Tripp Yates, CFP®, CPA/PFS Eaglestrong Financial

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About Tripp Yates, CFP®, CPA/PFS

Tripp has extensive experience in financial planning and investment management, and he diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families.

Tripp’s interest in investments started when he was young and was intrigued by his grandfather’s savvy investment knowledge. When he realized staying in public accounting was not his ultimate goal, he was excited to take his career in this direction.

His passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, save taxes, and invest wisely. Tripp strives to work in a humble and transparent way.

When he is not managing his firm and his clients, Tripp enjoys spending time with his family, running, and cheering on the Rebels and the Cubs.

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Recently Published

What is the Mega Backdoor Roth IRA?

October 31, 2019

What is the Mega Backdoor Roth IRA back door

 

You may have heard of the Backdoor Roth IRA. It is a strategy for those whose income is above the limit to contribute to a Roth IRA. However, they can still contribute indirectly by converting a non-deductible IRA contribution. While we encourage this strategy, the maximum amount is limited to $6,000 per year or $7,000 for those age 50 and older.  Many people are looking for the ability to save more to a Roth. At the same time, many people enjoy the tax savings in maximizing their traditional 401k contribution.  

 

With the Mega Backdoor Roth IRA, you can do both. If your company retirement plan allows after-tax contributions and in-service withdrawals or rollovers, then you can utilize this strategy. 

 

In 2019, you can make 401(k) employee contributions up to the maximum $19,000. Those age 50 and older can contribute an additional $6,000 catch-up. Your company may provide a matching and/or profit-sharing contribution on top of your contributions. The total combined employee and employer contributions are limited to $56,000 or $62,000 for those age 50 or older. Many people are not reaching this combined contribution maximum. That is where the Mega Backdoor Roth IRA strategy comes into play.

 

To illustrate how this strategy works let’s walk through an example of a 45-year-old with $200,000 annual income.

  

What is the Mega Backdoor Roth IRA back door

 

The maximum 401(k) employee contribution of $19,000 is made to the regular 401(k) along with the employer match of 4% or $8,000. Both of these contributions are pre-tax which means you don’t pay tax on this money until you pull it out in retirement. This still leaves $29,000 available to contribute to the 401(k) plan as after-tax contributions which means you will pay tax on these contributions just as you would other income. However, the after-tax contribution portion can then be rolled over to a Roth IRA tax-free. Some company plans may only allow you to rollover once per quarter or less.

 

By getting your after-tax contributions to the Roth IRA, it allows the contributions and future growth to be withdrawn tax-free in retirement under current law. If the after-tax contributions are invested in the 401(k) plan, you will owe tax on the investment growth associated when you make withdrawals.

 

For those who already have after-tax contributions that have been invested in their 401(k), you will be required to roll over the investment growth associated. You can roll that into a traditional IRA to avoid tax on the investment growth. You can always convert the traditional IRA to Roth IRA if you decide you would rather go ahead and pay tax on the investment growth.

 

We believe now is a good time to get more money into a Roth IRA for several reasons.

 

  • Current tax rates are historically low and set to expire after 2025. It is likely that tax rates will be higher in the future. You can see the current year 2019 tax rates compared to those under old law in 2017 in the chart below.
What is the Mega Backdoor Roth IRA back door
  • Avoid required minimum distributions starting at age 70 ½. Retirees have most of their money in a traditional 401(k) or IRA. Whether they need the money or not, they will be required to take withdrawals that are taxable each year. Because Roth IRA withdrawals are tax-free, there are no requirements to withdraw the money. This provides more flexibility surrounding your taxable income in retirement.

 

  • Investment growth and your contributions are tax-free when you withdraw in retirement. Under current law, there are no taxes on withdrawals from a Roth IRA after age 59 ½.
What is the Mega Backdoor Roth IRA back door

 

Diversifying the tax structures of your retirement accounts will provide more flexibility around your taxable income in retirement. The Mega Backdoor Roth IRA strategy is a way to build up your tax-free Roth IRA account quickly. If this strategy sounds appealing to you, check your retirement plan documents to see if your plan allows it.

    

If you would like to discuss or learn more, schedule a call or meeting with me using the link below:  

Tripp Yates, CPA/PFS, CFP®

901.413.8659  tripp@eaglestrong.com

 

Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way.

 

With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is an active member of Harvest Church. 


 

References

https://www.madfientist.com/after-tax-contributions/

https://www.nerdwallet.com/blog/investing/mega-backdoor-roths-work/

https://rodgers-associates.com/newsletters/retirement-funds-exempt-from-creditors/

 

 

 

 

Disclaimer

Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.

 

 

#eaglestrong #eaglestrongfinancial

 

 

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Practice ownership: The sword to slay student loans

September 24, 2019

 

My latest article in the September issue of Dental Economics, Practice Ownership: The Sword to Slay Student Loans (with co-author Brian Hanks), encourages new dentists not to put off owning a practice just because of rising student loan balances.

 

Read the article to see a comparison of an employee-dentist vs. an owner-dentist and find out why we say:

 

"the fastest way for a dentist to pay off student loans is to own a good dental practice."

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3 Keys to Maximize Your Life Insurance Coverage & Cost

September 14, 2019

cost of life insurance

 

September is life insurance awareness month. While we don’t sell life insurance, we do analyze the type of coverage and the amount needed based on your age, income, assets, and family size. By not selling life insurance, we are able to give our clients unbiased advice to obtain necessary and adequate coverage. Especially for young families, life insurance is an important part of the overall financial plan.

 

1. How much coverage should you have?

 

A common rule of thumb is to obtain life insurance coverage for 10x your income. However, the amount of coverage a young earner with a family needs is 15-20x their income. For example, if your annual income is $150,000, then you would obtain $3,000,000 in coverage. The idea is that the beneficiary of your life insurance could invest the benefit and withdraw 5% annually which would equate to $150,000 to replace the income. This is by no means a perfect analysis but it is a quick “back of the envelope” way to estimate the amount of coverage you need.

 

If you have had time to accumulate investment and/or retirement assets, then it is likely that you would require less coverage. In the same way, if you save a lot of your income then the amount of coverage you need may focus more on your spending instead of income. Dual income in households can also impact the coverage calculation. The general idea is that as you approach retirement and/or no longer have minor children, the need for life insurance goes away.

 

Other factors that can affect the amount of coverage needed:

  • Spousal Coverage: If only one spouse works outside the home and you have young children, it is important to have coverage for the stay at home spouse to account for the cost of care for your children. For example, $500,000 received as a life insurance benefit and invested would equate to around $25,000 annual sustainable spending for childcare. 
  • Business Owners: For those with ownership in a business, it is important to consider additional life insurance for a couple of reasons:

    • Pay off associated business debts

    • If you have partial ownership, life insurance provides a way for the other partners or owners to pay your beneficiary your ownership share

2. What are the policy types?

 

The two main types of life insurance are term and whole life.

  • Term: This policy is straightforward life insurance coverage for a specified term such as 10, 20 or 30 years. At the end of the term, the life insurance is no longer in force.

  • Whole Life: This policy tends to be more expensive because it remains in effect for your “whole life.” Usually, it will have a cash value associated that you can receive if you terminate the policy. You can also take loans from the policy cash value.

We recommend term life insurance for our clients because we encourage getting the most coverage at the lowest cost. There may be unusual times where whole life insurance makes sense for a specific client, but term insurance is optimal the majority of the time.

 

3. What does coverage cost?

 

Selecting the type of policy and term coupled with your age and health will determine the cost. We’ve included some estimates below (from Quotacy) to give you an idea of the cost at the age of purchase.    

life insurance cost

 

If you are a member of a professional organization for your occupation, check to see what rates they have available. For example, because I’m a CPA and a member of the American Institute of Certified Public Accountants I can purchase life insurance through that group. I have also worked with dentists who are able to purchase coverage through the American Dental Association. Many times, the member groups rates are lower than other coverage providers. Also, your employer may offer group coverage up to 3 times your salary.

 

Ensure you have adequate and cost-effective coverage in place. The younger and healthier you are, the lower the cost of insurance. If we can help you analyze your life insurance, let us know.

Tripp Yates, CPA/PFS, CFP®

901.413.8659  tripp@eaglestrong.com

 

Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way. 

 

With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is an active member of Harvest Church. 


 

References

https://www.nerdwallet.com/blog/insurance/average-life-insurance-rates/

 

https://www.kiplinger.com/article/insurance/T034-C032-S014-when-rules-of-thumb-for-life-insurance-dont-work.html

 

 

Disclaimer

Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.

 

 

#eaglestrong #eaglestrongfinancial

 

 

Share with others:

Read the full post →

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Ideal Clients

  • Business Owners
  • Gen X
  • Medical Professionals

Ways Advisor Charges

  • Monthly Fee
  • Flat Fee
  • Assets Under Management

Fee Options

  • Monthly Fee: $200+/month
  • Flat Fee: $500+ one-time packages
  • AUM: 1%

SEC Records

States Registered

  • Tennessee

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