There is a special retirement plan in America that most people don't know about

It's being used by wealthy doctors, lawyers & business owners to get up to a $300,000 tax deduction every single year

And it's fast growing in popularity

Here's how a cash balance plan works: Most people know about 401k plans

A 401k is awesome, but you can't contribute more than $23,500 as an employee

Even with employer matching, it's capped at $70K a year

That's a lot of money if you are making $150K, but nowhere near enough if you are earning mid 6-figures

The single most tax-advantaged account in America is also the most misunderstood:

The HSA or Health Savings Account

Despite the name, don't think of it as a savings account - it's actually an incredible tool for building wealth if you know how to use it correctly: An HSA is the only account in America that is TRIPLE tax-advantaged:

- Tax deduction for contributing
- Tax free growth & compounding
- You can also use dollars at any time for eligible healthcare expenses (all kinds of wellness expenses are now HSA deductible!)

One of the most insane loopholes in the US tax code:

If a household earns over $250K, they are not allowed to directly contribute to a Roth IRA anymore

But, they can still use their 401k to fund their Roth IRA with up to $140K every single year!

Here's a step-by-step guide: Roth IRA's are very powerful - you put in post-tax dollars but then never pay taxes again

They are so effective at saving money on taxes, the IRS limits high earners from contributing to one

Or at least that was the intent, until people found "the mega backdoor Roth" loophole

You could earn mid 6-figures as a digital nomad from America living in Latin America, Europe or Asia

And legally pay an effective tax rate of only ~10% to the US government

Here's how a friend of mine set up his business to optimize his taxes as a US citizen living abroad: 1 - Since his business has no US employees or offices, he set up a foreign business in the Cayman Islands which has no corporate taxes

He has a US C-Corp that wholly owns this operating company

This structure only nets out to a ~10.5% corporate tax rate to the US (vs 20%+)

I sold my startup in 2020 and had no idea what to do with the money I made

So I ran the ultimate A/B test: I gave half to a famous private bank to manage while I invested the other half

Here's how the results stack up almost 5 years later: I will summarize the findings here so everything juicy is not locked behind an email gate

But if you want the full 3,000 word breakdown including how I saved on taxes, the fees I paid and the lessons I learnt along the way

Read it here: sillymoney.com/p/how-to-not-i…

I sold my first tech startup in 2020 for a life changing amount

But back then, I knew absolutely nothing about personal finance and taxes as a startup founder

Now that I'm doing this for a second time, here are some personal finance things I now think about: An important caveat before we get into it - this is not worth spending too much time on

The hardest part about this whole thing is building a startup that ends up being worth anything at all

This only matters for the tiny percentage of companies that are worth something

No one in America pays a higher tax rate than regular employees with a high W-2 salary

You make a lot of money but aren't rich enough to own a lot of assets

Here are 9 things you can do to pay less in taxes before the end of the year: The tax code in America favors business owners & people who own assets vs people with a high salary

The playbook you can use to reduce taxes on a high W-2 salary is far smaller than on capital gains or business owner income

However, here are 9 strategies that will help:

Just spoke to a founder who could pay zero taxes on more than $400M when they sell their company

It's completely insane tax jiu-jitsu yet fully legal with how the law is written

Here's how they set it up: Most people have heard of QSBS or Qualified Small Business Stock, the most generous tax break for startups

QSBS allows you to pay no taxes on $10M when you sell your company... or 10 times your basis (whichever is more)

The trick here lies in the second part!

Peter Thiel just turned 57 years old

In less than 3 years, he will get access to the $5B (yes, billion!) dollars locked away in his Roth IRA

The best part? He will not owe a single dollar of taxes on it

Here's how he set it up (& how you can emulate the strategy): Everyone has access to a Roth IRA

You can put in up to $7,000 a year in after-tax money and invest it in anything you like

Your dollars compound tax-free and you will owe ZERO taxes on the balance in retirement

No matter how high tax rates go in America!

A buddy of mine will earn $500K+ this year as a one-person business in a high tax state

If they don't do anything, they would have to pay a tax bill of ~$250K between federal, state & self-employment taxes

Here's what I told them to save 6-figures in taxes this year alone: 1 - Choose to file your taxes as an S-Corp

This bifurcates your salary into a fair W-2 income you pay yourself & the rest is distributed as profits

You only have to pay self-employment taxes (social security & medicare) on the W-2

This alone saves many thousands of dollars

No one pays more in taxes in America than W-2 employees with a high salary

But, there are still lots of tricks in the tax code you can use to pay less

Here are 12 strategies an employee with a high salary can use to reduce their tax bill before the end of the year: 1 - Donate to charity

Use a Donor-Advised Fund (DAF) to donate money to charity - this gets you a big deduction upfront & you can give to charity on your own timeline

Instead of contributing cash, donate appreciated assets like company shares for an even bigger deduction

There is a special type of retirement plan almost no one knows about

You could use it to stash away literally hundreds of thousands of dollars every single year

Here's how a cash balance plan works (& how we used it to save a business owner $100K+ every year): Most people are familiar with a 401k plan from work

These plans are great, but are capped at a maximum contribution of $69K / year

That can be a lot of money if you're making $150K a year.. but for super high income earners, that's not enough!

Enter the cash balance plan

A common misconception:

Money in your 401k and IRA's are locked away until you retire

Let me show you FIVE powerful strategies to access dollars in your retirement account any any age at all:

(bookmark this post for later) 1 - Borrow up to $50K from your 401k (or $100K if married)

You can borrow money from your 401k for any reason, at any time at all

Even though you have to pay a market interest rate, the interest goes right back into your 401k account!

Very powerful esp. with a Solo 401k

Nobody pays more in taxes than employees with a high W-2 salary

If you fall into that bucket, see if your company offers a "Non-Qualified Deferred Compensation Plan" (NQDC)

Here's how these work and how they can save you millions of dollars in taxes: If you are a high earner, you can use a NQDC to defer part of your salary, which brings you two big tax benefits:

1 - You reduce how much money you pay at the highest marginal rate

2 - You can invest the entire pre-tax deferred amount which lets you compound from a higher base

The single biggest perk of being self-employed:

You can set up a private 401k plan for yourself & your spouse and get a $138K tax deduction

And then use it to invest in absolutely any asset class

Here's why the Solo 401k is the most powerful retirement account in America: 1 - Up to a $69K tax deduction, or $138K if you add your spouse

It's super hard to max out a corporate 401k plan because you can only contribute $23K as an employee

With your own company, you can max out the "employer" contribution to hit a $69K tax deduction per spouse

One of the most remarkable loopholes in the US tax code:

If a married couple earns $240K+, they cannot contribute directly to a Roth IRA

But, they can instead use their 401k to get $100K+ into their Roth IRA every single year

Here's how the "mega backdoor Roth" works: Roth accounts are very powerful

You contribute post-tax dollars, but then never pay any taxes in retirement... no matter how high tax rates go

These accounts are so effective that the government imposed income limits that disallowed couples earning $240K+ from contributing

No group in America pays more in taxes than employees with a high W-2 salary

But, that doesn't mean you can't optimize it to pay less

Here are 15 strategies for employees with a high salary to reduce their tax rate: 1 - Max out your 401k at work

Contribute the full $23K pre-tax you are allowed to as an employee & get your full employer match

Total contributions are capped at $69K / year so see if your plan allows you to do the rest as "mega backdoor Roth"

Max it out every single year

A weird skill I learnt a few years ago that has dramatically improved the my quality of life (& for my family):

Learning how to use credit card points to travel in style

This thread will teach you everything you need to know (& 1 very important thing to avoid): I know what you're thinking... Ankur, you can afford to travel without using credit card points

Why go through the bother?

1 - Being good at using credit card points barely takes any time

Plus, it's a strangely fun game to try and "beat the system" with real-life prizes

Everyone should open a Roth IRA

A Roth IRA is so effective at lowering your taxes that the government doesn't allow anyone earning $160K+ to contribute to one directly

However, here's THREE loopholes that let high earners get thousands of dollars into a Roth IRA legally: With a Roth IRA, you do not get a tax deduction when you contribute dollars in

In return, you then never have to pay a single dollar of taxes when you finally get access to the money in retirement

No matter how high tax rates go!

Peter Thiel allegedly has a $5B Roth IRA...

The single best thing you can do to save money on taxes in America is to start a business

Whether it's freelancing on the side or starting a venture backed startup

The US tax code is written to specifically favor business owners over everyone else

Here's exactly how: 1 - Business Expenses

If your tax rate is 25%, you can get an effective 25% discount on anything you need to run your business

Anything you buy specifically to run your business is automatically fully deductible

But, you can also deduct things that W-2 employees cannot!

I've hired hundreds of people at startups I've founded in the last decade

Here is my guide for any ambitious young person applying for a job at a tech startup:

Follow this playbook to differentiate yourself from 99% of candidates 1 - Quality > Quantity

It's better to send one, targeted high quality application to your dream startup than blasting your resume to hundreds of opportunities

Most applications to a rando applicant tracking system at a startup that's doing well are dead on arrival