TL;DR: You can now contribute up to $35k of excess funds from your 529 to your Roth IRA. Beginning in 2024, the Secure ACT 2.0 (signed into law by Biden) means you can move up to a lifetime cap of $35k from your 529 to your Roth IRA. The Roth IRA must belong to the beneficiary of the 529 (usually the student, not the parent). This means that if you have overcontributed, you can move some of the excess funds into jumpstarting a retirement fund! Some rules: the 529 account must have been opened for at least 15 years, and you cannot contribute funds that were added in the most…

TL;DR: Gains can grow tax-deferred, but be careful of the fees. If you’ve maxed out on other retirement tax-efficient vehicles, here is another one – you can contribute to a tax-defered annuity. In these plans, any gains you get are tax-deferred until you withdraw, but to avoid a penalty you have to withdraw at an old retirement age (like with most retirement accounts). However, there seems to be very little flexibility around what you can invest in, and if it’s like investing in an index you can achieve the same kind of “tax-deferral” by not selling your stocks/ETFs. The main advantage would be that taxes you’d otherwise pay on dividends…

TL;DR: This turns out not to be a clever way to save on taxes. However, you should make sure you don’t get taxed twice. Some brokerage services allow you to automatically reinvest your dividends. Online websites seem to be misguiding by giving examples where you can adjust your basis, and this saves you on taxes somehow. Let’s be clear – this isn’t some magical tax saving. It is true that you can automatically reinvest your dividends. However, you will still be taxed on it as normal. It’s just that if you end up not adjusting your basis to reflect the extra purchases, you would be taxed twice. But “adjusting your…

TL;DR: How to withdraw your Roth IRA money tax and penalty-free. Let’s first review Roth IRA retirement accounts (I first introduced them here): You can contribute up to $6,000 a year (as of 2020), with an extra $1,000 of catch up contributions if you’re 50 or over. You are contributing after tax (hence, roth). You have complete freedom over how to invest that money, and that your earnings are tax-free. There is an income limit – in 2020, your income must be under $139,000 (if single, or $206,000 if married filing jointly) to contribute. (However, there are ways to do a backdoor contribution). There are no age limits (min or…

TL;DR: You may be able to contribute more to your retirement accounts. This is just to bring this to your attention – make sure you do your own research. Your maximum contribution to 401k accounts is $19,500 this year right? WRONG And I’m not talking about the catchup contribution you can make if you’re over 50. The overall limit is actually $57,000. Depending on your employer (please check with them), you may be able to contribute more than the $19,500 to an after-tax 401k (not Roth) where taxes on gains are not skipped but just deferred until you have withdrawals. But here’s the twist – you may be able to…

Usually when you invest, you have to pay taxes on your gains. However, this isn’t always true! With tax-efficient vehicles such as a 401k or IRA, you could make the taxes 0%. Learn more about them here!