Tax Savings Plans

401k (Retirement Plan Through Employer)

  • With your employer

  • Pre-tax contributions

  • Deducted from payroll

  • $20.5k annual limit (revised up from $19.5k)

  • Limited in investment options (mutual funds)

  • Penalties if withdrawn before age 59.5

Roth IRA (Retirement Plan When You're Young or Making Under a Certain Income Limit)

  • 6k per year annual limit if under age 50

  • Post tax contributions

  • Income limit (129k if single). Penalty if you contribute too much or over this income.

  • Withdrawals after age 59.5 tax free

Regular IRA (Regular Retirement Plan)

  • 6k annual limit

  • Post tax contributions

  • Non deductible

  • Freedom to choose anything to invest in

  • Penalties if withdrawn before age 59.5

  • Withdrawals are deferred tax (whatever income tax bracket you are at when you're over 59.5)

Rollover IRA (When You Change Jobs)

  • Roll over your old 401k from a previous employer into a rollover IRA

  • Instead of being limited in investments, you can now invest in anything

  • Pre tax contributions

  • Amount in the plan is only what you rolled over from a previous employer, cannot contribute more separately

  • Penalties if withdrawn before age 59.5

  • Withdrawals are deferred tax (whatever income tax bracket you are at when you're over 59.5)

529 Plan (Education)

  • Can be for yourself or for your kid - can change beneficiary

  • Can open multiple plans

  • Can choose which state you want to do

  • NY plan: 5k deductible per year. If you leave NY, then you lose this benefit

  • Contribute post tax

  • No upper annual limit

  • Up to 16k considered a gift, from a tax POV

  • Gains and withdrawals are tax free IF it is for education only

  • Take note of upfront fees, deferred fees, and management fees / operational fees

  • 2022 Best Plans

Individual Investment/Brokerage Account (For Fucking Around)

  • Post tax contributions

  • Gains and withdrawals are taxable especially be careful with short term gains (day trading)

  • Can invest in anything, whenever

  • E.g. Wealthfront, Robinhood, Fidelity

Series I Savings Bonds (Inflation Hedge)

  • Subject to federal tax, exempt from state and local tax

  • Withdrawals for qualified education expenses are federally taxable

  • Annual interest rate linked one part fixed one part to inflation. Inflation adjusts every 6 months according to CPI

  • Minimum hold 1 year

  • Redeem before 5 years = forego last 3 months interest

  • Buy here, up to 10k annually

Series EE Bonds

  • Guarantees 2x principal in 20 years

  • ~3.5% annual return

  • Federal tax exempt if withdrawals are for education

HSA (Healthcare Spending Account)

  • Enroll through your employer during an open enrollment period

  • Pre-tax contributions

  • Can only withdraw for medical expenses not paid by your high deductible health insurance policy

  • Funds rollover year to year

  • Can withdraw post age 65 for non medical expenses, will owe income tax

  • Annual contribution limits of $3,650 (2022, it changes annually)

  • Period products count too!!!

  • Employers can contribute to HSA

FSA (Flexible Spending Account)

  • Pre-tax contributions

  • Employers cannot contribute to FSA

  • Consider FSA if you do not have a high deductible health plan

  • FSA funds do not roll over

  • Cannot have both unless you have an HSA and LPFSA (dental and vision)

  • Check annual contribution limits

Crypto (For Really Fucking Around)

  • Coinbase, Gemini, Binance, etc.

  • Yield farming

  • High yield interest accounts like Gemini Earn

  • Everything at your own risk

  • Potential to lose everything you invest, and more.

Investing with Your Company

  • If you can lever up that would be nice too