Clients are looking for individualized tax plans that illustrate the power of tax-advantaged investment accounts. By creating a tax plan that helps them now and in retirement, your clients have the potential to save an average of $50,000 in taxes.
Health savings accounts (HSA)
HSAs are one of the most powerful investment tools that are available to any individual with a high-deductible health care plan. The key to taking advantage of an HSA is to cover health care costs out of pocket, which gives you the ability to invest the HSA funds and allow the account to grow tax-free. This investment vehicle can be used as an addition to a 401(k).
Advantages:
- Contributions reduce taxable income
- Earnings within the HSA are tax-free
- Withdrawals are tax-free (using the funds to cover prior health care costs during working years)
529 college savings
A 529 is an investment account that is built to save for education expenses. However, up to $35,000 of funds in a 529 can be rolled into a Roth IRA after 15 years. Tax savings on contributions are on a state-by-state basis, but in most states, you will receive a tax deduction or credit.
Advantages:
- Most states offer tax savings on contributions
- Investments within the account grow tax-free
- Withdrawals for education expenses are tax-free
Up to $35,000 can be rolled into a Roth IRA without facing penalties or taxes
Roth conversions
A Roth IRA is a common tool used to invest for retirement. In 2025, Roth income contribution limits are $150,000 for single filers and $236,000 for married filing jointly. However, the backdoor Roth method is available to all individuals regardless of income.
Advantages:
- Contribute to a non-deductible IRA and convert to Roth IRA in the same day
- Earnings within the Roth IRA grow tax-free
- Withdrawals after age 59½ are tax-free
Allows for high-income individuals and households to contribute to a Roth IRA
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