WCI #399: 529s, UTMAs, and HSAs

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. This is White Coat Investor podcast number 399. This episode is brought to you by SoFi. Helping medical professionals like US bank borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts as well as an investment platform, financial planning and student loan refinancing, featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that Sofi offers@whitecoatinvestor.com Sofi loans originated by Sofi Bank NA NMLS 696891 advisory services by Sofi Wealth LLC. The brokerage product is offered by Sofi Securities LLC, member of FINRA SIPC investing comes with risk, including risk of loss. Additional terms and conditions may apply. All right, a few things I wanted to go over before we got started today. The first one is a bit of a memorial announcement. We had a pilot on this podcast, episode 186, who is pretty well known in the personal finance community, a fellow by the name of Jason Depew. This was back in 2020 that he was on our podcast and I recently learned that he passed away suddenly at the age of 44 from a cardia and hope that his friends and family will find some comfort in this difficult time. May he rest in peace. It's a good reminder to all of us though, that none of us get out of here alive. Remember to live every day as though it's your last, every year as though it's at least the best year of the rest of your life. You know, it's interesting, we talk about withdrawal rates and things like that all the time. And people got to remember when they're thinking about not spending principal, right? I only want to spend the income. Never touch the principal. You don't get out alive, right? If you never spend the principal, you will die with all the principal still in the accounts. Okay? And that means you spent a lot less than you could have spent. Now that might be fine, you might have some legacy goals to leave that money to your heirs, to leave that money to charity, whatever. But if you would actually find more happiness and enjoyment from spending some of that principal, realize that you can. That's the whole point of saving up all this money is to be able to use it for something in your life that does some good for you. And for other people, something that I want to remind everybody about, and for many of you, you might just be hearing this for the first time, is the Corporate Transparency act, which takes effect in 2024. Now, I ran a blog post on this back in April. So if you go to the website and search the blog for Corporate Transparency act, it'll pop right up. Basically, they decided that. And when I say they, I'm talking about the government has decided that it needs to know who the beneficial owners are of all the LLCs and corporations. Right? They don't want a bunch of shell companies that are laundering money and committing financial crimes and all this sort of stuff. So everybody that owns one has to register the beneficial owners. And if it's a trust that owns it, the trustees of the trust have to be listed on there. So if you have an LLC or a corporation, you have to register that company with FinCEN. It's not hard to do. It's totally free. It only takes a couple of minutes. I mean, I did seven of these in, like, I don't know, 10 or 15 minutes. And it's not that big of a deal, but you have to do it. If this LLC or corporation was in place on the 1st of January, 2024, the deadline is the end of 2024. I think it's the 1st of January, 2025 is the last date you can do this. You need to do it right. This is not optional. The penalties are actually pretty bad. Late filing can make you liable for a penalty of $500 a day that you're late. Right? So $15,000 a month for not registering your little LLC you use for doing some side gig that you're doing. In addition, there can be a $10,000 fine and two years in jail. In jail? Yeah. So they're pretty serious about it. You got to register your companies, okay? LLCs, corporations, and you know who the beneficial owners are. I don't think you have to do it for sole proprietorships or partnerships because your name's already on it, right? So it's just LLCs and corporations. One other thing people ought to be aware of that comes up once a year. It's not now. It's actually the end of July. That comes up is a tax form called 5500EZ. And it has to be filed by 401k providers, right? Including solo 401k. So if you have an individual or solo 401, you might have to file this form every July 31st. The two things that make you have to File it is if you have a quarter million dollars or more in it at the end of the prior year or if you close the 401, both of those make it. So you have to file this form 5500EZ. It's not hard to file again, go to the website, search 5500EZ and a how to post will come up. That shows you how to do it. I feel like I'm reminding people about this stuff all the time, but maybe I'm not doing it as often as I need to. But the penalties for that can be really bad. I just saw somebody on the forum today who is facing a penalty of $150,000 for. For failing to file that form. Right? I mean, how many years of 401 contributions is that you could potentially lose? Now, the truth is there's some ways of getting out of those penalties. And so far, everybody I've talked to that forgot to file this or went to file it late actually managed to get out of them eventually. But it is possible that you could be stuck with those penalties. And waiting longer does not make it easier to get out of them. So file your 5,500 EZ each July. Wait. When you start a new company now, you need to register with FinCEN. Any company you had before the start of 2024, you gotta file this by the end of 2025. All right? Another thing you ought to know about is it's the end of the year and we're having an end of the year sale. This is our buy one, get one sale. Buy any course that we have and you will get continuing financial education 23 for free. That's like free 50 hours of content, right? It's good for all the CME. It's a great course. We made it using WC Icon 23. Now you might go, oh, I want CFE 24. Well, you can buy that too. Buy 24 and you get 23 for free. Both of them come with CME, but they're great, right? And the truth is, stuff doesn't go out of date that quickly. Everything we talked about at the conference in 23, 95% of it is still totally applicable, so it's well worth your time to take. But if you go to whitecoatinvestor.com courses, you can see what we have to offer. This includes our fire your financial advisor course that helps you to create your financial plan. It's our real estate no hype real estate investing course is also available there. And of course, our CFE courses and Lots of these are eligible for you to use CME money to purchase. If you got to use your CME money before the end of the year, now's a great time to use that. But why not give yourself the gift of financial literacy this year? Take advantage of this sale and kick off your 2025 year. Right? You don't have to take the course by the end of the year. In fact, you don't even have to buy it by the end of the year to get the buy one get one free. It actually goes through the 6th of January. So from today through the 6th of January the sale goes on and you can take the course anytime you want. Once you buy it, you own it forever. So you don't have to take it by the 6th of January or anything by any means. You can spread it out over the whole year if you want. And in fact that continuing financial education course you may want to these if you have some sort of an Apple device, you can stream these in your car like a podcast, listen to them podcast style and that's a great way to listen to this stuff via one of the apps that's available for it. Okay, that's all@whiteconeinvestor.com courses. Let's talk now about some of your questions. A recent one came in by email asking about Dynasty 529s. So let's read it. I know you seem to have a lot of 529s for other relatives. Have you thought about overfunding a 529 to the contribution limit? $550,000 for my state and haven't it be a sort of multi generational tax advantaged legacy fund. I've tried playing with numbers. It's a nice thought and something that would encourage them to only use it for educational purposes only having to tap in it after roughly 30 years of growth from time they finish higher ed to the time their children will need it ad infinitum. You could try and pass along the vice to leave at least $200,000 in each account for the next generation. Obviously you can have an irresponsible grandchild. That would be the case for any money being left to progeny. My questions are the how to details of it and the gift tax implications. Thanks so much. Hope you get to this. All right. Okay. Well can you do this? Yes, you can do this. I guess the question is if you're going to leave that much money, is a 529 really the right vehicle for some or all of it? Right? I've got overfunded 529s already. Given my children's college choices and plans. Right now we have relatively low but six figure 529s for each of our children. And they're all talking about going to schools in Utah. And none of them right now are talking about professional school. And so as you know, if you know anything about education in Utah, tuition here ranges from about 4,000 to $12,000 a year. That's it. Right. So six figure 529 is already overfunded. You can do lots of things with overfunded 529s. You can just pull the money out and pay taxes and a 10% penalty on all the gains and buy a sailboat with it. You can also use up to 35,000 of it, you know, 7ish thousand dollars a year to fund the beneficiaries Roth IRAs. That's part of Secure Act 2.0. And it's a pretty cool thing that you can do these days if it's only a little bit overfunded. That's not going to help you if it's six figures overfunded, but it'll help you if you're a little overfunded. Probably the most common thing, though is just to change the beneficiary and you can change it to a sibling or cousin or even yourself. But I think what most people plan to do, and certainly our plan for our overfunded 529s is to change the beneficiary to our grandchildren, the kids of our kids. And the cool thing about that is, well, you know, let's say, you know, the $150,000 in a 529 now maybe they spend $80,000 of it. That leaves $70,000. Right. And that compounds now for however long it takes until their kid goes to college, right? At least 20 years. Probably closer to 30 years. Right. Well, money doubles ish at 7% returns about every decade. So we're talking 3 to 4 doub probably on this money if it's invested aggressively. So that $70,000 might become $600,000. Now, obviously 600,000 isn't going to go as far in 30 years as it does today. But that's a pretty big $529,000. Even if you split it among two or three or four kids, that's still a big legacy being left to them, really. I probably already funded my grandkids 529s. Now this emailer is talking about doing this to an even larger extreme. Right. You can put A lot of money in 529s. In fact, there's no limit. He talks about his state limit being $550,000. That's just the limit until you can't contribute anymore. Right? You can still have it grow beyond. Then you just can't contribute to it. But there's actually no limit on how many 529s you can have. Your spouse can then open a 529 for each of your kids in your state. You can go to the other 49 states and you and your spouse can open a 529 and put 3, 4, $500,000 into each of those. Right. You could have a gazillion dollars in 529s left for your beneficiaries. And at a certain point you got to go, well, how much do I really want to put towards this goal alone? If you've got that much money to leave behind, maybe you want to leave money for something besides just education. The other problem with using a 529 is every generation's got to make the same decision you're making, right? They may decide not to leave it to their kids, their grandkids, et cetera. They may decide, I'm going to pull it out, pay taxes and penalties and buy a sailboat with it. And so that's the main problem. So if this is really a goal to have a multi generational kind of education fund, I think you're probably better off with some sort of a trust. Right? This is fine for this is a great thing to do with an overfunded 529. And maybe it goes two, three, four generations, maybe. But if you really want to ensure it does that or have it go further than that, I think you're probably better off with the trust. I hope that's helpful. Obviously you can do that. The gift tax considerations thing to keep in mind is every time it goes to the next generation, that's basically a gift tax event. Now, gift tax doesn't matter for most of us, right? Because most of us aren't going to have enough money to have more than the estate tax exemption. So we're just using up our exemption. We're not actually paying any taxes. You just have to file a return when you do it, and that return's not even that terrible. But you do have to file a gift tax return if you're leaving somebody more than $18,000 a year. And that includes changing generation on a 529 beneficiary. Okay, I hope that's Helpful. Let's talk a little bit about some I bond interest. This is a question off the speak pipe, also related to education. Hello, Dr. Dali. I had a question about I bond interests in my child's name contributing to a 529 plan. We have 529 plans that are owned by the parents with the beneficiary of child. And we have I bonds that we purchased using the child's Social Security number. Generally, when those I bonds are withdrawn, you have to pay tax on the interest of those I bonds. But there is a caveat if you are below a certain income threshold. All right, obviously we don't have the whole question. I'm not even sure we have the question at all to the speak pipe. But hey, we're here to serve you. We want to help you as much as we can. We don't care if you don't even leave us a question on the speak pipe. We're still going to try to answer your question. I'm probably not going to answer whatever your specific question is, but let's talk for a minute about savings bonds and how they're related to 529s. Savings bonds in some ways are kind of the old way to save for college. It was cool. You could put money in savings bonds and it was a very safe way to save. You had the option where it was basically a nominal bond. Those are the EE bonds. And you had the option where it was an inflation index bond. Those are the I bonds. And the interest, as long as you didn't make too much money like a doctor or something you didn't have to pay taxes on if you used it for education. So you pulled the money out when your kids got to college and it had basically Grown like a 529 does. Doesn't work for high earners. Right? For you and I, basically, you make too much money. You still have to pay taxes on the interest, even if it's used for education. So a 529 plan is just a much better way to save for college. Plus, if you want, you can invest it a lot more aggressively. We invest our 529s really aggressively because we figure the consequences of them tanking just before they go to college aren't that big. If that happens, well, they still have plenty of money, number one. And number two, we can help with cash flow. Right? It's not like we don't have any other assets out there or any other income out there. And so we invest very aggressively for college and savings bonds. Let's be Honest. They're not an aggressive investment. Don't expect high returns out of them. We had a year there where I bonds paid like 9%, which was awesome, but that's about the best they've ever been in their entire existence. I think the question you might have been wanting to ask was whether you could contribute I bond interest into a 529 and whether that's considered an acceptable use for I bond interest. And I tried looking this up. I could not find the answer. I'll bet somebody out there listening to this knows the answer for sure. But I'm guessing this is not an acceptable education expense. And the reason why is because you can pull money out of the 529 and spend it on a sailboat. So I don't think they're going to let you get away with not paying taxes on that. I bond interest and then buy a sailboat with the same money. I just. I think they probably thought about that and kept you from doing that. The idea of putting it in the child's name, though, that's a reasonable thing to do. Right? Because it's not your interest, it's their interest, and their income is going to be low. And so that's kind of a smart little workaround to not being able to use that interest. But I just think 529 is so much better way to save for college than savings bonds. But if you really want, what you want is savings bonds, I bonds is what you want. Yeah. Maybe it's smart to put it in the kid's name. Just keep in mind, right, when that kid becomes an adult, they can use that money for anything. Right. You control a 529. You don't control a savings bond in your child's name. It's like a UTMA account that way. Right. It's their money at least once they hit the age of majority in their state. In my state, that's 21. In most states, it's 21. So that gives you a couple of years after they leave for college where you're still kind of in control, but eventually it's gonna be their money. And. And if they want to go spend it on fast cars and stimulants, they can. All right, speaking of utmas, let's look at our next question. This one comes from Carter, and he's got a question about utmas. Hey, Dr. Dali, finance worker from the Midwest have an UTMA account with about $1,000 worth of capital gains for a nephew who has no income. Curious if it would make sense to do some capital gains harvesting to reset the basis in that. Thanks. Yes, tax gain harvesting. This is called Most of the time when we're on this podcast talking to high earners, what we were talking about is tax loss harvesting, where you sell, you know, things you have in your taxable account for a loss and swap them out for something very similar. So your asset allocation really doesn't change, but you get to grab that loss that you can use to offset $3,000 a year of ordinary income, an unlimited amount of capital gains, and you can carry it forward for decades until you sell a house or sell a business or something. You can use it to offset the capital gains then. But this is different. This is tax gain harvesting. So if you are in a very low tax bracket, particularly a low capital gains tax bracket, why not realize the capital gains and update your basis to current value? It's a great move, right? You just got to be a little bit careful with it. You don't want to end up kicking yourself into a bracket where you have to pay 15% on those capital gains. But for the most part, capital gains stack on top and so it's not that hard to avoid this. And almost surely this is a nice thing to do. It's entirely possible it won't make a difference because maybe this UTMA isn't that big and when the kid pulls it out, they're probably still in the 0% capital gains bracket. Right? But it's possible they hold onto this for a long time and they'll really appreciate you updating their basis by tax gain harvesting. So good thought. Thanks for asking. Okay, another question, man, everything's about our kids in this episode today. Next question is also about UTMA accounts and this one came in by email. I was wondering if you could talk to us on your podcast about tax benefits with the UTMA or UGMA account. I've read on the White Coat forum about tax gain harvesting with the UTMA account. We just talked about that. I was trying to understand it. I'm already funding my kids 529 plans and understand the risk of loss of control with the UTMA account once they turn 21, but wanted to know if there's any tax benefit of funding a UTMA account. We are a two physician household. Okay, well, yes, there is a tax benefit. It's probably not as awesome as you were hoping though. If you put money in a 529 in a lot of states, I don't know, 20 states or so, you get some sort of a tax break on your State taxes for that year. Right. Sometimes it's a credit, sometimes it's a deduction. Whatever helps you in your taxes right. Now you don't get that with the utma. Okay. Nor do you get the other cool benefit of a 529, which is that everything grows tax protected as it goes along and comes out tax free if spent on education. Right. You don't get that in a utma. What is a utma? It's a taxable account for your kid. That's what a UTMA is. Okay. When they turn 21 is their taxable account. Until then it's a custodial taxable account. But it generates income and taxes must be paid on that income as it grows. Now if you invest it very tax efficiently, you could probably get 100 grand or so, maybe even a little more in there and not have to pay any taxes on that income. But at a certain point when it gets to a certain size, there's going to be some taxes due. So that is the way UTMA accounts work. You can tax gain harvest in them. Just be careful. It doesn't take that large of a gain to all of a sudden kick it into a place where the kids are going to have to start paying taxes on it. The only real tax benefit of these is it's taking money out of your taxable account and putting it in their taxable account. And so they get a certain amount of money basically that comes tax free and then another chunk of money. And this is like it changes every year, goes up slightly with inflation, but it's like 1200 bucks, 1300 bucks for each of those. Right. So 1250 or 1300 comes out tax free and then another 1300 at 0%. Right. Basically their bracket. And then it comes out at your tax rate after that. That's called the kiddie tax. Right. And the idea is that you can't put a gazillion dollars in there and have it paid on at your kids tax rates. It goes to your tax rate. So if your capital gains rate is 20% or 23.8%, guess what? That's what you're going to be paying on the income from these utmas. So they're really cool accounts if you don't put that much money into them. Our kids all have utmas. We view it as their 20s fund and it's really a pretty cool tax move up to 100, maybe $200,000 if you want to leave them $500,000. This isn't going to do you any good. You might as well, leave it in your own taxable account and give it to them whenever you're ready to give it to them. I guess you do get the benefit of getting it out of your state by giving it to them as you go along. But that's really all you're helping with, right? It's not your money anymore, it's out of your estate, so no estate taxes are due on it. But if you don't have an estate tax problem, that really doesn't matter all that much anyway. Hope that's helpful. Hope that explains UTMA accounts. I think they're great to use. Just don't try to pass $10 million with them. It's probably not the best way to do that. At that point you're probably thinking maybe a trust. The big downside is their money at 21 or sometimes even 18 in some states. So keep that in mind. Right. If they're not ready to handle that sort of money, they're not ready to handle that sort of money. And you better find a different way to pass it on to them. Okay, let's talk about HSAs and HRAs. Hi, this is Roy. I'm a hospitalist in California. This question regards health savings accounts and health reimbursement plans. I'm an employee of a group that uses a health reimbursement plan called Ben Comp. This allows pre tax payment of qualified medical expenses, essentially unlimited with a 12% service fee and covers my entire family. First of all, my understanding is that if I do use this plan, I am not eligible to contribute to a health savings account since I am already receiving tax advantaged health reimbursement benefits. So my first question is, is this 100% true and accurate? I'm having a hard time finding the answer to that. The second part is, would I be better off not subscribing to this BENEF plan and using an hsa? Contributing to that for myself and also for my family for the future accumulated benefits. I would appreciate your thoughts on this. Thank you. Okay, HSA Health savings Account, HRA Health reimbursement arrangement. Yes, you can have both at the same time. The rules get kind of complicated though, so it's important to spend some time on the rules and really understand exactly how they work. Remember, a health savings account, once you build it up, it's yours forever. If you didn't spend it all by the end of the year, it's still your money. That's very different from flexible spending arrangement or flexible spending account. That's used lose it goes away at the end of the year. But a health savings account is yours forever. So even if you're no longer eligible to contribute to it, it's still your account. You still have it, you can invest it, you can still use it, you can still spend it on the healthcare of you and your dependents, right? HSA is yours forever. That's why it's such a cool investing account. Okay? But as a general rule, it doesn't mix super well with a health reimbursement arrangement. An hra. The idea behind an HRA for a lot of companies is we'll use a high deductible plan, but then we're also going to provide this HRA that basically turns the high deductible plan into a low deductible plan. And I had one of those in my partnership when I was a pre partner and it was cool. Once I became partner, no longer got that benefit. But it's cool that it keeps your deductible low. However, for the most part, when you have that HRA available to you, you can't contribute to an HSA even if it's a high deductible plan. But there are some limited rules that allow you to avoid a problem with this. One is if it's a limited purpose hra, not a regular one that you can use for any healthcare expense, but one that only covers like dental and vision, then you can still use your HSA for other medical expenses. A post deductible hra. I guess these exist out there. I've never seen one, but I'm sure somebody out there listening to this has one where it only reimburses expenses after you've met your high deductible health plan deductible. I don't know, maybe it helps with the co insurance amount. After that, in between your deductible and the maximum out of pocket. I don't know. Like I said, I haven't seen one, but I understand they're out there. You can also suspend your HRA before coverage begins. That makes you eligible to use your HSA for covered expenses. And of course you can use your HSA money, right? You just can't then turn around and get reimbursed by your employer for what you used your HSA funds to pay for. Okay? So I hope that's clear as mud, but there are some rules there. As a general rule, if you've got an hra, use it, right? This is a great benefit. Thank your employer. It's a nice thing to have, right? But it does limit how you can use your hsa. Mostly people only use them together when it's a limited purpose hra. Okay, hope that's helpful. All right, thank you, those of you out there, especially those of you working in healthcare. Right. It's a hard job. Sometimes we forget that until we're thrown into a hard situation where somebody's, you know, very ill or very hurt and, you know, their family's not having a good day, let's put it that way. And it's a stressful situation to be in little things you do. All the decisions you matter, you make can have a serious impact on people's lives and that's stressful. And oftentimes they're not even very thankful for it. So if nobody said thanks for what you're doing, let me be the first. I know lots of you are on your way into work, on your way home from work, running after work or before work or out walking the dog or whatever. Thanks for what you're doing. There's a reason you're a high income professional. It's because your job is hard and took a long time to learn how to do. Okay, let's talk about defined benefit plans. Somebody's not happy with their plan administrator. Hi, Dr. Dalli, great fan of your podcast. My name is Al. I'm calling from Boston. I'm a surgeon and I do a lot of consulting, medical, legal work. I have a fair amount of income from that consulting company, which is a single member llc and my wife is an employee of that consulting company. I have a defined benefit plan and each year I put away anywhere between 150 to $200,000 in that defined benefit plan. I'm recently not very happy with my plan administrator. Their fees seem excessive. They're always random bills and invoices. And I'm trying to see if any of the big financial institutions like Fidelity or Schwab or Vanguard do this type of thing and I'm not able to get any good information from them. Or alternatively, if there is a good, honest administrator defined benefit plan company out there that one could work with, any information would be greatly appreciated. This seems like it's a bit of an enigma and I can't seem to find good information about this and how to stay away from the wolves. Thanks so much. Any help you can provide will be greatly appreciated. And great show. Okay, let's talk about a couple of things here. First of all, let's answer your question. All right. Defined benefit plan. A cash balance plan. This is a great way to tax defer a lot of money, particularly as you get older. You can be your 50s and 60s. It's amazing how much you can put in this. My partnership has a cash balance plan and the one we recently implemented, we closed one and opened another one. I'm 49 years old. I'm allowed to put $120,000 a year into that plan in addition to $69,000 in into my 401k profit sharing plan. Right. So this is from one employer and I can put in $189,000 in tax deferred money if I made enough. I'm not actually working enough shifts that I can put that much in there, but that's how much I could put in if I was working full time. And so it's really cool. And as you get older, depending on how the plan is set up, you might be able to put in even more. 150, 200 is not that unusual. So these are pretty cool plans. They are like extra 401s masquerading as a pension. So hopefully there comes an event that allows you to close this thing every five or ten years or so and you just roll the money into your 401. Because it generally has to be invested a little less aggressively while the money is in the cash balance plan for various reasons because this thing has to look like a pension, et cetera. So what people that have these do is they tend to invest the 401 very aggressively, the defined benefit plan, not as aggressively. And it all works out okay in the end as far as their asset allocation goes. And that's fine. You can have these even if you're self employed, you know, if you're the only person, if you're just an independent contractor, you can still have a defined benefit plan, a personal defined benefit plan. I know Schwab offers these. They have kind of a cookie cutter plan. You may or may not be happy with them. It's probably cheaper than whoever you're working with right now. But what I would recommend is a resource that entirely too few white coat investors know about. If you go to the website whitecoatinvestor.com, you'll see a little tab at the top that says recommended. You should spend some time on that tab if you never have. We have all kinds of things there. Student loan refinancing companies, insurance agents, financial advisors, real estate investments, tax folks, you know, surveys you can take for money contract review, personal loans, a retirement calculator, burnout coaches. There's all kinds of things there. This is a lot about the way we make money and make payroll here at White Coat Investor because the vast majority of people on these lists are sponsors of the website. But we also try to put the good people on there, right, that are charging you a fair price, giving you good advice, giving you great service. If we get a bunch of complaints about them from White Coat Investors, we take them off the list. Right? But if you go down there, you will see one of those things is labeled retirement accounts and HSAs. And if you go into this page, we put several things on the same page just so we don't have a million of these tabs, but we've got a bunch of things on that plan. And the thing at the top is labeled Small Business Practice, Retirement Plan Providers, Advisors. And right now we have four people listed there. Four companies listed there. We have Latovsky Asset Management, Emperoon IQ 401K, that's FPL Capital Management. Those are the folks that run the WCI 401K and Wellington Retirement Solutions. All of them are capable of helping you with a defined benefit cash balance plan. If you're looking for better service, these guys are going to give you better service. They're not free, they're not super cheap like the Schwab cookie cutter plan. You might want to look at that. But they're going to give you a much better service than you're getting. And they're probably significantly cheaper than what you're getting as well. What happens? A lot of times these companies, they start charging AUM fees that go through the roof pretty rapidly and end up getting ripped off. Also on that page we have a list of companies that provide self directed and customized individual 401s and self directed IRAs. There's a number of those companies listed there. And then we've listed kind of the free Solo 401 plan providers. This is your. Well, shoot, we still got Vanguard on there. I need to delete that off the list. But we got Fidelity and Schwab and E Trade that'll offer free solo 401ks. Just don't expect a lot of service with that. Don't expect a lot of the cool bells and whistles you can get with the Solo 401K. You know, like make a backdoor Roth IRA contributions. You're not going to have it. Also on that page we have some HSA providers. We've got Lively listed there, Fidelity, where I have our hsa. And so we've got some people to help you with problems like this. And I think you'll Get a lot better service by using one of those folks that can help with your retirement plan. But no, you can't go to Vanguard to answer your question. And get this, you could go to Schwab and see if you like what they're offering. I don't even think Fidelity offers it. The other thing I wanted to talk about, though, is you mentioned that your spouse is working for your independent contractor business. And I wanted to talk for just a minute about why maybe that's not an awesome idea. And I've actually got a blog post coming up. I just realized it hasn't been published yet. That actually happens a lot. I write these blog posts and then they get published for 3 months or 6 months or 12 months or whatever. But they're really good blog posts. And we should talk very briefly about some of the principles in this one. This blog post is going to run in a few months, presumably. But basically in the blog post, I'm telling you, hire your kids and not your spouse. And there's a few reasons why you don't want to do that. You know, it's possible you still want to do it, but you probably don't. And the problem is people don't realize this. They just assume that there's some awesome tax benefit to hiring your spouse. Well, there is a cool tax benefit, right? You can have a 401 contribution for them, right? So that's cool. And also, your spouse might be able to get some years towards their Social Security benefit, and that can help. And, but truthfully, the only reason to hire your spouse is because you need the help and your spouse is willing to do it cheaper than somebody else is or they want to do it or whatever, right? But what you don't realize is there is a cost to hiring your spouse. This assumes your spouse is not working anywhere else, but you're going to have to pay the payroll taxes for them, right? Most docs, they have income that's above the wage limit for Social Security taxes. So if they make more money, they don't have to pay Social Security tax on it. Their spouse benefits from that because they're eligible for half of their benefit, right? But if you start paying your spouse and they're starting to zero income, all their income is subject to Social Security tax now, no matter what. Unless it's like an S Corp distribution, you still have to pay Medicare taxes, but you might be paying Social Security taxes you don't have to pay. So you may end up paying $15,000 in Social Security taxes that you don't have to pay in order to give your spouse access to a 401K. And that's probably, you're probably not going to come out ahead on that. It's probably not worth doing. You're probably better off just investing that money in taxable, not paying those extra Social Security taxes on it. Okay, so in general, hiring your spouse, not an awesome idea, tax wise. You know, it is an awesome idea though, is hiring your minor kids, right? Your minor kids. If the only owners of the business, and it's not a corporation, if the only owners of the business are their parents, their income, their wages are not, you don't have to pay Social Security taxes on them. Right? Or Medicare taxes. You don't pay any payroll taxes on them if they're a minor and the only owners of the business are their parents. Plus you're probably not paying them enough that they're actually going to owe income taxes, either federal or state. And it's earned income you're giving them. And so all that money can go into a Roth ira. It's never taxed, it's triple tax free. You don't even pay payroll taxes on it, which is better than anything else, right? It's just a great, great deal. And that money may never have taxes paid on it can grow tax free for decades and decades and decades. So if you can justify paying your kids, you know, you gotta pay them a fair price. You have to do all the paperwork, the W2s and W3s, W4s, I9s, time cards, right. Employment contracts, all that sort of stuff. You gotta do it, it's gotta be legit. And you gotta pay them a fair wage for what they're doing. You can't pay them $400 an hour to sweep the floor in your clinic. Okay, that doesn't work. But if you can pay them something, it's a business deduction to your business and nobody pays taxes on it. So it's pretty cool deal to hire your kids. Hiring your spouse, not so much. Not as big of a fan of that move. Okay, hope that's helpful to you. All right, as I mentioned at the top of the podcast, SOFI is helping medical professionals like U.S. bank, borrow and invest to achieve financial wellness. Whether you're a resident or close to retirement, SOFI offers medical professionals exclusive rate and services to help you get your money right. Visit their dedicated page to see all that SOFI has to offer@whitecoatinvestor.com SoFi one more time, that's whitecoatinvestor.com Sofi loans originated by SoFi Bank NA NMLS 696891 advisory services by SoFi Wealth, LLC. The brokerage product is offered by SoFi Securities, LLC member Finra SIPC investing comes with risk, including risk of loss. Additional terms and conditions may apply. Don't forget our end of the year sale. This is Buy one Get one. Okay, buy any of our courses and get our Continuing Financial Education 23 for free. This sale goes through the 6th of January. Okay, so you can use your 24 CME funds to buy it. You can use your 25 CME funds to buy it. 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I am back. I'm recording this, I think on November 12th. You guys aren't hearing it until after Christmas, but I've been back at work now for a couple of months. Really? Even though we're recording this in between the first episode I did talking about my fall and the second episode I did, that's when we're recording this six weeks ago. But I'm feeling pretty good. And I'm sure by the time you hear this, I hope I'm back on the hockey rink playing. I was on the ice for the first time this week and it was awesome to be back out there. And I went for a run for the first time since my fall this week. So I'm feeling pretty good. And by the time you hear this, I'll be even better and hopefully skiing. So I'm doing well. I hope you are, too. Keep your head up and your shoulders back. You've got this. We're here to help. The whole White Coat Investor community is standing behind you. You can do this. Okay? It's not that complicated. You can figure it out. And if you want a little help with it, we'll connect you with people who will give you good advice at a fair price. See you next time on the podcast. The hosts of the White Coat Investor are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.