Chris and Amy (Hypothetical Example)
Areas of Focus
- Self-employment / S-Corp structure
- Retire early
- Education funding for children
- Health Savings Account (HSA) opportunities
Background
Chris and Amy, in their mid-to-late 40s with two children, were exploring early retirement and tax-efficient strategies for their growing household. Chris recently transitioned to self-employment, while Amy manages the household. They wanted to plan for retirement, support their children’s education, and optimize tax-advantaged accounts.
Opportunities Identified
- Education Funding: Clarifying how much to set aside for future education costs.
- Retirement Strategy: Estimating the savings needed to reach a target retirement age.
- Early Distribution Rules: Exploring ways to access retirement funds before age 59½ without penalties.
- Business Structure: Evaluating S-Corp election for potential tax efficiency.
- Healthcare Savings: Considering HSA contributions to reduce taxable income while preparing for medical expenses.
Planning Approach & Strategies
- Modeled retirement projections using assumptions for budget, inflation, and market growth to provide a framework for annual savings goals.
- Reviewed business structure to explore potential tax strategies and optimize retirement contributions.
- Examined options like individual 401(k)s and backdoor Roth IRA contributions where applicable.
- Discussed early retirement access rules, such as Substantially Equal Periodic Payments (SEPP), to avoid penalties potentially.
- Outlined 529 plan contributions for education savings.
- Illustrated HSA strategies for tax-advantaged medical expense savings.
Illustrative Outcome
Chris and Amy gained a clearer retirement roadmap, coordinated strategies for education funding, healthcare savings, and business tax planning. They were encouraged to work with an estate planning attorney to align documents with their long-term goals.
Disclosure
This case study is hypothetical and provided for illustrative purposes only. It does not represent an actual client, and outcomes are not guaranteed. Clients should consult their own tax and legal professionals before implementing any strategy.