As you reach higher income brackets, it can be difficult to find tax-free strategies to amplify your financial growth and security for eventual retirement. With the different limitations and constantly changing statutes, it can be confusing to determine what your next correct step is. If you’re a high-performing and high-earning strategist who is looking to amplify their financial growth, we’ve compiled a list of the top three key methods that you can use to strategize your additional tax-free income.
1. Roth IRA 401(k) or 403(b) accounts
A Roth IRA is a basic financial step that you can take to secure your financial future. The issue for high-earners is that there is a firm limitation around how much you can contribute on an annual basis. While this is helpful for many, it may feel limiting for those in higher brackets. If you want the opportunity to enjoy similar benefits that you do with your Roth IRA, consider speaking to your strategic advisor about opening a Roth 401(k) or 403(b). These types of accounts offer a significantly higher ceiling, allowing you to contribute nearly $20,000 per year. While you may be taxed on this income, it will allow you to enjoy significantly higher accruals than you otherwise would with your current standard Roth.
2. 529 Savings plans
These types of accounts are generally used to pay for a relative’s college tuition or other beneficiaries. While you do have to begin the account with a named beneficiary, you can change this information at any time, and may even take the money back with no ill consequence. With this type of account, you can enjoy a variety of unique benefits, including upping the average gifting limitation to $75,000 per year. You can take advantage of this freely without gift taxes. This is an often overlooked consideration when making your long-term financial strategy and plan, so be sure to ask your advisor if this option would be right for your current earnings and investment strategy.
3. Tax-Free Savings Accounts (TFSA)
Tax-free savings accounts are a great asset to consider if you’re looking to have a more secure financial landscape for retirement. The first benefit they offer is penalty-free withdrawals. If at any time you have to remove money from the account the amount you withdraw can be put back into your TFSA the following year. This is advantageous in comparison to other types of accounts which are far more limiting and offer less overall benefit. Additionally, this account offers freedom to contribute and gives you tax-free appreciation capacity, which continues on during your lifetime.
Money Insights can help you to secure a strong financial future
Are you looking for new and innovative ways to strategize your finances and build wealth generation opportunities? Money Insights is here to help high-performing individuals master their financial future. For more information about what we could do for you, contact us today at 801-642-4924 or visit our website.