Learn the new limits for Roth IRAs and 401ks

Be one of a kind with Mike's Plan.

It's hump day, Wednesday, January 21st, and this is Mike Milligan. Welcome back to the One of a Kind Financial Show Daily. Income planning for retirement is critical, but planning for tax-free income, well, that takes a, a whole different set of skills. Real freedom begins when you can actually control your tax rate Recently on the One of a Kind Financial Show, Gary and I explored strategies that can help you keep more of your money in retirement and send less to Uncle Sam. Fred Rogers once said, often when you think you're at the end of something, you're at the beginning of something else. Maybe that's where you are sitting there today listening to this. You are, um, at the end of your rope when it comes to taxes and you're ready to try something new. Maybe you're at the end of the rope with an advisor because there's been poor communication or lack of performance or a lack of education when it comes to that. And you're ready to try something else. Listen to the show. You'll have an— you'll have a chance to engage and interact back with us. I look forward to talking to many of you. Enjoy this segment from the One of a Kind Financial Show.

And when it comes to retirement, most people focus on how much they've saved. But the most secret retirees learn too late is not how much you make, but how much you keep. Now, taxes can eat away at your nest egg year after year if you don't plan ahead. The good news is with the right strategies, you can set yourself up for more tax-free income in retirement. And that's exactly what we're diving into today. I'll start with the first one, Mike. Let's start with Roth IRAs and Roth 401s. Are these such powerful tools for retirement income?

They are. There's, there's not one person that we talked to, not in 2025, not so far in 2026, who have said, man, I really regret having this Roth IRA. What they say is, I wish I had more. In 2026, the IRS raised retirement saving caps again. Roth and traditional IRAs for those who are working have a contribution limit of $7,500 with the $1,100 catch-up if you're over 50. That number's been stuck at $1,000 for a while, guys, and it's gone up. So don't forget that extra $100. For 401s and similar employer plans, the salary deferral limit is now $24,500. With a standard catch-up of $8,000 and a higher $11,250 super catch-up for people age 60 to 63. So if you're still working and you have income coming in, and by the way, guys, if you're retired and you still have a part-time job, like you referee softball or you have money that comes in from refereeing volleyball or a part-time job, you can still make some contributions. But if you're this high-income earner, these new numbers being adjusted up in 2026 means that you have more that you could save for your future retirement.

What happens if your income is too high for a Roth IRA? Can you still get in? Is there a way to get in on that, Mike?

There are. There are actually multiple ways to get in there. There's 2 ways to get into a Roth IRA. There's contributions and conversions. Contributions in to the Roth side of your 401 have no income limits. So it doesn't matter how much money you make in your job, you can get into your Roth 401. But there's also a tool that has become very popular on TikTok and Instagram called the backdoor Roth IRA. Gary, I remember back in 2006, 2005, 2006, when I was still working in a bank, I was talking about this strategy 20 years ago as a thing. The way this works is you could contribute to a traditional IRA using non-deductible contributions, meaning you don't get the benefit for it, and then you can convert it to a Roth. You pay taxes on any amount of the conversion of any IRA that you did deduct, but then it grows tax-free forever. And there's no income limit for that backdoor. model into a traditional IRA.

All right. This is something like Jerry Seinfeld might say, what's the deal with the health savings accounts? Are they really triple tax-free? What's the deal?

100%, they're triple tax-free if they, if they're used the right way. So health savings account is one of those rare triple tax-advantaged accounts. The contributions are tax-free, the money grows tax-free, withdrawals for qualified medical expenses are also tax-free. Gary, we advocate for something, by the way, in health savings accounts called the shoebox strategy. Have you ever heard me talk about the shoebox strategy?

No, I have not heard you talk about that.

Shoebox strategy is like if you go to the doctor, you buy medication, over-the-counter medicine, you take that receipt and you put it in the shoebox.

Yep.

There's a lot of people, there's a lot of people who use their HSA as soon as a medical expense comes. But if you've got the cash flow to pay the medical expense, the shoebox strategy allows you basically to have a triple tax-advantaged account that's growing uninterrupted, compounding, that you could take out the money tax-free. Because those expenses for HSA, for health savings, you don't have to take them the year you spend the money. So that shoebox becomes your tax-free, your get-out-of-jail-free card for that HSA account. The limits, by the way, in 2025 or 2026, the limits for these contributions went up on HSA to $4,150, $8,300 for a family. Plus you get a little catch-up, $1,000 if you're over 65 years old.

The number to get ahold of Mike and the team is 800-748-1838, 800-748-1838, or text the word ideas to 600-700. This is the One of a Kind Financial Show with Mike Milligan. About a minute left. What about munis? Talk about municipal bonds and how they can generate tax-free income.

You know, the last— well, munis have become very popular again over the last year and a half, 2, 2 and a half years. Back in the end of 2010s going into COVID, they were not very attractive because the rates were so low. But municipal bonds offer federal tax-free interest and often state tax-free income if you live in the state that issued them. In higher tax brackets, this makes a huge difference. So I'm talking to you folks, you single filers who make over $250,000, married filing joint who make over $400,000. Municipal bonds can have an effective tax return higher than many bank savings accounts and others. And the best part about munis is not only are they tax exempt, but they help the state you live in fund the revenue that they need for schools and hospitals and many other—

Sure.

Right.

All these things we're talking about leads us to the One of a Kind Financial Plan. Tell us about that, Mike.

One of a Kind Financial Plan is something that I created from my almost 30 years of experience between academic and practical work with clients sitting at conference tables and dining room tables and in Paneras, just getting to know people. What I've realized by the thousands of interactions I've had with everybody is Having a clear written plan is something that the one-size-fits-all world provides, but it's often too complex for people to understand. The One of a Kind Financial Plan's simple. It is, it provides a tax strategy to lower lifetime income taxes, a retirement income plan that you know that in retirement, once, twice, or 3 times a month, money is going to hit your checking account just like it did when you were working. And that relieves fear and anxiety of knowing where that money's coming from. An investment account that takes your risk, the risk that you want in retirement, and puts your investments there with a fee that's worthy. A long-term care plan that takes care of the older version of you so that you can have dignity in your family relationships and a legacy plan that says, I love you. Guys, I, uh, the One of a Kind Financial Plan is all about you. It's not about our firm. It's built so you can live a one-of-a-kind life.

This is your chance to benefit from the One of a Kind Financial Plan. Call right now. The folks at One Oak Financial are standing by ready for your phone call. 800-748-1838. 800-748-1838. Or text the word IDEAS to 600-700.

This has been the One of a Kind Financial Show Daily with your host, Mike Milligan. Mike is an investment advisory representative with Advisory Alpha LLC. Ideas by Mike, doing business as One Oak Financial, is an unaffiliated entity of Advisory Alpha LLC. Mike is in partnership with Advisory Alpha to be able to provide financial planning and assets under management services to his clients. Coaching, education, financial, other financial services are offered through Ideas by Mike, doing business as One Oak Financial. All education, all content provided on the One of a Kind Financial Show Daily and the One of a Kind Financial Show is for education purposes only. Please consult a licensed financial professional before acting on any of the things discussed in the show. And as always, you have the opportunity of reaching out to Mike by texting ideas to 600-700, getting on his calendar and spending time with him to discover how to build a one-of-a-kind financial plan for your one-of-a-kind life.

Be one of a kind with Mike's plan. In a face shot growth, take a stand. Visibility strategy, take the lead. Transformation's yours, fulfill the need. Mike's got the way. To help you rise and stay. Leadership impact you'll find in your one-of-a-kind mind. Be one of a kind. Take the flight. Mike's the guide, you'll shine bright.