Nate Reineke (00:13)
Hello, physician moms and dads. I'm Nate Bernanke, Certified Financial Planner and Primary Advisor.
Chelsea Jones (00:20)
And I'm Chelsea Jones, also a certified financial planner and primary advisor here at Physician Family.
Nate Reineke (00:26)
Chelsea, I don't know when people think we record these things, but this is coming out on Christmas Eve and we are not recording on Christmas Eve. But it's getting close.
Is Anna into Advent calendars yet?
Chelsea Jones (00:37)
β not really. I used to, we usually do have an advent calendar, like a little chocolate one or something, but we didn't get any this year.
Nate Reineke (00:47)
My
boys, we made that terrible decision in getting them the same one. So it's like a race to see who can wake up in the morning and open theirs first. β it's the worst. And then there's even a competition on who gets to show dad first. On what they got, but it's the same thing every time. my goodness. But they love it. They love Advent calendars. We love β the holiday spirit around my house. β
Chelsea Jones (00:56)
Mm-hmm.
Nate Reineke (01:15)
What do you normally do for the holidays? Do have any traditions in your own family that's like not your parents' stuff?
Chelsea Jones (01:22)
So we're kind of in the phase where, you know, our daughter is only so young. We're deciding what we want our traditions to be. And so we're kind of figuring them out as we go. But what I want to make sure we do is we got to involve Christmas lights somehow. So next weekend we're going or this weekend.
Nate Reineke (01:30)
Yeah.
Mm-hmm.
Chelsea Jones (01:47)
This weekend we're going to a place called Lou Gardens here in Orlando where they just, you know, you walk outside because it's warm enough here to just do that at night. And you just walk through this garden that's decorated with all these lights. And I'm really excited for it. She, loves looking at the lights around our neighborhood. So I'm excited to see her experience like that many lights at once.
Nate Reineke (01:57)
Yeah.
Yeah.
Mm-hmm.
Yeah,
when you were in Oregon, did you get to go to the zoo lights?
Chelsea Jones (02:19)
We didn't go to the zoo lights. No, I wanted to, but like, yeah.
Nate Reineke (02:24)
incredible.
It's because it's
so cold and rainy and everything. have all that time at the zoo. Not as many people come all winter, so they get to just like prep. And we go, we usually go there. It's not really a tradition. We only have one tradition on Christmas that like, because we don't want to set the bar too high, but as we've started making them over the years, I've noticed a few that we don't speak of, they happen every year. It's like we do all our Christmas lights after we eat Thanksgiving dinner and things like that.
Chelsea Jones (02:36)
Mm-hmm.
Nate Reineke (02:57)
But the one that we, I guess you could say demand. Is β cinnamon rolls on Christmas morning. But I don't really demand them. My wife loves making them. And I can't wait. So I'm excited. Yes.
Chelsea Jones (02:57)
Yeah.
Are you guys a stocking family?
Like
where you actually fill them up.
Nate Reineke (03:24)
Yes. It's actually pretty bad.
Chelsea Jones (03:26)
I...
Why do you say that?
Nate Reineke (03:31)
Well,
I don't love the stuff that comes in stockings and I kind of throw a fit about it every year. Like, hey, hey, easy, we don't need all this. And then I find myself like filling them up. So I go against what I tell everyone to like slow down.
Chelsea Jones (03:43)
Yeah.
Yeah,
I love getting, because my mom always filled up our stockings and it was always the like, there would be some candy, but we would get the stuff that we need every year. It'd be full of socks, underwear, you know, I don't know, toothbrushes. And as I got older, I enjoyed the stockings a lot more.
Nate Reineke (03:54)
Yeah.
Yeah.
Yeah.
Yes.
You know what's funny is
I remember the first year where I was like a broke college student and I needed a new toothbrush and I didn't get
I was like, hey, what happened? Like, I need that now. Back then it was just a terrible gift. And then I was like, I really need that. At the time I probably didn't know that toothbrushes were a dollar, but yeah, that's funny. Same thing. The worst is though that like they just get worse and worse over the years. You know, when grandparents are contributing to the stocking, like, I don't need foot powder, okay?
Chelsea Jones (04:31)
Yeah, I need those.
Yeah.
Nate Reineke (04:49)
Like, I'll buy my own foot powder.
Chelsea Jones (04:49)
I know.
I think for my grandparents, we usually do dirty Santa where you like draw numbers and pick a gift out of the center and you can take someone's. One year I ended up with something that involved like I think it was a little like bath bomb for your feet. Like you fill up a small tub and put your feet in foot lotion. I was like
Nate Reineke (05:01)
Mm-hmm.
Yeah.
Mm-hmm.
Chelsea Jones (05:18)
I'm not paying that much attention to my feet. I don't need foot lotion. How is it different than regular lotion?
Nate Reineke (05:19)
Yeah
Yeah, that just means you like you got me lotion I can't put on my face now for some reason
Chelsea Jones (05:31)
Yeah, but then there was this business card on the back of like, a friend was a salesman or a salesperson for like Mary Kay or a remember Avon.
Nate Reineke (05:40)
β
Yeah.
yeah. I've probably still got some of that stuff floating around my house.
Chelsea Jones (05:49)
Yeah, but gifts can be so funny.
Nate Reineke (05:51)
Yep,
they are. They're hilarious. Yeah, so we love gifts. We love love it all. But β it's interesting time of year because you start buying gifts and you're like, this is all like kind of useless.
Chelsea Jones (06:08)
Yeah, I've tried to be really intentional with the gifts that I get my, that we get our daughter because I'm like, I don't want it to be a bunch of toys that are just going to sit here. And so.
Nate Reineke (06:18)
I You know what's the worst?
Oh my gosh, made me sick. Cleaning out this, you know, it's Christmas time. I'm trying to clear the decks for all this stuff I know we're going to get. I filled up the entire truck, like my entire, the whole bed of my truck with junk. And about half of it was just Christmas gifts over the last like three years.
Chelsea Jones (06:28)
Yeah.
β goodness.
you
Nate Reineke (06:48)
and I was just sick to my stomach. I'm like, is thousands of dollars. Now I didn't buy it. We don't buy a lot of stuff, but grandparents do. And it's like, what do you say to these people? They wanna treat their grandchildren, but it's just junk. So anyways, this is not Christmas spirit talk. Buy all the junk you want. You only get one day to do it, okay? All the other time you can be frugal.
Chelsea Jones (06:53)
so much.
Yeah.
Yeah.
Yeah.
Yes.
Nate Reineke (07:16)
I don't mean to be Mr. Grinch over here. But we got some questions. β We'll jump into them now.
Chelsea Jones (07:18)
We're not Grinch's.
Yeah. So the first question on decks from an anesthesiologist in Iowa, they said, I want to help my son with the home purchase. What is the best way for me to do this? So some context here. β they knew that they wanted to help their son buy a home. They didn't know how they wanted to do it. They didn't know if they wanted to do like all at once or, you know,
So we talked about like the repercussions of, you know, helping versus straight up buying your kid a home. β and at the end of the day, we really were comparing two different options. One was giving the son a loan and intra-family loan, which has to be this formal thing. You got to get a document. You have to actually charge them interest. or else it would be.
Nate Reineke (08:00)
Yeah.
Mm-hmm.
Chelsea Jones (08:22)
There's like imputed interest nonsense. Yeah. and the other option was just giving gifts. And then there was a branch of the gift. You could either do one big gift and like give them the money to pay for a house, or you could give them little gifts each year to just help them pay for a house or pay their mortgage. β at the end of the day, we went with little gifts.
Nate Reineke (08:23)
A gift, yeah. Yeah.
Chelsea Jones (08:49)
up to the gift exclusion amount each year, gift tax exclusion amount, which was $36,000 per child, because they were really big on keeping things even. So they were thinking about, you know, helping their son out that specifically looking for a home, but they wanted to be able to, you know, gift money, gift the same amount to their other children. So, yeah, we were looking at small
Nate Reineke (09:16)
So the best way to do this
is you're saying like, just do it, β plan it out, give a bit over time, and then you don't hit that. You don't go over the gift limit. Can I talk about the gift limit for a second? Because I actually got a similar question. They weren't ready to do this, but they were planning on doing this. It's like, how do I give my children money? β so I'll hit the gift limit, and then I want to just talk about this in general.
Chelsea Jones (09:24)
Yeah.
Nate Reineke (09:46)
β Gift limit changes every year. I'm not even gonna I think it's 19,000 this year. So you said 38 38 total so mom and dad give child each give 19,000 you don't go above the gift limit But a lot of times people get sort of attached to this gift limit Like it's the end of the world if they go a dollar over the gift limit. It's really not β It's still if you're if you're gonna give them 40 grand
Chelsea Jones (09:46)
Mm-hmm.
Yeah, 19 times 2. Yeah.
Nate Reineke (10:15)
you might as well just give them 39. Because then you don't have to mess with the tax forms and things like that, do you think you're going over the gift limit and start keeping track of this stuff? But what that really means is if you go over the gift limit, it's β it is tied to essentially inheritance tax. So your lifetime exclusion β for there's a limit that we have where your children can inherit money from you. And if it doesn't go over a certain dollar amount,
Chelsea Jones (10:23)
Mm-hmm.
Nate Reineke (10:45)
they don't won't pay any inheritance tax. And so if you stay under the gift limit, it never goes against your the exclusion limit you have. Right. I'm not using exact words because there's white. Whenever I use the exact words the IRS using, I lose people. So bottom line is you can date your children can inherit a certain amount of money without you paying any without them paying any taxes or your estate paying taxes. β If you go over the gift limit,
it goes against your limit that they can inherit eats into it. Now here's the thing right now that limit is enormous. So the federal limit is really high. Now the state your state has limits they have to be careful about. And if you're close like you you're going to give them 40 versus 39000 you might as well give them 40 just because we don't know what the federal limit will be when you actually die. So that's the whole thing.
Chelsea Jones (11:18)
It just eats into it. Yeah.
The federal limit, yeah.
Nate Reineke (11:44)
But if you have a really, really good reason to give them money and you're not really close to that federal limit, don't see a... I never understood why you wouldn't give them the money just because someday your estate might pay a little bit of taxes. So it's there. The estate tax limit is there.
But I don't tend to think about it with smaller decisions like this. Like giving a hundred grand to somebody.
Chelsea Jones (12:16)
Yeah, and in this case,
this doctor is retired, first of all, so they're not earning money to give. They would have to take it out of their investment account, meaning they would have to pay taxes. And two, if they were to just straight up buy a home for their son, they're looking at like $500,000 homes, so it'd be taking a pretty big chunk out of their investment account. And so...
Nate Reineke (12:24)
Mm-hmm.
Yeah.
Mm-hmm.
Chelsea Jones (12:46)
They didn't really like the idea of taking a big chunk out and owing the taxes, β mainly because they owe enough taxes. It's a family that we do Roth conversions for, and so we're filling up a certain bracket. They didn't want to push themselves into a higher bracket or pay more than they were already paying. β And two, they liked the idea of
Nate Reineke (13:01)
Mm-hmm.
Chelsea Jones (13:10)
just not straight up giving their kid a house.
Nate Reineke (13:13)
Yeah, that's what I want to talk about. β It seems to me that there are sort of, there's a few camps of people β that set goals to give their kids money. β The first one being they just think that's right. They just think it's the right thing to do. Maybe their parents gave them some money. Next one being β the camp of people that
Chelsea Jones (13:14)
Be
Nate Reineke (13:43)
β They don't think their children, the next generation, let's say, will be able to make it without them giving their children money. β And then the last being β parents just saved a bunch. They're never going to be able to spend it all. And they're looking for β good reasons to give money away. You know, not luxury cars, but hey, how about a starter home?
The last one I kind of understand, but I, you know, it's a personal decision, but there's a part of me that knows β the character that it took to build my own life and not get really handouts from people, even if it was my parents. Now that is all, β that is all your own personal experience because I just said I didn't get any handouts yet. My parents did help pay for my college.
Chelsea Jones (14:40)
Mm-hmm.
Nate Reineke (14:41)
But I
felt like I didn't get any handouts. So it's all, you know, it's unique to everybody. So obviously I did get some handouts and I did get things like, hey, here's a bridge loan so you can do this thing, but you have to pay me back. I got some of that from my parents. β Then there is the, so, the main one I want to talk about, I guess, is the people who think their kids can't make it. They won't be able to do it.
Chelsea Jones (14:55)
Thank
Nate Reineke (15:10)
And I just did a plan for this. And for this family, there was some validity because they live in Hawaii and it would probably be very difficult for their children to buy a house in Hawaii. But β you have to understand that the things you are seeing online or on the news or whatever, whatever you're reading, you're seeing that the next generation, you know, they're screwed.
They're never gonna be able to own a home. They're never gonna be able to live on their own, live outside their parents' basement. You hear all this. I disagree, β especially for physicians' children. Because physicians' children, they already have a huge leg up, and that is not bad. That is a testament to how hard physicians are working to get that. So imagine, you know,
the average person who has to go into a ton of debt to go to college, but a physician's paying for their kids college. And imagine the average person that maybe showed up to college campus with a $3,000 car. A physician sending their child to school with a car that will probably last until they're 30 if they really needed to. There's all these things. When you put all those things together, needing a car, needing a house, having student loans, it does start to amount to a
something you might not be able to do as a 25 year old in this world, but physicians are setting their kids up with an education, with the basic needs, also with a backstop, you can always go home to the point where I don't believe it is totally necessary to set up a separate goal to pay for your child's down payment on their first house. Now, if you're in the other two camps where you just have the money to do it,
or in the first camp where you just feel like it's the right thing to do, that's an entirely different story. But if you feel like you must in order for your child to succeed, that is not true. That is not true. they will become, know, they hopefully they will launch out into the world as their own person and they will blaze their own way. And when they're in their thirties, they'll probably thank you for that, for allowing them to do that. All right. I hope so.
Chelsea Jones (17:27)
Mm-hmm.
Yeah.
Nate Reineke (17:32)
So that's my take on giving gifts to kids. But if you want to save on taxes, we have a couple ways for you to do it if you are giving your kids a gift.
Chelsea Jones (17:41)
Yeah, yeah, if you're giving your kids a gift, β the like we already talked about the annual gift tax exclusion and the approach that we are actually taking with this client particular. Like I mentioned earlier, they're retired. They don't they're not earning money. They don't have cash flow coming in. And so they do have a taxable account, And if they were to just give their children cash.
Nate Reineke (18:00)
Yeah.
Chelsea Jones (18:08)
whether that be, you know, no matter what the amount would be, they would have to owe taxes. They would have to pay capital gains taxes. And so another option could be to just gift your children appreciated stock. So this is literally just taking the shares, transferring them into your child's name. Your basis goes along with it. And so they would owe gains according to, you know, the price that you paid.
Nate Reineke (18:22)
Mm-hmm.
Chelsea Jones (18:37)
But what also tags along with it is your holding period. So they would immediately be subject to long-term capital gains rather than short-term. And so you could gift them this appreciated stock. They could sell it right away, pay long-term capital gains, and depending on what their income is, they could pay 0%. And so, yeah, for this family, that made a lot of sense, gifting the appreciated stock, because it's
Nate Reineke (18:57)
Mm-hmm.
Chelsea Jones (19:05)
prevented them from paying taxes to get the money to gift. And it also doesn't put a tax burden on their children receiving the gifted shares.
Nate Reineke (19:12)
Yeah, that's good.
Yeah. Yeah, if you're in one of those boats where you're like, just makes total sense for you to give money rather than planning to do it in 20 years from now and being nervous about it, you just have plenty to do it. That's the way to go. OK, next question here. Oncologists in Colorado. I'm going to read it, because I like this question. β
Chelsea Jones (19:28)
Mm-hmm. Yeah.
Do it.
Nate Reineke (19:38)
Do you think a really early retirement is worth pursuing? So I actually, β I didn't get this, it wasn't this direct, but I did get this question. I actually got a version of this question twice in the last week. And it made me think, I went back and looked, we recorded an episode. β It was called, Should Physicians Set Themselves on Fire? And that was, think, the second.
third episode we ever recorded. was four years ago on this podcast. And it was interesting. I didn't listen to it, but I think I might. I might listen to it and make a comment about it or something on an episode. But it's been a fascinating four years because I felt long and hard about this question four years ago when I was recording that episode. what I have found and okay.
Chelsea Jones (20:30)
Mm-hmm.
Nate Reineke (20:36)
There's some bias here, and I'll reveal it at the end. But what I have found is nobody actually retires early.
Chelsea Jones (20:45)
100%.
Nate Reineke (20:48)
Nobody actually retires early. And that could be because people who are so intent on actually retiring early would never call someone like me or someone like you because like they couldn't, they wouldn't pay a nickel for good advice because they're counting every penny. Maybe that's it. But a lot of people, I mean, we've talked to hundreds of physicians since that day and I have yet to meet one.
Chelsea Jones (21:09)
Yeah.
Nate Reineke (21:17)
and actually meet one who, let's say, is retiring in their early 50s or mid 50s. I know they're out there. I know they're out there, but they just are very few and far between. So the question, is it worth pursuing? β I think it is worth saving a whole bunch of money and investing a whole bunch of money because it gives you flexibility. It's hard for me to say it's not worth doing that.
Chelsea Jones (21:19)
Mm-hmm.
Mm-hmm.
Nate Reineke (21:45)
It's hard for me to say, β rather than save money, you should just go spend a whole bunch of money. It's like, we're money people. I get it. I get wanting to have a bunch of flexibility. But when I talk to people and I hear the pain in their voice about how much it would take to truly retire early, cannot approve that. I can't put my stamp of approval on that. It's just, I really believe
Chelsea Jones (21:45)
Yeah.
Mm-hmm.
Yeah.
Nate Reineke (22:13)
that the time you have between let's say when you're 35 and 55 is so valuable for you to not use it wisely, spend time with your family, spend time with your hobbies, doing fun things, traveling just so that you could retire at 55 instead of 62. I don't think that's a great trade off.
Chelsea Jones (22:21)
you.
Mm-hmm.
Yeah, I would agree. And what I've seen as well with the people who want to plan on retiring early, some people, you know, there are some people where I've shown them how much it would take and they still want to try it. Because they, you know, they fear burnout, they want the option, but it kind of turns into a self-fulfilling prophecy because the amount that they need to save requires them to work crazy hours, not see their family.
Nate Reineke (22:47)
Mm-hmm. Mm-hmm.
Yeah.
Chelsea Jones (23:04)
and then they feel burnout instantly. And so it's just, is it worth?
Nate Reineke (23:08)
You know, that's a really good
point. I know I haven't thought of that, but I had another situation like that just happen. β It was it was a little different, but they had extra money. OK, this is I think this is a physician or a high achieving person thing. OK, they had extra money. β They did not need to invest it, but there was a really good reason to invest it. It's something to do with we were going to pay off their mortgage. And like a certain amount of time.
Chelsea Jones (23:16)
Mm-hmm.
you
Mm-hmm.
Nate Reineke (23:38)
And their mortgage was at like a 2 % interest rate. So it was a little harder than just saying, hey, put that extra 10 grand a month toward your mortgage. They're just like, man, 2 % is hard to do. So they said, well, since I don't actually have to pay off my mortgage, β I'm just going to invest it. And then maybe sometime in the future, I'll take that money and I'll clear the mortgage. I said, OK, so let's start putting $10,000 a month into your brokerage account. And they go, whoa, whoa, whoa, we need to think about this. And I was like, why?
Well, I don't know if we're going to have 10 every month. said, OK. You want to do eight? Well, no, we're going to think about it, see if we can do the 10.
What's going on here? That's kind of what is in my head. And then you realize, you know, it became very obvious. If you set a goal as a physician, when I see physicians set goals, there is no not achieving that goal. If you set a goal to retire at 53, you're retiring at 53. The only well, at least you're going to have enough money to retire if you want to at 53. Maybe you won't actually do it.
Chelsea Jones (24:19)
Yeah.
Right.
Mm-hmm.
Nate Reineke (24:44)
But my point being is that you have to understand your own personality here and say, if I set this goal, know, it's sort of like, like I could get behind someone saying, I want to retire at 55. I'm going to shoot, shoot for the moon. But if I don't get there, that's OK. But that's not actually how physicians act. They will set that goal and they will achieve it and they'll, you know, they will burn out along the way. So that's why we're so dead set on realistic goals that actually
Chelsea Jones (25:01)
Mm-hmm.
Right.
Mm-hmm.
Nate Reineke (25:15)
like you'll actually go for.
Chelsea Jones (25:17)
Yeah. And going in eyes wide open too. some people, I think if you've never done any actual projection to see what it takes to actually be able to retire and not have to work at all, β it can be.
Nate Reineke (25:21)
Yeah.
Chelsea Jones (25:34)
easy to think that as a physician and the amount of money that you make that you should be able to do that by 55.
Nate Reineke (25:40)
Yeah.
Chelsea Jones (25:41)
But one, it takes a lot of money, especially if you want to keep up with a certain level of lifestyle that you've been able to maintain as a physician. If you spend $5,000 a month in retirement, then it might not be as hard as you would think. But for a lot of doctors, for a lot of families, that's not enough.
Nate Reineke (25:44)
Mm-hmm.
Yeah.
Yeah.
Okay
Yeah, if that's by the way, the ultimate hack to setting yourself on fire here, like financial independence retire early is just spend less money. The amount of times that like I've had someone where they spend, they just spend very little. And I say like, okay, what are they going to need to do? It's like, not not a lot.
Chelsea Jones (26:12)
Yeah.
Nate Reineke (26:27)
That's the ultimate hack, but nobody wants to do that, right? They want to retire early with a nice lifestyle. So I think this is where a really good plan. We have this play session, right? Where if you get a plan with us, then on the third call, β you work with your planner and they will do like a legitimate play session. Well, what happens if I retire even two years earlier or two years later? What does that mean?
Chelsea Jones (26:31)
Mm-hmm.
Yeah.
Nate Reineke (26:52)
And so if you have a reasonable idea of what's comfortable to say, if you can see what's like a comfortable retirement, what's a stretch goal and what's like a super reasonable like β one in the middle. β But don't take your stretch goal too seriously. Physicians out there, physician moms and dads with precious children at home because it might kind of burn you.
Chelsea Jones (26:53)
Mm-hmm.
Yeah, I always like to say that you only have so many resources. You have a finite amount of resources. That could be money, that could be time, that could be literal mental bandwidth to be present with your family. And retiring really takes a lot of resources. And so you're gonna have to take those resources away from something. And it may be your goal, but you just have to go in eyes wide open, knowing what you're gonna have to sacrifice to get it.
Nate Reineke (27:27)
Yeah.
It does.
That's right.
Okay, last question of the day. OBGYN Massachusetts, are there any tax breaks I should avoid missing before the end of the year? So, β we almost didn't put this on, right, Chelsea? Because we're planners β and you don't try to avoid missing tax breaks β on Christmas Eve, which is when this episode comes out. But there are some you might be able to do if you have like a final paycheck and you're gonna go make that change before.
the cinnamon rolls are out of the oven. β So here's kind of what they are, the things to think about. And I guess what I would say is, is very, I mean, β the end of the year, Chelsea, it happens every year. The end of the year is not a surprise. So β do this before. And if you're a client of mine or a of Chelsea's, you're either meeting with me,
Chelsea Jones (28:24)
Mm-hmm.
Nate Reineke (28:36)
once a year and Kyle once a year, Chelsea once a year and Kyle once a year. So you should be able to do this throughout the year. But you want to be thinking about 401k, 403b, 457 contributions. You to make sure you get the maximum amount into your HSA. 529 contributions have to be in before the end of the year. That's something you could probably squeeze in on Christmas Eve. Just if your estate has an income tax deduction, that'd be only reason to squeeze it. But if they do, you can do that.
Chelsea Jones (28:57)
Mm.
Nate Reineke (29:04)
IRA contributions can go in pretty fast. A little late for this, but throughout the year you want to plan on like charitable contributions, bunching, and the appreciated stock gifts like you were talking about. You do those strategically in any given year. And then something that this isn't really a tax break, but it helps you peace of mind when you're planning with your CPA, you have 1099 income. I've seen a lot of
Chelsea Jones (29:10)
you
Nate Reineke (29:33)
people feel good about doing, it's called kind of like a top-up withholding. So with your final paycheck, you would do a big withholding so that you don't owe a bunch in taxes at the end of your own penalties. So those are kind of like the big things, but the new limits are out, right?
Chelsea Jones (29:46)
Mm-hmm.
They are. They finally came out. They came out a little later this year because the government was shut down when they normally come out. But they came out eventually. So you need to make sure that you increase your contributions to meet the new limits. So quick run through of those. The 401k limit went up by a thousand bucks. So the new limit for people under 50 is twenty four thousand five hundred. β If you're over 50, that's thirty two five. β
Nate Reineke (29:56)
β lovely.
Chelsea Jones (30:18)
The IRA contribution limit went up by 500 bucks. So 7,500 for people less than 50. The catch up for IRAs is actually indexed for inflation now. So in the past it's just been an even thousand dollars. So the catch up contribution would just be 7,500 plus a thousand. But since it's indexed for inflation now, the catch up contribution for IRAs is 8,600. So you get an extra 1,100 instead of just a thousand.
Nate Reineke (30:25)
Mm-hmm.
Yeah.
Chelsea Jones (30:48)
So that's nice.
The HSA limit went up by 100 bucks for individuals and 200 for families. So it's 4,400 or 8,750. And then the dependent care FSA actually had quite a jump. It went up by 2,500 to 7,500.
Nate Reineke (31:04)
Yeah.
Yes, it was 5K, right?
Yeah. That one is so we don't talk about that one a lot. I wanted to add it in here because it's a big jump. β We've talked about it more and more in the last actually few months. But this is just if you if you're paying for daycare, if you're paying a nanny above the table, this isn't like paying your niece 20 bucks an hour to go on a date. This is like legitimate. The IRS, you're reporting an employee. β
$7,500 for a high income person is going to save you at least $3,000 a year. You know, this is for super high income, but I shouldn't say at least. It could save you $3,000 a year, but probably at least $1,500 or $2,000 for any physician. So this is super worth it. Big, big break there. But yeah, these new limits come out. We'll make sure to keep everyone
Chelsea Jones (31:49)
Mm-hmm.
Nate Reineke (32:05)
on track if you're a client. Kyle's doing, working on this right now and getting new IRA contributions set up for next year. And when you're in your annual progress checks, we will make sure to get your 401k contributions β updated if necessary. β Everybody that's listening, we really appreciate you. We thank you for listening. β I cannot believe when I looked back at that episode that it has been four years of doing this podcast. I felt like
a young guy with a dream to have a podcast one day for a business that helps people I like working with. And that's what I feel like with all of our clients. And we just appreciate you. Appreciate you listening. We appreciate what you do for our world. If you are not a client, you would like to work with us, you can go to our website at PhysicianFamily.com, schedule an interview with me. If you aren't ready for that, you can send us a question, podcast at PhysicianFamily.com. We will answer that.
even if it doesn't make it to the podcast. And remember, until next time, you're not just making a living, you're making a life.
