Aaron Saoud's Article in Lawyer Magazine

Let’s face it: as attorneys, putting our own financial futures as a priority in our day-to-day lives often doesn’t happen.

The purpose of this short article will help all of you reading it understand where your limited time can be focused when it comes to your finances.

One of the first questions I always get, especially from younger practitioners, is, “Should I be contributing to my firm’s 401K, and if so, how much?” While the answer to this question is very much going to be a case-by-case analysis, I always ask whether their firm is “matching” up to a certain percentage of their 401K contribution; and then I advise my clients to contribute at least that much! If your employer is willing to give you “free money” to bolster your retirement accounts, then my advice is always to take full advantage of this compensation benefit. Contribute the most that the firm is willing to match for you.

The next most common question I receive from attorneys is whether or not to open a traditional IRA or Roth IRA, or both, in conjunction with their employer-sponsored 401K. Again, this answer is highly dependent on your personal situation, so let’s start with briefly defining each. A traditional IRA is made up of money that has not yet been taxed (but will be taxed at some point in the future);[1] a Roth IRA is money that has been taxed already, but the account, including the interest it earns, will never be taxed again.[2] Sounds like a pretty good deal, right? And that’s because a Roth IRA can be a very powerful tool for lawyers to use. But it does come with certain restrictions to be aware of, like maximum earnings (income) limitations.[3] You must be aware of these limitations, so you don’t run into a penalty from the IRS. So, which is better? Both traditional IRAs and Roth IRAs have their place and should be considered with your financial advisor as part of your planning.

The last issue I want you to consider is the importance of working with a trusted advisor who can help create a financial plan with you and your family. The considerations should include a conversation about each of the following:

· Income Planning for Your Retirement: “How much do I need to retire comfortably?”

· Investment Strategy: Am I invested in the right funds and accounts (like a 401k, a traditional IRA, or Roth IRA), and am I using them in the most advantageous way for myself in the short and long term;

· Legacy Planning: What would be the consequences to your family if you were to pass away early? Is an estate plan in place to protect me? Is life insurance required for my spouse or children?

· Health Care and Long-Term Care Planning: Have I considered what the costs would be if I were to get sick, end up in a nursing home, or have a loved one that required full time care and attention?

I hope this provides a very basic framework for some of your financial concerns. Please contact me with any questions.

[1] Individual Retirement Arrangements (IRAs), Internal Revenue Service (Sept. 19, 2022), https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras. [2] Id. [3] Amount of Roth IRA Contributions That You Can Make for 2022, Internal Revenue Service (Sept. 22, 2022), https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2022.