Welcome, Reader. Fancy a treat?

Everyone wants to know: How can I pay less taxes? We'll get into trusts and estates in another newsletter, but how can you pay less right now? Here are 3 delish types of accounts.

Health Savings Account. The HSA is likely the most underutilized account.

• How it saves you now: The money you contribute to your HSA is tax deductible. So whatever you contribute (the max for 2025 is $4,300 or $8,550 for family), your taxable income is reduced by that amount for the year. And those funds are there for your medical needs. Contact lenses, dentist, acupuncture, breast pump... You can even get a debit card.
• How it grows: Tax free. HSAs can be invested so they grow for you year over year. The interest, dividends, and gains from investments grow tax free. Boss, right?
• How it saves you in the future: When used to pay for qualifying medical expenses, it's withdrawn tax free. You can't deny that you're going to need this in the future. Sample of unique medical expenses as defined by the IRS: a service dog and their food, hand sanitizer to prevent COVID, pregnancy test, transportation primarily for, and essential to, medical care.
• Fancy notes: You qualify to open and contribute to a HSA if you have high-deductible health insurance as defined by your state. The amount you contribute rolls into the next year. Think of this as a burly retirement account you have access to at any time between now and retirement, if used for medical expenses.

Custodial Roth IRA. Did you know you can open a Roth for an infant?

• How it saves you now: As long as your kid earns income, that income (up to the contribution limit) can be deposited into a Roth for that kiddo. Roths are taxed up front and not taxed when the money comes out (so long as it's qualified). So the very cool part about contributing to a Roth for your kid is it's based on THEIR TAX BRACKET, not yours. Your local pediatrician takes a photo of your baby for a brochure and pays your baby - you put that money into a Roth and it will be taxed at their rate. Likely it will be very low indeed.
• How it saves you in the future: Any money saved for your kids now is money saved in the future. If you contribute $2,500 to your child's Roth when they are four years old and never contribute another penny, assuming a growth rate of roughly 7%, that money could be worth around $114,875 when they reach retirement age (59.5 years old). Boom, baby.
• Fancy Notes: Roths aren't just for retirement. Money can be withdrawn for qualified purposes before retirement age as long as the account has been open at least five years. Some examples: $10,000 for a first-time home purchase, $5,000 for childbirth or adoption, $(infinity) if used for higher education.

SEP Retirement Plan. Do you have a business or side hustle? Check out the Simplified Employee Pension.

• How it saves you now: All contributions made by your business are tax deductible for the contribution year. The contribution limits are massive (25% of an employees compensation, including yourself, up to $70,000 for 2025).
• How it saves you in the future: Retirement, baby! Note that withdrawals are taxed, even in retirement.
• Fancy notes: If you're using a SEP to contribute to your own retirement, note that if you have any employees, you are required to contribute for them, too.

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Remember, you are inherently worthy whether you have $1.00 or $10,000,000. These are just numbers; you are a miraculous human.

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