Author Archives: fitaxguy

The Widow’s Tax Trap and RMDs

People worry about taxation in retirement. In particular, they worry about the taxation of required minimum distributions (RMDs), especially after the death of a spouse. Widows find themselves in the single tax brackets after decades of enjoying the more favorable married filing jointly tax brackets. 

Widows and widowers finding themselves as single taxpayers is often referred to as the Widow’s Tax Trap. 

RMDs require taxable withdrawals from traditional retirement accounts such as IRAs and 401(k)s. But just how bad are they when a widow or widower is in the Widow’s Tax Trap?

Let’s unpack just how bad the combination of the Widow’s Tax Trap and RMDs is for an 81 year-old widow with a very tax inefficient structure: almost $3.7 million of her approximately $4.5 million of financial wealth in a traditional IRA.

My experience tells me many financial planners and gurus will tell you this is a terrible outcome. That $3.7 million traditional IRA is infested with taxes!

But is it really?

81 Year-Old Widow in the Widow’s Tax Trap

I put together an analysis of an affluent widow in the Widow’s Tax Trap. Let’s call her Jane. Her traditional IRA causes her to have an RMD of almost $190,000. Wow!

Grab the tax analysis file here!

To be fair, most Americans will never have a $3.7 million traditional IRA and/or a $190K RMD. But I analyze them to demonstrate “what if the widow is highly inefficient from a tax perspective?”

What are the federal income tax rates on that feared RMD? 

Isn’t it remarkable that an 81 year-old widow with almost $3.7 million in a traditional IRA has more of her RMD taxed in the 12 percent tax bracket than in the 32 percent tax bracket?

Despite all the fear of taxation of RMDs, that’s the reality when it comes to a very affluent, very inefficient 81 year-old widow. 

Some might say “but what about IRMAA?” “What about the net investment income tax?”

Yes, Jane pays IRMAA of approximately $6,500 in two years because of her RMDs. And yes, the RMDs trigger approximately $500 of net investment income tax.

But do either of these have any impact on Jane’s lived experience and financial success?

Absolutely not!

The government scores some Garbage Time Touchdowns on Jane by collecting some IRMAA, some net investment income tax, and some income tax in the 32 percent bracket. 

A Garbage Time Touchdown is a late in the game touchdown scored by a team that will lose the game regardless of the touchdown. As a New York Jets fan, sadly I’m an expert in Garbage Time Touchdowns.

Jane has some tax inefficiencies that are just Garbage Time Touchdowns.

Think about the lifetime arc of Jane’s taxes in today’s tax planning world:

  • As a single individual, Jane likely deducted workplace retirement plan contributions at a 22, 24, or 32 percent rate. Win versus the IRS!
  • As a married couple, Jane and her husband likely deduct into workplace retirement plans at a 22 or 24 percent rate. Win versus the IRS!
  • In early retirement, they live off taxable accounts and do not do Roth conversions. They may pay nothing in federal income tax! Win versus the IRS!
  • Once taxable accounts are depleted, traditional retirement account distributions could have benefitted from the Hidden Roth IRA. Win versus the IRS!
  • Even RMDs are likely subject to the 12 percent and 22 percent brackets while they are both alive. Win versus the IRS!
  • As a widow, the relatively minor tax inefficiencies creep in. These are Garbage Time Touchdowns. 

This arc, which eschewed Roth 401(k) contributions and taxable Roth conversions, screams “Jane wins a blow out victory over the IRS” over the course of her lifetime. 

Sure, at the end Jane gave up some Garbage Time Touchdowns to the IRS, but not after decades of defeating the IRS. 

What’s more important than winning the spreadsheet is lived experience. Notice that Jane paying 32 percent on about six percent of her RMD has $200K of after-tax cash flow? 

In order for the Widow’s Tax Trap to bite hard, the widow generally has to have about $200K or more of after-tax cash flow.

The taxes bite when widows can most afford them!

Watch me break down the tax analysis of our 81 year-old widow on YouTube.

Roth Conversions to Avoid the Widow’s Tax Trap

Should Jane and her husband have done taxable Roth Conversions in retirement to avoid the widow paying 32 percent federal income tax on some of her RMDs?

Here vocabulary becomes very important. Yes, some taxable Roth conversions taxed at 22 percent or 24 percent could have been beneficial. But they were hardly necessary.

Outside of cases where taxable Roth conversions create enough required income to qualify for a Premium Tax Credit, taxable Roth conversions are not necessary. 

Yes, there are times where large taxable Roth conversions can be beneficial in that they mitigate harmful effects of the Widow’s Tax Trap. But the analysis above shows that the harmful effects of the Widow’s Tax Trap aren’t all that harmful for the vast, vast, vast majority of Americans. This is true even those with most of their financial wealth in traditional retirement accounts. 

Why would Jane and her husband prioritize large scale taxable Roth conversions to avoid having six percent of her RMDs as a widow being subject to the 32 percent tax bracket? 

Further Reading

The tax planning landscape has changed. One resource that puts aside the fear and realistically tackles today’s tax and retirement planning landscape is Tax Planning To and Through Early Retirement, a book I’m proud to have co-authored with Cody Garrett. 

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn: @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

2026 Backdoor Roth IRA Timing

Merry Christmas and Happy New Year!

The Christmas season (ending January 11th this year) coincides with the beginning of personal finance’s Backdoor Roth IRA season. 

Many readers look forward to New Year’s Day not to watch the Rose Bowl but rather to contribute to a traditional IRA, the first step of the Backdoor Roth IRA. 

The question then becomes: how long should I wait to do the second step of the Backdoor Roth IRA, the conversion of the traditional IRA contribution and any small growth to a Roth IRA?

Below I discuss my views on the matter as they apply to 2026 Backdoor Roth IRAs. 

Backdoor Roth IRA Timing Concerns

The Backdoor Roth IRA involves three accounts and two steps. First, the investor transfers money from a bank account (A) to a traditional IRA (B) as a regular annual contribution to the traditional IRA. Second, the investor converts the entire traditional IRA balance to a Roth IRA (C).

Written out logically, the Backdoor Roth IRA sequence is as follows:

A→B→C

The question is “do we respect the transfer to B or do we disregard the transfer to B and say, instead, that there was a single transfer from A to C?

Michael Kitces, in 2015, wrote an article stating that he was, at that time, concerned that, if the Roth conversion step was done close in time to the traditional IRA contribution, the transfer to the traditional IRA would be disregarded. For high income individuals, this would create an excess contribution to a Roth IRA subject to a 6% annual penalty.

I do not share his concern. My perception is that most financial planners, financial advisors, and tax return preparers also do not share his concern. 

My Approach

I wrote a detailed blog post stating that I do not believe the step transaction doctrine invalidates the Backdoor Roth IRA. Of particular note is Section 408(d)(2)(B), which provides that all IRA distributions (including Roth conversions) during the year are aggregated into a single distribution. 

This rule tells us that timing within the year is irrelevant for determining tax treatment. Why would a judicial doctrine change the Backdoor Roth IRA’s tax treatment based on a timing concern when the Code itself says timing is irrelevant? 

Favored Backdoor Roth IRA Timing

Here is my favored approach: Make the traditional IRA contribution at any time during a particular month and then wait until the following calendar month to do the Roth conversion step. Usually the traditional IRA is invested in a low yielding stable cash or cash equivalent type of asset, creating a small bit of income in between the two steps. 

Here is how that plays out with an example:

Keith, age 47, wakes up on New Year’s Day 2026 and contributes $7,500 to a traditional IRA invested in a money market fund. On February 2, 2026, when the traditional IRA has grown to $7,525, he converts all of it to a Roth IRA. 

Yes, Keith could have converted the $7,500 to a traditional IRA on January 2, 2026. I would strongly argue that he has a good Backdoor Roth IRA in that scenario.

But my favored approach is for him to wait until February. Why not? What’s the downside to my favored approach? Practically none. My favored approach increases Keith’s taxable income by $25, which is obviously no big deal. It also buys Keith a bit more protection against the step transaction doctrine concern (which, admittedly, I believe to be a minimal concern). 

Backdoor Roth IRA Diligence

Allow me to touch on two important diligence points when doing the Backdoor Roth IRA.

The first is to ensure that as of December 31st of the year of any Roth conversion step (so 2026 in Keith’s example), it is important to have $0 (or close to $0) in all traditional IRAs, SEP IRAs, and SIMPLE IRAs. For more discussion as to why that’s important, see this post. 

Second, it is important to properly complete the Form 8606 and file it with the annual federal income tax return. This post has an example of how a Form 8606 is completed to reflect a Backdoor Roth IRA. 

Further Reading

In early 2026 many Americans will find they made too much to have made their 2025 Roth IRA contribution. Having contributed in 2025, they now need to remedy the overcontribution. Further, they may still want to do a Backdoor Roth IRA for 2025 in 2026, what I refer to as a Split-Year Backdoor Roth IRA. 

Read here to find out my favored approach when facing this situation. 

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn at @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, legal, investment, medical, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, legal, investment, medical, and tax matters. Please also refer to the Disclaimer & Warning section found here.

The Backdoor Roth IRA After an Excess Contribution to a Roth IRA

It happens all the time. People contribute to a Roth IRA only to find out at tax time they made too much income to have made the Roth IRA contribution. 

There are two primary ways to correct this situation. They are a recharacterization and a corrective distribution. Both are entirely valid remedial paths when it turns out that one contributed to a Roth IRA and their income was too high to have done so. 

But which remedial path makes the most sense if the investor wants to also do a Backdoor Roth IRA for the year in question?

As I am posting this in late 2025, this is about to become very relevant as applied to excess Roth IRA contributions occurring in 2025. Many will find out in early 2026 as they work through their 2025 tax return that they did not qualify for a previously made 2025 Roth IRA contribution. 

Below I explore this topic with two examples. 

Recharacterization

Let’s consider Rich and Rebecca, married and both age 48 in 2025. At least one of them was covered by a workplace retirement plan in 2025. Rich and Rebecca each contributed $7,000 to a Roth IRA on January 2, 2025 anticipating their 2025 modified adjusted gross income would be approximately $225,000. Due to a year-end bonus and unexpected capital gains distributions, their 2025 MAGI turned out to be $250,000, which they discovered after talking to their income tax return preparer in February 2026. 

Having exceeded the 2025 Roth IRA MAGI contribution limit of $246,000, they need to remedy the situation. Since neither of them has any balance in a traditional IRA, SEP IRA, and/or SIMPLE IRA, they are also interested in doing a Backdoor Roth IRA for 2025 (what I refer to as a Split-Year Backdoor Roth IRA). 

They proceed as follows. First, they ask their financial institution to recharacterize their 2025 Roth IRA contributions and related earnings ($550 in Rich’s case, $600 in Rebecca’s case) as traditional IRAs in late February 2026. This event does not create any 2025 or 2026 taxable income. 

Second, in early March 2026, Rich converts the balance in his traditional IRA, now $7,560, from his traditional IRA to a Roth IRA. Likewise, Rebecca converts the balance in her traditional IRA, now $7,612 from her traditional IRA to a Roth IRA. This creates $560 of 2026 taxable income for Rich and $612 of 2026 taxable income for Rebecca. 

Both Rich and Rebecca have $0 balances in all traditional IRAs, SEP IRAs, and SIMPLE IRAs as of December 31, 2026. 

I believe that it’s helpful to illustrate the sequence logically using letters. A is a checking account, B is a traditional IRA, and C is a Roth IRA.

Here is how the entire sequence looks when Rich and Rebecca first contribute to a Roth IRA, correct it through a recharacterization, and then do the Split-Year Backdoor Roth IRA. 

A→C→B→C

Corrective Distribution

Let’s consider Carl and Debbie, married and both age 47 in 2025. At least one of them was covered by a workplace retirement plan in 2025. Carl and Debbie each contributed $7,000 to a Roth IRA on January 2, 2025 anticipating their 2025 modified adjusted gross income would be approximately $225,000. Due to a year-end bonus and unexpected capital gains distributions, their 2025 MAGI turned out to be $255,000, which they discovered after talking to their income tax return preparer in February 2026. 

Having exceeded the 2025 Roth IRA MAGI contribution limit of $246,000, they need to remedy the situation. Since neither of them has any balance in a traditional IRA, SEP IRA, and/or SIMPLE IRA, they are also interested in doing a Backdoor Roth IRA for 2025. 

They proceed as follows. First, they ask their financial institution to send them a corrective distribution of their 2025 Roth IRA contributions and related earnings ($650 in Carl’s case, $700 in Debbie’s case) in late February 2026. 

The February 2026 corrective distribution of the excess Roth IRA contributions and related net income attributable to the returned contributions creates taxable income of $650 to Carl and $700 to Debbie in 2025 to be reported on their soon-to-be-filed 2025 federal income tax returns. See Section 408(d)(4)(C), Treas. Reg. Sec. 1.408A-6 Q&A 1(d), and this Vorris J. Blankenship article. 

Second, in late February 2026, both Carl and Debbie make a $7,000 contribution to their traditional IRAs and code the contribution as being for 2025. 

Third, Carl converts the balance in his traditional IRA, now $7,010, from his traditional IRA to a Roth IRA. Likewise, Debbie converts the balance in her traditional IRA, now $7,010, from her traditional IRA to a Roth IRA. This creates $10 of 2026 taxable income for Carl and $10 of 2026 taxable income for Debbie. 

Both Carl and Debbie have $0 balances in all traditional IRAs, SEP IRAs, and SIMPLE IRAs as of December 31, 2026. 

Here is how the entire sequence looks when Carl and Debbie first contribute to a Roth IRA, correct it through a corrective distribution, and then do the Split-Year Backdoor Roth IRA. 

A→C→A→B→C

Critical Assessment

Let’s step back. Logically, what is the Backdoor Roth IRA? It boils down to the following formulation:

A→B→C

I and others have argued that “B” should be respected. I’m unaware that the IRS disagrees with this view. At this point, after a decade and a half of Backdoor Roth IRAs, it would be exceedingly odd for the IRS to start aggressively challenging the transaction. 

Assessing the Corrective Distribution Remedial Path

Viewed logically, the “corrective distribution followed by the Split-Year Backdoor Roth IRA” is just as strong as the Backdoor Roth IRA itself. It simply appends two additional transactions, an (ultimately excess) Roth IRA annual contribution followed by a corrective distribution. If one can defend the Backdoor Roth IRA, one should be able to defend the corrective distribution followed by the Split-Year Backdoor Roth IRA.

You might argue that the money was in a Roth IRA and ultimately ends up back in a Roth IRA. That can be true, though the investor need not use the exact same dollars received in the corrective distribution to initiate the later Split-Year Backdoor Roth IRA. 

Regardless, in order to “collapse” steps, the IRS would need to successfully defeat not one, but two, steps. First the IRS would need to successfully disregard the corrective distribution on which the investor most likely reports taxable income. Second, the IRS would need to disregard the transfer to the traditional IRA. 

The IRS has not aggressively tried to disregard a single step (the traditional IRA contribution) when it comes to the Backdoor Roth IRA transaction for the past 15 years. It’s difficult to imagine the IRS would try to aggressively disregard two distinct steps, which is what it would take to defeat the “corrective distribution followed by the Split-Year Backdoor Roth IRA” path. 

Assessing the Recharacterization Remedial Path

Where I get much more concerned is the “recharacterization followed by the Backdoor Roth IRA” path. 

In all of these analyses, the key issue is “do we respect “B”?” Recall the recharacterization followed by the Backdoor Roth IRA formulation:

A→C→B→C

Notice what’s on both sides of B? 

C!

We have a case where funds are in a Roth IRA, temporarily rest in a traditional IRA, and then end up right back in a Roth IRA. 

Yes, the Internal Revenue Code allows recharacterizations. But could the IRS successfully disregard a recharacterization into a traditional IRA when both immediately before and immediately after those funds are in a Roth IRA?

I believe that a recharacterization followed by a Split-Year Backdoor Roth IRA dramatically increases the risk to the investor. The risk is that the recharacterization would be disregarded, exposing the investor to the annual 6% excess Roth IRA contribution penalty. 

Favored Approach

I strongly favor the corrective distribution remedial path if one is looking to do a Backdoor Roth IRA after having made an excess contribution to the Roth IRA for the year.

What are the drawbacks to my favored approach? It requires three steps instead of two, since the investor must initiate the corrective distribution, contribute to a traditional IRA, and then convert the traditional IRA. 

Further, my favored approach generally accelerates the tax on the “net income attributable” to the excess contribution. Recall Rich and Rebecca pay that tax in 2026 while Carl and Debbie pay practically all of that tax with their 2025 federal income tax returns. 

My favored approach generally does not increase the small tax created by the combination of the remediation and the Split-Year Backdoor Roth IRA. It simply accelerates it by one year. In a low yield world, that is a tiny drawback. 

I believe that the corrective distribution remedial path is very strong. I do not believe that the IRS would stand a very good chance of disregarding two steps to create an excess contribution to a Roth IRA. Further, I believe that respecting time spent in a traditional IRA is much more challenging when that money is in a Roth IRA immediately before and immediately after being in the traditional IRA. 

When both corrective distributions and recharacterizations are available to those looking to ultimately do a Backdoor Roth IRA, why not choose the corrective distribution path? 

Finally, note that this blog post is not advice for you or anyone else. I am not writing that the recharacterization remedial path cannot work. Rather, I am, in an academic sense, simply stating two things.

First, the recharacterization followed by a Split-Year Backdoor Roth IRA path increases the risk to the investor.

Second, the corrective distribution path appears to be preferable to the recharacterization path if one is looking to do the Split-Year Backdoor Roth IRA after an excess contribution to the Roth IRA for the same year. 

The Real Answer

Congratulations on reading a blog post that should not exist! The real answer to this issue isn’t my analysis. Rather, it is for Congress to eliminate the MAGI restriction on the ability to make an annual Roth IRA contribution. This would align American rules with Canadian rules. 

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn at @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, legal, investment, medical, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, legal, investment, medical, and tax matters. Please also refer to the Disclaimer & Warning section found here.

2026 ACA Premium Tax Credits: Embrace Solutions!

Fear is prevalent.

ACA Premium Tax Credits are going away!!!

The 400 percent cliff will ruin your early retirement!!!

Neither of these is true. But the messages are out there.

Yes, the Premium Tax Credit for 2026 is very unsettled. Could it create problems for early retirees in 2026? Yes.

But now is the time to embrace solutions, to borrow a phrase from Jon Taffer. 

Since 2026 ACA open enrollment begins in less than a week, below I assess the lay of the land for ACA medical insurance and Premium Tax Credits in 2026. I then move onto planning as early retirees consider their ACA medical insurance options for 2026 in late 2025.

Premium Tax Credit

From 2014 through 2020, the Premium Tax Credit reduces ACA medical insurance premiums based on this table. Of note is that this table fully eliminates Premium Tax Credits once one’s income is over 400 percent of the federal poverty level. I refer to the years 2014 through 2020 as the “First Era.”

From 2021 through 2025, the Premium Tax Credit reduces ACA medical insurance premiums based on this more generous table. Of note is that this table ratably reduces, but does not eliminate, Premium Tax Credits once one’s income is over 400 percent of the federal poverty level. I refer to the years 2021 through 2025 as the “Second Era.”

With no change to the laws, in 2026 we start what I refer to as the “Third Era.” The Premium Tax Credit will be determined based on the First Era table. The enhancements to ACA Premium Tax Credits will go away. ACA Premium Tax Credits themselves will not go away. 

Fears Over Changes to the Premium Tax Credit

If we look at history, we know that the 400 percent of federal poverty level cliff will not ruin an early retirement.

Why?

We saw from 2014 through 2020 plenty of Americans were successfully early retired. Many of them got Premium Tax Credits.

Yes, the First Era featured the 400 percent of federal poverty level cliff. Yes, that was a financial planning issue for early retirees to deal with. No, it did not ruin their early retirement. 

Further, medical insurance premiums are simply one of many financial planning issues early retirees deal with. It’s odd to claim that a change to one expense in 2026 will destroy a retirement plan.

The Government Shutdown

Currently, many federal government agencies are either closed or working with reduced operations. This is commonly referred to as the “Government Shutdown.”

The Government Shutdown provides a potential leverage point for politicians to extend a version of the enhanced Premium Tax Credits. Democrats generally want to make the Second Era Premium Tax Credit enhancements permanent. Interestingly enough, there are two Republican cohorts that also want to extend some version of enhanced Premium Tax Credits. One is a baker’s dozen of generally Blue State Republicans in the House and one are more populist Republicans led by Representative Marjorie Taylor Greene. 

There are no guarantees. It is absolutely possible that some version of enhanced Premium Tax Credits will apply in 2026. However, from a planning perspective, early retirees should consider the very real possibility that we go back to the First Era Premium Tax Credit rules in 2026.

2026 Premium Tax Credit Solutions

One year’s medical insurance premiums are not likely to ruin anyone’s early retirement and finances. 

That being said, early retirees should approach the situation by embracing solutions.

To my mind, for those looking to improve their tax and ACA medical insurance premium picture in 2026, as of late October 2025 there are two primary paths. The first path is “Bronze Plan and Lower Income” and the second path is “Catastrophic Plan and Lower Premiums.”

Bronze Plan and Lower Income

I have previously said that in the new planning environment, Bronze is Gold. 

For many early retirees, Bronze ACA plans will be very desirable in 2026. Why? First, the premiums are lower than Platinum, Gold, and Silver plans, reducing pressure on the Premium Tax Credit issue. 

Second, beginning in 2026 all Bronze plans will qualify as “high deductible health plans” allowing deductible HSA contributions. This allows early retired enrollees to deduct their HSA contributions, possibly increasing their Premium Tax Credit and possibly ducking under the 400 percent of federal poverty level cliff. 

Third, this sets up a tax free pot of money from which to pay medical expenses in 2026. From a Premium Tax Credit perspective, it’s better to reach into a tax free pot than to fund medical expenses by selling a capital gain asset or taking a taxable distribution from a traditional IRA.

A component of Bronze is Gold planning is keeping taxable income low. One helpful tactic in this regard is to hold all taxable bonds in traditional retirement accounts. This keeps interest income off one’s tax return, reducing Premium Tax Credit damage that taxable bond interest can do. 

Cody Garrett and I anticipated that keeping income low for Premium Tax Credit purposes would be a big issue in 2026 when we wrote Tax Planning To and Through Early Retirement. That’s why, on pages 176 and 177 of the paperback version, we include 8 tactics early retirees might be able to use to lower their income in 2026 and increase their Premium Tax Credit. 

Catastrophic Plan and Lower Premiums

A little-noticed change in September 2025 can be very helpful to those thinking about enrolling in ACA medical insurance in November 2025 for 2026.

The government now allows those with incomes above 400 percent of the federal poverty level to enroll in an ACA Catastrophic medical insurance plan. Previously, catastrophic plans were mostly open only to those under age 30 or could otherwise demonstrate a hardship. Now the rules allow having income over 400 percent of federal poverty level to qualify as having a hardship, and thus enroll in Catastrophic coverage.

I believe that Catastrophic coverage is an option well worth considering for many early retirees. Catastrophic policies generally have no coinsurance to start, but they do have in-network annual out-of-pocket maximums. To my mind, that latter feature is, by far, the most important benefit of a medical insurance policy–avoidance of financial ruin in the event of significant medical expenses. 

Further, Catastrophic plans generally have lower premiums than Bronze plans, perhaps significantly lower. Note this can vary significantly based on age and geography.

Those on a Catastrophic plan do not qualify for a Premium Tax Credit. That can be a feature rather than a bug if you’re likely to be near the 400 percent of federal poverty level cliff anyways. Being on a Catastrophic plan makes Roth conversions much more desirable. With no Premium Tax Credit to manage for, the early part of an early retirement becomes a much more desirable time to do Roth conversions.

In today’s planning environment, I’m generally conservative when it comes to Roth conversions when one is on an ACA medical insurance plan. Why do Roth conversions when you are subject to what are essentially two federal income taxes; the federal income tax itself and the possible reduction or elimination of the Premium Tax Credit?

Catastrophic plan enrollment can open the door to more potentially beneficial Roth conversions.

Note that starting in 2026 all Catastrophic plans will qualify as high deductible health plans, allowing deductible HSA contributions. These deductions can help with Roth conversion and other tax planning.

Conclusion

Think twice when you hear fearful messages about 2026 Premium Tax Credits. For early retirees, now is the time to plan and embrace solutions. It’s also time to keep one’s ear to the ground. It’s possible that eventually some version of the Second Era’s Premium Tax Credit enhancements will ultimately be enacted.

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn at @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, legal, investment, medical, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, legal, investment, medical, and tax matters. Please also refer to the Disclaimer & Warning section found here.

2025 Year-End Tax Planning

It’s that time of year again. The air is cool and the New York Jets season is over. That can only mean one thing when it comes to personal finance: time to start thinking about year-end tax planning.

I’ll provide some commentary about year-end tax planning to consider, with headings corresponding to the timeframe required to execute. 

As always, none of this is advice for your particular situation but rather it is educational information. 

Urgent

By urgent, I mean those items that (i) need to happen before year-end and (ii) may not happen if taxpayers delay and try to accomplish them late in the year. 

Taxable Roth Conversions

Before we talk about taxable Roth conversion timing, we must talk about taxable Roth conversion desirability. Taxable Roth conversion desirability has significantly declined in recent years. Many commentators have not caught up to the new reality.

Fortunately, Mike Piper knows what time it is. At the 2024 Bogleheads conference, he said “[Roth conversions] don’t usually improve financial security in retirement.” Cody Garrett and I also acknowledge and tackle the changed landscape in our new book Tax Planning To and Through Early Retirement. 

Yes, there can be some taxable Roth conversions that are highly advantageous. But they tend to be much more limited in scope and scale than most commentators acknowledge. In our book, Cody and I detail the sorts of taxable Roth conversions that tend to be beneficial.  

Back to timing. For a Roth conversion to count as being for 2025, it must be done before January 1, 2026. That means New Year’s Eve is the deadline. However, taxable Roth conversions should be done well before New Year’s Eve because 

  1. It requires analysis (hopefully done with up-to-date thinking) to determine if a taxable Roth conversion is advantageous, 
  2. If advantageous, the proper amount to convert must be estimated, and 
  3. The financial institution needs time to execute the Roth conversion so it counts as having occurred in 2025. 

For those age 65 or older by year-end, the Roth conversion calculus should consider the new senior deduction.

Generally speaking it is not good to have federal and/or state income taxes withheld when doing Roth conversions!

Donor Advised Fund Contributions

The donor advised fund is a great way to contribute to charity and accelerate a tax deduction. My favorite way to use the donor advised fund is to contribute appreciated stock directly to the donor advised fund. This gets the donor three tax benefits: 1) a potential upfront itemized tax deduction, 2) removing the unrealized capital gain from future income tax, and 3) removing the income produced by the assets inside the donor advised fund from the donor’s tax return. 

In order to get the first benefit in 2025, the appreciated stock must be received by the donor advised fund prior to January 1, 2026. This deadline is no different than the normal charitable contribution deadline.

2025 is a great time to make a donor advised fund contribution. Why? Because of the new 0.5% of income haircut on itemized charitable deductions starting in 2026. Assuming one has high income in both years, 2025 might be more desirable than 2026. I walked through an example of how the new haircut reduces itemized charitable deductions with Brad Barrett on the ChooseFI podcast. 

Due to much year end interest in donor advised fund contributions and processing time, different financial institutions will have different deadlines on when transfers must be initiated in order to count for 2025. Donor advised fund planning should be attended to sooner rather than later. 

Adjust Withholding

This varies, but it is a good idea to look at how much tax you owed last year. If you are on pace to get 100% (110% if 2024 AGI is $150K or greater) or slightly more of that amount paid into Uncle Sam by the end of the year (take a look at your most recent pay stub), there’s likely no need for action. But what if you are likely to have much more or much less than 100%/110%? It may be that you want to reduce or increase your workplace withholdings for the rest of 2025. If you do, don’t forget to reassess your workplace withholdings for 2026 early in the year.

One great way to make up for underwithholding, particularly for retirees, is through an IRA withdrawal mostly directed to the IRS and/or a state taxing agency. Just note that for those under age 59 ½, this tactic may require special planning.  

Backdoor Roth IRA Diligence

The deadline for the Backdoor Roth IRA for 2025 is not December 31st, as I will discuss below. But if you have already completed a Backdoor Roth IRA for 2025, the deadline to get to a zero balance in all traditional IRAs, SEP IRAs, and SIMPLE IRAs is December 31, 2025. 

Year-End Deadline

These items can wait till close to year-end, though you don’t want to find yourself doing them on New Year’s Eve.

Tax Gain Harvesting

For those finding themselves in the federal 0% long-term capital gains tax bracket and with an asset in a taxable account with a built-in gain, tax gain harvesting prior to December 31, 2025 may be a good tax tactic to increase basis without incurring additional federal income tax. Remember, though, the gain itself increases one’s taxable income, making it harder to stay within the federal 0% long-term capital gains tax bracket. 

I’m also quite fond of tax gain harvesting that reallocates one’s portfolio in a tax efficient manner. 

Tax Loss Harvesting

The deadline for tax loss harvesting for 2025 is December 31, 2025. Just remember to navigate the wash sale rule. 

RMDs from Your Own Retirement Account

The deadline to take any required minimum distributions from one’s own retirement account is December 31, 2025. Remember, the rules can get a bit confusing. Generally, IRAs can be aggregated for RMD purposes, but 401(k)s cannot. 

RMDs from Inherited Accounts

The deadline to take any RMDs from inherited retirement accounts is December 31st. 

Can Wait Till Next Year

Traditional IRA and Roth IRA Contribution Deadline

The deadline for funding either or both a traditional IRA and a Roth IRA for 2025 is April 15, 2026. 

Backdoor Roth IRA Deadline

There’s no law saying “the deadline for the Backdoor Roth IRA is DATE X.” However, the deadline to make a nondeductible traditional IRA contribution for the 2025 tax year is April 15, 2026. Those doing the Backdoor Roth IRA for 2025 and doing the Roth conversion step in 2026 may want to consider the unique tax filing when that happens (what I refer to as a “Split-Year Backdoor Roth IRA”). 

HSA Funding Deadline

The deadline to fund an HSA for 2025 is April 15, 2026. Those who have not maximized their HSA through payroll deductions during the year may want to look into establishing payroll withholding for their HSA so as to take advantage of the payroll tax break available when HSAs are funded through payroll. 

The deadline for those age 55 and older to fund a Baby HSA for 2025 is April 16, 2026. 

2026 Tax Planning at the End of 2025

ACA, HDHP, and HSA Open Enrollment

It’s open enrollment season at work and November 1st starts ACA medical insurance open enrollment for 2026. Now is a great time to assess whether a high deductible health plan (a HDHP) is a good medical insurance plan for you. One of the benefits of the HDHP is the health savings account (an HSA).

New for 2026! All Bronze and Catastrophic ACA plans will qualify as HDHPs! This opens the door for many self-employed and early retired individuals covered by these plans to make deductible HSA contributions. These deductible contributions can increase Premium Tax Credits and lower income taxes. 

As I write this in mid-October 2025, the Premium Tax Credit is in flux. I do think many early retirees and self-employed individuals will benefit from considering a Bronze or Catastrophic plan. As I’ve said before, Bronze is Gold!

For those who already have a HDHP, now is a good time to review payroll withholding into the HSA. Many HSA owners will want to max this out through payroll deductions so as to qualify to reduce both income taxes and payroll taxes.

Self-Employment Tax Planning

Year-end is a great time for solopreneurs, particularly newer solopreneurs, to assess their business structure and retirement plans. Perhaps 2025 is the year to open a Solo 401(k). Often this type of analysis benefits from professional consultations.

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn at @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, legal, investment, medical, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, legal, investment, medical, and tax matters. Please also refer to the Disclaimer & Warning section found here.

Tax Planning To and Through Early Retirement Launch Day

It’s finally here! Tax Planning To and Through Early Retirement launches today, September 23rd. It’s available at Amazon and other online retailers.

To mark the occasion, we discussed the book on yesterday’s episode of the ChooseFI podcast and today’s episode of the BiggerPockets Money podcast.

We will be on several more podcasts in the coming weeks and months discussing the book and its concepts. 

One I’m particularly excited about is this Friday’s BiggerPockets Money podcast episode where we discuss tax planning for the five phases of retirement drawdown. You can find that episode on September 26th on the BiggerPockets Money YouTube channel and on podcast players.

I have also put two special YouTube videos on my YouTube channel discussing concepts from the book. 

  • Today I posted a video discussing just how much tax a retired married couple might pay on a $40,700 Roth conversion using an example from the book. You might be very pleasantly surprised by the result.

A Favor Request

I speak for both Cody and myself when I say we are grateful for all of the support we have received for this project.

If you have purchased the book and read it, we humbly for one more favor. Please write an honest and objective review of the book on Amazon. The number and quality of reviews is vital to the book remaining one that Amazon recommends to its customers. 

We want to get word out about Tax Planning To and Through Early Retirement. You can help us do that with an Amazon review! 

Thank you for considering our request.

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn: @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

The Tax Planning World Has Changed

The tax planning world has changed. Have I and my fellow advisors caught up?

Below I discuss three changes in the past three years. These recent changes make a big impact on retiree taxation. Most commentators and gurus have largely ignored these changes.

The world has changed. It’s time for financial planners and tax advisors to adjust their advice accordingly.

No RMDs Until Age 75

In September 2022 required minimum distributions (“RMDs”) began at age 72. RMDs make traditional retirement account balances in retirement accounts less desirable, since they require taxable distributions.

In December 2022, SECURE 2.0 became law. For those born in 1960 and later, it delayed the onset of RMDs until age 75. SECURE 2.0 moved the needle when it comes to the desirability of traditional retirement accounts since it cancelled the three most likely to occur RMDs.

How long do we expect people to live beyond age 75? Take a look at the most recent Social Security Trustees Report actuarial table. For the vast majority of Americans, RMDs will now impact a very small proportionate share of their lifetime. 

It’s time for advisors to question prioritizing a planning concern, RMDs, that now impacts a very small slice of most Americans’ lives. 

Permanently Extended Lower Tax Brackets and Higher Standard Deduction

In 2022, advisors were on alert.

Better do those Roth conversions before lower tax rates sunset in 2026 was the common refrain. To be fair, in 2022 the Internal Revenue Code stated that the lower tax rates and the higher standard deduction expired on New Year’s Day 2026. 

Since 2022, both the world and the Internal Revenue Code have changed.

The sunset never happened! In July 2025, the One Big Beautiful Bill permanently extended the previously “temporary” lower tax brackets and the higher standard deduction. In fact, the new bill slightly increased the higher standard deduction ($750 for singles, $1,500 for those married filing jointly).

Let’s think about what that means for taxes in retirement. RMDs that would have been taxed at 15%, 25%, and/or 28% will now be taxed at 12%, 22%, and 24%. That makes a big difference in planning, as the taxation of RMDs becomes less harmful. 

It gets better! Less of most Americans’ RMDs will be taxed in a taxpayer’s highest bracket, thanks to the higher standard deduction. The higher standard deduction drags taxable income down in retirement, decreasing the amount of an RMD subject to the taxpayer’s highest marginal tax bracket. 

Senior Deduction

New for 2025 is the senior deduction. It is up to $6,000 per person for those 65 or older by year end. Yes, it is subject to modified adjusted gross income (“MAGI”) phaseouts between $75,000 and $175,000 for singles and $150,000 to $250,000 for those married filing jointly. But those income phase outs still allow many rather affluent retirees to claim some or all of the senior deduction.

Many affluent retired couples will not show $150,000 of MAGI, especially prior to claiming Social Security. Even those with $200,000 of MAGI, a very limited cohort of affluent retired couples, get $6,000 of the potential $12,000 deduction. While the senior deduction may be more limited for affluent single retirees, many will be able to control income so as to qualify for some of the senior deduction.

The senior deduction helps with several retirement tax planning tactics and objectives. For some, the senior deduction opens the door wider for significant tax free taxable Roth conversions prior to collecting Social Security. For others, it will open the door to very significant Hidden Roth IRA distributions prior to collecting Social Security. The senior deduction also reduces the tax hit on RMDs, since it lowers the amount of the RMD subject to the taxpayer’s highest marginal tax rate. 

2025 Increased Deduction: Consider a married couple both turning 65 in 2025. On New Year’s Day, their 2025 standard deduction was $33,200. Pretty good. With the increased standard deduction and the new senior deduction, assuming their MAGI is $150,000 or less, their total combined 2025 “standard” deduction is now $46,700. Yes, the tax planning world has changed!

Senior Deduction Uncertainty

Some worry: doesn’t the senior deduction vanish in 2029?

Aren’t we back to the “temporary” tax cuts that lowered the tax brackets and increased the standard deduction? 

“Temporary” was simply the weigh station to “permanent” in that case. I strongly suspect something similar will happen with the senior deduction.

Let’s play out the politics. If Congress does nothing, in 2029, the senior deduction, the new deduction for tipped income, and the new deduction for overtime income all vanish overnight. Is it politically wise for Congress to allow seniors, waiters, waitresses, and many blue collar workers to face tax hikes? 

Congress tends to act in its own best interests. While there are no guarantees, the politics are well aligned for the senior deduction to be extended into 2029 and beyond. 

Tax Planning Impact

Fewer RMDs. Lower tax rates and a higher standard deduction. The senior deduction.

Three big changes in three years change tax planning.

We’ve heard commentators push for Roth 401(k) contributions during the working years and aggressive Roth conversions during the early part of retirement. Both tactics optimize for taxes in the later part of retirement. But we’ve just seen three changes in three years that significantly lower taxes later in retirement. 

If the goal is to pay tax when you pay less tax, it’s time to adjust our thinking. 

This is particularly true when it comes to Roth 401(k) contributions. These contributions, for most taxpayers, tend to cost a tax deduction at the taxpayer’s highest lifetime marginal tax rate. In a changed world where retiree taxation has been significantly reduced, that’s not likely to be good planning for most Americans. 

My view is that the new tax planning environment reduces the desirability of significant Roth conversions prior to collecting Social Security. As Mike Piper stated, one of the main benefits of Roth conversions is to reduce tax drag caused by RMDs. The new tax laws significantly reduce that tax drag. Thus, accelerating income tax through Roth conversions becomes much less desirable.

Tax Planning Resource For a Changed World

Cody Garrett, CFP(R), and I created a resource for the new tax planning landscape. 

Tax Planning To and Through Early Retirement is a book that tackles the new realities of tax planning, including deep dives into accumulation planning, drawdown tactics, taxable Roth conversions, RMDs, the Widow’s Tax Trap, and the senior deduction. 

We also have an entire chapter titled Planning for Uncertainty. In that chapter we tackle the “What about future tax hikes?” question using history, logic, and reason. 

Conclusion

In football and in tax planning, the game changes. The recommendations advisors made four years ago may have been the right recommendations then. But big changes in the retirement tax landscape require advisors to reevaluate their strategies and tactics when it comes to tax planning. 

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn: @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

2026 401(k) Catch-Up Contributions and the Quorum Clause

Starting in 2026, those with significant prior year W-2 incomes must make catch-up contributions to 401(k)s and other workplace retirement plans as Roth contributions. 

Mandatory Roth catch-up contributions deny many workers 50 and older a valuable tax deduction. 

The new rule originates with SECURE 2.0, a component of the Omnibus bill passed in December 2022.

The validity of the Omnibus bill has been questioned. In 2023, the Attorney General of the State of Texas sued the Department of Justice claiming that the House of Representatives did not have a sufficient quorum under the Quorum Clause to enact legislation when the Omnibus was passed. I share the Attorney General’s concern and have written to the government expressing that concern. 

Were the Omnibus were to be invalidated on Quorum Clause grounds, the rule requiring mandatory Roth catch-up contributions could not be sustained.

Judicial Results to Date

In the federal courts in Texas, four federal judges have weighed in. Two have opined that the Omnibus was passed in a Constitutionally qualified manner consistent with the Quorum Clause. Two have opined that the Omnibus was not passed in a Constitutionally qualified manner since the House did not have a sufficient quorum at the time of the Omnibus’s purported passage.

First, in February 2024 a federal district court judge determined that the Omnibus was not passed in a Constitutionally qualified manner. In August 2025, that opinion was overturned 2 to 1 by a three judge panel of the Fifth Circuit. 

SECURE 2.0 Lay of the Land in September 2025

Here is how I assess where we are in September 2025. 

First, it is likely that SECURE 2.0 will never be overturned. While I cannot say that definitively, I feel rather confident that it will survive, and I would plan around that outcome.

Let’s play out the future. As of this writing, I do not know if Ken Paxton, the Attorney General of the State of Texas, will appeal the August decision to an en banc panel of the Fifth Circuit and/or to the Supreme Court. But assuming it goes to the Supreme Court, just for analytical purposes, I suspect at least two of the institutionalist bloc of Justices Roberts, Kavanaugh, and Barrett would side with both the Biden and Trump Departments of Justice against overturning the Omnibus on Quorum Clause grounds.

From a planning perspective, it’s time for higher income W-2 workers to understand that they must make any 401(k) or other workplace retirement plan catch-up contributions as Roth contributions in 2026. The IRS confirmed this in recent guidance. 

The threshold to be considered high income for this purpose is likely to be slightly more than $145,000 of W-2 wages from that employer in 2025. I suspect that in October the IRS will come out with the exact threshold 2025 W-2 wage threshold amount applicable in 2026 (this is adjusted based on inflation). 

In late 2025, those subject to this potential restriction may want to prioritize W-2 income reduction planning opportunities such as making remaining 2025 401(k) contributions as traditional contributions to potentially fit under the 2026 threshold. 

Silver Lining: Required Minimum Distributions

There’s a silver lining to SECURE 2.0 likely surviving Quorum Clause concerns: delayed RMDs. For those born in 1960 or later, SECURE 2.0 delays the onset of required minimum distributions (“RMDs”) from age 72 to age 75. 

This delay requires all of us to step back from the inchoate fears about taxes in retirement and reassess RMDs and their impact.

Conclusion

While the final path of the Omnibus Quorum Clause litigation is not certain, it’s tilting heavily towards the Omnibus, and thus SECURE 2.0, surviving concerns about the House of Representatives’ use of proxies to establish a quorum in December 2022.

From a financial planning perspective, it is time to plan for higher income workers being required to make 401(k) catch-up contributions as Roth contributions. Further, it’s quite reasonable for those born in 1960 and later to plan on RMDs beginning at age 75.

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn: @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

Calculating the Senior Deduction

The tax laws have changed. Starting in 2025, those aged 65 at year-end can generally claim an additional deduction (referred to as the senior deduction or the Enhanced Deduction for Seniors) of up to $6,000 per person. 

Below I discuss how to calculate the senior deduction, how to optimize planning for the senior deduction (starting in 2025!), and offer thoughts on the future of the senior deduction. 

Standard Deduction or Itemized Deductions

One excellent feature of the senior deduction is it applies regardless of whether one claims the standard deduction or itemized deductions. The senior deduction is in addition to either the standard deduction or itemized deductions. 

Senior Deduction Calculation

The maximum senior deduction is $6,000 per person per year. It is not indexed for inflation.

Two things eliminate the senior deduction. The first thing that eliminates the senior deduction is not having a valid Social Security number (see Section 151(d)(5)(C)(iv)). The second thing that eliminates the senior deduction is filing as “married filing separately” (see Section 151(d)(5)(C)(v)).

One thing reduces or eliminates the senior deduction: having modified adjusted gross income (“MAGI”) above certain thresholds. 

For singles, the MAGI threshold is between $75,000 to $175,000. Within that threshold, the senior deduction is reduced 6 cents on the dollar. MAGI at or above $175,000 eliminates the senior deduction entirely. The MAGI threshold amounts are not adjusted for inflation. 

For those filing married filing jointly, the MAGI threshold is between $150,000 to $250,000. Within that threshold, each person’s senior deduction is reduced 6 cents on the dollar. Effectively, this means a dollar of income within the threshold reduces the total senior deduction 12 cents on the dollar. MAGI at or above $250,000 eliminates the senior deduction entirely. Again, the MAGI threshold amounts are not adjusted for inflation. 

MAGI for Senior Deduction Purposes: For the vast majority of readers, MAGI will simply be the adjusted gross income (“AGI”) reported on the tax return. However, three items are added back to determine MAGI: excluded foreign earned income/housing income, excluded income from certain U.S. territories, and excluded income from Puerto Rico. 

Senior Deduction Examples

Let’s start with Sally. She is single and turns 66 during 2025. Thus, she is eligible for the senior deduction. In 2025, her AGI and her MAGI is $100,000.

Here is her 2025 senior deduction is computed:

LetterItemAmount
AModified Adjusted Gross Income$100,000
BInitial Threshold Amount (Single)$75,000
CExcess MAGI (A minus B, cannot be less than $0)$25,000
DReduced Deduction (C times 6 percent)$1,500
E2025 Senior Deduction ($6,000 minus D)$4,500

Let’s move onto a married couple filing jointly. George and Lucille file married filing jointly and both turn 66 during 2025. Thus, they are each eligible for up to $6,000 of senior deductions. In 2026, their AGI and their MAGI is $162,000.

Here is how their 2025 senior deduction is computed:

LetterItemAmount
AModified Adjusted Gross Income$162,000
BInitial Threshold Amount (MFJ)$150,000
CExcess MAGI (A minus B, cannot be less than $0)$12,000
DReduced Deduction (C times 6 percent)$720
E2025 First Spouse Senior Deduction ($6,000 minus D)$5,280
F2025 Second Spouse Senior Deduction ($0 unless both spouses are at least age 65 by year end. If both are at least 65 at year end, enter the same amount as “E”)$5,280
GTotal Senior Deduction (E plus F)$10,560

Senior Deduction Optimization Planning

How does one plan to optimize for the senior deduction?

My favorite tactic, for those who can afford to, is to delay claiming Social Security benefits. That helps keep income lower longer in one’s mid-to-late 60s, increasing the odds they can claim the senior deduction. Delaying Social Security also increases the chances one can claim a full senior deduction and either (i) do an advantageous Roth conversion or (ii) benefit from the very favorable Hidden Roth IRA. 

A second favored planning technique to optimize the senior deduction is to keep ordinary income as low as possible in retirement. Tactics that further this objective include holding all taxable bonds and taxable bond funds in traditional retirement accounts and avoiding nonqualified annuities. 

Senior Deduction Tax Return Reporting

The senior deduction is computed on Part V of a new tax return schedule, Schedule 1-A, Additional Deductions, filed with one’s annual federal income tax return.

The Future of the Senior Deduction

The new senior deduction is scheduled to expire on New Year’s Day 2029. My personal view is that outcome is unlikely to occur. 

Two other tax deductions expire at the same time: the deduction for some tip income, and the deduction for some overtime income. It’s doubtful that Congress will allow seniors, waiters, waitresses, and blue collar workers to all face a significant overnight tax hike. I strongly suspect all three tax cuts will be extended such that they do not expire in 2029.

We have just seen this play out. Many advisors encouraged Roth conversions “before the 2017 TCJA tax cuts sunset.”

Yes, the higher standard deduction and lower tax brackets were originally scheduled to sunset at the end of 2025. Did that sunset happen? No!

Tax Planning To and Through Early Retirement Book

Cody Garrett and I wrote what we believe to be one of the first books to tackle the new senior deduction and the 2025 tax law changes in a serious way. 

Tax Planning To and Through Early Retirement is available on Amazon. It tackles retirement tax planning considering the new tax planning environment. 

Conclusion

The new senior deduction has a rather straightforward calculation, as I demonstrated above. Retirees should be attentive to monitoring income to help optimize for the senior deduction. 

FI Tax Guy can be your financial planner! Find out more by visiting mullaneyfinancial.com

Follow me on LinkedIn: @SeanWMullaney

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

One Big Beautiful Bill Passes

On July 4th, President Trump signed into law the reconciliation bill, commonly referred to as the One Big Beautiful Bill.

The Bill will drive a significant amount of my content creation this summer.

On my YouTube channel, I will devote my Saturday videos to discussions of how the One Big Beautiful Bill impacts financial planning and retirement planning. Already I did a video stating that the One Big Beautiful Bill ought to have us questioning our thinking about the future, and a video about how One Big Beautiful Bill changes the tax planning landscape for charitable giving.

Separately, I am working with Cody Garrett, CFP(R), to put the finishing touches on our forthcoming book, Tax Planning To and Through Early Retirement, which we anticipate publishing later this year. The book will devote significant space to how the new law changes retirement planning.

To find out when we are publishing the book, please sign up for an email alert here.

Two One Big Beautiful Bill resources:

The bill text: https://www.congress.gov/bill/119th-congress/house-bill/1/text

Jeff Levine’s X thread on the bill: https://x.com/CPAPlanner/status/1940856699872858202

Follow me on YouTube: SeanMullaneyVideos

This post is for entertainment and educational purposes only. It does not constitute accounting, financial, investment, legal, or tax advice. Please consult with your advisor(s) regarding your personal accounting, financial, investment, legal, and tax matters. Please also refer to the Disclaimer & Warning section found here.

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