Do you worry about taxes and how they impact your financial goals? Whether you’re on a FIRE path or retiring traditionally, there are many critical tax topics to consider. In this episode, Jason talks with financial planner and CPA Sean Mullaney, creator of the FI Tax Guy blog. We talk about common tax misunderstandings, the power of solo 401k accounts, Roth conversions, and tax loss harvesting.
Show notes may be found below the video
Note: The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual. Eric, Jason, and Two Sides of FI do not endorse Sean Mullaney, Mullaney Financial & Tax, Inc. and their services.
If you’re not familiar with Sean’s great blog, “The FI Tax Guy: The Tax Efficient Path to Financial Independence“, you’ll definitely want to check it out. He’s been posting there for over four years, so there’s a wealth of information available. We’ll link to some essential content below, including a few articles we referenced in this episode. In addition, Sean also has a YouTube channel.
Sean’s book: “Solo 401(k): The Solopreneur’s Retirement Account” – Navigating retirement for solopreneurs is not easy—strategically save with the Solo 401(k). If you’re self-employed, saving enough money to retire can feel complicated when you wear both the employer and employee hats. Get educated and empower your retirement with Solo 401(k). In this book, Sean Mullaney, a financial planner and licensed CPA, cuts through the complexity and boils down what solopreneurs need to know about saving for the future. The Solo 401(k) plan allows self-employed entrepreneurs to reduce taxes and strategically save for retirement. This guide will give you the valuable insight you need to create, navigate, and optimize your own Solo 401(k) plan with tax planning you may not have considered.
Key Posts From The FI Tax Guy Blog:
- FIRE Tax Strategies for Beginners – Are you new to financial independence (FI or FIRE)? Are you steeped in financial independence, but confused about tax optimization? If so, this is the post for you. This post works on the 80/20 principle: sure, there’s a ton of knowledge, expertise, and hacks out there, but often times 80 percent of the benefit can come from 20 percent of the knowledge.
- The Special Tax Loss Harvesting Opportunity for 2022 – There is a tax loss harvesting opportunity in 2022 that has not existed in recent years to the scope and scale it exists today: tax loss harvesting with bonds and bond funds. In most recent years, many bonds and bond funds have not had significant built-in-losses. 2022 is different: now there are plenty of bonds and bond funds in taxable accounts with significant built-in-losses.
- The Advantages of Living On Taxable Assets First in Early Retirement – The FIRE community loves the accumulation phase. Build up assets towards the goal of financial independence. Questions increasingly creep in when it comes to the distribution phase. Members of the FIRE community wonder: what do I live on when I get to retirement? This is particularly true when one reaches early retirement prior to age 59 ½. In this post, Sean discusses the options and the reasons he believes that for many, the best assets to live off of first in early retirement are taxable assets.
- 2022 Year-End Tax Planning – In this post, Sean shares the primary tax planning items for the year 2022 as he sees them. Topics covered include tax loss harvesting, Roth conversions, tax gain harvesting, HSA contributions, RMDs, and more.
- The Four Backstops to the Four Percent Rule – We’ve talked plenty on 2SFI about the 4% Rule (of thumb) and what our own strategies are with respect to withdrawal rate. This post adds a wrinkle to the discussion: the four backstops to the 4% Rule for early retirees. What if worries about the adequacy of the 4% Rule for early retirees can be addressed by factors outside of the 4% Rule safe withdrawal rate? And what if those factors quite naturally occur for early retirees? Read on to get Sean’s thoughts on why this may be the case.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.