Retirement

Paying for Assisted Living & Home Care for Senior Citizens in Texas

Did you know that nearly 12% of Texans are over the age of 65? With longer lifespans comes a reality many of us will face—caring for aging loved ones. While it’s a privilege to help, the costs of care can add up quickly, and understanding your options is crucial. Whether it’s in-home help or full-time nursing care, Texas offers resources, but knowing where to turn can make all the difference.

🏡 In-home Care

Sometimes, an elderly family member may only need help with grocery shopping, meal preparation, or light housekeeping. If cooking has become a challenge, the Texas chapter of Meals on Wheels provides meals to seniors at little or no cost.

If you’re comfortable with someone visiting your loved one in their home, there are many in-home care services available—both through agencies and individuals. National services like Care.com and Visiting Angels offer resources, and there are also local options. Costs vary depending on the level of care, with payment typically by the hour or a flat day rate. Local and state agencies may offer some financial support—details are available on the Texas Health and Human Services website. If your loved one owns their home but is low on cash, a reverse mortgage could free up funds while allowing them to stay in their home.

🩺 Assisted Living and Nursing Home Care

If an elderly family member needs help with cooking, shopping, or getting to appointments, those needs can usually be handled with services like ride-shares or grocery delivery. However, when medical issues like Alzheimer’s, dementia, or physical disabilities arise, more intensive care may be required. If a live-in caregiver isn’t an option, it might be time to consider assisted living or nursing home care.

For seniors who are still mobile and cognitively strong, assisted living can be a good solution. These facilities provide meals, activities, and social interaction, all in one place. But be prepared—costs in Texas range from $4,000 to $10,000 a month depending on the amenities and level of care needed.

For those requiring nursing home care, the costs are often higher, and assets like a home could be used to cover these expenses. Entry fees or deposits of several thousand dollars are common, and while room and board are included, extras like cable or salon services may cost extra. If your loved one’s assets are depleted, it’s worth exploring Medicaid options, though availability can be limited and the paperwork time-consuming.

Need Help?

Caring for an aging loved one can be overwhelming—emotionally and financially. But you don’t have to figure it all out on your own. We’re here to help you navigate the financial side of senior care, from understanding care costs to making the most of available resources. Give us a call today, and let’s plan together for the care your family deserves, with less stress and more peace of mind.

Tax-Deferred: What Does It Mean And How Does It Benefit You

When you’re planning for your child’s future education or your own retirement, there are several smart ways to save. You might dive into the stock market, invest in income-generating real estate, or stash money in education savings accounts or retirement plans.

Understanding how these different savings vehicles are taxed is critical to making the best choice for your financial situation. Let’s start with a look at the tax treatment of IRA accounts.

💡 IRA, Roth IRA, and other Retirement Plans

Individual Retirement Account (IRA)
There are two main types of IRAs: the Traditional IRA and the Roth IRA. Despite their similar names, their tax treatments are worlds apart.

Traditional IRA – Contributions to a traditional IRA are usually tax-deductible unless you have a retirement plan at work. In that case, higher-income earners may lose the deduction. Earnings within a traditional IRA are tax-deferred—meaning you won’t pay taxes now, but you will when you take money out. If you didn’t take a deduction for contributions (whether by choice or due to restrictions), withdrawals will be partly taxable and partly tax-free.

Roth IRA – Roth IRA contributions are never tax-deductible, but the real magic happens when you withdraw. If you’ve had the account for at least five years and you’re over 59.5 years old, both contributions and earnings come out tax-free.

So, which one is best for you? It depends. If you need that tax break now, a traditional IRA may be the way to go. But if you’re fine without the immediate deduction, the Roth IRA’s tax-free withdrawals are a serious long-term win.

Retirement Plans
Whether you’re an employee or self-employed, the tax code offers a buffet of retirement plans to help you save. From 401(k)s to SEP IRAs, these plans generally allow you to defer taxes on contributions until you withdraw the funds in retirement. However, if you opt for the Roth version of a 401(k) or 457 plan, your contributions aren’t tax-deferred, but your withdrawals will be tax-free in retirement.

💡 Savings, Gains, and Withdrawals

Bank Savings
Simple but effective, money tucked into a bank savings account or CD earns interest that’s taxable in the year it’s earned. The good news? Once you’ve paid the tax, the full amount is yours to use, no strings attached.

Capital Gains
Whether from stocks, bonds, or real estate, capital gains are a big part of tax-deferred investing. Long-term capital gains, which come from assets held for over a year, are taxed at a lower rate than short-term gains. For most people, that rate is 15%, significantly lower than ordinary income tax rates.

Education Savings Accounts
Planning for college? The Coverdell Education Savings Account and the 529 Plan are your go-to tax-advantaged savings tools. While contributions aren’t tax-deductible, both plans’ earnings grow tax-deferred and are tax-free if used for qualified expenses like tuition. Start early to maximize the benefit!

Health Savings Accounts (HSA)
HSAs are a powerhouse of tax advantages if you have a high-deductible health plan. Contributions are tax-deductible, earnings grow tax-free, and withdrawals used for qualified medical expenses are also tax-free. After age 65, you can even use the funds for non-medical expenses—though you’ll pay taxes on those withdrawals.

Unqualified Withdrawals
Beware of dipping into retirement or savings accounts for non-qualified reasons. Early withdrawals can trigger hefty taxes and penalties. It’s always best to consult a tax professional before making any moves.

Navigating the world of tax-deferred investing?

Our team of experts can help you find the best strategies for your specific situation in 2024 and beyond. Let’s talk about how you can grow your savings while minimizing your tax bill—schedule a consultation with us today!

How to Leverage Roth 401(k) and Roth IRA Plans for Retirement Success

Contributing to a Roth 401(k) or Roth IRA is a smart move for your retirement game plan. These accounts let you save while enjoying significant, long-term tax perks. But before diving in, it’s worth weighing the pros and cons to figure out what best aligns with your financial goals.

The key difference between a Roth and a traditional retirement plan boils down to when you pay taxes. With a traditional 401(k)/IRA, you contribute pre-tax dollars now and settle the tax bill later, during retirement. Roth plans flip the script: you contribute with after-tax dollars today, meaning those withdrawals in retirement come tax-free. It’s all about deciding when you’d rather deal with Uncle Sam.

❓ Roth Plans vs. Taxable Accounts: Why Go Roth?

Choosing a Roth 401(k) or IRA over a standard taxable account can offer significant protection and perks. While you get the same investment options, Roth accounts come with some legal shields, especially when it comes to bankruptcy protection and lawsuits—something taxable accounts can’t guarantee.

Another bonus? No annual tax reporting. Unlike taxable accounts where you pay income taxes annually, a Roth allows your earnings to grow tax-free, and qualified withdrawals are tax-free too. Fewer tax headaches, more growth potential.

💡 Roth vs. Tax-Deferred Retirement Accounts: More Savings, Fewer Hassles

A Roth 401(k)/IRA offers better long-term tax savings than a tax-deferred retirement account. Since you pay taxes upfront, all future growth is tax-free—meaning you can enjoy more tax-free money in retirement. And with no required minimum distributions (RMDs), your money can keep growing as long as you want.

Plus, there’s no age limit for contributions as long as you have earned income. It’s a plan that grows with you, literally.

✍️ Estate Planning with Roth Plans: Leave More for Your Heirs

From an estate planning perspective, Roth accounts offer a win-win. With tax-free distributions, there’s no income tax for beneficiaries on the money they inherit. Plus, Roth plans allow your heirs to take RMDs on their terms while leaving the rest to grow tax-free. And bypassing probate? That’s just icing on the cake.

🚶‍♂️‍➡️ The Backdoor Roth IRA: A Clever Workaround

If your income exceeds the IRS limit for Roth IRA contributions, a “backdoor” Roth IRA could be your secret weapon. It’s an IRS-approved method that allows high earners to enjoy the benefits of a Roth. You can roll over funds from a traditional IRA into a Roth IRA or convert the entire account. Keep in mind, you’ll still owe taxes on the transferred amount, but it can be worth it for the long-term tax savings.

In a nutshell, choosing a Roth 401(k) or Roth IRA is a solid investment in your financial future. It’s about playing the long game and reaping the rewards when you need them most.

Ready to Plan for Your Future?

At Insogna CPA, we’re pros when it comes to helping you navigate retirement planning. Whether you’re eyeing a Roth 401(k) or looking into that sneaky backdoor Roth IRA, our team of licensed CPAs is here to make it easy. Reach out today, and let’s build a strategy that sets you up for success. Your future self will thank you.

Can I Use My Roth IRA as an Emergency Fund?

Thinking about withdrawing your Roth IRA? Maybe it’s for a new home, unexpected expenses, or you’re just curious about accessing your retirement savings. The good news is, yes, you can withdraw money from your Roth IRA—but there are some important rules and timing to consider. Let’s break it down so you can understand when and how to make the most of your Roth IRA without getting hit with penalties or taxes.

❓ Can I Withdraw or Use My Roth IRA as an Emergency Fund?

A: Yes, a qualified distribution that occurs at least 5 years after the year you made the ROTH contribution, you an take money out for either:

1️⃣ You’re over the age of 59 ½,
2️⃣ Distribution is related to your disability (defined in I.R.C. § 72)
3️⃣ Money is paid to a beneficiary or estate on or after your death, or
4️⃣ Taken for a qualified special purpose, including for a first-time homebuyer expense up to $10,000.

You can qualify as a first-time homebuyer even if you’ve owned a home in the past. As far as the Internal Revenue Service (IRS) is concerned, you’re a first-time homebuyer if, “you had no present interest in a main home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse also must meet this no-ownership requirement.”

Ready to make smart moves with your retirement savings?

Before you make any Roth IRA withdrawals, let’s ensure you’re maximizing every tax benefit. Schedule a chat with us today, and we’ll guide you through your options. Your future self will thank you!

2024 Tax Tips for IRA Owners

There are plenty of opportunities—and a few pitfalls—for individual retirement account (IRA) owners. While you don’t want to fall into a tax trap, you should definitely take advantage of these IRA tax tips and smart strategies available for 2024.

Individual Retirement Account Varieties: Traditional and Roth IRAs come in two varieties: Traditional and Roth. The Traditional IRA generally provides a tax deduction for contributions, tax-deferred growth, and taxable distributions upon withdrawal. On the other hand, Roth IRAs don’t offer an immediate tax deduction, but your distributions in retirement are tax-free.

This leaves IRA owners with an important decision, one that has long-term consequences. If you can contribute without needing the tax deduction, a Roth IRA might be the better choice in many cases. However, be aware that high-income earners face restrictions on contributions to both types of IRAs.

💡 Potential Pitfalls with IRAs

Here are some common pitfalls that can trip up IRA owners:

📌 Early withdrawals – The government designed IRAs as retirement savings vehicles, so tapping into your account before age 59½ often comes with a 10% early withdrawal penalty on the taxable amount. However, there are certain exceptions to this penalty.
📌 Excess contributions – The tax code sets annual limits for IRA contributions. Exceeding those limits results in a 6% excise tax penalty on the excess amount, which continues until the over-contribution is corrected.
📌 Multiple rollovers – While you can take possession of IRA funds for up to 60 days during a rollover, only one rollover is allowed per 12-month period. Exceeding this results in the additional rollover being treated as a taxable distribution—and an excess contribution if it’s redeposited into another IRA.
📌 No Traditional IRA contributions after age 70½ – Once you hit age 70½, you’re no longer allowed to contribute to a Traditional IRA, though Roth IRAs don’t have this restriction.
📌 Failing to take a required minimum distribution (RMD) – Traditional IRA owners must begin taking RMDs at age 73 (previously 70½). If you fail to do so, you’ll face a steep penalty equal to 50% of the RMD amount. Roth IRAs are exempt from RMDs while the account owner is alive.
📌 Late contributions – You can still make IRA contributions for the prior year until the tax filing deadline (April 15). This is helpful if you’re unsure whether you could afford a contribution before the year ended.
📌 Backdoor Roth IRA – High-income earners may not be able to contribute directly to a Roth IRA, but there’s a workaround known as the backdoor Roth. This involves making a non-deductible contribution to a Traditional IRA and then converting it to a Roth IRA. Be cautious of the tax implications, as the IRS treats all IRAs as one when calculating conversion taxes.

💸Saver’s Credit

For low- to moderate-income taxpayers, the Saver’s Credit can help offset the first \$2,000 contributed to an IRA or other retirement accounts. This credit is available on top of any other tax benefits from contributing, but it has limited availability. Reach out to learn more about whether you qualify.

📩 IRA-to-Charity Direct Transfers

If you’re 70½ or older, you’re required to take RMDs from your IRA. You can take advantage of a special provision that allows direct transfers of up to $100,000 per year from your IRA to a qualified charity. This not only satisfies your RMD but can also lower your taxable income, helping you benefit even if you don’t itemize deductions.

Maximize Your IRA Tax Benefits

IRA owners face plenty of decisions and potential pitfalls, but with the right guidance, you can turn these to your advantage. Whether you’re planning for your RMDs, looking into a backdoor Roth IRA strategy, or simply trying to avoid common missteps, having a proactive approach to your IRA can save you a lot of tax headaches.

Ready to take control of your IRA tax strategy? Reach out today, and let’s plan your path to a secure retirement. We’re here to help you navigate the complexities with ease.

Retirement accounts: Which is right for you?

Did you know one of the smartest ways to reduce your taxable income is by investing in your retirement? Retirement savings not only prepare you for the future but can also help you keep more of your hard-earned money today.

For business owners, contributing to your retirement plan is a double win – it helps reduce taxable income and builds personal wealth. However, if your business employs W2 staff, keep in mind that certain IRS/ERISA rules may affect your ability to contribute.

Fortunately, if you qualify, there are several retirement plans that can offer significant tax benefits:

📌 SEP IRA

If you’re self-employed, you can contribute up to 25% of your earnings, with a maximum of $66,000 for 2024. SEP IRAs are flexible, and you don’t need to worry about a year-end deadline.

You can set one up just before filing your taxes for the previous year, making it a great last-minute tax-saving move.

📌 Solo 401(k)

If you’re the only employee in your business, the Solo 401(k) is a perfect choice. Contributions can be made until December 31, and if you’ve elected S-Corp status, be sure to run the contributions through payroll.

The beauty of a Solo 401(k) is that it allows you to contribute up to \$23,000 (for 2024) into a Roth 401(k) as an employee deferral – perfect for those wanting to maximize Roth contributions. Plus, your business can match up to 100% of the employee deferral amount and contribute profit-sharing, totaling up to 25% of your salary. If your spouse is involved in the business, you can double the household contributions, creating additional tax savings while padding your retirement.

📌 Defined-Benefit Pension Plan

For those needing huge tax savings, the defined-benefit pension plan, also known as a cash-balance plan, is king. Combine it with a 401(k) profit-sharing plan, and your business could sock away a few hundred thousand dollars per year. However, defined benefit pension plans are the most complicated of the business retirement plans to set up because the plan design is complex, time-consuming, has costs involved, and generally requires a five-year contribution commitment. A defined benefit plan is worth setting up for higher-income business owners willing and able to max out contributions to both their 401(k) and defined benefit plans, as contribution limits can be in the six figures annually depending on the business owner’s age and W2 income.

Ready to supercharge your retirement savings?

Whether you’re self-employed or running a business, choosing the right retirement accounts is essential. Don’t let tax-saving opportunities slip away – talk to us today and see how we can help you save more for retirement while lowering your tax bill this year.

You deserve to retire with peace of mind, and we’re here to guide you every step of the way.