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every year I think it's super important
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for all of us to keep up with the
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changes particularly the contribution
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limit changes for our 401ks our IRAs and
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our health savings account because these
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represent a foundation for most of us
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for our retirement preparation for our
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retirement savings so let's jump to the
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IRS website and while the headline may
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not seem that exciting if if you're a
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little bit older there's some big
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changes coming that you need to know
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about okay so the article is 401K limit
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increases to
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23,500 for 2025 and the IRA limit
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remains
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$7,000 but stick with me because like I
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said if you're a little bit older
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there's some big changes coming okay
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this catch-up contribution limit
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generally applies for employees aged 50
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and older who participate in most 401ks
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403bs government 450 seven plans and the
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federal government's Thrift Savings Plan
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so that catchup
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contribution remains at $77,500 for
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2025 and therefore participants in most
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most of these plans can contribute up to
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$31,000 each year okay but under the
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changes made in the secure 2.0 act a
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higher catchup contribution limit
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applies to employees age 60 61 62 and 63
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and this higher catchup provision
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instead of 7,500 a year goes to
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11,250 so the maximum an employee can
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contribute to their
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401K um if if you're under 50 is that
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23,500 limit which is the limit for a
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reg for a 401k the catchup Provisions
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start at 50 but now there's a change for
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people that are over 59 so 50 to 59 uh
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the employee can contribute
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31,000 and if you're 60 to 63 the
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employee can contribute
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34,7 now I want to stress that this is
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how much the employee can put in and
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your company contribution is in addition
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to this amount so that's that's a big
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change another thing is the catch up
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contributions so this um additional
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$7,500 or
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$1,250 depending on your age it has to
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be made to a Roth 401k in other words
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you have to pay tax on that money before
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it goes in if your wages were greater
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than
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$145,000 so that's important so those
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are big changes now let's look at the
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IRA same same article from the IRS the
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limit on annual contributions to an IRA
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remains
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$7,000 the IRA catchup contribution for
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individuals over 50 and over was amended
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under the secure 2.0 Act of
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2022 to include an annual cost of living
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adjustment but it's going to remain
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$1,000 for
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2025 so you can find this article at the
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IRS website irs.gov and this you the the
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specific role changes the contribution
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limits if you look up notice 2024 for
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2024 calendar year- 80 okay what about a
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health savings account health savings
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account is as a financial adviser for
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over 20 years the health savings
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accounts are kind of the trifecta it's
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like the the if if I was a congress
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person if I was a Senator God help us
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all um but if I was if if I was one of
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those this would be the type of plan
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that I would want most Americans to be
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able to have why because you get to put
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money in if you qualify you get to put
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money in in pre-tax dollars it grows
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taxfree and if you take the money out
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for qualified
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expenses you don't pay any tax on the
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way out either so it's it's you get all
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three benefits for instance with a the
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difference between a regular IRA and a
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Roth IRA with the regular Ira we put
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money in in pre-tax dollars it grows
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taxfree but when we take it out we have
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to pay tax on it so it's got two out of
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the three benefits with a Roth IRA we
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don't get the tax break on the way in
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but it does grow in the account taxfree
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and then if we um comply with all the
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rules and regulations when we take the
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money out we don't pay tax on it so
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again it's got two out of the three but
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with the health savings account it has
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all three
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we put the money in in pre-tax dollars
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it grows taxfree and if we use it for
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qualified expenses and um play by the
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rules we get to spend that money we get
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to take the money out without paying tax
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on it okay but there is no free lunch
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there's there's quite a bit of rules and
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regulations about this and and this
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information is from a Fidelity article
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that talks about HSA contribution limits
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and eligibility rules for 2024 we're
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mostly worried about 2025
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so in 2025 the health savings account
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contribution limits are
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4,300 for somebody uh that has coverage
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just for themselves and it's
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$85 for family coverage and for those 55
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and older there's an additional $1,000
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catchup contribution as a reminder
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that's not a big change from 2024 and
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2024 uh the the Provisions the amount
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that could be put aside instead of 43,00
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$4,300 in 2025 it was
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$4,150 in
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2024 and instead of the
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8,550 in 2025 it was
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$8,300 um Dollar in
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2024 uh for family coverage and for
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those 55 and older there's a that same
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catchup contribution of ,000 now it's
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important we have to be eligible now
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there is no income limit the night the
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good news is unlike IRAs there is no
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income threshold above which you can no
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longer contribute uh to it but there
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is um there there are
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other uh qualification there are other
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eligibility rules the main one
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is you have to have What's called the
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high deductible health care plan A hdhc
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High deductible health care plan and it
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has to have a deductible of at least
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$1,600 for an individual and
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$3,200 a year for her family and it's
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out of pocket maximum including the
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annual deductible cannot exceed
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$850
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$850 for an individual and
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$16,100 for family coverage and to
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contribute to an HSA
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you must not be enrolled in a health
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plan that's not an HSA eligible plan
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which would include Medicare so if
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you're on Medicare if you receive
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medicare then unfortunately you cannot
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contribute to a health savings account
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because Medicare is not a high
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deductible health care plan and you
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cannot be claimed as a dependent on
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somebody else's tax returns now the good
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news is you have pass the first of the
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year to make these contributions to a
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health savings account account so as I'm
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recording this uh we're getting close to
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the end of the year but that deadline
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doesn't matter like it does with many
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other tax advantage accounts the
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deadline that matters is is when you
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when your tax filing deadline is which
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in most taxers is about April
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15th so I want to end this video with
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with talking about the difference
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between a Roth and a regular either 401k
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or an Ira I've already talked about the
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two out of three that U benefits that
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you get you don't get all three like you
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do with the whole savings account but
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often times people think you know what
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uh a Roth 401k a Roth IRA is always
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superior to a regular and that's not
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necessarily the case it depends on what
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your tax rates are going to be you want
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to pay tax on that money when your tax
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rate is the lowest so again with the WTH
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You have to pay tax when the money's
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going in because you don't get the you
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don't get to put money in in Pre tax
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dollars but if you think your tax rates
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going to be higher in the
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future then you'd be better off um
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paying the tax with a Roth at the
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today's quote unquote lower tax rate let
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me give you an example let's say that
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you have $10,000 that you want to save
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um with a with a Roth IR you're going to
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have to pay tax on that let's assume
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you're in the 20% tax bracket so let's
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assume that you're going to be of the
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10,000 you can only put $88,000 in your
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rck because you had to pay tax on it 10
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years later let's assume it doubled you
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got
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$166,000 so when you take that money out
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you have
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$16,000 because you don't have to pay
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tax on it but what about the reverse
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what what if you put that money in a
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regular IRA a regular 401 let's do a
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401k because it has that higher limit
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you've got that
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$10,000 you get that tax that you get to
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put the money in in pre-tax dollars so
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you get to put in the full
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$10,000 10 years later it doubles and
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it's now worth $20,000 but you have to
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pay tax on that let's assume your tax
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rate's the same 20% so what do you end
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up netting you end up netting the same
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amount
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$116,000 so you want to pay taxes when
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you think the rate is going to be the
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lowest so if you think the rate is going
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to be
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lower um in retirement then you want
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than a regular 401K this isn't financial
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advice I'm not an accountant I'm not a
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IRA specialist I don't know your
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situation but in general it just makes
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sense you want to pay the tax rate when
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the tax rate is the lowest um and so if
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if you have a regular
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401k and you think your tax rate is
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going to be lower in retirement you want
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to pay that tax rate in retirement if
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you think that the tax rate is lower now
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and it's going to be higher later either
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because your personal tax bracket's
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going to be higher where you think the
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government's going to increase the tax
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rate then you'd rather use a Roth 401k
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and pay the the lower tax rate today and
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down the road not have to pay the higher
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tax rate so I hope that helps helps if
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it does help making good decisions like
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this are important and it's why I made
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this video up here which are eight
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things to think about stop doing in your
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50s and 60s in order to enjoy your
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journey more another example of making
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good decisions and enjoying your time
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enjoying the one Journey that we get and
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being able to enjoy the Youth of our
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senior years eight things to stop doing
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in your 50s and 60s in order to to enjoy
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your journey late more I'll see you in
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that video bye-bye