In this episode, Tyler and Abrin break down the different types of taxation for investment accounts and how this can impact your long-term goals.
They start out with breaking down Tax-Advantage accounts. These are 401k plans, 403b, IRA’s and any other qualified account that you contribute pre-tax dollars into. The accounts give you a tax deduction when you make your contributions and grow tax deferred until you start taking out distributions in retirement. Withdrawals from these types of accounts are taxed at your ordinary income rates. The general idea of why it is beneficial to use these types of accounts is that the tax break you get in your working years will probably be greater than the taxes you will owe on withdrawals in retirement. Ideally, you would be in a higher tax bracket in your working years and a lower tax bracket in retirement.
However, these accounts can still be beneficial if you will remain in the same tax bracket in retirement as you were in throughout your working years. These have no taxes on capital gains, interest, or dividends while you are investing for retirement. This is not the same for a taxable account.
Abrin and Tyler breakdown a common question they receive from clients surrounding Rollovers. When you initiate a rollover of a old workplace plan into either a new work plan or IRA, there is not taxation. This is the same for a direct rollover from one account to the account, as well if you take a full withdrawal of the account and contribute into retirement account within 60 days.
Abrin and Tyler shift gears and start to explore Roth Accounts. They discuss how a Roth IRA allows you to put after tax money into the account today and if you wait until 59.5 years old you can withdraw the earnings tax free. In addition to this great tax tool, you can always take the principal in the account out without incurring a 10% penalty or owing any taxes. By using this type of account in your financial planning you will add some good diversification to your tax picture in retirement.
These types of accounts are funded with after tax money but come with no withdrawal penalties. You can invest in anything in the world and your taxation will be determined by how long you hold those investments and what type of investments you hold. If you hold an investment for less than a year, you would be taxed at a short-term capital gains rates which is whatever your ordinary tax rate is. If you hold those investments for longer than a year, you will be taxed at long-term capital gains rates which is either 0%,15%, or 20% depending on how much you bring home in income.
One important note is that any interest or dividends will be taxed as ordinary income tax rates in the year that they are paid out.
Taxes going up?!?
Recently the Biden administration has proposed a tax increase on long term capital gains for taxpayers who make more than 1 million dollars a year. The proposed increase would raise the current capital gains tax from 20% up to 39.6%. Abrin and Tyler discuss both sides of this issue. On the one hand, this seems to be a way to get top earners in the country to pay a higher tax rate on money they are making on investments. The flip side of the argument is that by doubling the capital gains rates on those earners, you may remove the incentive for those folks to invest in companies within the United States. While this is still just being discussed by Congress, it may be the beginning of a much larger conversation on tax increases in the future.
DISCLAIMER: The foregoing content reflects the opinions of Penobscot Financial Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security.
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Abrin Berkemeyer: Welcome to Financial Discretion Advised, I’m Abrin Berkemeyer.
Tyler Halford: I’m Tyler Halford. Let’s cue the music.
Abrin Berkemeyer: All right. Today on the podcast we’re going to be talking about investment and retirement income taxation.
Tyler Halford: Yeah.
Abrin Berkemeyer: Where do we want to start?
Tyler Halford: That’s a good question. What’s going on with you Abrin, how are you today?
Abrin Berkemeyer: I’m good, I’m good. Yeah, let’s break the ice a little bit.
Tyler Halford: Yeah, we’re doing this on a Friday. You’re looking, like I said, you look like you’re going fishing.
Abrin Berkemeyer: I mean, it’d be a beautiful day to go fishing.
Tyler Halford: Yeah, it’s nice out there. You’re doing all right?
Abrin Berkemeyer: I’m doing okay. How are you today?
Tyler Halford: I’m good, I’m good. I’m doing a little test. My wife tells me that she listens to the podcasts. I have some questions that she actually does. So I’m going to throw this out there, put it on the record. I had a donut with bacon on it today.
Abrin Berkemeyer: Oh, nice.
Tyler Halford: And I will tell you that if she does listen to this podcast, I will be hearing about that at some point. So that’s a little test there for everyone. But like Abrin said, we’re going to do investment and retirement income. A lot of clients have questions around how are my investments tax in a taxable account? How am I going to be taxed when I started taking money out in retirement? Thought we’d dive into that today. Plus there’s some stuff in the news, might be some changes on how those things are taxed.
Abrin Berkemeyer: Right.
Tyler Halford: Depending on how much money you make. So yeah, let’s dive into them.
Abrin Berkemeyer: Probably one of the best places to start is the tax advantaged accounts. So throughout your working career, you may have saved money in a Roth IRA or a 401k plan or a 403B plan. If you saved money in a 401k or a 403B, most likely that was done in a pre-tax basis, which means you got a text deduction while you put the money in. So you weren’t taxed on that income while you were working. And now you’re at the retirement stage and you’re looking to take money out of that account. And this is where they’re going to hit you.
Tyler Halford: Yeah. So you’re going to get your taxes there, right? So these accounts work that you put your money in today, uncle Sam gives you that tax break says, why don’t you save to retirement? It benefits uncle Sam because it lessens the burden when you get older and retirement on the social security system, you have some money set aside so they’re going to give you this whole break. However, uncle Sam is not giving that tax break forever. He’s going to eventually come asking for that money. But a lot of folks will put money into a pre-tax plan for a couple of reasons. One, the idea is that you’re probably making more money today. So you’re at a higher tax bracket. You get your tax deduction, you get the break today.
Tyler Halford: If you step into retirement, and this is the important part of when you take the money out and how it’s taxed, it’s going to be taxed at your income, right? Your ordinary tax income.
Abrin Berkemeyer: You don’t have any income. You just quit your job.
Tyler Halford: Right? So if income is lower, the idea is that when you’re pulling the money out, you are getting taxed at a lower rate than you would have if you didn’t get the tax break when you were in the working world. A lot of clients have questions around that because they don’t know what taxation looks like. Essentially it’s income in retirement, it’s treated as such. You got the break when you were working at a higher rate, hopefully you’re taking out at the lower rate, right?
Abrin Berkemeyer: Yeah. And you will at least because of the progressive tax rates, obviously. You got your first tax buckets, you’re being taxed at 10%, your second level you’re taxed 12%, and then the third level, 22%. obviously you’re going to fill up those lower tax buckets when you have no income when you take money out of a pre-tax account, like a 401k.
Tyler Halford: Yep. Now before we dive into this and I want to put out a bit of disclosure people listening, Abrin and I are going to dip our toes into some hot political topics of today. We don’t want to go one way or the other here. We want to get the pros and the cons of what’s going on. But I think there’s an argument that can be made that we may be living in the lowest tax environment that we’ll see in our lifetimes, right?
Tyler Halford: Taxes today are, especially after the 2017 tax act are probably as low as they’re going to be. So thinking about that, what tax rate you’re putting into a pre-tax or a Roth IRA today, what’s the impact going to be down the road, especially if you’re younger, probably going to see some tax hikes along the way at some point. So it’s just a little bit more complexity, right?
Abrin Berkemeyer: Yeah. That’s the tough part about the planning for it is that tax rates change based on what the government decides to do and with where they set income tax rate. So obviously if you are planning for lower taxes in the future, then whether it’s because you’re going to be at a lower income tax bracket or whether, because you think that the government is going to move into a lower tax environment, that’s obviously where pre-tax accounts come out on top.
Abrin Berkemeyer: And I think the important thing for other important aspect of these pre-tax accounts, like 401ks, is that people need to understand is the tax treatment of the money in the account while it’s growing. So in these accounts, you’re going to buy some fund, some investment in your pre-tax account. When you sell it, you’re not taxed in that account. So you can hold cash in a 401k, you can hold an S&P 500 mutual fund in a 401k. And no matter when you buy or sell, there’s no tax implications in that account because it’s growing tax deferred over your career. And then when you take the money out, whether you invest it in cash, or whether you invested in some funds, it doesn’t matter. It’s only taxed when you take the money out. So it doesn’t matter if you invest it in along the way.
Tyler Halford: And a couple of big things about that. A lot of questions I get when I’m meeting with folks is if they have a 401k and they want to move it into an IRA, am I going to get taxed on that? What if they sell it, I take a check, you have 60 days to get into an IRA without being taxed on it as a distribution, but you just sold all the investments you had, you bring a check to your new custodian, you put it in your IRA. You are not taxed on any of that. You can go to work with a new advisor, blow up all of your investments, change everything, not see a single ramification on the tax side.
Tyler Halford: So I think that’s important for folks to know, because I think there’s some anxiety around that wanting to make changes in your retirement accounts. You can do that and you can do it without having to incur any.
Abrin Berkemeyer: This way with tax advantaged accounts, that’s really what we mean is you can maneuver your investments around any which way and it’s not going to have a tax implication in a pre-tax account like a 401k or an IRA or a 403B. Let’s switch gears. The other avenue that you could take would be Roth contributions. So that could still be in a 401k setting or more traditionally a Roth IRA.
Tyler Halford: Yep.
Abrin Berkemeyer: That’s another very taxed advantage account because in this case, you put the money in after tax so you don’t get a tax deduction today. The trade off is you get some favorable treatment in retirement when we’re talking about taking out money, like we are now. When you take money out of a Roth IRA, it’s completely tax-free. And that includes what you contributed comes out tax free because you’ve already been taxed on it. If they taxed you twice on it, that’d be pretty terrible. And then you get tax-free growth in a Roth IRA or a Roth 401k. So that’s a really good tool for planning, especially if you think today, relatively low tax environment, historically speaking.
Abrin Berkemeyer: Going forward if we think that we’re going to have to raise taxes to pay off things like national debt over time, then if we’re think we’re going to be in a higher tax bracket towards add retirement or just later in retirement, a Roth IRA or a 401k is going to give you that tax free growth. You’re not going to have to pay higher taxes if the tax rates go up, or if you want to take out more income in retirement.
Tyler Halford: And I know everyone listening has listened to all of our podcasts.
Abrin Berkemeyer: Every single.
Tyler Halford: Every single one of them, probably twice. If you need a refresher, go back, we’ve talked about why we really like Roth IRAs. We’ve talked about why making conversions can make some sense to having it. One thing that I think is probably a good podcast that we should do is location of assets into different accounts and why it makes sense to hold certain types of your investments in a Roth versus a traditional, it’s a pretty complex and in-depth conversation so I don’t think we’ll do it here today.
Tyler Halford: But don’t think that you’re locked into having to do one or the other. You can have a 401k at work and do a Roth IRA if you’re under income limits outside of work. And that can give you a lot of flexibility in retirement to help you control taxation. I know we talked about RMDs and having to take your money out of your qualified accounts, your pre-tax qualified accounts, the Roth doesn’t make you do that. You can fold your Dodge coin and your Tesla in your Roth and hope it grows to the moon tax-free and hold some less risky assets in the IRA. And it just allows you to create one, I think in my opinion, a better portfolio overall for all your investments, keeping things in the right places, but gives you a lot of flexibility and control over taxation once you do get into retirement.
Abrin Berkemeyer: Yep. And the other nice thing about these Roth accounts, like I said, their tax advantage. When you sell an investment, no taxation, even when you take the money out, no taxation, but along the way, you’re not getting taxed on any capital gains or any interest or any dividends in Roth, just tax-free through and through.
Tyler Halford: Yep. All right, so we’ve covered retirement side of things.
Abrin Berkemeyer: Well, I guess you got, yeah, another type that we can touch on briefly, and those would be after tax contributions to a pre-tax account. So this is much more rare, but something that we should touch on. So along your working career, some folks may contribute to a traditional IRA, which is another pretax savings vehicle, but they might be over income limits to take the tax deduction on their return. So if you put $6,000 in to a traditional IRA, but you can’t actually take the deduction on your tax return, then that money’s going in what we call after tax into a traditionally pretax account.
Abrin Berkemeyer: When you do that, you get the tax deferred growth on that money. So if you put $6,000 in and say it grows to $12,000, when you take that money out, that $6,000 of growth is going to be taxed as income, just like any other pretax account. But since your contributions went in after tax, you’re going to be able to take that initial $6,000 out that you put in and take that out tax-free.
Tyler Halford: Yeah, it takes a little bit of math essentially take you contributed after tax divided by what’s in the account.
Abrin Berkemeyer: Right, yeah. The percentage of comes out what they call pro rata. So if you have an after-tax traditional IRA and you dump your 401k into that, and then you’re trying to take money out from your IRA that’s got after tax money plus pretax money in it, only a portion of that that you put in after tax with every check you give yourself out of your account is going to come out tax-free as the after tax contribution.
Tyler Halford: Yeah. Good accountant or financial advisor can help you through that piece. Certainly talk to an account when it comes to the taxes, but yep. Sorry, I forgot about those Abrin, you’re always keeping sharp.
Abrin Berkemeyer: Just honest.
Tyler Halford: You’re sharp. You may not dress well, but you’re sharp. All right, so let’s move outside of the retirement account world.
Abrin Berkemeyer: Non-tax advantage.
Tyler Halford: Non-tax advantage. So what we would call a taxable account.
Abrin Berkemeyer: Yeah.
Tyler Halford: Which is funny because I guess you could never pay taxes on it if you didn’t want to sell anything.
Abrin Berkemeyer: Hypothetically.
Tyler Halford: Yeah. So these are accounts, just a brokerage account. You open it up, you buy some investments. How do we get taxed on that? Right? It’s not the same as your income tax. Well maybe if you hold stuff for less than a year, but we’re not going to call it your income tax rate.
Abrin Berkemeyer: So to start, you putting money in after tax, because this is money that’s already been taxed by the government. So you can think of this as coming out of your net pay.
Tyler Halford: Uncle Sam’s not helping you out here.
Abrin Berkemeyer: Uncle Sam’s not helping you out. You don’t get any special tax treatment going forward, but you do get some good trade offs on that, it means you can use the money at any time. So if you have a say, early retirement, then the normal distribution age for a tax qualified accounts would be at 59 and a half. If you take to try to take money out before that, they slap a 10% penalty on it. So just a regular taxable account like we’re talking about now is one way that you could save up for an early retirement because you can take money out of this at any time because they don’t give you very many special tax incentives for investing in this type of account.
Tyler Halford: But it’s also good for shorter-term goals. Maybe you want to buy a house in seven years and you got some extra money you’re going to put it away. Let it do some work for you.
Abrin Berkemeyer: Why buy a house? Buy a house boat. Come on.
Tyler Halford: Well, once again, everyone’s listened to our really great podcasts and Maine state real estate. I need to invest. Going to be buying a house in the state of Maine. But yeah, so you don’t get that tax advantage up front. The government is going to give you a bit of a tax advantage for investing in companies if you’re going to hold that for over a year.
Abrin Berkemeyer: What would you call that?
Tyler Halford: Let’s go long-term with it.
Abrin Berkemeyer: Long-term, okay.
Tyler Halford: So yeah, if you’re going to take some money and you’re going to invest it into companies and essentially help companies here in the United States, but across the globe, right? The global economy and you hold those for a year or more, you’re going to get a special tax rate, your long-term capital gains rate. Today that’s either 0%, 15% or 20%, depending on how much money you make. I think we got to be up over what, close to half a million if you’re going to hit that 20% [crosstalk 00:14:08]. Yep. Everyone in the middle, I think for joy filers, if you’re up over $80,000 or so, you’re going to hit that 15%. Anything under that, you’re the lucky ones. You’re going to go 0% taxes on those long-term capital gains rates.
Abrin Berkemeyer: So just initially right there, some strategies you can implement in retirement might be if you don’t have a lot of pretax assets, maybe you get through retirement and your situation’s a little different than some other folks these days and you’ve just got a lot of taxable account assets. You’ve got no income and you’re married, filing jointly. You could take out roughly $80,000 of long-term capital gains from your investment, sell them, pay 0% taxes while you’ve got no income.
Tyler Halford: So this is another place where an advisor and a CPA or an accountant can really help you out. I know at the end of the year here we look at clients and say, all right, what’s income look like, can we take advantage of that? Right? Because my favorite tax rate zero, I say that a lot. So yeah, that’s definitely something to pay attention to. I want to make another note for folks. When I throw out the 0%, 15%, 20%, one thing to remember is that that rate will always be lower than what your ordinary income rate is. So it is an advantage, no matter which part of that scale you’re on, at least that’s how things are today.
Abrin Berkemeyer: So typically if you’re in the 15% long-term capital gain rate, if that was income, that would put you at the 22% marginal tax rate. So right there, you got 7% tax savings by holding onto an investment for a year in a taxable account through the long-term capital gains.
Tyler Halford: Yeah, so the system is incentivizing us to hold things long term. That benefits everyone, the investor benefits the companies, so that’s something. Now, let’s say you bought a company and you’re just not happy with it. It’s not doing what you want it to do, so you want to sell it within a year. What’s taxation look like then?
Abrin Berkemeyer: Well, if you have a gain, even though it’s not doing what you want it to do, which sounds [crosstalk 00:16:19].
Tyler Halford: All right. Let’s say you’re like me, you picked a stock. We’re not [Craig John Kiss 00:16:26] here. We didn’t pick the soaring winners. We just have a stock as muddling along. But you got a small gain on it but you want to get rid of it.
Abrin Berkemeyer: Yeah, you want to get rid of it, you held it for less than a year, we’ve got long-term after a year. I guess we call it a short-term gap.
Tyler Halford: Let’s go short term with it.
Abrin Berkemeyer: Just inventing great terms that you can find on the internet. So short-term capital gain. That just means that you’re going to pay income on any gain that you had. So you have an investment, you bought it for $10 bucks, you sold it a month later at $15, government’s going to charge you income tax on that $5 capital gain that you had. It was a short term because it was less than a year. Yeah.
Tyler Halford: Yeah, just treat it like your income. It’s an extra income we’re going to add to the end. Now certainly you can net things against each other. That’s tax loss harvesting. That’s another episode that will be a little more in depth than we’ll talk about here today, but you can take those gains that you had short-term and long-term gains and net them against each other. If you had some losers in some winners, in a perfect world, you make a ton of money on your investments, but uncle Sam looks at it, looks like you made nothing. That’s kind of tax loss harvesting, that’s playing the game.
Abrin Berkemeyer: But I think the important thing for folks at the withdrawal stage is to remember, you’re going to want to mitigate your short term capital gains as much as possible because that’s going to be your highest tax bracket. If you can wait that year, you’ve got the investment in, say you’re 30 days out from a long-term capital gain and you don’t think it’s going to collapse in the next 30 days then generally it’s a good idea to hold onto the investment, get into that lower tax bracket, save yourself some money.
Tyler Halford: And we get close to that, maybe we’re a half a month away from realizing long-term gains versus short term, I’ll be talking to clients and in our world we never use the G word, the guaranteed word, right? I can’t tell you what your returns are going to be. But I know that if we just go the next 10 days, then we’re going to at least make this much more because we’ve saved on taxes. So if you can hold off, certainly in your advantage to do that.
Abrin Berkemeyer: Yeah. And then hopefully the investment stays good [inaudible 00:18:38].
Tyler Halford: Hopefully, you didn’t take a recommendation from Abrin and I.
Abrin Berkemeyer: So then you got a couple other tax implications on these accounts. So we’ve covered the short term capital gain, the long-term capital gain. Those are really two of the biggies, but then you also don’t get any special tax treatment on interest or income that your investments are earning throughout the year. So just like a bank account where you’ve got your really low amount of interest that you’re earning every year these days, in your taxable account, if you have interests that your investments are earning, that’s going to be taxed to you in the year that you receive it. So you get that and then you got income, which is usually in the form of dividends from companies. So a stock or a publicly traded company might take their profits and decide to distribute that back to their investors in the form of a dividend and that’s income to you in the year that you receive it.
Tyler Halford: Whether you want it or not. But yeah, so unless they’re qualified, but before that, it almost makes sense to be holding those types of assets in a tax advantage account.
Abrin Berkemeyer: Yeah.
Tyler Halford: Where they’re not going to tax you on the interest.
Abrin Berkemeyer: Right. You got an interest in it and a lot of income-producing assets and you got that in traditional IRA, it doesn’t matter how much income they pay, you’re not being taxed until you take that money out of that account.
Tyler Halford: Another quick thing on that. If a company is giving you stock dividends, not money, that won’t be taxed too in a year, you’ll receive them in the same way that if they gave you a cash dividend, just a caveat there. So some companies will give you shares.
Abrin Berkemeyer: Sure. Anyway, sorry you were going on about qualified dividends. I was actually pitching qualified dividends to you, but yeah, so qualified dividend I guess I’ll feel that one too. I feel like I’m doing a lot of talking today, but one of us has to be a ringer around here. So yeah, qualified dividend, essentially you have held an investment for a long enough period of time, that income that you receive from that investment becomes still a dividend becomes what’s called a qualified dividend. And that’s when you actually get taxed on those dividends as a long-term capital gains rates. So good, also that just another index incentive to invest long term companies.
Tyler Halford: Now we keep saying capital gains tax and those types of things, you’ve probably started to hear about that in the news a bit, the current administration is looking to increase that top band there, that 20% on the longterm capital gains up to 39.6%, which is a big jump obviously from 20%, they’re looking to do this on the higher earners, a million or more. Like I said at the beginning, this is getting to a bit of a political discussion. That’s not what we’re trying to do here, what we want to do is dissect what kind of impact can that have, pros and cons of it. By increasing that tax rate, what we talked about earlier, by having lower tax rates, especially on people that hold investments for over a year, we’re incentivizing investment in companies.
Abrin Berkemeyer: It’s the old tax carrot and stick, right? You wag somebody a carrot. I guess that person probably the investment horse.
Tyler Halford: Yes.
Abrin Berkemeyer: You have a carrot in front and you say hey, we’ll give you lower tax burden for this behavior.
Tyler Halford: Right.
Abrin Berkemeyer: And so that long-term capital gains tax treatment where you’re going to save money because it’s lower than your income tax treatment. That’s the government telling you that this is a good idea. Let’s incentivize longer term investments.
Tyler Halford: Right.
Abrin Berkemeyer: So that’s the carrot. Obviously increasing taxes is another way where they can dis-incentivize people to have certain behaviors. So when you have really high tax rates, look at tobacco, the product gets the crap taxed out of it. And that increases things like cigarette costs, that disincentivize people to buy it because it’s higher costs.
Tyler Halford: Right. Taxation is a way to kind of try to control behavior, like you said. And so the argument against raising this tax would say you’re going to raise it on higher earners in the country. They’re more apt to have the money to invest in companies and kind of to put their money to work. Will they do that if they’re not receiving that incentive to get lower taxation on those types of investments? Will they put their money in other places to try to avoid paying that high tax rate, right? I said you’re always going to have a lower tax rate than you would if you had an ordinary income. We’re starting to push that up to the top bracket now if we’re looking that.
Tyler Halford: The flip side of that is we are doing a ton of spending right now, we just pulled our economy out of the worst pandemic in a hundred years, a lot of spending there, how do we pick up the tab for that? This seems to be one avenue that they’re exploring is saying all right, these folks have a ton of money already, they’re making a ton of money, they’re investing it, why don’t we raise the tax rates on that?
Abrin Berkemeyer: Right. Raise tax, hypothetically more revenue.
Tyler Halford: More revenue, more money coming in. There’s a lot of infrastructure talk right now going through the government about all right, let’s rebuild the country essentially. And then how do we pay that? It is, I would say politically dangerous to want to tax everyone, especially lower earners in the country. So it tends to go to the higher end of the income brackets there. So that’s going to be a hot topic, I think you’re probably going to hear it in the news, it’s going to be discussed. That’s what they’re talking about when they’re saying capital gains rates. They’re talking about these long-term investments and they’re making the argument that if you’re on the top band, do we want to keep it at 20% or do we want to up it and see if we can generate more revenue and they’re going to be discussing what kind of impact is that going to have on investments in the economy, especially in the US economy.
Abrin Berkemeyer: Right.
Tyler Halford: Which is where the majority of when people are investing a good portion of their portfolio is probably going to sit in the US, companies here in the US.
Abrin Berkemeyer: Yeah. And I think one of the other areas that you can kind of touch on with that would be real estate investing as well, just hard real estate, not talking about buying a re in your account, but if you’re buying hard real estate, obviously this is one area that could be impacted long-term. Real estate obviously comes with big price tags, everybody knows it’s about a house. Even though we’ve got long-term capital gains rates increasing on high earners, people that earn more than a million, you could still be a relatively middle-class person that goes out and buys an investment property, real estate property say, $500,000 multiunit that you have as a part of your portfolio over your lifetime, and that appreciates over time.
Abrin Berkemeyer: And then say you get through retirement and now you’re looking to offload it. Maybe that investment property was $500,000 when you first bought it, appreciates up to 1.2 million because your market’s hot. Now, when you sell that, you’re going to have a capital gain because that’s another area that gets capital gains treatment because you’ve held the investment property for more than a year. And now that when you sell it, you know that’s an area where it might be getting pushed up into that higher tax bracket just for that one year, obviously not every year. That’s a different story if you’ve got-
Tyler Halford: But you’re right, the investment’s not as attractive [crosstalk 00:26:42]. Will that impact folks? Is that something they’re going to discuss? I’m sure they’ll dive into all of these types of things, but you’re certainly right. Sometimes when this legislation goes into effect, there are ramifications that weren’t intended, right? I don’t think that that’s exactly what they are targeting when they’re talking about raising the capital gains tax, but there’s certainly outcomes that just affect some people in different ways. So, yeah. So I think that’s- I mean, did you have anything else on taxes?
Abrin Berkemeyer: No, I think that pretty much covers it. Yeah, that’s pretty much, those are your kind of your three and a half kind of accounts that you would have and how you’d be taxed on that money when you take it out. I’m not necessarily talking about strategy, but yeah, it’s just kind of the basics of what type of account you got, what type of taxes you should be expecting to pay based on where you parked it and when you sell investments and when you take income.
Tyler Halford: Yep. Just the end disclosure, always talk to an accountant or work with a financial advisor. If you’re not or if you have questions, they should be able to help you take a look at your accounts and figure out the best tax advantage way to take care of what you’re trying to do. So always speak to a professional, even Abrin and I, if I have clients who are asking me about it, I will all the time say go talk to an accountant because I want to make sure we get the tax thing right because it can make a huge, huge difference on your investments and your retirement. So yeah, that’s all I got for you. I’m going to go out there and have another bacon donut. Don’t tell my wife.
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