Cody Garrett — Podcast Appearances & Summaries

Featured On 1 Podcast

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3 episodes

All Appearances

3 episodes

Navigating Health Insurance | With Cody Garrett | Ep 588

ChooseFI

Mar 2, 202659 min

AI Summary

→ WHAT IT COVERS Financial planner Cody Garrett analyzes ACA health insurance marketplace data across all 50 states, revealing how the return of the 400% federal poverty level income cliff in 2026 creates massive premium tax credit repayment risks, and how county-level cost variations and tactical account withdrawals can determine outcomes worth tens of thousands of dollars. → KEY INSIGHTS - **The 400% FPL Cliff:** Earning even $1 above the 400% federal poverty level eliminates all premium tax credit eligibility for the year. For a married couple in 2026, that threshold is $84,600. Exceeding it by $1 after receiving $3,942 monthly in advanced credits triggers a $47,000 federal tax liability at filing time. - **Advanced Credit Adjustment Strategy:** Households receiving ACA premium tax credits can log into healthcare.gov and reduce their monthly advanced credit payment at any time during the year without changing their plan. Reducing or eliminating the advance protects against repayment shock if income unexpectedly rises above the 400% federal poverty level threshold. - **HSA Contribution as Last-Resort Income Reducer:** All bronze and catastrophic ACA plans qualify as HSA-eligible starting in 2026, and HSA contributions do not require earned income. A contribution made by April 15 of the following tax year reduces MAGI retroactively, meaning a $401 HSA deposit could eliminate a $47,000 premium tax credit repayment liability entirely. - **County-Level Cost Variation:** ACA premiums vary dramatically by county, not just by state. The second-lowest-cost silver plan for a 60-year-old couple costs approximately $56,000 annually in Charleston, West Virginia versus $22,000 in Richmond, Virginia — a $34,000 difference — making geographic location a material variable in early retirement healthcare cost planning. - **Asset Location Controls Taxable Income:** Holding bonds and income-generating assets inside pretax or Roth retirement accounts rather than taxable brokerage accounts reduces annual dividend and interest income that counts toward MAGI. Combined with Roth IRA contribution withdrawals and HSA reimbursements, this approach keeps household income below the premium tax credit cliff without triggering capital gains. → NOTABLE MOMENT Garrett illustrates how a couple doing zero-percent capital gains harvesting to save a few thousand dollars in taxes could inadvertently push income $1 over the $84,600 threshold, converting a $47,000 premium tax credit into a full tax liability — making the harvesting strategy deeply counterproductive at the margins. 💼 SPONSORS None detected 🏷️ ACA Health Insurance, Premium Tax Credits, Federal Poverty Level, Early Retirement Healthcare, Health Savings Accounts

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Tax Planning To and Through Early Retirement | Cody Garrett & Sean Mullaney | Ep 565

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Sep 22, 202567 minCo-author

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→ WHAT IT COVERS Cody Garrett and Sean Mullaney explain tax strategies for early retirement, demonstrating how retirees can achieve extremely low effective tax rates through strategic use of standard deductions, capital gains harvesting, Roth conversions, and ACA premium tax credits. The discussion dispels common fears about RMDs and future tax increases while providing concrete calculations showing retirees often pay significantly less tax than workers. → KEY INSIGHTS - **Effective Tax Rates in Early Retirement:** Early retirees living on $200,000 from taxable brokerage accounts can potentially pay zero federal income tax due to basis recovery, the $31,500 standard deduction for married couples, and the $96,700 zero percent long-term capital gains bracket. This contrasts sharply with workers earning $200,000 who pay approximately $27,000 in federal income tax plus $15,000 in FICA taxes, demonstrating the structural tax advantages Congress provides to retirees over wage earners. - **Traditional vs Roth Contributions Strategy:** Contributing to traditional 401k accounts during working years provides deductions at marginal rates of 24-32 percent, while distributions in retirement get taxed progressively starting at zero percent through the standard deduction, then 10 percent, 12 percent brackets. Even if tax rates increase 50 percent in the future, deducting at 24 percent today and paying 15 percent tomorrow still creates positive arbitrage, making traditional contributions favorable for most workers planning early retirement. - **Golden Years Roth Conversions (Ages 65-69):** Married couples aged 65-69 can execute tax-free Roth conversions of approximately $45,700 annually by combining the $31,500 standard deduction, $3,200 additional standard deduction for seniors, and $12,000 senior deduction totaling $46,700 in tax-free space. This strategy works best when living expenses come from taxable brokerage accounts with basis recovery, creating minimal taxable income while converting traditional IRA funds to Roth accounts completely tax-free before RMDs begin at age 75. - **ACA Premium Tax Credit Optimization:** Early retirees need income between 138-400 percent of federal poverty level to maximize ACA premium tax credits worth thousands annually. Taxable brokerage accounts provide optimal flexibility because only the capital gains portion counts as income, not the entire withdrawal amount. Small Roth conversions can strategically increase income to the 138 percent threshold when needed, while avoiding excessive conversions that would eliminate premium tax credits by pushing income above 400 percent of poverty level. - **RMD Fear Reassessment:** Since 2017, RMD rules have become significantly more favorable through three changes: TCJA permanently lowered tax rates and increased standard deductions, 2022 regulations increased life expectancy factors reducing annual RMD amounts, and the starting age increased from 70.5 to 75 for those born in 1960 or later. These changes eliminate the first four to five RMDs entirely and reduce taxes on remaining distributions, making RMDs more of an administrative nuisance than a financial threat for most retirees. - **Phase One Distribution Order:** Early retirees before age 65 should prioritize spending from checking and savings accounts first to generate zero taxable income, then taxable brokerage accounts with basis recovery to minimize income while accessing cash. This approach keeps modified adjusted gross income low for ACA premium tax credit eligibility while preserving traditional retirement accounts for later tax-free or low-tax Roth conversions during the golden years when premium tax credits no longer apply and before RMDs begin. → NOTABLE MOMENT The hosts calculated that an NFL quarterback earning $60 million annually who takes a $23,500 401k deduction at 37 percent could theoretically benefit from traditional contributions over Roth, even at extreme income levels. This demonstrates how progressive tax brackets favor deferral regardless of income, since retirement distributions start at zero percent through the standard deduction and fill lower brackets first, creating arbitrage opportunities even for ultra-high earners who embrace financial independence principles. 💼 SPONSORS None detected 🏷️ Tax Planning, Early Retirement, Roth Conversions, ACA Premium Tax Credits, Required Minimum Distributions, Capital Gains Harvesting

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Are Roth Conversions Necessary? | Cody Garrett and Sean Mullaney | Ep 581

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Jan 12, 202666 minCo-author and Guest

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→ WHAT IT COVERS Sean Mullaney and Cody Garrett explain why taxable Roth conversions are rarely necessary despite widespread promotion, examining when they provide benefits versus when traditional retirement accounts already deliver light taxation throughout retirement. → KEY INSIGHTS - **Working Years Rule:** Avoid taxable Roth conversions during employment years when W2 income already fills higher tax brackets. Conversions stack on top of existing income and face rates of 22% or higher, making them inefficient compared to retirement conversion opportunities. - **Retirement Tax Reality:** Married couples in 2026 can have $133,000 of income taxed only at 0%, 10%, or 12% brackets due to high standard deductions. This creates effective tax rates of 5-8%, contradicting fears about crushing retirement taxation and eliminating conversion urgency. - **RMD Tax Impact:** A widow with $3,680,000 traditional IRA taking $189,700 required minimum distribution at age 81 pays only 21.3% effective tax rate including Medicare surcharges. Only 6% of her RMD hits the 32% bracket, demonstrating even worst-case scenarios remain manageable. - **Conversion Beneficiaries:** Primary beneficiaries of Roth conversions are your 75-plus year old self who is already financially successful and cannot spend the money, or heirs receiving windfalls. Neither represents compelling financial planning priorities compared to current retirement security needs. - **Backdoor Distinction:** Backdoor Roth and mega backdoor Roth contributions differ fundamentally from taxable conversions. These mechanisms move money that would otherwise go to taxable accounts into Roth accounts with minimal tax impact, making them generally advantageous during high-income working years. → NOTABLE MOMENT Mullaney demonstrates that commentators have consistently predicted rising retiree taxes for years while Congress repeatedly cuts them instead. He argues the fundamental retirement account job is securing your retirement, not managing heir tax liabilities on their financial windfalls. 💼 SPONSORS None detected 🏷️ Roth Conversions, Tax Planning, Early Retirement, Required Minimum Distributions, Retirement Income

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Health & Wellness Episodes Best Health Podcasts (2026)

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