TED BENNA IS OFTEN called the “father of the 401(k).” In 1980, he implemented the first 401(k) plan based on his somewhat bold interpretation of the Revenue Act of 1978. He certainly couldn’t have envisioned the $11.4 trillion in “defined contribution” 401(k) and 403(b) accounts that we have today.
Individual retirement accounts also took off in the early 1980s, and traditional IRAs now hold an additional $11.3 trillion. Combined, that’s an impressive $23 trillion in tax-deferred retirement assets.

It’s that time of year – time to gather your records and prepare your 2024 tax return.  Many HD contributers are involved the IRS’ Voluntary income Tax Assistance (VITA) program,  helping to prepare free tax returns for qualifying individuals. This is an excellent program for lower income tax payers. The linked website has a tool for finding a local site. If you have family, friends, or neighbors who might benefit from this excellent program, please think about letting them know.

It would be nice, quite a windfall.
However, we didn’t pay for our benefits. In the aggregate, beneficiaries pay for about 15% of all benefits received, hence maximum 85% of benefits being taxable. I checked my records a found that within six years of starting, I collected benefits (including spousal benefit) equal to all the taxes I and employers paid since 1959. 
The law says the benefits are taxable income, but given the standard deduction, a lower income retiree may pay very little or no actual taxes on the benefits received. 

IN WASHINGTON, 2025 is beginning to look a lot like 2017. Republicans again control the White House, the Senate and the House of Representatives. But a key difference between then and now is that today the Republican majority in the House is far narrower.
This means more negotiation will be required, and agreement on a new tax bill may take months. In the meantime, here are some key areas that investors will want to keep an eye on.

I am not an economist and even they often don’t agree, but shouldn’t we be concerned about the Country’s deficit and debt?  
Nobody I know likes taxes, but does debt and growing interest payments present a greater risk? Federal interest payments are over one trillion dollars a year – that is a million, million by the way. 
I sometimes think, can we get to the point where nobody, not even another country wants to invest in the US?

I appreciated the HD community’s responses to my November 2024 post regarding the decision to use either Roth or HSA (health savings account) funds to bridge some of my income needs until I receive SS benefits at age 70.  You swayed me first to use my HSA funds. I have several years of medical receipts exceeding the low five-digit account balance, so they will carry me through most of the “bridge” period.
With that decision, I realized that I could also use my HSA funds to leverage a federal Savers tax credit on my 2026 tax return.

The following is from one of the newsletters I used to send to my clients each year. It is not meant to be comprehensive but it may help the organized challenged people (OCP) among us.
Most of you are probably sick of reading this paragraph because I include it every year. If you are one of my organized peeps you can just skip this one.
Two things to do here. First is to look at the left side of last year’s tax folder (that’s where I attached all of their source documents) to get an idea of what you may need this year.

Consider this post on social media.
“Today we are paying our North Carolina real estates taxes, which are significant.  I don’t have a problem with paying my fair share.  This year, I DO have a problem that some of my tax dollars are being doled out to pay for private school vouchers for private schools!  And some of the people getting those vouchers have incomes over $100,000.”
I asked if they were missing part of the equation.

Asking for a friend… Really. My friend has a VERY SIGNIFICANT capital loss carryforward and wondered whether this impacts the typical calculations that go into deciding if Roth conversions make sense. He expects his future tax rate will be lower and his heirs will have higher tax rates.
 
My friend uses his taxable account for investments in equities, hoping to earn capital gains that can be offset by his capital loss carryforward. He intends to invest the Roth money in interest and dividend bearing investments to balance out his portfolio.

Net unrealized appreciation (NUA) is the difference between the cost basis and the current market value of shares of employer stock held in an employer-sponsored retirement account.
If certain criteria are met (death, disability, separation from service, or reaching age 59 ½) an investor can transfer everything in their 401(k) to a rollover IRA—except their employer’s stock. These shares, instead, get deposited into a regular taxable brokerage account.
This triggers an immediate income tax bill on the stock’s cost basis (at income tax rates),

A married couple that are both receiving Social Security will lose the low income advantage to reduce Social Security taxes if they file married filing separately.  The designation creates an 85% tax on most of their Social security income.  Once your income exceeds the point of making SS 85% taxable, there may be advantages to filing separate returns, but not when income is low.
 

In some situations thousands of tax dollars can be saved by using the married filing separate filing status. However, doing so can trigger a larger income-related monthly adjustment amount (IRMAA) to your Medicare premium.
For example, the surcharge for a single taxpayer with modified adjusted gross income of $104,000 is $69.90 per month, while the same for a married taxpayer filing separately is $384.30. In that situation it will most likely be better to file a joint tax return and pay the extra income tax.

If this happens what are your thoughts? Will it change any financial strategy, such as a ROTH conversion? … Maybe something else?

As we rapidly approach the end of the year our thoughts naturally turn to family, friends, holidays gatherings, gifts, traditional foods, decorations, and …. Year-end tax planning.
There are lots of articles that point out the X things you should do at year-end to simplify, optimize, and minimize your taxes. That’s not what this post is about.  In this post I want to highlight one of the best government-led programs I’m aware of – the IRS’ Voluntary Income Tax Assistance,

THE JUNE 16, 2021, edition of The Washington Post carried this headline: “Cristiano Ronaldo snubbed Coca-Cola. The company’s market value fell $4 billion.”
The incident in question had occurred a few days earlier, at a press conference in Budapest, where the soccer star was set to play in a high-profile championship game. Coca-Cola was a sponsor of the tournament, so when Ronaldo sat down at the microphone, he found two bottles of Coke positioned in front of him.