When her health insurance changed unexpectedly, this client became concerned about the impact on her family’s finances. She quickly scheduled a call through my 15-Minute Callback service to discuss her situation.
During our conversation, she explained how the insurance changes were affecting her family. We realized that this shift might also require a reevaluation of their tax strategy. Previously, her husband’s 401(k) contributions were directed to a Traditional (pre-tax) account to help them qualify for better insurance. With their circumstances changing, she asked if they should continue this approach or adjust their savings strategy.
How We Helped:
- Tax Analysis: We reviewed their current tax situation to understand how the insurance changes might affect their overall financial plan.
- Contribution Comparison: We compared the benefits of pre-tax versus Roth contributions, considering their current and future tax scenarios.
- Strategic Adjustment: Given their low tax bracket, we recommended paying taxes now to benefit from more tax-free Roth savings later.
- W-4 Update: We encouraged them to consider updating their W-4 to slightly increase tax withholding, helping them avoid an unexpected tax bill at year-end.
Why Personalized Tax Planning Matters
By providing tailored tax planning, we helped them make informed decisions, bringing peace of mind and confidence that they were on the right track for their family’s future.
Complicating Factors: Military disability benefits, unique employer benefits, income from an investment property, and an uncertain employment situation for one spouse.