh eight five zero one
fifteen forty nine Tracy, it's always great seeing you.
Speaker 2 (23:22):
You enjoy this beautiful day.
Speaker 4 (23:23):
Thanks Sean.
Speaker 3 (23:24):
Take care,
This is straight talk from the house with certified financial
planner Tracy Aton right here thirteen ten double you IB.
Speaker 2 (00:05):
You can learn more about Tracy and the team.
Speaker 1 (00:07):
All on the website Tanton Investment House dot com. That's
t A N T O N investment House dot com.
A lot of great information about Tracy, also in the team,
and also there's links to podcasts, some articles, other fantastic information.
Speaker 2 (00:21):
Also a place to uh to.
Speaker 1 (00:23):
If you want to set up a meeting and appointment Tracy,
you can do that online Tanton Investment House dot com
or call the office six oh eight five zero one
fifteen forty nine. That's six oh eight five zero one
fifteen forty nine. Of course, t Anton Investment House a
fee only fiduciary and joining us this morning is certified
financial planner Tracy Andton.
Speaker 2 (00:40):
Tracy, how you doing this week?
Speaker 3 (00:42):
I'm doing great, Sean, how about you?
Speaker 1 (00:43):
Doing really good? And we've got a fantastic as always.
I feel like people are sometimes wondering, is this is
this new or is this recorded? Because I always see
this and I think this is a great topic. What
are we talking about this week?
Speaker 2 (00:55):
Tracy?
Speaker 4 (00:56):
I know I'm always trying to hit the ones, and
I think what are the most important things we can
talk about, right, So today we're going to talk about
health savings accounts and why they make a difference.
Speaker 3 (01:06):
But then we're going to.
Speaker 4 (01:06):
Switch halfway through the show and talk about tax planning
and just how to make a difference there. And it's
more than what you think. There's a lot to tax
planning and how just small moves can make a big difference.
Speaker 2 (01:20):
That is awesome.
Speaker 1 (01:21):
And I know we talked a couple of weeks ago
just touched on hsas and some of those benefits, and
let's talk about some of some of those main purposes
when it comes to an HSA as well as some
of those tax benefits.
Speaker 4 (01:34):
Yeah, so health savings account or hsas, as you mentioned,
our useful way really to save for retirement, especially when
you combine them with employer sponsored retirement plans. So obviously,
healthcare costs continue to rise. We know that they've increased
about three hundred and seventy four percent since nineteen ninety and.
Speaker 3 (01:53):
More employers are offering.
Speaker 4 (01:55):
What they call high deductible health plans to lower their
monthly premiums because premiums so expensive. So again, these pair
these plans are often paired with hsas to help cover
those out of pocket medical expenses. So you pretty much
you need a high deductible plan in order to do
a health savings account. And again, what's the advantage along
(02:17):
the way you can contribute to an HSA and take
it and take money out for medical expenses and not
pay any tax.
Speaker 1 (02:25):
That is really really good, as we talk certified financial
planner Tracy Anton right here, thirteen ten WI BA the
website Tanton investment House dot com. That's t A N
t O N investment House dot com tel for number
six So eight five zero one fifteen forty nine. That's
six eight five zero one fifteen forty nine. And Tracy,
I think sometimes folks get I hear about fsays and
(02:47):
those type of things. Now HSA is more flexible or
what's what's kind of the guidance there?
Speaker 2 (02:52):
Right?
Speaker 4 (02:53):
So hsas well, they were first created sean to help
people save on healthcare costs. But I want to just
read that many employers now see them as just a
great way to boost retirement savings along with traditional retirement accounts.
But HSA is they have three big tax benefits. Okay,
So contributions are tax deductible or pre tax the same
(03:15):
terminology really, and earnings grow tax free, and the withdrawals
for qualified medical expenses are all tax free. So you
got a triple whammy here. You know, three big tax advantages.
So you can deduct contributions to your HSA from your
taxable income. You can do this either through payroll deductions
or by claiming them as a deduction.
Speaker 3 (03:36):
On your tax return.
Speaker 4 (03:38):
And any earnings or investments that grow any your HSA
are not subject of federal income tax. And then when
you withdraw the money from your HSA to pay for
qualified medical expenses, those withdrawals are tax free.
Speaker 3 (03:52):
Whether you do it now or in retirement doesn't matter.
Speaker 4 (03:54):
If it's qualified medical expenses, you pay zero tax. So,
unlike the flexible savings account that you just mentioned, unused
HSA funds roll over each year with no limit, so
allowing the balance to grow over time. Whereas employees can
also invest their HSA money in things like stocks and bonds,
(04:15):
making it really a huge valuable tool for you know,
healthcare savings. And while there are no annual contribution limits,
there is no limit on how much can be saved
and invested in the account over time.
Speaker 3 (04:28):
That's that's not exactly true.
Speaker 4 (04:30):
I mean, there is a certain amount that you can
contribute to the HSA, and we can get into that.
But long term, what's really nice is the difference between
the FSA is you've got to use that before December
thirty first or lose it, where this it just keeps
rolling over. So yes, you can have a bigger and
bigger balance in your health savings account and you can
(04:52):
invest that now.
Speaker 3 (04:53):
So what some people do is they also, you.
Speaker 4 (04:56):
Know, they will leave maybe a year out for current
expenses that they might need along the way, and they
won't invest that portion, but the rest of it gets
invested because you have market volatility with investing those dollars.
But again, I think hsas they're much better than FSAs
because you don't have to use it or lose it,
and you can invest it.
Speaker 3 (05:17):
The other cool thing.
Speaker 4 (05:18):
Sean, is that hsas can also be a valuable tool
for retirement savings and you can accumulate for future healthcare expenses.
So after age sixty five, you can withdraw money from
your HSA really for any reason without paying a tax penalty,
although you'll still owe income tax on the withdrawal if
(05:39):
the money is used for non medical expenses. So let's
say you know you were just a healthy person and
you didn't need the money, and now you're retired and
you're thinking, I got a pretty good balance in this
and I doubt I'll use it or not use all
of it.
Speaker 3 (05:53):
Well, you can take out money.
Speaker 4 (05:54):
You just have to pay income tax, but you don't
have to pay any kind of penalty.
Speaker 3 (06:00):
So it's important to know that.
Speaker 4 (06:02):
And then HSA funds are portable, which means your HSA
funds stay with you if you change jobs or health
plans and when you retire, So again another another big advantage.
Speaker 2 (06:12):
There a lot of great benefits.
Speaker 1 (06:14):
We talked this morning with certified financial planner Tracy Anton
right here on thirteen ten wi BA. Don't forget you
get to know Tracy in the team at t Anton
Investment House. The website tantoninvestment House dot com. That's t
A N t O N investment House dot com. The
telephone number six so eight five zero one, fifteen forty nine.
That's six eight five zero one, fifteen forty nine. Talking
(06:35):
this week with Tracy about HSA's and we're also going
to be talking about some tax planning stuff a little
bit later on the program. But right now, as we're
talking about those HSA's, let's.
Speaker 2 (06:45):
Talk about their growth. How are they growing?
Speaker 4 (06:48):
Yeah, So HSA accounts are continuing to grow, with thirty
eight million accounts holding about one hundred and thirty seven
billion in assets as of mid twenty twenty four, which
is a large increase of five percent accounts and eighteen
percent in total assets from the previous year. Why because
markets went up, right, So more people are also choosing
to invest their HSA funds, with three point two million
(07:11):
accounts now including investments. Over the years, HSA assets have
steadily increased, growing from three point four billion in twenty
seven to one hundred and twenty three point three billion
in twenty twenty three, with projection projections estimating one hundred
and forty two billion in twenty twenty four. So people
are onto it right, People are saying, yeah, hsas are
a great way to invest not only for my healthcare
(07:33):
needs but retirement long term. So again, you know, a
great approach would be, you know, put money into your
four to one K obviously you want to get your
employer match if they match, and then saving an HSA
to cover at least you know that year's deduction and
then investing any extra funds after that. So that's that's
(07:54):
what I'd recommend.
Speaker 1 (07:55):
The great guidance is learning from certified financial planner Tracy
Anton here at thirteen ten wib A. Tracy, I think
a lot of folks wonder and I have this question
as well, kind of the differences in how hsas are
and defined contributions, how those plans are different.
Speaker 4 (08:09):
Well, n HSA grows. Employers are structuring investment options like
for one ks to help individuals manage healthcare costs in retirement.
Just like a defined contribution plan, HSA holders can choose
really from a mix of investment options based on their
risk tolerance and financial goals. So some employers mirror four
(08:30):
one K investment menus, like they can do a target
date fund or provide a range of stable and growth
focused strategies. So investment strategies, you know, they often change
as your career changes, So younger employees may invest aggressively
and mid career individuals balance contributions.
Speaker 3 (08:49):
With growing expenses.
Speaker 4 (08:50):
So you know, these are the things is how do
I invest? Well, you can change that along the way.
You know, higher earners may focus on preserving funds and
retirees part as liquid liquidity for healthcare and use, so
you don't have to invest all all the dollars in healthcare.
But you know, just I think the health the HSAS
is nice because there's no tax. Really if you're using
(09:13):
it for medical expenses, there's just no tax. You know,
both hsas and for one ks they offer the tax advantages.
But hsas provide that like unique triple tax benefit, right,
so tax recontributions, growth and withdrawals for medical expenses, you know,
whereas the fore one K.
Speaker 3 (09:30):
Hsas have no.
Speaker 4 (09:31):
Require minimum distributions.
Speaker 3 (09:33):
They can be accessed any time for healthcare costs.
Speaker 4 (09:37):
And but I think you know you can dovetail these, right,
you can put your regular form and K in with
your HSA, and you know that just helps your retirement
security and also helps your medical expenses along the way.
And it doesn't also pigeon you either, Like you know,
you worry about how much you're contributing to certain kinds
of plans, you know, often college accounts too. It's like, well,
(10:00):
how mu should I put in for my kid? Because
what if they don't they don't go to college, you know,
and stuff like that so it's like but with HSA,
it's it's nice because well, you can use it in
you know, even if your health is great and you
don't need it for healthcare expenses, you can use it
in retirement.
Speaker 3 (10:17):
It's taxable, but there's no penalty.
Speaker 1 (10:20):
Such a great tool, as we talked this morning with
certified financial planner Tracy Anton right here on thirteen ten
WI B A. Got questions about HSA and other things.
Of course, great resource to learn more the website Tanton
Investment House dot com. That's t A N t O
N investment House dot com. Also, if you missed any
part of today's program, you can always listen back to
the podcast right online at Tanton Investment House dot com.
(10:43):
Double number six oh eight five zero one fifteen forty nine.
That's six oh eight five zero one fifteen four nine.
We're gonna shift gears a bit in the next segment
talk about some tax planning and the importance of that.
We will do that with certified financial planner Tracing Anton.
Next to Straight Talk from the House continues right here
on thirteen ten double U I B A. This is
(11:04):
straight Talk from the House with certified Financial Planner Tracy Anton.
Here on thirteen ten, double U, I B A. Of course,
Tracy comes to us from t Anton Investment House, a
fee only fiduciary. The website Tanton investment House dot com.
That's t A N t O N investment House dot com,
dolpha number six oh eight five zero one, fifteen forty nine.
That's six oh eight five zero one, fifteen forty nine.
(11:26):
And Tracy, typically I would say, we're talking this week
about HSA's. We did talk about HSA's and if you
missed any part of that, you can listen back to
the podcast at Tanton Investment House dot com.
Speaker 2 (11:34):
But we're going to be switching gears. What are we
going to discuss next? Tracy, Well, what we're going.
Speaker 4 (11:38):
To talk about is something called proactive tax management. And
again came across a really good article at via ed
Slot's website. We have a subscription to his newsletter, and
you know, I love the things that he's talking about
because there are things in there. For example, this article
talking about strategic being proactive with your tax planning, and
(12:02):
it's more than what you think. It's not just about
following the tax laws or even making tax efficient withdrawals
and retirement. Really tax management should be a key part
of your financial planning, and it should help minimize the
tax burden, grow your wealth, and secure your financial future.
And he just he goes into some basic things to.
Speaker 3 (12:23):
That, you know, kind of a checklist.
Speaker 4 (12:25):
So I thought, oh, this is really good to talk
about because we don't really talk enough about how to
manage your investments from a perspective of taxes. And I
always think, you know, performance first, but taxes are almost
as equally important.
Speaker 1 (12:44):
Talking this morning was certified financial planner Tracy and Don
here on thirteen ten Wuiba, you think about things that
can erod a portfolio when you know you want to
make sure that those taxes paying what you're obligated to
but more than you're out to do. Let's talk then,
Tracy about how assets kind of when it comes to
comes to tax planning well.
Speaker 4 (13:04):
Retirement planning is used to rely on basically three main sources.
So you have your personal savings, social security, and pension. However,
since pensions have mostly kind of disappeared in the private sector,
the way people save for retirement has changed. So today
retirement savings typically fall into three main categories. You have
the pre tax accounts, right, including traditional form one ks
(13:26):
and iras where contributions are tax deductible. And then you
have post tax accounts that are funded with money that
has already been taxed.
Speaker 3 (13:34):
And you have tax advantaged.
Speaker 4 (13:36):
Accounts which include WROTH irays and health savings accounts which
again offer special benefits there and then managing those withdrawals
from these three kinds of accounts smartly. If you do
it smartly, you can really help maximize your savings and
reduce taxes in retirement. And we just did a show
on brokerage accounts and why are brokerage accounts so important?
(13:59):
So if you miss that, as Sean would tell you,
go back because we talk a lot about brokerage accounts.
So that's like, you know, the three legged stool. You've
got the pre tax, the post tax, and then the
brokerage account which is after tax money and why those
are advantages. But those three things together, managing those things
and when to take the money from them is a
huge component and really should be accentuated. I think people
(14:23):
don't think about that enough.
Speaker 2 (14:24):
One of the cool things too.
Speaker 1 (14:25):
Not only can you listen back to the podcast at
Tanton investment House dot com, you can also share the
podcast with people in your life as well.
Speaker 2 (14:32):
I love to have you do that. Again.
Speaker 1 (14:34):
Great, it's a nice little gift you can share with somebody.
I've had at a number of people over the years
that I've I've turned down to the program and they
absolutely love it. And there's a lot of great information
and all the shows are getting. Can access all of
those at Tanton Investment House dot com. That's t A
N t O N Investment House dot com. Let's talk strategy, Tracy,
how can you strategize tax brackets?
Speaker 4 (14:56):
Well, again, not all assets are created equal when it
comes to taxation, So strategically managing those tax brackets by
converting traditional retirement accounts to WROTH accounts or even realizing
capital gains in low tax years can help minimize overall
tax overall taxes over your whole lifetime. So again, WROTH
(15:18):
conversions may seem costly upfront, since the converted amount is
tax that year, but they can lead to major tax
savings in the long run. So by paying taxes when
you're in a lower bracket, and then future growth in
the WROTH account can be withdrawn tax free, reducing your
total lifetime tax liability is just huge. So again, the
(15:39):
shift and focus from short term tax costs to long
term savings really is a key part of smart tax management.
I mean, nobody likes to pay taxes, and I find
that a lot of tax preparers they're like, oh, you know,
they kind of kick the can.
Speaker 3 (15:52):
They don't do this kind of planning.
Speaker 4 (15:54):
And that's because it's our jobs, it's investment advisor job.
Speaker 3 (15:58):
But then there's.
Speaker 4 (15:59):
Always ken you a conflict here between Oh, shouldn't I
just put the money in pre tax I get a
tax savings today. You might not want to do that.
You might want to do the wrath fore go that
tax break today because you're in such a low bracket.
Speaker 3 (16:12):
I mean, I've had some pretty.
Speaker 4 (16:14):
Strong discussions with people saying no, no, no, look the
long term, this is what's happening. This is what's happening.
You know, ultimately it'll be the investor's decision. But I
find focus sometimes isn't the wrong place for tax preparers.
I love them, and I know they know so much
more about tax taxes than I.
Speaker 3 (16:32):
Do, and I'm grateful for that.
Speaker 4 (16:34):
But when it comes to this kind of investment planning
and related to taxes, you've got to look at your
financial plan that's the key place. It's not today's taxes always,
it's long term planning. So again I went on a
tangent there. Well, I think it's just so important.
Speaker 2 (16:52):
I love it, and Tracy, I know.
Speaker 1 (16:54):
One of the things too, that that folks may not
be aware of is avoiding marginal tax traps. That's important stuff,
isn't it.
Speaker 4 (17:00):
Yes, it's really an important tactic. You have to avoid
marginal tax traps. So what that means is many investors, annoyingly,
they end up paying higher taxes in ways they don't expect,
like they're having more of their Social Security benefits being
tax and they face higher Medicare premiums as their income rises,
or they're dealing with increased capital gains taxes. So basically understanding,
(17:24):
there these hidden tax issues that can help really avoid
unpleasant surprises. Sometimes you can't be avoided, but other times,
you know, by changing how you take your distributions or
when you take your distributions or from what kind of account,
that can make a huge difference. And you know, people
will be like, oh, my Medicare premiums. You know, I
don't want to do that. It makes sense, that's what
(17:46):
you should be looking at. And also social security benefits.
You know a lot of times people are working part time,
and you know, avoiding taking money or avoiding a WROTH
conversion in that year makes sense to So again thinking
about all these all these things is so important. But
you know also placing tax sensitive assets properly. So what
(18:06):
that means, Sean, is is where you place your investments.
So which type of investment vehicle for example, you know,
is it your brokerage account, is it your IRA, or
is it your wroth IRA. It's basically just as important
as what you choose for your allocation between equity and
fixed investments. So let me go in so you understand
what as I go around and around. For example, let's
(18:29):
say you're putting high yield tax bonds in a tax
deferred account like an IRA. That makes more sense because
you you know, a high yield taxable bond account creates
a lot of income. Well, you don't want to put
that in your brokerage account, per se, because that's going
to create along the way the brokerage account has the
tax implications every single year. Where's your IRA. It's all deferred, deferred, deferred.
(18:54):
So what would makes more sense is put more growthier
stocks in the taxable account because they're not created income,
they're not creating dividend income, they're not creating this interest.
And so placing your the right kind of investments into
the right vehicle also makes sense, and it also can
make a big difference in your after tax returns.
Speaker 3 (19:16):
But I would have to say that you can't go
can't go overboard on some of this.
Speaker 4 (19:21):
So you know, these are good ideas, but you know,
let's save a brokerage account. You in your plan is
to use the money between five and seven years from now. Well,
you don't want to have all growth stocks because what
if that sector, you know, because it's overpriced. You know,
maybe it falls right or maybe it has less returns
than the value stacks. So you know, you want to
(19:43):
take a healthy approach to these kinds of things. But
in general, you know, if you if you're investing, you do.
Speaker 3 (19:50):
Want to lean toward things.
Speaker 4 (19:51):
You want to lean toward having more income and more
conservative accounts in your IRA and more aggressive, less less
income producing investments in your broker to account.
Speaker 1 (20:04):
Great illustration, and it's it's great too. We talk about
kind of get an explanation. I think sometimes people wonder
and that's some of the great stuff. And we get
the chance to talk with Tracy each and every week
right here on thirteen ten wi b A kind of
getting the why of these things. And a lot of
times you'll hear this stuff and you'll say, well, why
is that. The great thing about Tracy is she'll let
you know exactly why that is that way, and that's
a great thing too, as we talk with certified financial
(20:24):
planner Tracy Anton here on thirteen ten Wi B A
and getting more information. The website is a great resource.
T Anton investment House dot com. That's t A N
T O N investment House dot com. You can listen
back to this in previous shows podcast. You can also
get to know Tracy in her team again, all on
the website Tanton Investment House dot com. Tracy, before we
wrap this week, I know there's more. I always feel
(20:46):
like there's a little bit more to our cons.
Speaker 4 (20:48):
We always have to leave something out, I know, but
them keep.
Speaker 1 (20:53):
Coming back exactly exactly. And there are other tax strategies here,
aren't there.
Speaker 4 (20:59):
Well, you know, mass during some gifting strategies is also
can be really nice. So those people that are interested
in charities are transferring wealth learning what those dollars are.
So basically, options like donor advice funds are available, Charitable
remainder trusts, or giving within the family can help make
gifts more tax efficient.
Speaker 3 (21:18):
For example, in twenty twenty five.
Speaker 4 (21:20):
Individuals can give up to nineteen thousand dollars or thirty
eight thousand for married couples to any number of recipients
without paying any taxes on the gifts or even having
to do a gift tax return. So that's a really
great option. Another option, Sean is deciding whether to pay
taxes now or later. That's an important decision. So while
many investors try to delay taxes, like we talked about
(21:43):
as long as possible, that's not always the best choice.
Speaker 3 (21:46):
So in some cases.
Speaker 4 (21:47):
Paying tax is now through roth conversions or again when
you're in these lower tax brackets, or taking advantage of
long term capital gains you know, if you have them.
Maybe realizing a long term loss can also be helpful,
so you can save more taxes in the long run.
So again, sometimes it's best to pay taxes now than later,
(22:08):
and then also that the money grows tax free.
Speaker 3 (22:11):
That's another huge thing, you know, in the wrath, So
we'll talk about that later.
Speaker 4 (22:14):
And then again, managing your tax bracket is really an
ongoing process. So again, tax laws change, personal situations shift,
and financial markets they do very so staying on top
of the taxes it really does require ongoing adjustments. It's
not just like one time, Okay, set it and forget
it type thing.
Speaker 3 (22:33):
It's not.
Speaker 4 (22:34):
It's like you continuously look for options, you know, choices
that are available as your life changes. You know what's
now available to you that wasn't before, or what makes sense.
Speaker 3 (22:45):
You know.
Speaker 4 (22:46):
It's it's it's it's a continuous dynamic change and it's
it's just it makes it kind of fun, but it
also makes it that you have to stay engaged.
Speaker 1 (22:55):
A lot of great information on this week's program, a
lot of great information on all the shows, don't forget.
Subscribe and listen back as well as the podcast all
online Tanton investment House dot com. That's t A N
t O N investment House dot com. Great place to
learn more about tracyn the team, and again listen back
to the podcast there at the website Tanton Investment House
dot com. Delphy number six oh eight five zero one
(23:16):
fifteen forty nine, that's six oh eight five zero one
fifteen forty nine Tracy, it's always great seeing you.
Speaker 2 (23:22):
You enjoy this beautiful day.
Speaker 4 (23:23):
Thanks Sean.
Speaker 3 (23:24):
Take care,
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