Here’s to Last-Minute Tax Moves

It’s almost tax filing deadline day. Pop the balloons and streamers, right?

But, really, it’s almost here.

The federal income tax filing deadline this year is less than two weeks away, on Tuesday, April 18.

Why am I bringing this up? One, a reminder can’t hurt; but two, as editor of Dent Research’s 401k Advisor, in addition to my duties as portfolio manager of Boom & Bust and editor of Peak Income, I’ve got last-minute 401(k) tax breaks on my mind.

If you’ve read some of my work before, you know I’m all about tax breaks. I don’t believe in giving the governrnment a single red cent if I can legally avoid it. And there’s no better place to create some advantages for yourself than with your 401(k).

I recommend you max out your 401(k) by contributing the full $18,000 (or $24,000 if you’re 50 or older). But contributing anything to a 401(k) is a good start.

Even more so if your employer matches any contributions. Not all offer that benefit, but if they’re kind and able enough, that’s free money on the table.

I’ve said it before, but this is so important: Since every dollar you divert to your 401(k) avoids taxation, the “returnrns” you get from playing keep away from Uncle Sam, and employer matching, crush the returnrns you’re likely to earnrn from the investments themselves.

We’re talking bigger than 40% “returnrns” for those in the highest tax brackets. Think about that, and then think about the fact that, as Rodney wrote earlier this week, 40% of Americans over 62 have less than $25,000 in financial assets.

At this point, you can’t contribute any additional 2016 funds into your employer’s 401(k) plan. Those contributions had to be taken from your paycheck by December 31.

But you might have some other options at your disposal to lower your tax bill and pad your retirement nest egg.

If you or your spouse have access to a 401(k) at work, you might also be able to make a deductible contribution to a Traditional IRA, if your income falls below a certain limit.

But even if you earnrn too much to make a deductible contribution, you can make a non-deductible contribution that would still benefit from tax-free dividend, interest, and capital gains compounding.

A Roth IRA is also a great long-term savings vehicle. You get no immediate tax break, but your earnrnings would grow tax-free over time and, unlike with the Traditional IRA, there are no required minimum distributions once you turnrn 70½.

For another last-minute tax fix, consider a Health Savings Account (HSA). Due to the massive inflation in healthcare costs over the past decade, more Americans than ever have been corralled into high-deductible health insurance plans, many of which come with access to an HSA.

I personally pay cash for my medical expenses and use my HSA as a “spillover” IRA, though I should be very clear that IRAs and HSAs are very different vehicles when it comes to withdrawal fees and investment options. Though they do have the same contribution cut off: the April 18 tax filing deadline.

I write in more detail about these type of tax-break options, how to approach the Trump Rally with your retirement accounts, and update our first-quarter performance in the latest edition of Dent 401k Advisor, which subscribers received this week.

Coincidentally, we’ve just re-opened access to one of Dent Research’s most elite level memberships. Among many other benefits, you get lifetime access to 401k Advisor. That’s a good thing, if we do say so ourselves.

But there’s limited time and room to sign up. We only have space for 150 new subscribers, and spots are going fast. Get yours now.

Until next time,




Charles Sizemore

Boom & Bust Portfolio Manager

Charles Sizemore

Charles specializes in finding value opportunities and income plays outside of the mainstream stock market.