One of the most critical pieces to success in professional sports is planning. Yet, the interesting part about that planning is you know that the game certainly won't go according to plan. In fact, a good game plan maps out specific situations based on certain outcomes of the game. Said another way, you want to plan for the inevitable unknown of the outcome. Your team could be leading down the stretch or could need a miracle comeback, your game plan better have the right levels to pull for each scenery. Well if we think about our money in the same mold, this is where estate planning for professional athletes plays a critical role in athlete wealth management . In this blog, I am going to break down the role estate planning plays for professional athletes and five biggest mistakes I see. Estate Planning for Professional Athletes Here is my best pitch as to why you should get estate planning done as a professional athlete ~ you already have a plan in place and you won't like it. You see everyone has a plan in place ~ The Government's One . Turns on that plan is littered with costs, publicity, and total disregard for what you want to happen. To revert back to our gameplan analogy that would be like putting a random fan in charge of your team's next gameplan. You still have a plan but it surely isn't optimal or going to get you where you want to go. So it is your choice, you create the plan or you stick with the government's plan. For today's blog, we are going to focus on five critical mistakes I see professional athletes make. If you want a deeper dive into the nuances of estate planning make sure you check out my  estate planning guide for professional athletes . In that guide, we talked about how your estate plan is like a parking garage, where you get to put all of the things you care about. Come a big storm, your things are protected. Then picture if any of those things ever want to leave you have an attendant at the gate with a roadmap of where they should go. Come a time of change, your things have direction. A proper plan provides protection and direction of the things you care about. Yet to build the right plan, we have to avoid the common pitfalls that come with estate planning. Here are five ⬇️⬇️⬇️ Pro Athlete Mistake 1: Failing to Start It is hard to plan for the future much less create a plan for decades in the future. Well, Lord willing that is what you are doing with your estate plan as a professional athlete. You are planning for the day that you either can't make those key decisions or won't be there to make them. It is grim to consider but the number one mistake I see professional athletes make is assuming they should do this later. Well let me reframe your perspective on this ~ consider how hard you have worked to put yourself in the position you are in today. It is typically decades in the making. All of that work and the rewards can be misplaced in a second without proper estate planning. That means getting started today. Pro Athlete Mistake 2: Crack In The Foundation To revert to our house analogy, all houses (and estate plans) are not created equal. In fact of the dozens of estate planning documents I have reviewed, the vast majority need upgrading. This can be anything from: Changing names Adding additional details Updating your wishes and desires Putting in key elements for the next generation Your estate plan is a list of documents filled with names, wishes, and desires for all the things that matter to you. The reality of life is those names, wishes, and desires will change over time. You need to make sure you are working with a qualified financial team that is reviewing those documents. Our goal at Moment is to ensure that those documents continue to match up with a client's goals. Remember, don't build the house and fail to maintain it. Pro Athlete Mistake 3: Building Just One Level My first house was a one-bedroom apartment with my wife. It had all the features and space that we needed. Well, four kids later our house has two levels. Just as my needs progressed with my house, so can your estate planning documents. They can start with things like: Pour Over Will Health Care Directive Revocable Living Trust Financial Power of Attorney These building blocks can quickly turn into more complex structures like irrevocable trusts and generational planning. The key is ensuring your plan, investments, and future goals are relayed into an estate plan that matches those desires. Remember you might need a one-bedroom apartment or a five-bedroom two-story home. Pro Athlete Mistake 4: Set & Forget Forgive me for sounding like a broken record but this is not a set and forget it thing. No, you don't need to be reviewing this every quarter but each year you should be giving thought to any changes that need to be made. Remember done right these documents are your current thoughts on a lifetime's worth of work. To me, that is valuable enough to be reviewed each year. Pro Athlete Mistake 5: The Next Generation If you are anything like me, the single biggest factor in me playing professional sports was my ability to put the work in. Yet, that was innate. It came from seeing how hard my parents worked and the lessons that taught me. Many of our athlete clients, they have or are creating generational wealth. This means we need to be thoughtful about how our estate planning decisions (and the money involved) affect the next generation. For me, it is a balance of passing along wealth carefully while keeping the same values that made you the person you are today. This can be done through proper estate planning and the conversations that follow the document creation. Remember this entire estate planning process isn't about you, it is about everyone that comes after you. Estate planning is one of the most underutilized and misunderstood tools professional athletes have in their wealth management playbook. The key is ensuring you have a financial team that is a specialist in athlete wealth management . You want someone who understands the nuances that come with estate planning for someone 18-30 years old. You want someone who can take a complex legal term and explain it to you in a way that is easy to understand. After all, you have worked your entire life to put yourself in this position. The next step is planning for the inevitable time you pass those resources to the next generation. If you are a future or current professional athlete looking for help with estate planning schedule a call with our team . Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding estate planning for professional athletes: When should professional athletes get an estate plan ? We believe every athlete should understand the pros and cons of getting this in place today. What is the cost of core estate planning documents? Document creation costs between $3,000 - $6,000 but Moment also provides clients access to a tech platform at no additional cost to the client. This varies depending on the clients specifics need and complexities. Can you change your estate plan? Yes, the majority of documents (revocable trusts) can be changed at any time. You do not need to create a full set of new documents and instead can just make minor adjustments along the way. Is my information protected if I share it with an attorney? Yes as part of attorney client privilege, everything you share with an estate planning attorney stays between you and the attorney. This is especially important for high-profile public figures like professional athletes. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Pension plans used to be the most common retirement plan. Companies would pay its employers a salary with the promise of a pension once they retired. But the pension plan is becoming less seen today. The National Football League is one of the few employers that continues to include the pension benefit as a part of its retirement plan. In this blog, I am going to break down all the things players in the National Football League need to understand about the NFL Pension Plan in 2024. NFL Pension Plan "A pension plan...what is that?" Pension plans are becoming an afterthought. But the NFL has made it a priority to include in the NFL Retirement Plan . A pension plan is a retirement plan that provides income to employees after they retire. In simple terms, an employee receives a specific payment amount when they retire. So how does this work for NFL players? It starts with earning a "Credited Season." A Credited Season means you were on one of the following rosters for three or more  regular or post-season games: Active Roster Inactive Roster IR (Injured Reserve) PUP (Physically Unable to Perform) Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season. From a Credited Season to Becoming Vested Earning a Credited Season is Step 1. Step 2 is becoming "vested." In order to be entitled to the NFL Pension Plan, a player must earn three or more credited seasons. Simply put, three or more Credited Seasons means you are now "vested." Think of it like levels to a game. First, you have to make the 53-man roster. Second, you have to be on said roster for 3 or more games. Third, you have to earn 3 or more Credited Seasons. These Credited Seasons open the doors to the benefits negotiated under the NFL's Collective Bargaining Agreement (CBA). NFL Pension Plan Specifics As an eligible player, it is important to understand the NFL Pension Plan specifics. Again, in order to be eligible for the NFL Pension plan, a player needs to have earned three or more credited seasons. To start, the NFL Pension Plan generally begins when a player reaches between the ages of 55 and 65. Once a player reaches retirement age, there are three factors impacting a player's pension benefits: How many benefit credits a player has earned When a player chooses to begin receiving retirement benefits The form in which a player chooses to receive his retirement benefits Benefit Credits In the NFL, each season a player plays fo r three or more  regular or post-season games, they earn a credit towards their pension amount. Outlined below are the credits earned for each credited season a player is awarded: *Remember, you need 3 or more Credited Seasons to be eligible Credited Seasons Benefit Credit 1982-1992 255 1993-1994 265 1995-1996 315 1997 365 1998-2011 470 2012-2014 560 2015-2017 660 2018-2019 760 220-2030 836 These credits are then used to determine how much a player may receive for their pension. The average NFL pension is ~$43,000 per year as of 2023. When Is A Player Eligible For a Pension? As mentioned above, the NFL Pension Plan typically begins when an eligible player turns 55. However, these benefits can be paid at two different times: Normal Retirement Deferred Retirement Normal Retirement begins on the first day of the month beginning after a player turns 55. Deferred Retirement can begin on the first day of the month after a player reaches the age of 55. However, in deferring this benefit, the amount of a player's monthly benefit will be increased. This is because a player will be receiving a pension for a shorter amount of time. Regardless of when an eligible player chooses to receive his pension, he must be at least 55 years of age. How The Pension Benefit Is Paid When it comes to receiving the pension, a player has multiple options. These include: Life Only Pension Qualified Joint and Survivor Annuity Pension Life and Contingent Annuitant Pension Life and Ten-Year Certain Pension Life Only Pension The Life Only Pension is the most common pension plan chosen by NFL Players. This pension will provide equal monthly payments to an NFL player for their lifetime. Once a player passes away, this benefit ends regardless if a player has a family. Qualified Joint and Survivor Annuity Pension If a player is married, the Qualified Joint and Survivor Annuity Pension is most common. This plan gives a player a reduced monthly pension during the player's lifetime. However, when a player dies, the surviving spouse will receive 50% of the pension. Life and Contingent Annuitant Pension The Life and Contingent Annuitant Pension plan is similar to the Qualified Joint and Survivor Annuity. It pays a reduced monthly pension during the lifetime of a player. There is one difference. The amount depends on the beneficiary's expected lifespan. It also depends on the percentage the beneficiary will receive. A player can choose the percentage of the pension paid to the beneficiary. That can be anywhere from 1% to 100%. It is important to keep in mind if the beneficiary is not your spouse, parent, child, or dependent, the value of the benefits payable may change. Life and Ten-Year Certain Pension Similar to the other pensions, this option provides monthly payments for life. The difference with this plan is that 10 years of payments are guaranteed. If a player passes away young, the beneficiary will continue to receive the same monthly payments during the guaranteed time. Pension Protection for Family While it is never in the plan, it is important to understand what happens to a player's pension benefit if he passes away before reaching retirement age. The NFL continues to emphasize the importance of taking care of the family. With that, the NFL has created a Widow's and Surviving Children's Death Benefit. While not a pension plan, it does provide a pre-retirement death benefit to the spouse. The typical monthly death benefit for the widow and surviving children is $9,000. The $9,000 is paid to the family for the first 48 months following a player's death. This amount decreases to 50% of the player's benefit credits after those 48 months. The minimum that would be paid is $4,000. What Next? As hard as it may be to walk away from the game, the NFL has made it a priority to help players into retirement. This includes the NFL Pension Plan. The NFL Pension plan provides players with specific payment amounts when they retire. It is important to discuss the benefits with your financial team. At Moment Private Wealth, we help you create a plan with this benefit in mind, including how to budget as a professional athlete . I highly suggest checking out the NFL Retirement Plan (2024 Edition) . The NFL Pension is just one of the many benefits afforded NFL players. ___________________________________________________________________________________________________________ If you are in the National Football League and want to better understand the NFL Pension Plan, schedule a call with a Moment Founder . Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How many credited seasons are needed to be eligible for the Pension Plan?   Each player must have earned 3 credited seasons to be eligible. At what age am I eligible for the NFL Pension Plan?   Players can start receiving their pension at the age of 55. Do I have to start taking my pension at 55 years of age?   No, a player has the option to defer payment. In doing so, the amount of the pension increases per year since a player will be receiving a pension for a shorter amount of time. Are there different Pension Plans I can choose from?   Yes, there are multiple plans. Be sure to consult your financial team for the best option for you. Will my family be taken care of if something happens to me?   Yes! The NFL has instituted a Widows and Surviving Children's Benefit. If the family is not included as beneficiaries in the Pension Plan, they will receive benefits via this plan. ___________________________________________________________________________________________________________ *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

I recently sold my business and am moving to the lake for retirement. What are you most excited about in retirement? Half of my income isn't going to go to Uncle Sam. Not so fast...you will still pay taxes in retirement, but we can minimize those taxes. Tax planning for business owners is the foundation for paying less in taxes today and in the future. In this blog, we are going to teach you how to reduce your taxes in retirement. Reduce Your Taxes in Retirement One of the biggest misconceptions is tax planning is over once your income stops. Taxes will continue and tax planning should continue as well. Luckily there are ways to reduce those taxes in retirement. We are going to break this blog into two areas. Taxable income sources in retirement. Strategies to reduce taxes in retirement. In each section, we will look at the income sources you are facing and strategies to consider to reduce your taxes. Let's Dive in. Required Minimum Distributions (RMD) The first income source to be aware of is the most common. These are the RMDs from your retirement accounts. Let's first look at what an RMD is. Over the course of your life, you have likely contributed to accounts that allow you to defer taxes into the future. These accounts include the following: Traditional 401(K) Solo 401(K) Traditional IRA When you made a contribution to these accounts the government allowed you to take a tax deduction in that year. This is a common strategy we use for business owners with high incomes. The downside to these accounts is that eventually, the government wants their pound of flesh. The government will force you to take money out of these accounts at age 72. The amount is determined by two factors. How much money was in the account at age 72? What your age is? You will take the dollar amount in your accounts eligible for RMD and match it with this table. Let's look at an example of someone who is age 72. RMD assets on 12/31 of the previous year = $1,000,000 Age 72 Distribution Period = 27.4 RMD = $1,000,000/27.4 = $36,496.35 This will be the amount you are required to take out of your tax-deferred account in the upcoming year. This will be added to your taxable income for that year. Now before you get upset that you have to pay more taxes let's look at strategies to reduce your RMD. Qualified Charitable Distributions - Strategy 1 The first strategy to consider is a QCD. A QCD is a strategy that involves gifting your RMD to a charity of your choice. This is an excellent strategy to consider and here is why. When you gift a QCD directly to charity this will allow the income to never hit your tax return. In the example, we could give the entire $36,496.35 to charity and it would be as if we had no additional income. Roth Conversions - Strategy 2 The next strategy to consider is a Roth conversion. As a refresher, a Roth IRA and a Rraditional IRA have a couple of key differences. Roth IRA = Tax-Free Growth Traditional IRA = Tax-Deferred Growth Roth IRA = No RMD Traditional IRA = RMD Having more money in your Roth IRA is going to reduce your overall RMD tax liability. Many clients approaching retirement want to consider a Roth conversion strategy. This is the process of moving money from your Traditional IRA into your Roth IRA. When doing this you will pay taxes today on the dollars you move into your Roth, but you will eliminate any future taxes on these dollars. The earlier you consider this strategy the more impactful it will be. So the next time you fear your RMD consider these strategies. Portfolio Income One of the most common types of income in retirement comes from your portfolio. These are taxes owned on the investments within your accounts. Before we look at different strategies to consider it is key to understand how taxes work in these accounts. There are three basic types of accounts you can have in an investment portfolio. Each of these accounts will affect your taxes in retirement. Tax Deferred Accounts: 401(K)'s IRA's Sep IRA's Solo 401(K)'s Taxation: These are accounts that you will pay ordinary income on all money you take out, but by leaving the funds in these accounts you will defer all taxes. Tax-Free Accounts: Roth IRA's Roth 401(K)'s Taxation: These are accounts that grow tax-free and all distributions are tax-free. These are the best accounts to have assets in during retirement. Taxable Accounts: Brokerage Accounts Taxation: These accounts will be taxed along the way. Every decision you make in these accounts has immediate tax consequences. Now that we have an understanding of each type of account you could be drawing from let's look at the different strategies to reduce portfolio taxes in retirement. Asset Location - Strategy 1 The location of your investments is a key strategy for reducing your taxable income. Before we look at the best structure let's look at the taxes owned on investments. Bonds - These assets are part of your defensive strategy. The main benefit of a bond is that it will pay consistent income to you over time. This income will be taxed as ordinary income. Stocks - These assets are part of your offensive strategy. The goal of these assets is to appreciate over time. When you own stocks there are two ways to make money. The first is dividends from those stocks which will be taxed immediately. The second is capital appreciation or the position going up in value. To summarize there are two ways to make money on investments. Income - The money paid through interest or dividends throughout the year. Capital Appreciation - The money you make by an investment going up in value. Typically the most tax-efficient strategy is to place your income-producing assets in your tax-deferred accounts. This will allow that income to be generated on an annual basis to be deferred in the future. While your income-producing assets will be in your tax-deferred accounts your capital appreciation assets will be allocated towards your taxable brokerage and tax-free accounts. Typically this is best because we can control when we pay taxes on these positions. We would need to sell the position to create additional taxable income. Asset location is a strategy all individuals in retirement should discuss with their advisory team to ensure they have the right investments in the right accounts. Tax Efficient Investments - Strategy 2 This strategy will be focused specifically on your taxable brokerage account. After all most business owners in retirement have a significant amount of funds in these types of accounts. These funds may have come from saving money over the years or the sale of a business. In these types of accounts, there will be three forms of income. Interest from Bonds Dividends from Stocks Capital Gains from Stocks In retirement, it is key to have the right investments to minimize taxes. Interest from bonds can be either tax-free or taxable. Depending on your tax bracket will change what type of bond we should own. Taxable bonds will pay a higher return but that is only best depending on the overall tax bracket you are in. Dividends from stocks can be paid in two ways. Qualified dividends and ordinary dividends. Qualified dividends will be taxed at a lower rate than ordinary dividends. Most stocks can get qualified dividend treatment with the proper investment strategy. This could be the difference in paying 0% in tax on your dividends up to 37%. Capital gains from stocks are determined by the difference between your cost basis and your current value. The most important consideration is how long you have held these assets. Capital gains have two different classes. The sale will be treated as a short-term gain or a long-term gain. Short-term gain - Held for under 1 year. Long-term gain - Held for over 1 year. Now the important part. How are they each taxed? Short-term capital gains will get taxed as ordinary income with the highest tax bracket being 37%. Long-term capital gains are a different story. They receive special tax treatment and get preferential rates. When possible always sell assets at long-term capital gains to significantly reduce your taxes. Managing an investment portfolio in retirement is key to paying the minimum amount in taxes. The biggest mistake we see business owners make is ignoring taxes during retirement. There is no perfect strategy to fully reduce taxes, but there are many ways to reduce taxes. If you are a business owner looking to reduce your taxes in retirement we are here to help. Tax planning will always favor those business owners who take the time to get educated and they combine that knowledge with the right team. If you are concerned about your tax team or want to get better educated about taxes in retirement reach out to our team below. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Are you a fiduciary? Moment Private Wealth se rves clients as a fiduciary 100% of the time. How does Moment Private Wealth make money? We are only paid in one transparent way, by our clients. We receive no kickbacks or participate in any profit-sharing arrangements. Our fees are simple, transparent, and clear for our clients. How are you different than other financial a dvisors? We are specialists in working with professional athletes and business owners. We limit the number of new clients we take on. This allows us to provide unparalleled value and highly personalized service to professional athletes and business owners. We work as a team to service our clients. We believe in building a team of “A” players. This ensures our clients receive world-class tax, estate, insurance, and investment strategies. We focus on educating first, then executing. Where do you hold my investments and how can I see them? Moment Private Wealth uses Fidelity Investments as a third-party custodian for our client investment accounts. As a third-party custodian, Fidelity safeguards and provides reporting to you and the IRS each year. Clients can also access all financial information via the Moment Private Wealth Client Portal. How do you work with other members of my team? We believe in the power of the team. Our client teams consist of Moment Private Wealth, an accountant, an attorney, a banker, and an insurance specialist. We help our clients build out their team of individuals or work with existing partners clients have. Our goal is to ensure every family has a team of experts to protect their interests. What is the penalty for not taking my required minimum distribution? You will owe a 50% penalty on the amount that was supposed to be distributed from your retirement account. What is a required minimum distribution (RMD) ? Required minimum distributions are the amount the government requires you to take out of your retirement accounts at age 72. When you tax these dollars they will be taxed as ordinary income. How to pay less in taxes as a business owner? Taxes are going to be your largest lifetime expense. Our goal is to help you pay the least amount possible and never leave the IRS a tip. Our team of specialists understands this and works to reduce your taxes today and in the future. H ow do taxes work as a business owner? When you own a business you are going to get taxed in two ways. First, you will be taxed as an employee through the W2 wages you take from the business. Second, you will be taxed on the profits that your business earns. What are the best tax strategies for business owners? The best tax strategies can save you thousands if not millions in taxes. The best strategies will be specific to your needs and goals. Strategies most business owners consider take into account what they expect to make in income this year as well as in future years. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Just Google your name, what comes up? Well for most people, it might be a career accomplishment or their LinkedIn profile. For professional athletes, you will be able to find exactly how much money they made, what team they played for, and probably guess how much they paid in taxes. Those tax bills are high and everyone wants their piece of those big contracts. So, let's play this out, you are a state where MLB, NFL, NBA, and NHL teams visit frequently. You would be crazy to not want your share of that revenue. After all, we aren't talking about pennies here, we are talking about millions of dollars in potential tax revenue. This concept led to what we now know as the jock tax. Simply put the jock tax is a tax levied against professional athletes who spend time playing (and earning money) in cities and states where games are held. Understanding the jock tax is one of the single best nuances to know when it comes to tax planning for professional athletes . In this blog, I am going to cover how the jock tax started, what it means for professional athletes, and the key factors to consider. Jock Tax The jock tax has been around for decades but didn't come to the forefront until 1991. You see in 1991, a little-known basketball player named Micheal Jordan was in the prime of his career. His Chicago Bulls had just beaten the Los Angeles Lakers in the NBA finals. While the city of LA was grieving its loss, tax officials were busy letting Michael Jordan's CPA know that he was going to owe taxes in California for the games played there. Thus the jock tax, as we know it today become a hot-button issue for professional athletes. Today the jock tax applies to nearly every state that imposes a state income tax and many cities that host major sports teams. In practice, it requires athletes to calculate duty days (how many days they are present in each state), formulate tax strategies, and ensure proper filings in multiple states every year. It is a game of tax chess that without proper knowledge and implementation can cost athletes hundreds of thousands if not millions of dollars in taxes. Let's dive in... Jock Tax Explained For Professional Athletes On the surface, the jock tax is pretty simple, if you play there you pay there. The reality of how this works as a professional athlete is a bit more complicated. Consider how many states you might play in during a season: NFL players are looking at 8+ states. NBA players are looking at 15+ states. MLB players are looking at 20+ states. You can thank the jock tax for having to file in more than all those states. In a traditional job, where you work in one state and even if you travel to your company's second location you are not subject to taxes in that state. For professional athletes, it works in reverse. Each state that an athlete plays in must be reported on their tax return. That means athletes must be tracking where they are playing and how many days they are spending there. Let's use an example: You play 100 games throughout the season and five of those games are played in Missouri. Missouri state income tax is 4.95% 5% of a $1,000,000 salary = $50,000 $50,000 (MO state portion) X 4.95% (MO state tax) = $2,475 in Missouri state taxes ***Many cities will also charge city tax for the games a professional athlete plays there. To fully understand how this works let's continue with our example: If you are an athlete with Florida residency (0% state income tax) you would pay no additional state taxes beyond the Missouri portion for those games. If you are an athlete with California residency (13.3% top state income tax) you would pay an additional 8.35% at the end of the year to California. This is the difference between California state income tax (13.3%) and Missouri state income tax (4.95%). The thing to remember as a professional athlete is if you play there, you will pay there. Jock Tax Strategies for Professional Athletes Look there is no way around paying taxes as a professional athlete. Taxes will be your largest lifetime expense. The good news is you can and should plan around it. When it comes to jock taxes, we have seen athletes overpay states by hundreds of thousands of dollars without proper planning. Here are two tax planning moves athletes should focus on: Hire A Specialized Team Ok, let's be real you are in the .000000001% of people to ever play the sport you are playing. You need to consider your choice of financial team to be just as specialized as you are. You want to ensure your financial advisor and CPA work in unison and have deep expertise in multi-state taxation for athletes. The two biggest mistakes I see athletes make are hiring generalists when they need specialists and not having a team working alongside each other. Consider this: You are an athlete preparing for your upcoming season when your CPA calls letting you know your duty day calculation might be incorrect. You are scrambling to find the right documents, make the necessary phone calls, and still prepare for the season. When instead if you were working with an integrated team like how we operate at Moment, your advisor and CPA would be proactively tracking down this documentation throughout the year to ensure correct calculations. Now this is assuming your CPA and advisor understand duty day calculations in the first place. Forgive me for sounding blunt but this is too important to ignore. This is not the time, place, or team where you should be hiring friends. You need to hire experts who have experience or you just might be tipping the IRS. Track Duty Days The best way to ensure your financial team provides you with the best tax estimates is to give them the best information. This includes where you were during the playing season. Now there are some easy hacks to track this that I used throughout my career, the easiest of them all being using your credit card for all purchases. Do this and you can easily go back and trace where you were over a certain week or month. In addition, teams do their best to provide the correct withholding for states when the team is playing there. Just remember this is a starting point, not the final word when it comes to your tax bill. An example: If you spend time on the injured list throughout the season, the team is not tracking your location. If you are spending time rehabbing an injury and are away from the team this could affect your state tax calculation. It is critical to ensure your advisor is aware of these moves during the year. This might sound significant in the grand scheme but I am telling you right now it isn't. We have saved clients hundreds of thousands of dollars on previous mistakes with duty day calculations. The checks are too big and the opportunity cost is too great not to be planning around this. Jock Tax Considerations You will hear plenty of wild stories in the clubhouse, many of them around taxes. They usually start with a legitimate strategy an athlete's financial team proposes but by the time the third player hears about it ~ we are in the telephone game. I say this because theory is often different than reality when it comes to tax planning for professional athletes . In theory , establish residency in a zero-income tax state, sign with a team in that state, and play your entire career there. In reality , life changes a lot from draft day, rarely do you have a choice of who you play for, and the chances of you spending your entire career in one place are slim to none. The key is not trying to predict the future but rather being educated on your options, tax considerations, and tracking key information. Jock tax is one of the most misunderstood concepts in professional sports locker rooms. It is also one of the biggest levers to pull in tax planning for professional athletes . You want to make sure that your financial team is a specialist in athlete wealth management . This means they understand terms like: Duty Days Multi-State Taxation Jock Tax Strategies We have worked hand in hand with professional athletes saving them hundreds of thousands of dollars when these calculations were done incorrectly. Remember taxes are your largest lifetime expense and proper tax planning is critical to maximizing your earnings as a professional athlete. If you are a future or current professional athlete looking for help understanding the jock tax and the role it plays for you schedule a call with our team . Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions received regarding MLB service time: What is the jock tax for professional athletes ? It is a tax imposed on professional athletes for the time spent playing in certain states and cities. How is the jock tax calculated? The jock tax is calculated based on duty days. Duty days are the days a player has during a professional season. If a player has 100 duty days during his season and spends 10 days in a certain state or city, thus 10% of his income earned during that season would be allocated to that state. Can professional athletes plan around the jock tax? Yes, players and their financial teams must understand how the jock tax works. The biggest step here is tracking your days in each state that you either played or were present during your playing season. Players should not solely rely on the team to ensure this number is correct. What if my previous financial team missed my duty day calculation? You can go back and file an amended tax return reflecting the correct duty day calculation within a certain time period. What if a state withheld too much in taxes for my days spent there? You can file to have those taxes returned to you but you will need to show that state proof of your duty day calculation and supporting evidence. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Burned out and ready for the next big thing. You may be in your 40s looking to take chips off the table or in your 60s ready to spend more time at the lake. Retirement planning for entrepreneurs will give you the peace of mind that the move you are making is the right one for you. A solid retirement plan is key to an overall wealth management plan for business owners . In this blog, we are going to show you how to build and maintain a retirement plan. Retirement Planning for Business Owners Business owners don't love talking about retirement. Why? They never really retire and always have their hands in something. Does this sound like you? We are going to show you how we plan for people just like you. We are going to break this blog into two areas. Creating a retirement plan. Maintaining a retirement plan. Let's Dive in. Create a retirement plan So you want to retire but you don't know where to start. Look no further. We are going to follow these three steps to create your retirement plan. Goal Setting Lifestyle Cost How Much Money Do I Need to Retire Goal Setting Without goals, it is impossible to build a plan. Walking through a goal-setting discussion can help provide you clarity on several important topics. Time Goals The number one topic for business owners is how to spend their time. After all, you have spent decades building organization...and now you are suddenly going to STOP. For some, this works but for most, it doesn't. Set goals for how you will use your time. Make up for lost time with family Volunteer your time with young entrepreneurs Serve on the board of other companies you can help We find the best time goals are the ones that are the most fulfilling. When you set your time goals understand that money is important but time is often more valuable. Money goals Money makes the world go round. You have probably heard this line before. Although there is truth to this line there is also danger. I encourage business owners to think of money in two buckets. Needs Wants What are the things that I need in my life vs want in my life? These conversations often stem from personal experiences. For example, if an owner grows up with little money they often are more concerned about their needs than wants. Setting money goals should start with your needs and then progress to your wants. These money goals are a great transition into the next part of building a retirement plan. Lifestyle Cost Knowing what it costs to live your ideal lifestyle is key to a stress-free retirement. We break these costs into two categories Fixed Costs Variable Costs It is important to think about these costs in these two buckets as it allows you to determine where we can pull back if we need to. More to come on this later. Fixed costs are ongoing costs that you can't quickly adjust up or down. Mortgage Payments Debt Service Health Care Costs Think about these as payments that you have to make every month no matter what. Variable costs are ongoing costs that we could adjust at a moment's notice. Eating Our for Dinner Private School Tuition Country Club Membership All things that are nice to have but aren't necessary for daily living. Sitting down and taking a good look at these expenses must be completed in order to have a successful retirement plan. Without these numbers, it would be the same as running your company without an operating budget. How much money do I need to retire: This is where the rubber meets the road. How much you need will be swayed by your lifestyle costs and long-term goals. The first step is to break your finances into two buckets. Income Streams Investable Assets Income Streams in retirement could include the following. Social Security Pension Income Portfolio Income Real Estate Income Required Minimum Distributions We will add these income streams together and compare this number against your lifestyle costs. Planning often becomes simple when your passive income matches your lifestyle costs. Rarely is this the case which is where your portfolio comes into play. When analyzing your investment portfolio we often see the range you can distribute off the portfolio being between 2%-6%. This is a wide range because it is heavily affected by your current income streams and capital needs. For those who aren't positive about their goals, it makes it difficult to be on the top end of the range (6%). So how does this play out in reality? Check out this video where I break down an example Maintaining a retirement plan Creating a retirement plan is one thing but maintaining it is a different animal. Unfortunately, many people fall into the trap of creating a plan only to stuff it in a drawer and forget about it. The reality is that life changes and when it does your financial plan should be updated. We are going to walk through how we use guardrails-based planning to help you maximize your retirement. There are three primary levers we monitor: 1) Annual Spending 2) Upper and Lower Guardrails 3) Spending vs Available Income Guardrails-based planning as illustrated above can help you spend more money during your retirement. Here is how is plays out. First, we need to set the available income. The income we believe can comfortably be spend off of the portfolio while still maintaining the principal. In this example we have the distribution rate set at 4%. Note that this distribution is largely effected by the following factors. Time Horizon - The younger you are the lower the distribution rate. Capital Needs - The more likely you are to need a large chunk of money the lower the rate. Risk Tolerance - The higher your risk tolerance the higher the distribution rate. Now that we have our available income setup we move to the guardrails. The guardrails are a unique planning tool to help you meet your goals in good times and bad times. The easiest way to think about guardrails is that we will be able to spend more money when the portfolio is increasing in value and less money when the market decreases. This provides a substantially different result than traditional planning. In traditional financial planning, an advisor sets an inflation adjustment on your spending and assumes you will continue to increase your spending regardless of what the portfolio is doing. We have found this strategy to be unrealistic. Guardrails-based planning allows us to set an upper and lower bound that we adjust as the portfolio adjusts. Here is how it works. If the portfolio is up 20% your available income increases by 10%. If the portfolio is down 20% your available income decreases by 10%. Having guardrails allows us to accomplish these objectives. Maximize the amount of money we can spend off the portfolio. Use a strategy that protects your portfolio in down markets. Avoid leaving too much money in your legacy bucket. When maintaining a retirement plan this is hands down the best way I have seen to keep your plan on track. Remember not to put your financial plan in a drawer. This is not a set-it-and-forget-it strategy. This needs to be constantly monitored to ensure that you keep your retirement plan on track. Building a retirement plan for a business owner often is not easy, but if done currently it will give you peace of mind. When in doubt keep it simple. Set your goals with simple clear guidelines. Use your guardrails to stay on track. If you are a business owner looking to retire we are here to help. Retirement planning should not be avoided. The sooner you plan the better off your retirement will be. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Are you a fiduciary? Moment Private Wealth se rves clients as a fiduciary 100% of the time. How does Moment Private Wealth make money? We are only paid in one transparent way, by our clients. We receive no kickbacks or participate in any profit-sharing arrangements. Our fees are simple, transparent, and clear for our clients. How are you different than other financial a dvisors? We are specialists in working with professional athletes and business owners. We limit the number of new clients we take on. This allows us to provide unparalleled value and highly personalized service to professional athletes and business owners. We work as a team to service our clients. We believe in building a team of “A” players. This ensures our clients receive world-class tax, estate, insurance, and investment strategies. We focus on educating first, then executing. Where do you hold my investments and how can I see them? Moment Private Wealth uses Fidelity Investments as a third-party custodian for our client investment accounts. As a third-party custodian, Fidelity safeguards and provides reporting to you and the IRS each year. Clients can also access all financial information via the Moment Private Wealth Client Portal. How do you work with other members of my team? We believe in the power of the team. Our client teams consist of Moment Private Wealth, an accountant, an attorney, a banker, and an insurance specialist. We help our clients build out their team of individuals or work with existing partners clients have. Our goal is to ensure every family has a team of experts to protect their interests. How much money can I spend in retirement? Retirement spending starts with your goals. Once you have established your goals we recommend deciding a safe withdrawal rate to meet your goals. Using guardrails-based planning will allow you to increase your retirement spending over time. What is guardrails-based planning ? Guardrails-based planning allows families to spend more in their retirement years. It is a strategy that allows your income from your portfolio to increase in good times and decrease during market downturns. What is a Monte Carlo analysis? This type of analysis takes into account your financial variables and runs a number of different scenarios. You then will receive a probability of success. This probability represents your ability to meet all of the financial goals plugged into your analysis. H ow do taxes work as a business owner? When you own a business you are going to get taxed in two ways. First, you will be taxed as an employee through the W2 wages you take from the business. Second, you will be taxed on the profits that your business earns. What are the best retirement strategies for business owners? Retirement planning as a business owner can seem challenging, but the best strategies are the ones with clear goals and guidelines. At Moment we start with your goals in mind and use financial planning strategies that help you spend the most money during your retirement. All while ensuring you have peace of mind. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

I owe how much in taxes? I could feel the horror on the other end of the phone after they learned they owned hundreds of thousands more in taxes. The only way to avoid these situations is with proactive tax planning. Proactive tax planning is the actions we take over the course of the year to avoid any surprises when implementing tax planning strategies for business owners. In this blog, we are going to give you a roadmap for proactive tax planning. Proactive Tax Planning I love surprises, but I don't like tax surprises. I have yet to meet a business owner who wants any surprises when it comes to taxes. In this blog, we are going to show you how to be proactive. We will be looking at three key areas. What work should be done on a quarterly basis? What work should be done on an annual basis? Let's Dive in. Quarterly Basis They say consistency is key. This couldn't be any more true when it comes to tax planning Here are two things you should do each quarter to avoid surprises. Review of Business Financials: You will want to get into your books each quarter to review how things have been going. I regularly see business owners make the mistake of not looking at the books regularly and this gets them in trouble. If you don't know how you are doing it makes it difficult to know what decisions to make. Looking at your books regularly will help you make better business decisions later on in the year. A common issue I see with business owners is waiting until the end of the year and then deciding to buy anything they can for their business to reduce their taxes. Although this is a viable strategy it is reactive and not proactive. The way you plan for this in advance is by reviewing your books on a quarterly basis. Quarterly Estimates: After you review your financials in the business it is time to review your quarterly estimates. Before we dive into what you need to pay let's first look at what is a quarterly estimate. There are two ways you typically pay your taxes for the year. The first is through your salary with normal withholding. The second is through estimates. This is where you pay the amount of tax you expect to owe based on the profits for each quarter. This is important for two key reasons. To avoid penalties and interest on taxes owed. To avoid a big surprise at the end of the year The big mistake to avoid is simply paying your quarterly estimates based on last year's profit. You can avoid this by reviewing your books each quarter. That way you don't end up paying too much in estimates or too little in estimates. So when should you pay these estimates? Each quarter there is a due date for the estimates. April 15th June 15th September 15th January 15th One of the biggest questions we get is how to avoid penalties and interest. The key here is knowing how the IRS treats each type of withholding. Quarterly estimates are treated as paid only at the time in the year the estimate is made while normal withholding is spread throughout the course of the year. The trick here is to make sure you are paying estimates when you earn the income or withholding extra funds through payroll at the end of the year. Annual Basis Proactive planning happens at different times during the course of the year. Now that we have reviewed the quarterly proactive planning we will look at the annual planning. Annual planning covers the topics that need to be completed at one point during the year. Here are the top three planning moves to stay proactive with your tax situation. Annual contributions to retirement accounts. Providing tax forms to your CPA firm Annual Review of your tax return Let's dive into our first area. Annual contributions to retirement accounts: Every year there will be deadlines for different retirement accounts. The first step is knowing which accounts to contribute to, but in this blog, we are going to look at the key dates for each of these retirement accounts.  There are three key dates for retirement accounts that must be known to be proactive.  April 15th  At the tax deadline, there will be multiple accounts that you must finalize your contributions. These accounts include the following Roth Individual Retirement Accounts Traditional Retirement Accounts Solo 401(K) Retirement Accounts Health Savings Accounts October 15th  When you file an extension for your taxes you have until the 15th to finalize your return. There is also one accounts that allows you to make a retirement account contribution for the previous year prior to the October 15th deadline. Self-Employed Pension Retirement Account This account is specific for those with self-employment income. December 31st  The last day of the year is when you can finalize contributions for the following accounts. Traditional 401(K) Retirement Accounts Roth 401(K) Retirement Accounts Opening a Solo 401(K) Retirement Account Note that for those looking to make a solo 401(K) contribution, this account must be opened prior to the end of the year you plan to make the contribution. Providing Tax forms to CPA Firm Being proactive requires you to be looking ahead. If you are lucky enough to have a tax planner and not a tax preparer you will find this section to be easier to implement. Once a year for clients it is required to gather all tax documents and provide them to your CPA. This can be tricky when you are making tax moves during the year. Our goal with the annual tax letter is to outline to your tax team what moves were made during the course of the year and what tax forms to expect. Tax Moves Outlining the tax moves is key to ensuring your CPA is critically thinking about your tax return. Often clients get in trouble when they blindly provide information to their CPA without context.  Context is key to communicating tax moves to your CPA. Tax Letter Annually in the 1st quarter of everywhere we need to provide a tax letter to your CPA. In this tax letter, we will outline all the forms they should expect to receive from us along with any form we know of that we don’t have access to. Outside checking accounts Outside investment accounts This tax letter is a key part of helping give context to your CPA team. Once your CPA gets this information is it enough to assume everything is done accurately? No. CPA's are humans and humans make mistakes. It is our job to provide a second set of eyes to the expert work completed by your tax team. Annual Review of Tax Return On an annual basis, we need to review your previous year's tax return. This review will give you a second set of eyes to ensure all your information was reported properly. Here is an example of the output we provide to each of our clients when reviewing their tax returns on an annual basis. These are the key considerations we are looking for when completing a review of a client's tax return. Accurate Information You would be amazed at how many returns we have reviewed that have incorrect information. The most common issues we see are inaccurate cost basis for sales of securities and children missing off of tax returns. Both of these could cost a client thousands in taxes if done incorrectly. Retirement Account Contributions Another issue we commonly see is inaccurate information surrounding a client's retirement account contributions. It is not uncommon to see a 401(K) contribution missed or other deduction. Review of Quarterly Estimates Typically on your tax return your CPA will provide quarterly estimates for the current year. Although these can be accurate they often need to be adjusted. During the course of our review, we will look to see what we recommend and take this into consideration when we work to complete the quarterly estimates for your family. Tax considerations are an ever-changing target for business owners. It is a never-ending chase to minimize taxes both today and in the future. Your financial advisor should work hand in hand with your tax team to ensure you are minimizing these taxes. When was the last time your advisor asked to review your tax return? Can you even remember or maybe it is never? If this is the case for you reach out to our moment team to get a free review of your tax return at no cost. If you are a business owner who is looking to find a financial team that specializes in you, schedule a call, and talk with a Moment founder. Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Are you a fiduciary? Moment Private Wealth se rves clients as a fiduciary 100% of the time. How does Moment Private Wealth make money? We are only paid in one transparent way, by our clients. We receive no kickbacks or participate in any profit-sharing arrangements. Our fees are simple, transparent, and clear for our clients. How are you different than other financial a dvisors? We are specialists in working with professional athletes and business owners. We limit the number of new clients we take on. This allows us to provide unparalleled value and highly personalized service to professional athletes and business owners. We work as a team to service our clients. We believe in building a team of “A” players. This ensures our clients receive world-class tax, estate, insurance, and investment strategies. We focus on educating first, then executing. Where do you hold my investments and how can I see them? Moment Private Wealth uses Fidelity Investments as a third-party custodian for our client investment accounts. As a third-party custodian, Fidelity safeguards and provides reporting to you and the IRS each year. Clients can also access all financial information via the Moment Private Wealth Client Portal. How do you work with other members of my team? We believe in the power of the team. Our client teams consist of Moment Private Wealth, an accountant, an attorney, a banker, and an insurance specialist. We help our clients build out their team of individuals or work with existing partners clients have. Our goal is to ensure every family has a team of experts to protect their interests. What is a tax deduction? A tax deduction is your ability to reduce your total income by the amount of your deduction. For every dollar of deductions, you will reduce your taxable income by a dollar. How to avoid a big tax bill ? To avoid a tax bill you need to be proactive with your tax planning strategies. This will require your team to work on your taxes throughout the year. You should be looking at taxes on a quarterly and annual basis. How to pay less in taxes as a business owner? Taxes are going to be your largest lifetime expense. Our goal is to help you pay the least amount possible and never leave the IRS a tip. Our team of specialists understands this and works to reduce your taxes today and in the future. H ow do taxes work as a business owner? When you own a business you are going to get taxed in two ways. First, you will be taxed as an employee through the W2 wages you take from the business. Second, you will be taxed on the profits that your business earns. What are the best tax strategies for business owners? The best tax strategies can save you thousands if not millions in taxes. The best strategies will be specific to your needs and goals. Strategies most business owners consider take into account what they expect to make in income this year as well as in future years. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Arguably the biggest misconception athletes have is the difference between what their contract says and what hits their bank account. We (me included) all first think that our contract number is a good measure of what we will get when in reality it is often 30 - 50% less than that. The role taxes play for professional athletes cannot be understated. They will be your largest lifetime expense and it isn't even close. That is the bad news. The good news? We can and should be planning for them. After all, consider if you had any other large expenses, you would want to do your research to make sure you are not overpaying. I want you to think about taxes the same way. They are an expense that can be reduced. The key is understanding how tax planning for professional athletes can be optimized. In this blog, I am going to break down 10 tax planning strategies for professional athletes. Taxes for Professional Athletes Individual tax returns were due on April 15th of this year. For most athletes the first time they started thinking about this was a few weeks before that. That inherently is the problem. There is almost nothing left to plan for other than what you will owe by then. If you read nothing else in this article, read this: tax planning and tax preparation are two different things. Tax Planning : Looking out in the future to find ways to lower your lifetime tax bill. Tax Preparation : Reporting on everything you did in your tax planning and letting the IRS know. One is proactive and saves you money, the other is reactive and is only doing what is required. One of the biggest mistakes professional athletes can make in choosing a financial team is choosing a team that cannot provide guidance on taxes. Here is a little secret ~ the vast majority of financial firms (think big banks) cannot provide tax planning to clients. Remember how we said taxes are your biggest lifetime expense? Now consider that the most integral part of your financial team, your advisor, might not be able to give you planning or guidance on taxes. That is a recipe for overpaying on your taxes, something you can and should avoid. So let's dive in and discuss ten tax strategies for professional athletes. 1. State Residency Income is taxed at two levels, the federal level and the state level. While the federal level applies to all US citizens, the state level varies depending on your state of residence. This ranges from 13.3% for California residents down to states with zero income tax such as Florida and Texas. Consider that is a $130,000 difference for every $1,000,000 earned between California and Florida. Establishing residency in a low or zero-income tax state can save athletes hundreds of thousands to millions of dollars in lifetime taxes. So, how can you establish state residency in a low-income tax state (the right way)? State residency is determined by a series of facts and circumstances. The following is a good starting point for athletes considering a change in state residency: Establish a full-time residence Obtain a state driver's license Register your vehicle with the state Obtain insurance coverage in the state Change your mailing address for all bills Register To Vote Live There State residency is not a black-and-white issue. It is instead about stacking undeniable proof that this new state is your primary residence. Professional athletes should look to execute this with a qualified financial team that has experience handling multi-state taxation and residency. 2. Retirement Accounts Retirement accounts are all about optimizing for your lifetime tax bill. Current Year Benefits  - This provides a tax deduction in the current year and you will owe taxes in the future. Current-year benefit accounts are traditional retirement accounts. Future Year Benefits  - This provides no tax benefit in the current year but future year tax benefits in the form of tax-free growth/distributions. Future-year benefit accounts are those with the Roth prefix. Example : If you are in the 37% federal income tax bracket today but projected to be in the 22% federal income tax bracket in the future your focus should be on current-year benefits.  Lower tax brackets today focus on future-year tax benefits Higher tax brackets today focus on current-year tax benefits    Most Common Types of Retirement Accounts Solo 401(k ) – Restricted to businesses with no employees or if your spouse is the only other employee. This is a great option for NIL athletes or those earning off-the-field endorsement income. 401(k) – The most common retirement account and is provided by your team. 401(k) access and opportunities vary by league. For a deeper dive into league benefits for Major League Baseball and The National Football League check out our player's benefits articles. IRA – This is easy to set up and comes in three forms: Traditional, SEP, and Roth accounts. Each provides unique benefits, limitations, and opportunities.   3. Investment Strategies The two best times to pay taxes are never or later. As an athlete, you will have 40+ years of compounding for your investment portfolio. Our goal is to grow that money while at the same time paying as little in tax as possible. The thing that matters far more than your rate of return is your after-tax rate of return. Said more simply, what you keep matters more than what you make. As an athlete builds an investment portfolio, the focus should be on after-tax return. We do this for athletes by focusing on the following investments: Exchange Traded Funds Municipal Bonds Direct Indexing Combine that with strategic rebalancing and you set yourself to make taxes a priority not an afterthought in your investment portfolio. 4. Donating Money One way to give back and reduce your tax bill is through strategic gifting. The key term here is “strategic”. An athlete’s earning lifecycle is condensed into roughly one decade or less. This means we want to take advantage of high-income years today (through gifting) but give ourselves optionality to give money away long after our playing career ends. The single best tool to do that is a Donor Advised Fund (DAF). Here is how it works: A Donor Advised Fund is an account that allows you to donate money, take a current-year tax deduction, keep the money invested, and give it out over future years. Example : You are earning $5,000,000 yearly and want to give away $10,000 yearling over the next twenty years. To maximize his tax benefits, we might recommend giving $100,000 or more in the current year to a Donor Advised Fund. This allows us to get a large tax deduction in year one but provide grants to our favorite charities over time. I am yet to meet any athlete who wants to give more money to the IRS and less to their favorite charity. A Donor Advised Fund is a great way to accomplish that. 5. Types of Income To understand taxes, you need to understand the types of income. Professional athletes earn two types of income, W2 and 1099 . One is a result of work you do on the field (W2) and the other is the result of work you do off the field (1099). The type of income will drive the rules, strategies, and placement of income as it comes in for an athlete. Once you understand the type of income you are earning you then can determine which strategies to focus on. 6. Deferring Income It doesn’t matter what you get paid, it matters what hits your bank account. This couldn’t be truer when we think about planning around income. Accelerating income (taking in more in one year) or deferring income (pushing some out) can significantly impact your tax bill. This is especially relevant for professional athletes closing in on the “next” income tax bracket.  Example : You are earning $350,000 in taxable income for the year.  You just landed an endorsement deal that will provide you with an additional $100,000 of income.  The 32% federal income tax bracket starts at $364,201 (married filing jointly in 2024).  This means the first $14,201 will be taxed at 24% but the other $85,799 will be taxed at 32% This is a net cost of an additional $6,863 in taxes. If you pushed that money into a future year it could provide additional tax savings.  7. Roth Conversations The two best times to pay taxes are later or never. My estate planning attorney once told me that and while generally true there are exceptions.  The biggest one is Roth conversions. Remember the goal is not to pay the lowest amount of tax in a single year but rather to pay the lowest amount of tax over your lifetime. A Roth conversion is the process of taking money in an individual retirement account (IRA) and moving it (converting) to a Roth IRA. Where this comes into play for professional athletes is the years of lesser income. Consider for a second that the average professional career is less than five years and you c an start to see the opportunity: High Income High Income High Income High Income Lower Income (Roth Conversion) Example : You convert $100,000 while in the 22% tax bracket at the age of 30. This results in a current year tax bill of $22,000 ($100,000 X 22%) but provides you tax-free growth for decades. This can result in hundreds of thousands in lifetime tax savings when executed correctly. 8. Tax-Loss Harvesting Tax loss harvesting is when you sell a position (one at a loss) and buy an “equivalent” position (similar but not the same position).  This allows you to do two things:  Capture the loss for taxes (more on that later) Continue staying invested in the market to capture the upside Example : You bought $1,000,000 of a growth fund that is now down 10% or $100,000. You can sell that fund, immediately rebuy a similar fund (another growth fund), and capture the $100,000 loss. This provides you a tax asset of $100,000 for future years in which you might sell an investment and take a gain. Those losses can be used up to $3,000 per year to offset ordinary income. Additional losses can be used to offset capital gains income in the future.  ***Unused losses can be carried forward into all future years. 9. Quarterly Estimates It pays to be up to date on your projected tax bill. While the team will withhold taxes from your salary, this does not mean it is the correct amount. In addition, off-field income is generally the athlete’s responsibility to report to the IRS. This is where quarterly estimates come into play. A quarterly estimate is a payment of projected taxes each quarter. This is something that your financial team (Financial Advisor & CPA) should be working together on each quarter. To ensure a penalty-free year you must reach the Safe Harbor Rule. For professional athletes, this means paying: 90% of Current Year Income Tax Liability or 110% of the Previous Year’s Income Tax Liability This is where a qualified team of advisors can save athletes thousands of dollars in penalties and fees. 10. Estate Planning Estate planning is for old people and athletes are young, right? Wrong. Estate planning is simply deciding where your assets go when they go there, and how they get there. It is a financial roadmap for when you are no longer able to articulate the plan. Estate planning is even more critical for high-earning athletes due to something referred to as a Death Tax. Here is how it works: If your estate (everything you own added up including life insurance) is more than 13.61 million in 2024 you are subject to it. That tax is a staggering 40%. The good news? You can plan now to avoid it in the future. A properly executed estate plan can help to mitigate, reduce, or fully eliminate an estate tax liability. The best time for tax planning as a professional athlete is today. You set yourself up for future flexibility and a lowered lifetime tax bill. If you are a future, current, or former professional athlete looking for tax planning schedule a call   with a founder. Look, we get it, taxes can be frustrating, confusing, and downright overwhelming. At Moment, our mission has stayed the same since day one. To build a firm focused on helping the people we know best, athletes and entrepreneurs. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How does Moment Private Wealth help athletes with tax planning? At Moment we provide quarterly projections, tax strategies, and work in coordination with our client's CPA to ensure every client is paying the lowest amount of tax possible. When should professional athletes be planning for their tax bill? We believe that good tax planning is year-round. How do you work with CPAs? We believe in the power of the team and our job is to make sure your entire tax team is aligned. The best strategies mean nothing without proper implementation and execution. What is the biggest tax strategy professional athletes should consider? I will give you the best worst answer, it depends. It depends on what you are trying to accomplish and the details of your situation. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

I walked up to the rental car counter, insurance in hand. I thought I was prepared until the agent asked for my credit card. You see I had just signed my first professional contract and I didn't have a credit card. After all, I was 18, had no credit, and had just signed my first employment agreement. It was just one example of the nuances that came with being a professional athlete. Over the years, I could name a laundry list of things that popped up where I would think, "No normal employee is dealing with this." The reality is athlete wealth management requires expertise in the core areas (cash flow, tax, estate, and investing) as well as the areas specific to you as a professional athlete. One of those areas is private banking for professional athletes. It is an area where having relationships, strategies, and connections pays big dividends for professional athletes. In this blog, I am going to discuss everything professional athletes need to know about the role banking plays in money management. Private Banking for Professional Athletes Everyone needs a banking relationship. We often just think about these relationships as the place you go to deposit and withdraw money. In the digital age, this might be an online-only bank with no physical locations. The solutions for retail banking relationships are cookie-cutter offerings. If you fall into a certain box, the bank can provide certain services at predetermined rates. For many, this is all that is needed. For professional athletes, more expertise and customization are needed. Private banking provides solutions that can be catered to the needs of the individual. While it is not a "yes" to everything, it does provide far more optionality. The most common solutions we see a private banking relationship solve are: 24/7 Support Teams Athlete Specific Lending Access to Preferred Rates Credit Cards (With No Credit) Increased Visibility & Collaboration Let's dive into how a private banking relationship benefits professional athletes. Early Career Solutions The first several weeks of a professional career go by in the blink of an eye. One minute you are dreaming about pro sports and the next you are drinking from a fire house trying to make a good first impression. The role private banking plays early in a career has as much to do with execution as it does with speed. Look, go into a local bank and see how long it takes to see a representative. After seeing them and them trying to sell you everything under the sun, they most likely will tell you they can't help. The reason? Athlete contracts are weird. While every sport has some guarantees in these contracts, financial institutions (like banks) don't recognize these the same as an average W2 employee. Said another way, an employee of your favorite local restaurant has a better chance of the bank being able to help them than you do...even if you are making millions of dollars. The two biggest early career strategies private banking relationship helps with are: 1.     Access and Understanding – You don't want to have to deal with a 1-800 number if something is going on and you want to ensure your financial team understands athletes. That means making the process as simple, smooth, and streamlined as possible. 2.     Debit and Credit Cards – Most young athletes have no previous credit history so even with a large contract in hand getting proper limits can be difficult. A private banking relationship solves this issue. I can't stress this enough but you want to make sure your entire financial team has expertise in dealing with professional athletes. Something as simple as receiving account and card information is simplified and streamlined by a team that understands you are moving something on a monthly basis. Mid Career Solutions Your needs and complexities as an athlete will grow as your career progresses. Something I always remind our athlete clients of is the fact that life changes a lot from the time you are 18 to 30. Take me for example: At 18: No kids, one credit card, and few needs for banking relationships. At 30: 4 kids, multiple credit cards, and my family was looking to move for the third time. With each move, came a new mortgage. Something that on the surface seems simple enough. High-earning professionals should have no problem getting a mortgage...right? Well for a professional athlete that is a far different proposition. You see those contracts might be guaranteed to you but they are outside of the typical bank's box. That is where a private banking relationship can be invaluable. Forgive me if I sound like a broken record...you need people on your financial team who understand the ins and outs of working with professional athletes. So remember, whether you are on your draft contract or getting ready to sign a free-agent deal, you need the right people in the right seats on the bus. Internal Benefits We understand the external benefits such as the strategies and access that a private banking relationship can help with. Let's talk about the internal benefits of this. As an athlete, your financial team should consist of a team of skilled professionals. This is not a one-man show but rather a group of people as experts in their field. One of the biggest benefits of having the right banking relationship is how that helps the internal communication among your team. Consider this: You sign and receive your first credit card. Is it set up, ready to go, and linked for autopay to your account? You are in the middle of buying your first house and there is a hiccup with the title company, who do you call? The internal communication of your financial team especially the banking team and the financial team is key. It ensures that everything runs seamlessly and nothing is slipping through the cracks.   Finding Your Solution Now that we understand how valuable the right banking relationship can be for your career, how do you go about finding it? Well, in short, the best way is through your financial team. At Moment, something we pride ourselves on as athlete wealth managers is helping professional athletes build out their financial teams. This includes a private banking relationship that ensures access, custom solutions, and ease of communication for our clients. If your financial team does not provide this, the number one thing to look for is someone with a sports and entertainment division. You want to be working with a team that understands your needs and can communicate in a way that makes sense to you. If you are a future, current, or former professional athlete looking for more from your financial team, schedule a call   with a founder. Look, we get it, money can be confusing, but it doesn’t have to be. At Moment, our mission has stayed the same since day one. To build a firm focused on helping the people we know best, athletes and entrepreneurs. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How does Moment Private Wealth help athletes with banking? We help our athletes get set up with a private banking relationship that can handle all of their needs. Does Moment Private Wealth help athletes set up savings and checking accounts? Our private banking relationships are specifically designed for professional athletes. This ensures our athletes are getting everything they need to have successful outcomes. How do you separate investment accounts from everyday cash accounts? We find it important to keep our client's "spending" money separate from their investment accounts. This helps to create a more streamlined process for tracking savings, spending, and investing. What is a reasonable budget for professional athletes? I will give you the best worst answer, it depends. For recently drafted athletes a budget of a few thousand a month is reasonable but for players making tens of millions per year or more the math can change quickly. Can athletes get a traditional mortgage? The answer is yes but you need to make sure you are working with a bank that works specifically with athletes. This will ensure the process is smooth and streamlined. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

One of the greatest benefits afforded most employees is access to a 401(k) plan. But did you know, the NFL 401(k) plan, also called the "NFL Second Career Savings Plan" offers one of the most lucrative in all of professional sports? Yes, NFL players are employees and have the opportunity to contribute to their team's 401(k) plan. In this blog, I am going to break down all the things  players in the National Football League need to understand about the NFL 401(k) Plan in 2024.   Before diving in, it is important to understand, retirement planning for professional athletes doesn't have to start after you stop playing the game. In fact, the sooner you start taking advantage of this benefit, the sooner your financial future will take shape. NFL 401(k) Plan - Second Career Savings Plan The 401(k) is one of the more traditional benefits a company offers its employees. In simple terms, a 401(k) plan is a retirement savings plan, sponsored by the employer. This allows employees to save money for retirement. Said another way, it is a benefit afforded to employees, enticing them to continue working with the company. Who Can Participate in the NFL 401(k) Plan? The NFL 401(k) Plan has many benefits. One is, the number of players that can participate. Players that are eligible to participate include: Active Roster Players Inactive Roster Players Practice Squad Players Reserve/Injured (IR) Players Physically Unable to Perform (PUP) Players Basically, if you are a part of the team as a player for at least one game of the regular or post-season, you are eligible and automatically enrolled. **Please confirm with your Club that you have been automatically enrolled How the NFL 401(k) Works Before we dive into the specifics, it is important to understand how your NFL 401(k) works. The NFL 401(k), like most 401(k) plans is a three-step process: 1.) Money is Put In - this money comes from your paycheck and is put into your account. 2.) Money is Invested - as the owner of the account, you direct the investment of the money in the 401(k). 3.) You Take the Money Out - Once you reach retirement age, you can take out the money you invested along with its gains. It is important to note, there are penalties for withdrawing early. Currently, if you withdraw before you turn 59.5, you will pay a 10% penalty. The key to understanding the NFL 401(k) plan is understanding how NFL contributions work. NFL Player401(k) Contributions Each NFL player on the eligible participant list above is automatically enrolled in the 401(k) Savings Plan. That means, beginning with your first paycheck (on or after October 15th), you will automatically start contributing to your 401(k). With that, it is important to understand your contribution limits and how the contributions work. First, if you are automatically enrolled, 10% of your pre-tax salary will be contributed to your account. The current contribution limit in 2024 is $23,000 of "pre-tax" money. Outside of saving for retirement, this means you would receive a tax deduction for your contribution. For example, let's say you make a salary of $1,000,000 in 2024 and contribute the max $23,000 into your 401(k) plan. Your taxable income is now $977,000 instead of $1,000,000. This means you have a potential tax savings of more than $8,500 if in the 37% federal tax bracket. Not bad, huh? NFL Club 401(k) Contributions 2024 is a big year when it comes to the NFL Club 401(k) contributions. First, it is important to understand if you have earned a "Credited Season" or earned three "Game Credits" as a Practice Squad Player. Let's start with earning three (3) "Game Credits" as a Practice Squad Player. You earn "Game Credits" by being a Practice Squad Player only, or through a combination of being both a Practice Squad Player and an Active player. If you earn three (3) "Game Credits," you can earn up to $1,500 of matching contributions from the NFL. These numbers drastically change if you are an active player and earn a "Credited Season." A Credited Season means you were on one of the following rosters for three or more  regular or post-season games: Active Roster Inactive Roster IR (Injured Reserve) PUP (Physically Unable to Perform) Similarly, if you are released injured or receive an injury settlement for 3 or more games, you earn a Credited Season. If you meet the above criteria, you are eligible for the "2-for-1 match." This means the club you play for will contribute two dollars for every dollar you contribute. In other words, for every dollar you contribute up to that $23,000 max, the club will contribute an additional two dollars into your account. That is  FREE MONEY ! Here is a breakdown of the matching contributions the NFL has proposed for the upcoming seasons: What do I Invest in? Contributing to your 401(k) is step 1. Step 2 is knowing what to invest in. The NFL offers a variety of Investment Fund Options. Before I outline these options, it is important to understand investing as a professional athlete . Further, consult with a wealth management professional before investing. Our team at Moment Private Wealth specializes in helping professional athletes. We can help you too! Below are your Investment Fund Options as an NFL Player: Target Date Retirement Funds - these are age-based funds that help you take more risk when you are young and get more conservative over time. Index Funds - these are funds that track a market index (a basket of stocks and bonds). Multi-Manager & Specialty Funds - these funds concentrate on specific markets or industries. These offer less diversification and come with higher potential risks. Regardless of your thoughts about investing, in order to make money, you have to put your money to work. This starts with investing correctly! What Next? Father time is undefeated. Your playing days will come to an end. When the time comes, your retirement money doesn't just disappear. You can roll over (move) your 401(k) to an IRA or keep it in your current 401(k). If invested properly, this money will grow. More importantly, when you reach 59.5, you can start using this money into retirement. _________________________________________________________ As an NFL player, establishing your 401(k) early in your career can set you up for future financial success. It is the difference between 3rd and 8 and 3rd and 2. I may not play the sport, but I know there are way more options in your playbook at 3rd and short. Approach your 401(k) the same. The sooner you start contributing, the more you gain over time. The more you gain over time, the more options available to you. ___________________________________________________________________________________________________________ If you are in the National Football League and want to better understand the NFL 401(k) Plan, schedule a call with a Moment Founder . Not sure what questions to ask, check out this video on 10 questions you should ask when interviewing a financial advisor. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Am I already enrolled in the 401(k) Plan as an NFL Player?  Yes! Each player is automatically enrolled in the 401(k) Savings Plan. Can I participate in the 401(k) Plan as a Practice Squad Player ?   Yes, everyone is eligible. However, there are specific requirements for 401(k) Club contribution limits. What is the current 401(k) contribution limit?   In 2024, the 401(k) contribution limit is $23,000. At what age can I start taking out my retirement money without paying a penalty?   Players can start taking distributions once they reach the age of 59.5. Is there a 401(k) match provided by the NFL?   Yes! If a player contributes to their 401(k), the NFL will contribute a "2-for1- match." ___________________________________________________________________________________________________________ *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

Let me set the stage. You go from being able to barely afford Chipotle to being able to buy anything. You go from never considering that big purchase to realizing you could cover it with one paycheck. So is the journey from amateur athlete to professional athlete. The reality is as a professional athlete you can buy almost anything yet that doesn’t mean you can afford it (more on that later). You see the foundational element for building wealth is knowing your numbers. The number every athlete should know… What does it cost to be? If the paychecks stopped tomorrow, how much would it cost monthly to keep living the same lifestyle? Most athletes do this backward, they build the lifestyle and fingers crossed they have saved enough to sustain it in retirement. The reality is we need to start with the end in mind and work our way backward. We know the paychecks will stop. We know our careers as athletes will end. We know that our expenses and bills will continue. In this guide, I am going to break down a key component of financial planning for professional athletes , budgeting. We will discuss the dos, don’ts, and frameworks to build spending habits that can be sustained far after your playing career is over. Budgeting for Professional Athletes Let’s not overcomplicate this, you can only do three things with money. Save it Spend it Give it away Seriously, that is it. I am going to let you in on a little secret. The athletes who end their careers with the most money are not always the athletes who earn the most. They are the athletes that set a good foundation from day 1. It is far easier to set up good spending habits early on than it is to pull back the reins years in. I mean think about it, once you go on the trip, pick up the fancy car, and buy the “dream house” you are not going to want to downgrade. Look that is the goal, that you build a lifestyle (slowly) throughout your career and put yourself in a position to continue that lifestyle after your career finishes. The good news? For many athletes you can do this without being the star, making an All-Star team, or delivering a Hall of Fame speech. Let’s dive in… Types of Purchases There are a million (and a half) things you can buy. Yet, they can all be broken down into one of two buckets. 1.     Reward Purchases – Something you buy one time to reward yourself for your accomplishment (getting drafted, signing the free agent deal, etc.…). 2.     Lifestyle Purchases – Something you can continue to buy year after year (think ongoing expenses). The issue professional athletes run into is we often combine these two types of purchases. The new car becomes a habit. The dream house turns into two houses. The once-in-a-lifetime trip turns into a yearly retreat. Instead, we need to be clear on what are the things we can reward ourselves with and the things we can afford (not buy) on a daily/weekly/yearly basis. Consider this example: Player 1 buys a new escalade for signing a new contract and keeps it for six years. ***Total cost of $111,000 Player 2 buys a new escalade every two years needing the “new technology”. ***Total cost of $333,000 Player 1 needed to earn ~ $185,000 to buy that Escalade (40% tax rate). Player 2 needed to earn ~ $555,000 to buy a new Escalade every two years. Compounding that is Player 1 now has $222,000 less in his nest egg for retirement. You see how this cycle compounds and before you know it a player's “normal” is one that is unsustainable? So remember, the key for any professional athlete is to group their purchases between rewards and lifestyle ones. Fixed vs. Flexible I talk a lot about compounding. This idea is that once you put something in motion it continues to build off of the previous efforts. It is true in sports, investing, and spending. You see compounding can work in the reverse when it comes to spending for professional athletes. To understand how this plays out we first have to understand the two types of expenses. Fixed : These costs are not going away and are hard to change (think housing). Flexible : We could reduce these costs rather quickly if needed (think vacations). Those fixed costs can’t be turned on a dime and the vast majority compound on top of each other. Consider this example: You purchase a home for $1,000,000. Now come all your fixed costs... Mortgage Insurance Maintenance Property Taxes You see how that one fixed cost (your house) now leads to several more fixed costs. Oh and if you want to downsize and sell it get ready for a laundry list of additional costs. Now look there is nothing wrong with home ownership we just need to know what we are getting into. For athletes, the key is understanding is the thing I am buying a fixed or flexible costs. Because remember costs can compound just as quickly as anything else. Benjamins not Pennies Remember how I said you need to know your numbers or the “cost to be you”. You do, but don’t fret you don’t need to track it down to your coffee order. You can (and I do) but that is not the majority of athletes. Instead, I want you to consider this: If you were walking down the street and you saw a penny would you pick it up? Maybe, maybe not… Now consider you are walking down the street and you see a 100-dollar bill, would you pick it up? Ya no brainer… Ok so let’s think about tracking our spending the same way. We want to know what the core expenses are. Here is an example: If you told me you knew how much your meals costs, housing costs, and transportation costs you would be ahead of the vast majority of professional athletes. You see these are the three core expenses. Now look there are plenty of things outside of this that come into daily life but we can walk before we run. I recommend athletes start with a monthly budget and work backward. Here is an example: Let’s say we are shooting for $4,000 per month. In the first few months , we are spending $3,000 per month Do we have to know every single expense that went into that? No, but we know we are in a good place. Now let's say we have the same $4,000 budget and we are spending $5,000 per month. Now we need to do a deeper dive into where this money is going. Hear me when I say this, it does not have to be perfect you just need to start thinking about it.   The Perfect Outcome The reality is no professional athlete earning millions of dollars should ever be a headline for Bankruptcy. Yet it happens and it will continue to happen. The reason is simpler than you think. Step 1: Comingle reward purchases and lifestyle purchases Step 2: Fail to realize the difference between fixed vs. flexible expenses Step 3: Combine steps 1 and 2 with not knowing the cost to be you and boom. Athletes you can hire the best team in the world (and you should) but your money is still your responsibility. Delegation (having someone help you) is important but be careful not to over-delegate. You want to be the guy in the locker room who has an idea of what is going on not the player who just says, “I got a guy”. Understanding what you are spending, where it is going, and how that affects your future is critical. If you are a future, current, or former professional athlete looking for more from your financial team, schedule a call   with a founder. Look, we get it, money can be confusing, but it doesn’t have to be. At Moment, our mission has stayed the same since day one. To build a firm focused on helping the people we know best, athletes and entrepreneurs. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How does Moment Private Wealth help athletes budget? We work with athletes to ensure they know their core expenses and build a budget based on that. Does Moment Private Wealth help athletes set up savings and checking accounts? Yes, we have a private banking relationship specifically designed for professional athletes. This ensures our athletes are getting everything they need to have successful outcomes. How do you ensure your clients do not end up as another statistic? The reality is most athletes want to do it right but surround themselves with “Yes Men”. We pride ourselves on speaking truth to our clients even if it is not always what they want to hear. What is a reasonable budget for professional athletes? I will give you the best worst answer, it depends. For recently drafted athletes a budget of a few thousand a month is reasonable but for players making tens of millions per year or more the math can change quickly. How do you help athletes balance spending now versus saving for the future? This is one of the biggest tug-of-war for professional athletes. We want our athletes to be able to use the money they have but also be aware of the value of a dollar. Given the age in which athletes earn their income the value of each dollar today is arguably two, three, or even five times higher based on future investment returns. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

The line between amateur athletes and professional athletes is blurred. It used to be: ·       One is paid ·       One is not paid Today it is: ·       Both are paid ·       Each are paid in different ways Welcome to the ever-changing world of amateur sports, where players are (finally) compensated for the revenue they bring to their schools. Something that has taken far too long but has provided athletes today with financial opportunities not seen by previous players. Those financial opportunities can all be bundled into three initials, NIL. NIL stands for Name, Image, and Likeness and allows athletes to profit off their star power both on and off the field. You see the profits have always been there (check the NCAA financials), they just have not been going to the players. With these increased opportunities comes increased responsibility as a player to correctly manage this money. When it comes to athlete wealth management, athletes need to make sure they have a financial team that understands all the details of their situation. In this guide, I break down everything athletes need to know about Name, Image, and Likeness (NIL). I will discuss how taxes work, ways players can maximize their money, and things to look out for. NIL Guide: Contracts NIL is the Wild Wild West. Remember this is entirely new territory over the past several years. To understand what it is like this let's compare an NIL contract (or offer) to that of a professional sports contract. In professional sports, teams and players work under a collective bargaining agreement. This agreement is one that is agreed to by both the owners (offering the contract) and the players (accepting the contract). Each league whether it is MLB, NFL, NBA, or the NHL has unique clauses, structures, and details to their contracts. However, what is consistent is a standard template that must be adhered to. This protects both the ownership group and the players signing the contract. NIL has nearly none of that, thus making it the Wild Wild West. We have already seen boosters making empty promises, players suing for damages, and coaches feeling like they are caught in the middle of it all. Pair that with a transfer portal that has essentially created a free-agent model in college athletics and you can see where this leads. To players getting overpromised. So what do you need to know as an athlete? Not all contracts are created equal It pays to have legal representation You need to understand the pros and cons of an offer Before signing anything make sure you have protections Look, NIL contracts will continue to be a bit of a black box until players, schools and the NCAA add further structures around these deals. The thing I want you to realize as a player is this creates an additional responsibility for you to vet these deals. Now look, you don’t have to be the expert here, but you do need to be responsible for what you are signing. I encourage every athlete to run any NIL offer past their agent, legal representation, and financial team. This three-pronged approach ensures that you have all of your bases covered. The old adage certainly applies here, trust but verify. This is your career, take ownership of it. Now let's talk money… NIL Guide - Taxes It will be your largest lifetime expense and it is your responsibility. You are going to hear me say that a lot throughout this guide ~ your responsibility. The reason is simple, I see too many athletes both amateur and professional fail to take ownership of their careers. This includes their money. The best outcomes come from taking ownership and combining it with a team specializing in you. Athlete wealth management requires an understanding of how less than .0001% of the population earns money ~ through sports. To understand how to maximize NIL income, we have to understand how it is taxed. NIL income is taxed as 1099 income. This means it is labeled as self-employment income. In simple terms - You as the athlete are making the money, you are your own little business, thus making it self-employment income. Think about it you are not working for another company to earn this income, you are working for yourself. 1099 income has several key tax features to understand: It is subject to self-employment taxes It has unique retirement account options It provides more planning opportunities than traditional (W2) Income Self-Employment Taxes These are taxes imposed by the IRS to cover the costs of Medicare and Social Security. For most W2 earners they pay one side of this or 7.65%, while their employer covers the other side of this. For those earning 1099 income, such as NIL money, you cover both sides of this thus doubling the amount of self-employment taxes paid. That is the bad news, now here is the good news. You can and should be planning around this to minimize this liability. One of the most common ways for athletes earning significant NIL income ($100,000 or more) is by setting up an LLC and electing S Corp tax status. This allows you to run your one-person business just like any other business and provides some key tax benefits. The salary you pay yourself is subject to those self-employment taxes but money above and beyond that is not. Thus saving you a potential 15.3% in self-employment taxes. If you are interested in a deeper dive into tax planning for professional athletes check out our full guide. Retirement Accounts Ok, so it is not all bad news if you are earning 1099 income. In fact, this type of income allows you to contribute to one of my favorite retirement accounts. A Solo 401(k) Now a Solo 401(k) is just like a company-sponsored 401(k) except it is restricted to companies that only have one employee (you) and their spouse. So at max, you can only have two people working for your business and if you have that second person they have to be your spouse. Here is an example of the power of a Solo 401(k): You are earning $300,000 in NIL money. By maxing out a Solo 401(k) contribution you reduce your projected taxable income by up to $69,000 (2024 amounts). This could save you north of $20,000 in taxes. Retirement accounts for professional athletes are like a puzzle. To complete the puzzle in the best fashion you need to start with the core pieces. The Solo 401(k) is that core piece. Planning Opportunities In 2017 the Trump tax cuts reduced the federal tax rates but also removed many of the deductions athletes (or any W2 earner) could take. Many of those deductions still apply to those earning 1099 income. They include most expenses incurred through earning that income: Legal Fees Agent Fees Travel Costs Remember you are your own little business and the tax code in America favors the business owner. NIL Guide – Investments There are a million ways to invest money, but they can all be broken down into two buckets. Ways that work Ways that don’t work In short, the ways that work are often boring, take time and don’t provide great stories. The ways that don’t…well you can probably figure it out…they make good campfire stories. As an athlete earning NIL income my recommendation is that you focus on investments that work. You need to treat this money just like we treat money for our professional athletes like it could be your last from sports. This means considering the downside of any investment just as much (probably more) than the potential upside. While this guide is not a deep dive into investments to me it needs to pass two tests for you to consider it. Test 1 - Does this investment have a track record of working? Test 2 - Does the potential reward equal the amount of risk I am taking? Most investments never pass those two tests and if they don’t just move on. Investing is about stacking the odds in your favor. Do that and you win the game. NIL Guide – Perfect Outcome You need to treat every dollar that you make as it could be your last from sports. The athletes with the best financial outcomes build this mindset. The reason is simple, you have already defied all the odds to make any money from sports. To keep making money you have to keep defying the odds. When I think about the athletes that are optimizing NIL income two words come to mind. Protection - Contracts that protect player's rights and money. Planning - They are proactively planning with a financial team that understands them. Remember, the goal is that NIL income is just the start of your journey to earning money through sports. It is a way for you to start building the habits necessary to maximize further career earnings. Yet, we also must remember it could be your last money earned through sports. The good news is the roadmap doesn’t change whether it is the beginning or end of your earning power. If you are an athlete earning NIL income and have questions on how to maximize it, schedule a call with our team. At Moment, our mission has stayed the same since day one. To build the firm that I wanted as a professional athlete. One with a singular focus on helping the people we know the best, athletes and entrepreneurs. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. How does Moment Private Wealth help NIL athletes? Moment works to help athletes ensure they have the proper professional on their team first. The second step is helping educate athletes about what they should be considering. The third step is helping athlete implement the necessary strategies, planning, and investment to maximize their NIL earnings. What is the first step to take when receiving an NIL contract? My recommendation is to ensure you have the contract reviewed by your attorney or agent. Are all NIL contracts the same? No, each contract is unique and it is important for athletes to understand what they are agreeing to before signing any NIL contract. How are NIL earnings taxes? NIL income is taxed as 1099 or self-employment income. What investments should I consider with NIL income? Before considering any investments, players should first consider what accounts further optimize their NIL income. Consider your NIL income like a puzzle with the planning coming first and the investments coming second. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.

"This is the big leagues"! My exact thought as I was walking aimlessly through the Detroit Tigers clubhouse in 2011. I was a 20-year-old trying to figure out how this "big league" thing worked. It felt like every need I had was being met proactively by a world-class staff and clubhouse attendants. I never thought a clubby would help me save thousands of dollars on my taxes. Yet, that is exactly what happened when a clubhouse attendant in passing asked if I was contributing to the MLB 401(k) plan. It sounded Greek to me, "401..what"? You see in 2011 minor league players had no access to a team-sponsored 401(k) as they do now. So when I got called up to the big leagues I didn't know what it was, how it worked, or the benefits of doing it. Funny to think about now but the conversation has saved me thousands (probably more) off my lifetime tax bill. In this blog, I am going to break down everything you need to know about the Major League Baseball 401(k) plan. As you read this, remember retirement planning for professional athletes starts while you are still playing. MLB 401(k) Plan A 401(k) plan is a company-sponsored retirement plan. Said another way, it is a benefit an employer offers you to further incentivize you to stay with them. A 401(k) is one of the most standard benefits companies provide. The reason is simple, it is an efficient way to save for retirement. You see the IRS provides benefits for 401(k) contributions. Contributions work in one of two ways: Roth Contributions Traditional Contributions The difference between the two is how those contributions are taxed. Roth contributions receive no current-year tax benefits but your money grows tax and comes out tax-free after age 59.5. Traditional contributions receive a current-year tax benefit (deduction) but your money grows tax deferred and is taxed upon taking it out. In short, one type provides a benefit today while one provides a benefit in the future. The key is understanding what your tax bracket is today and what you are projecting it to be in the future. Another note on 401(k) plans is that those tax benefits don't come without a catch. You see contributions are subject to a 10% penalty should you withdraw them before the age of 59.5. ***Roth contributions can be taken out but all investment growth is subject to penalties. Now that we understand the basics of 401(k) plans, let's dive into how the Major League Baseball 401(k) plan works. MLB 401(k) Eligibility & Enrollment Remember how 401(k) plans are company-sponsored plans? Well, that means there are often restrictions as to when you are eligible for the plan. For the Major League Baseball plan a player must be on the active 26-man roster or the MLB injured list. Once you become an active player you are automatically registered on the plan. That does not mean you're optimizing your situation, it simply means you are enrolled. In spring training teams will provide you with a form to elect your plan status and contributions (more on that later). Our team at Moment helps players each year to ensure all eligibility and enrollment forms are completed correctly. Here are the key details of the MLB 401(k) plan: The plan is held at Vanguard Your eligibility is based on your roster status MLB provides players with enrollment forms in spring training So remember this while you are automatically eligible and enrolled upon being added to the active roster, that is just step one. The understand how to maximize the MLB 401(k) plan we have to understand the who, what, and how money is contributed to the plan. MLB 401(k) Contribution Limits The MLB 401(k) plan has three different ways you can make or receive contributions. Pre-Tax Contributions (Players make these) Post Tax Contributions (Players make these) Major League Baseball Contributions (Team makes these) A pre-tax contribution means that you are putting in money before paying taxes on this money. Remember how traditional 401(k) contributions receive a tax benefit? This is how. A post-tax contribution means that you are putting in money that you have already paid taxes on. MLB contribution is a direct team contribution to your 401(k). More on this later but this amount varies from year to year. In 2024 the contribution limits are as follows: $23,000 pre-tax $69,000 employee + employer (post-tax + MLB) The key to understanding the MLB 401(k) plan is understanding how MLB contributions work. This is not a match (common for a 401(k)), this is a direct team contribution. That means a player is not required to make a contribution to receive this benefit. Instead, they receive this benefit based on that year's service time. For a player to be eligible for a team contribution they must achieve a quarter of the year of MLB service time in that season. That equates to 43 days on the active roster. You see teams are assessed a luxury tax based on going over certain levels of spending. In 2023, that spending level was $233,000,000. 1st time offenders pay a 20% tax 2nd time offenders pay a 30% tax 3rd time (or more) offenders pay a 50% tax A portion of that tax is allocated to player benefits including MLB 401(k) contributions. So the more teams spend (and go over the threshold), the more money players receive in team 401(k) contributions. Here is an example of what this looked like in 2023 for players who had a full year of service time. *Note Max 401(k) contribution in 2023 was $66,000. $22,500 max pre-tax contribution $40,000 MLB contribution $3,500 max post-tax contribution Players, to receive the maximum benefit from the MLB 401(k) plan you need to make sure your financial team understands all the details of the plan. MLB 401(k) Considerations Now that we understand what a 401(k) is and how the MLB 401(k) contributions work, let's discuss the fine print. You know the stuff that matters that no one ever talks about. Investment Selection When you start contributing to the MLB 401(k) plan that is just a contribution, not an investment. That money will be automatically put into a conservative life strategy fund administered by Vanguard. You need to work with a qualified financial team to make sure your contributions are properly invested based on your goals. I have seen players leave hundreds of thousands on the table by not adjusting their investment selections. Plan Rollovers At some point, your playing career will end and you will have a choice to make. You can roll over (move) your 401(K) to an IRA or keep it at Vanguard. An IRA stands for Individual Retirement Account and essentially functions the same way as a 401(k) without the company component. There are no tax consequences involved with rolling this money from the MLB 401(k) to your IRA. Yet there are several key tax planning considerations to understand. If you want a deeper dive into tax planning for professional athletes you can check out that blog. For this one just understand you need to make sure there is a tax strategy in place should you wish to make this move. The transition time from current player to former player can be an optimal time to think long-term about tax planning. Everyone focuses on the massive salaries you can earn as an MLB player and rightfully so. Yet, it is critical to not overlook the benefits the MLB 401(k) plan provides current players. Done correctly this can be a key building block to your retirement planning as a professional athlete. I have seen players spend years in the big leagues and fail to understand the key details of the MLB 401(k) plan. That my friends is the quickest way to take a key benefit and waste it. If you are a current or former Major League Baseball player looking for help understanding the MLB 401(k) plan schedule a call with our team. If you are looking for more on retirement planning as a professional athlete check out this video on how we think about this. Get in Touch With An Advisor Frequently Asked Questions Here are some answers to questions I received frequently about this topic. Where is the MLB 401(k) plan held? The plan is held at Vanguard and can be accessed using their website. What is the maximum contribution a player can make in 2024? The maximum contribution allowed in 2024 is $69,000. This includes both team and player contributions. Do players have to do anything to receive team contributions? All players who achieve at least 43 days of MLB service time in 2024 will receive team contributions. A player maxes out team contributions with a full year or four quarters (43 days) of MLB service time. Are player's 401(k) contributions automatically invested? Yes, contributions are automatically invested into a Vanguard conservative investment fund. Players can then elect to change future or current contributions based on their goals. Can players move their MLB 401(k) plan after retiring? Yes, a player can roll over their MLB 401(k) to an Individual Retirement Account if they choose. While there are no tax consequences for this there are several tax considerations players should understand before doing this. *Moment Private Wealth offers information on tax and estate planning that is general in nature. Tax and Legal advice are not provided by Moment Private Wealth. Consult an attorney or tax professional regarding your specific legal or tax situation.