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Posted on April 16, 2024 by Dan Pascone
Breaking Down the Mega Backdoor Roth: A Tax-Saving Strategy for High Earners
TL;DR Answer Box Mega Backdoor Roth is a strategy that can let certain high earners move substantially more money into Roth each year by making after-tax (non-Roth) contributions to a 401(k) and then converting or rolling those dollars into Roth. It only works if your employer plan allows after-tax contributions and provides a Roth pathway […]
Posted on April 9, 2024 by Dan Pascone
All About the Backdoor Roth IRA
TL;DR Answer Box Backdoor Roth IRA is a two-step strategy that may allow high-income earners to fund a Roth IRA even when they are over the income limit for direct Roth contributions. The clean version is: contribute to a traditional IRA (often nondeductible), then convert to Roth, while tracking basis correctly on Form 8606 and […]
Posted on April 1, 2024 by Dan Pascone
3 Ways to Access Retirement Funds Early
TL;DR Answer Box If you want to access retirement funds early, you usually have three broad paths: build a Roth conversion ladder, use 72(t) substantially equal periodic payments (SEPP), or take a distribution and accept taxes plus the 10% early withdrawal penalty if no exception applies. The best fit depends on your timeline, tax brackets, […]
Posted on March 25, 2024 by Dan Pascone
Tax Deductions vs Tax Credits for High Earners: What You Need to Know
TL;DR Answer Box Tax credits vs tax deductions comes down to what they reduce. Credits reduce your tax bill directly, while deductions reduce taxable income and only save you a percentage based on your marginal tax rate. High earners often have fewer credits available due to phaseouts, but may still unlock meaningful credits with the […]
Posted on March 19, 2024 by Dan Pascone
What is the Alternative Minimum Tax (AMT) and What You Need to Know in 2024
TL;DR Answer Box Alternative Minimum Tax (AMT) is a parallel tax calculation that can apply when certain deductions and “preference items” reduce your regular tax too far. Many high-earning tech employees run into AMT because of Incentive Stock Options (ISOs), large capital gains, and state and local tax deductions that do not behave the same […]
Posted on March 19, 2024 by Dan Pascone
Case Study: The Alternative Minimum Tax (AMT) and Equity Compensation (ISOs & RSUs)
TL;DR Answer Box ISOs vs RSUs taxes can produce very different after-tax outcomes even when the headline “grant value” is the same. RSUs are typically taxed as ordinary income when they vest, while ISOs may avoid ordinary income tax if you meet qualifying disposition rules, but they can trigger Alternative Minimum Tax (AMT) when you […]
Posted on March 13, 2024 by Dan Pascone
Tax Implications of Equity Compensation in Tech: Navigating ISOs and RSUs
TL;DR Answer Box ISO vs RSU taxes comes down to timing, cash needs, and risk. ISOs can create powerful long-term capital gains outcomes, but they may trigger Alternative Minimum Tax (AMT) and require out-of-pocket cash to exercise. RSUs are simpler, but they are taxed as ordinary income at vesting and can create a withholding gap […]
Posted on March 4, 2024 by Dan Pascone
What are Capital Gains?
TL;DR Answer Box Capital gains tax planning comes down to two levers you can actually control: your cost basis and your holding period. Tax loss harvesting can reduce taxes today, but it can also reset cost basis in a way that increases future capital gains taxes, so it should be used intentionally, not automatically. High […]
Posted on March 4, 2024 by Dan Pascone
Harvesting Tax Losses to Beat Capital Gains
TL;DR Answer Box Tax loss harvesting is the strategy of selling investments at a loss in a taxable account to offset capital gains and potentially reduce taxes. For high earners, the biggest value is usually offsetting realized gains, not the $3,000 ordinary income deduction. The strategy works best when you avoid wash sales, keep your […]
Posted on February 27, 2024 by Dan Pascone
How to grow your wealth, not your tax bill
TL;DR Answer Box Reduce taxes for high earners is less about finding a magic deduction and more about controlling when you recognize income and where your dollars compound. Two strategies that may move the needle are Roth conversions (pay tax intentionally now for tax-free income later) and a properly designed life insurance retirement plan (LIRP) […]