Friday’s need-to-know money news

Today’s top story: 5 car-buying mistakes to avoid in today’s overheated market. Also in the news: PPP is gone but government help for small businesses isn’t, experts make 5 predictions for Black Friday 2021, and how to avoid making this common mistake with your health savings account.

5 Car-Buying Mistakes to Avoid in Today’s Overheated Market
With limited car inventory and sky-high prices, it’s important for shoppers to avoid these costly mistakes.

PPP Is Gone, But Government Help for Small Businesses Isn’t
Government funding is still available for businesses in need of COVID relief or capital. Here are the options.

Experts Make 5 Predictions for Black Friday 2021
What holiday shopping could look like in 2021.

Avoid Making This Common Mistake With Your Health Savings Account
Despite the tremendous upside, only 9% of HSA owners invest the funds in their account.

5 hacks to boost your retirement savings

seniorslaptopMany people have trouble saving anything for retirement. But I hear from a fair number of people who are looking beyond 401(k)s and IRAs for more tax-advantaged ways to save.

Many have maxed out their 401(k)s at work, or had their contributions limited because they’re considered “highly compensated employees.” Some don’t have a workplace plan at all, while others want to save more than IRAs allow. Even catch-up provisions–which allow people 50 and over to contribute an extra $5,500 to 401(k)s and an extra $1,000 to IRAs–aren’t enough for some of these super savers.

So here are options for those who have maxed out and caught up:

Opt for an HSA. Health savings accounts, which are coupled with high-deductible health insurance plans, offer a rare triple tax advantage: contributions are tax deductible, gains grow tax-deferred (and can be rolled over from year to year), and withdrawals are tax free if used for medical expenses. Withdrawals are also tax free in retirement, which makes HSAs a potentially better vehicle for saving than the much-loved Roth IRA. (Some say yes, others no.) Speaking of which:

Consider a back-door Roth contribution. If you make too much money, you can’t contribute directly to a Roth. There is a workaround, according to IRA guru Ed Slott, that takes advantage of the fact that anyone regardless of income can convert a traditional IRA to a Roth. You can read more about the strategy here and the potential drawbacks here.

Start a side business. Small business owners are spoiled for choice when it comes to tax advantaged plans. The options range from SEP IRAs to solo 401(k)s to full-on traditional pensions (and baby, you can save a ton of money in those—as in hundreds of thousands of dollars annually). Talk to a CPA about which plan makes the most sense for you.

Use a 457 plan. These deferred compensation plans are often available to state and local public employees as well as people who work for some nonprofits. Like a 401(k), you’re allowed to contribute pre-tax money. Unlike a 401(k), you don’t get slapped with early withdrawal penalties if you take the money out before age 59 (although you will owe income taxes).

Contribute to a regular brokerage account. There’s no upfront deduction, but investments held at least a year can qualify you for favorable capital gains tax rates. This, by the way, is typically a much better option than variable annuities, which tend to have high costs and limited tax advantages for most people.