Broker Check

The Double Play

By Michael Lynch CFP® 

Financial planning is for everyone has always been a motto at our practice. It may be true that more money means more money problems, but the reality is that there are probably just as many strategies available at the lower end of the income and asset range. (The biggest money problem is not having enough!) This is where we all start in life and it’s why we are passionate about working with people in their teens, twenties, and thirties with few assets to invest.

The value we can provide to youngsters and lower earners of all ages was hammered home earlier this year when we got a call from a long-time client’s son.  Like many of our relationships, we’ve watched him go from elementary school, worked with parents to fund college, and he’s now out on his own, earning some money and looking forward to grad school.  

The concern at hand was a particularly frustrating problem: He’s earned too much income in 2020 to qualify for the government subsidy on the health care exchange.  He needed a way to earn less money and since the tax year was in the books, he was scratching his head for options.  He couldn’t, after all, forgo shifts to reduce his last few paychecks.

Thankfully, I’d recently added Alisa Olsen CFP® to our team.  Alisa spent a decade helping me build our business and now she’s back with a primary focus on assisting the next generation of investors. We met and came up with a double play.  We suggested the client open a traditional IRA and contribute at least enough to extinguish the unwanted income.  The clients was $1600 over the income threshold, so he needed to put at least this much in. 

This alone saved four figures in premiums.  But Alisa was quick to point out the back end of the double play.  Due to the client’s income, he was eligible for the Saver’s Credit, a federal tax credit that provides cash on the barrel for 50 percent of the first $2,000 contributed to any retirement plan for individuals who earn less than $19,500.  The credit is not refundable, and he only owed $600 in federal tax.  The net effect, however, was this $2,000 completely wiped out his federal tax liability and saved thousands in health premiums. 

That’s a heck of a double play. 

If you want to see if we can find a way to “turn two” for you or a loved one, don’t hesitate to give us a call.  We’re ready to serve your entire family.

Michael Lynch CFP is a financial planner with the Barnum Financial Group in Shelton CT and the author of Keep It Simple, Make It Big: Money Management for a Meaningful Life, October 2020. He can be reached at or 203-513-6032.

Securities, investment advisory and financial planning services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 6 Corporate Drive, Shelton, CT 06484, Tel: 203-513-6000. Any discussion of taxes is for general informational purposes only, does not purport to complete or cover every situation, and should not be construed as legal, tax or accounting advise. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. CRN202412-1384458