The Tax Mistake I’m Seeing Everywhere at Cardinal — And How to Avoid It

The final article in our early‑season tax series for Cardinal employees

Every spring, I sit down with Cardinal employees who are doing everything they can to make smart financial decisions. They’re saving consistently, contributing to the 401(k), and trying to make the “right” choices with their benefits.

And yet, I keep seeing the same mistake that costs far more than people realize:

• choosing the wrong blend of Roth vs. Traditional 401(k) contributions

These mistakes happen because it’s not easy to project your retirement tax bracket — and without that, it’s almost impossible to know which account type actually saves you money.

Let me share a quick story that captures this perfectly.

A Real Example: When “Good Advice” Becomes Expensive Advice

Not long ago, a Cardinal employee told me another advisor had recommended she shift more of her 401(k) contributions into Roth because it would “save her taxes in retirement.”

It sounded responsible.
It felt like the kind of advice you’re supposed to follow.

But when we ran the numbers, here’s what we found:

• She was in the 22% bracket today
• Her long‑range retirement projection put her almost entirely in the 12% bracket
• She already had ample Roth and after‑tax brokerage assets
• Paying 22% now instead of 12% later would cost her tens of thousands of dollars over her lifetime

She wasn’t doing anything wrong.
She was doing her best with the information she had.

But without understanding her projected AGI in retirement, she couldn’t see the full picture — and that’s the case for many Cardinal employees.

Why AGI Matters More Than Most People Realize

If you’re in your late 50s or early 60s, your projected Adjusted Gross Income (AGI) becomes one of the most important numbers in your financial life.

It affects:

• how much of your future Social Security is taxable
• whether you qualify for the temporary “senior bonus” deduction (2025–2028)
• how Roth vs. Traditional contributions shape your long‑term tax bill
• how much flexibility you’ll have in the distribution phase
• how much you pay for healthcare if you’re on an ACA plan before Medicare

• whether you’ll face IRMAA surcharges once you’re on Medicare

• and for eligible employees, whether deferred compensation can be used strategically to shift income into lower‑tax retirement years

The challenge is simple:
Most people don’t know what AGI is, why it matters, or how to project it.

That’s not a criticism — it’s just the reality of a system that expects you to make complex decisions with very little guidance.

A Calm Way to Use This Year’s Return

As we wrap up this short tax‑season series, here’s the one idea I’d leave you with:

Be intentional about where you save.
Not based on rules of thumb or what a coworker is doing — but based on your future tax reality, not just your current one.

If you’re unsure whether your current mix of Roth and Traditional contributions fits your situation, that’s normal. Most people don’t have the tools to make that assessment on their own. But getting it right can save you unnecessary taxes now and throughout retirement.

You don’t need to overhaul anything today. A few thoughtful steps now can make next year’s tax season — and your retirement timeline — feel far more predictable.

This is the final article in our early‑season tax series. Next week, we’ll shift back to broader financial topics that matter to Cardinal employees.

If you ever want to talk through something you read here or have a question about your own situation, you’re welcome to schedule a brief, free Q&A conversation: CLICK HERE 

Take care and, as always, stay the course.