Taking Advantage of Every Opportunity | Jess Skubal | Athlete Wives Series #1
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Episode Summary
Jess Skubal has a unique perspective. She has a deep understanding of what it means to be married to a professional baseball player - her husband, Tarik Skubal, is a pitcher for the Detroit Tigers. She is also familiar with the most significant financial mistakes athlete families make due to her professional background working as a tax CPA for Deloitte, one of the world's top 4 public accounting firms. Jess is passionate about making sure every dollar is maximized, and as we state in the conversation: Investments are a matter of opinion, and taxes are a matter of fact.
Jess gives great insight on both the "WHY" and the "WHAT" related to tax planning and the importance of being able to take advantage of every opportunity available to the athlete.
Jess defines "WHY" as "having more money to do what is important to you.” Jess shares a personal story about how their own proactive tax planning led her and Tarik to fund their niece's college education.
Jess then also gives excellent advice on the "WHAT" by discussing three specific tax planning strategies that are available to the professional athlete and are unfortunately commonly missed:
Opening an Individual 401(k) plan for the player's off the field income
Recalculate your W2 received to ensure the player "pays where he plays."
Executing a 'Back Door Roth IRA' strategy for the player and wife for $12,000 of tax-free investment growth annually.
To ensure you are taking advantage of every opportunity, Jess' simple yet profound advice to other baseball spouses going through similar circumstances - do not be afraid to ask questions of your advisor, and better yet, find an advisor who will answer and accept your questions.
Episode Highlights
2:51 - Jess shares the story of how she in Tarik met in High School in Kingman, AZ
4:00 - Jess discusses Tarik's journey to the big leagues - including not being highly sought after or recruited out of high school.
4:55 - Jess worked as an accounting clerk while they did long-distance dating in college.
6:29 - Jess chose accounting as a major because she saw an opportunity to help people who were important to her.
8:01 - Jess began her post-collegiate career as a CPA working for Deloitte, one of the Big 4 and most prestigious accounting firms in the world, while Tarik was a Top 100 prospect in the minor leagues.
9:49 - While at Deloitte, Jess worked on many clients, primarily as a tax preparer.
11:24 - Jess later in her career worked on closely held and family businesses, but as she quotes, her "pride and joy" client was the tax planning work she performed for a family office.
12:53 - While working for her family office client, the 'Patriarch' of the family passed away, which generated an almost $40m estate tax liability. The importance of the family's tax planning surfaced by saving "a generation's worth of wealth.”
15:00 - Josh and Jess expand on the importance of general estate planning and the importance of estate tax planning to the athlete.
16:31 - One of Jess' overarching beliefs is to "ask the question." Often, advisors are not asked appropriate questions by their clients, which causes critical tax planning strategies to be missed.
18:07 - Jess expands on the definition of tax preparation vs. tax planning.
18:56 - Proactive thinking and tax planning are how you arrive at the most advantageous tax outcomes.
19:35 - Tax planning should happen 365 days out of the year - not just when you file your return in April of the following year.
20:46 - Players have two streams of income: W2 income earned as an employee from the team and 1099 income earned from all trading cards and endorsement money. Those two different income streams have different tax planning strategies available to the player.
21:06 - Jess talks specifics on W2 vs. 1099 strategies, including the importance of estimated tax payments.
21:45 - Players can set up a separate retirement called an individual 401k, which, as Jess says, has a 'triple benefit' to the family if done appropriately.
23:11 - The individual 401k is different than the MLB Vanguard 401k - because of Tarik's the field income, Tarik and Jess were able to receive a tax deduction for the money that went into the account; the money in the account is invested for their retirement, and with the money saved on taxes, the Skubals were able to fund a 529 plan for their niece's college education.
24:18 - Jess expands on the purpose of money and why appropriate tax planning gets you to do 'more of what you want to do.’
25:50 - The W2s generated to players could potentially be wrong - which is not well known, even amongst baseball players. Real dollars in tax savings could be missed if the family's CPA does not recalculate the player's 'duty days' schedule.
30:46 - Josh and Jess discuss the importance of a Roth IRA and why all players and families should take advantage of this tax-free account.
32:40 - Jess discusses the importance of taking advantage of every little opportunity every year to maximize a family's wealth.
33:45: Jess's advice to other families - don't be afraid to ask your tax and financial advisors questions. If you do not ask, real dollars could be missed.
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+ Read the Transcript
Josh McAlister (00:11): Welcome to the MLB Player's Wive Series, where we're here we go behind the scenes with the other side of the player's family, with their wives. We talk about everything that may impact them, from finances, to dealing with adversity, to just how do you keep the household running in the midst of being an MLB player's wife? My name is Josh McAlister. I work for a family office called AWM Capital, where we get to partner with families like our guests here today. Jess Skubal. Jess is the wife of Detroit tigers pitcher Tarik Skubal. They have a very unique and interesting story where they were high school sweethearts, and Jess will get into that a little bit, but also Jess worked at one of the most prestigious accounting firms in the world prior to Tarik making it to the big league club. Hopefully this will be helpful. There's going to be a little bit of tax planning and tax advice that Jess is going to be able to share with us, that are applicable to most families. But without further ado, Jess, thank you for being on the podcast.
Jess Skubal (01:16): Thanks for having me. I don't know how you got me on here, but thanks for having me. So, excited to talk about a little bit of tax planning and get back into my old CPA ways. So-
Josh McAlister (01:28): I know. Maybe the people that don't know you, you don't fit the mold of the CPA. Like the, I don't know, Excel spreadsheet, the rhetoric of just ticking and tying. You're actually very gregarious. You enjoy talking to people, and you're not a CPA anymore, right? So you're out of that world.
Jess Skubal (01:48): I am out of that world. Still have my license, but out of that world.
Josh McAlister (01:51): Yeah. Keep your license.
Jess Skubal (01:53): Of course. No. Yes, I do enjoy the ticking and tying and Excel spreadsheet though. That's very much my nerdy side coming out. So, Tarik has had many spreadsheet conversations that I don't think he really fully wanted to, but-
Josh McAlister (02:06): Or appreciates, maybe?
Jess Skubal (02:09): Uh-huh (affirmative). He doesn't understand the full excitement behind it, but-
Josh McAlister (02:13): I know. When a good spreadsheet works out, I'm a CPA myself. I worked at a rival firm of Jess's previously, but yeah, when a good spreadsheet works out, that's a pretty good feeling which only nerds can understand.
Jess Skubal (02:26): I would agree. I think everyone should have a spreadsheet, but I'm working on some of the other wives so far, so no luck quite.
Josh McAlister (02:33): We'll see. Well, I'd love to start here with just your guys' story. I'd love to hear more about your guys' background, how you and Tarik met, and just kind of go from there.
Jess Skubal (02:43): Like you said, Tarik and I are our high school sweethearts. We met in our high school in Kingman, Arizona. We had a lot of the same friends, a lot of the same classes and stuff like that. These friends were actually in our wedding this past November, so that's kind of exciting to keep that going. And all of our family's still in Kingman, so it's fun to go back. And it's a good little story to have that we've been together for so long. And I watched him pitch when he was in high school and just a little fellow, but now to see him up here is kind of crazy.
Josh McAlister (03:13): Yeah. You get a unique, I would say purview into seeing Tarik mature, right? All the way through high school to college, to pro ball. If you don't mind share a little bit about Tarik's journey, and then I want you to talk on your feelings, emotions, and what happened to you throughout the journey as well, even through college, up until drafting, et cetera.
Jess Skubal (03:41): No. So Tarik, obviously we went to the same high school and he only got one division one offer. So that was in Seattle. So he went to Seattle University from high school, which is a D One in the WAC conference. They play like Grand Canyon, stuff like that. But he really had to work his way up. He wasn't highly sought after, which now seems odd, but it was quite the story. And I went to a junior college here in Arizona and then I went to ASU. So we did long distance all four years of college, which was interesting and challenging to say the least. But, it was really cool to watch him work so hard and like really dedicate all his focus to baseball. And I would go up there as much as I could. And I worked as an accounting like clerk, so that way I could afford to go up and see him a lot of the time. And so it's just really cool to see how that's all progressed to like where we are today.
Josh McAlister (04:38): Is that how the accounting major, everything, is that how it all got started with you just being an accountant clerk and working to go see Tarik?
Jess Skubal (04:50): So I was actually a, like an office manager, bookkeeper in high school, my last two years of high school when Tarik and I started dating. So I had a very good job in high school, which he enjoyed the benefits of that quite a lot. But then kind of segued into me really liking numbers, and I've always liked working with numbers. So when it came time to decide what to do in terms of college, it was kind of a natural segue. I really enjoyed what I was doing. I was working with our CPA a lot in high school, and I liked that, and I kind of wanted to bring kind of answers to a lot of like small business questions that we never asked them. So I wanted to try to help somebody a little bit later down the line.
Josh McAlister (05:33): That's interesting. So the reason, I guess, why you chose accounting as a major is really to help, and to help previous relationships and businesses that you were working for back in, even into high school, better optimize their finances, their books, their tax strategy, et cetera. Is that fair to say?
Jess Skubal (05:53): Yeah. I think a lot of people have questions when it comes to taxes and are just really unsure. And even like starting off, I was so scared coming to talk to our CPA because I didn't know what questions to ask and I wanted everything to be perfect. When like now looking back, I should've been asking him a ton of questions because it would've just helped us in the long run. So I wanted to be the person on the other side and I really liked numbers. So I felt like this was my best way to go about it.
Josh McAlister (06:23): I love it. All too often we don't ask questions to the people we should be asking questions too. More on that later in the podcast, but let's kind of fast forward a little bit. You've got your degree. Did you get a master's of taxation?
Jess Skubal (06:39): Yes. So I have my bachelor's in accounting or an accountancy, that's the technical term, and I have a master's in taxation from Arizona State.
Josh McAlister (06:49): Got it. And so after you graduated with your master's of taxation, you went to work for Deloitte.
Jess Skubal (06:56): Yeah, I did.
Josh McAlister (06:57): Talk about public accounting. So, I'm a fellow public accountant or ex public accountant myself. And they talk about all the great learning opportunities that you can get, which is, I mean, translates a lot of hours, lot of hard work. Tell me about that time.
Jess Skubal (07:16): It was very, very, very educational and I am glad that I did it. It was a lot of hours, a lot of hard work, and a lot of really on the job training. You learn a lot in school, but there's nothing like actually getting a return and getting people's different scenarios that happen that you could have never dreamed of some of these things that come onto your plate. So, it was really exciting and it was definitely a learning experience at every step of the way.
Josh McAlister (07:44): No, I mean, we laugh, I will say Big Four, so the four largest public accounting firms in the world provide unique opportunities to really accelerate your technical expertise, and then also your business acumen at such a young point in your career. I don't really know of another, maybe high end law firm, high end, there's really, it's very difficult to put highly talented people into situations where they have to learn and they have to be able to be, and really to make decisions that are technically sound because there is a lot on the line. And so I think the Big Four and public accounting in general provides such an opportunity for people to get that experience very quickly and very easily. It does come at a cost. There are a lot of hours. But, I look back on my five years in public accounting and go, gosh, I don't know where I would be without it. So talk about your time at Deloitte. What clients did you work on? What was your daily rhythms? What were your deliverables, et cetera?
Jess Skubal (08:54): So at Deloitte, I started, I did an internship early on, but my main task was I was just like a staff accountant kind of coming in. And so that means when you think of getting your W-2s from even the teams or your job or anything like that and your brokerage statements, stuff that's coming in, I would take all of that and pretty much create a tax return out of it. I'm the first step into your final signature on your tax return. So that means just a lot of 1040s, which is an individual return. A lot of business returns, stuff like that. So really a lot of the groundwork for-
Josh McAlister (09:34): Love it. Most people don't know, and this will be more later, that tax prep is different than tax planning. And so you were on the tax preparation side. You were compiling, obtaining, organizing all of our tax documents that I would just say that most of us don't know what they are. You kind of just see W-2 or any sort of tax number on top, and you say, "Here tax person, please get me the biggest refund possible." And that's what we yeah, boiled down our CPA's relationship too.
Jess Skubal (10:08): And I got to work on a lot of different, like a lot of variety of clients just because like taxes, I mean, I can't say which ones they are, but I did get to work on big corporations, like closely held companies. So say like a mom and pop shop turned huge, those type of businesses. And then, but my main, my pride and joy is my family office. So when I say family office, it means like a multi-generational wealth to where you have maybe grandma and grandpa that had a great business or a lot of money. And then that trickled down to generations that created a lot more tax returns with kids and grandkids and trusts and stuff like that. And kind of estate planning was my main focus.
Josh McAlister (10:55): You're tugging on my accounting heartstrings here, Jess.
Jess Skubal (10:59): That's why me and you bonded.
Josh McAlister (11:02): Yeah, that's right. That's right. Your tugging. So, I want the listener to hear because there's a couple of things, right? Family office. I love it. And the fact that you said generational wealth, that's even just what we do AWM Capital is, right? We help players' families provide and sustain generational wealth to the kids' kids, right? Talk to me about what you did there, like even as nitty gritty of the complexities of the family office, right? Whether it be even when patriarch dies or matriarch dies or how do you get the kids involved? Yeah. Just talk as much as you can about that.
Jess Skubal (11:42): Oh yeah. No. And that was kind of one of my big tasks was a patriarch passed away. And so that just triggers a lot of different things for the generation below them. And they had such beautiful tax planning that it saved them, I would say a generations of wealth after them. So like they are able to now pass down so much more to their kids and grandkids then they would like if they hadn't had been tax planning so effectively and preemptively while they did. So, I really enjoyed seeing like how that all structured out and it just created a lot of trusts. So I know you work with trusts. I know you like to advocate for setting things up in trusts. It makes it so much easier when there is, in passing, whether that be because they were elderly or tragedy or anything like that. It just really cleans it up so nicely and makes the generation after them have so much simplicity in how they are able to continue on. And so that was really, obviously from a tax perspective was really cool to see how they structured it. But from like now a wife perspective, it's like, "Oh, I need to make sure that's in place for my family."
Josh McAlister (13:04): Yeah. I love all of that. I mean on the trust side of things, here's a simple token of advice, if you do not have a living trust, please get one. If you are married, it is paramount. I don't care what level of assets you have. I personally have a trust. I advocate that for all the clients we work with at AWM. Get one, okay? Second is, the tax planning side of things that you were just talking about from a generation perspective, I think people may or may not know this, but, and I'm going to be very generalistic in the tax rate for this. But when you die, you pay 40% of your net worth in taxes. And so I think there's something to define there is net worth. That's not just like, Hey, what do you have in your bank accounts or investment accounts? And then taxes are calculated off of that. Or even just capital gains. It's not even just the basis there plus the gain that you have. It is literally everything you own minus what you owe times 40%. And for high net worth individuals that can be millions of dollars.
Josh McAlister (14:18): Now there is something called an exemption. The reason why it's not talked about a lot is majority of families are never going to pay that 40% because they're below the exemption amount. But for somebody who has like, let's say you have like a hundred million dollar contract, I'm telling you have an estate tax liability that nobody wants to talk about because nobody likes talking about dying. But, there are avenues to pay for that 40% that is very cheap and just prudent to take through life insurance, through irrevocable trusts. You don't even need to know what all that is, but you need to ask the question.
Jess Skubal (14:56): Yes. Asking the question is 95% of how to get there. You don't need to be the expert, and that's even being an accountant. I don't know everything. If I did, then I would do it all myself. But no, that is why Josh is here and kind of helps everybody through that. So, I think it's just so important to ask the question about it. You're never going to go wrong. I mean maybe one person of the time they're going to tell you, "Oh, I actually don't deal with that." 99% of the time, they're going to say, "Oh, I'm so glad you talked about it. I'm so glad you brought that up. We have these three potential solutions to help you or to help your family." Because mainly you want the most amount, and I know I do, to eventually go to my future children. I want this wealth to be passed down to generations. I don't want to just benefit from myself.
Josh McAlister (15:51): Amen. I think we have a, going back to what we were talking about earlier, when we said, Hey, more to come later, let's just address that now, on asking the question, it can be intimidating. And that is difficult because we don't even know what questions to ask. We kind of just say, "Okay, here's all my tax docs. Here you go." Right? We already went through that. Maybe Jess, what would help empower listeners to be able to ask the questions is define tax preparation versus tax planning.
Jess Skubal (16:24): So tax preparation, I've always thought of it as like I'm the tax preparer. So kind of what I was saying earlier is I'm taking your documents. I'm drafting a tax return that you're going to sign at the end of this. You're going to either owe something or you're going to get refunded something. There's not a lot you can do from that point. That's kind of all of your information is pretty final. This is what happened in the year, now we're preparing your tax return. There's not a lot of moveable items in there. Whereas tax planning is, "Okay, we're in 2022. I want to think about maybe we're thinking about moving states. Okay, well let's talk to our tax advisor and see, should we move states this year, or should we wait until next year?" Stuff like that, it's something you can proactively do. And that's like the most important thing with taxes is if you're proactively thinking about it, you can do a lot more to kind of change your tax outcomes before it becomes that tax preparation and going into more of a final document.
Josh McAlister (17:31): Yep. I completely agree. I think to just highlight what you were saying on the tax planning side, that happens 365 days out of the year and it should, it really should. And I think even I'll give you a quick example is like right now at the time of recording this podcast, the stock market has been very volatile. Meaning, the prices have been changing. And it's been going and it's been decreasing, right? And I'm not here to talk about investments. I'm here to talk about taxes. What should be happening is tax loss harvesting. It needs to happen on a daily, or somebody or a team or software needs to be looking into people's accounts and going, "Here's an opportunity to save on taxes." When you harvest losses, right? That you experience in your investment accounts, you can net those against future gains, right? So thus you can save, call it 20% of all future gains. Well, that's a big deal when you're talking about millions of dollars, right? That is now a tax free transaction to you.
Josh McAlister (18:35): Understanding even like what player, here's another thing that is commonly missed with players is, most players have two streams of income at a minimum. One as a W-2. That's what you get from the team, right? And the other is, Hey, they signed a bunch of trading cards. They do endorsement deals. They make appearances. That's 1099 income. Those are two separate things to plan for. Can you talk a little bit about that Jess, and the two streams of income?
Jess Skubal (19:03): Oh yeah. So two streams of income, the W-2, they're withholding taxes. They're already taking your money out as you go. So what you get in the bank should have at least some taxes withheld and you kind of know what your bottom line is, what you're bringing home. Whereas like 1099 income, you're needing to account for some estimated payments and stuff like that. So that's something to just be aware of is, "Hey, maybe I got a lot of off the field income. Should I look at any estimated payments?" It's just a question to bring up to some of your financial advisors or tax advisors. But, a lot of things that are like beneficial for us, we did, we had Tarik set up an individual 401k to contribute for his off the field income. And it was able by contributing to our retirement, we were able to save tax dollars that we could use somewhere else. So, it's just about really like kind of finding just little pockets where you can save maybe some tax dollars and reallocate it to something you want to be doing. For us, we set up our nieces 529 plan. So, we got to save for retirement, save some tax, and help our niece go to college. So, I really see that as like three wins there.
Josh McAlister (20:22): Win, win, win. And here's what it can be is like getting the right advice. When you have a win, win, win, like that, you hit on three things that are just beautiful, if you can make tax planning beautiful. I guess that's our job on this podcast, right?
Jess Skubal (20:41): Beautiful sometimes. That's what I'm telling you, when a spreadsheet comes together, when a tax plan comes together, an estate plan, anything, it's just really warms my heart. So that is very nerdy, but that's okay.
Josh McAlister (20:54): That's okay. I love it. Hey, and there's a reason why some people do call it beautiful because, I mean, here's practical things, right? When you just talked about on the individual 401k. That is different than the MLB 401k, right? And you and Tarik were going to save money regardless. Well, why don't you just put money into that individual 401k that's growing for your retirement? That was going to happen regardless. Well, why don't you just save 40% from a tax deduction standpoint as well. And then you have more money to do more things. And you turned around and said, "You know what we can do? We can bless somebody else." Which is the generational wealth that you're just trying to do, right? It's a beautiful picture of tax planning working because yes, you can, like, everybody likes more money and I'm not minimizing this. We all want to have more money. But, if we're just doing it for the sake of money's sake, that's actually not the purpose of it. The why behind it is that you have competent people working to better do what is important to you.
Jess Skubal (22:03): I agree completely is it's about making the money do what you want it to do instead of just paying it in, kind of blindly paying into the taxes, because you're like, "Oh, just got to pay the taxes this year." It's like, well, let's think about the taxes first. Maybe let's ask some questions of, is there anything we can do? Is there anything we can strategize, like you said. Timing a lot in taxes is very offsetting. Some maybe market losses with a sale of something that you want to do this year. It's just really about timing, figuring out what you want to do with your money, and then trying to make it all work together.
Josh McAlister (22:45): Totally. Here's a corny little saying, but I think it's totally appropriate. Investments are a matter of opinion. Taxes are a matter of fact, right? When you save money from appropriate tax planning, those are real dollars, right? You just talked about an individual 401k, right? And that's from the 1099 side of income. That's all well and good. But the majority of players' monies come from the team is W-2. And we were talking about this prior to recording that like, oh, how are people going to respond if we say that those W-2s could be wrong? Which is like, what? How could they be wrong? That doesn't make any sense.
Jess Skubal (23:30): Don't cause any ruckus here. Yes. Now sometimes the W-2s are wrong. And unfortunately, sometimes it does cause families to pay more taxes just because for instance, Tarik plays spring training in Florida, which is a zero income tax state. Well, he is playing during that time. So in a sense, some of his income should be maybe allocated to Florida, which would really take away from some of his income from a higher tax state, like New York, or Michigan, or Chicago, Illinois. Anything like that is so beneficial just because they make a lot of money in a shorter amount of time. So every allocation of their days matter a lot. So if we can allocate some of that to a lower income state, that is the beauty of tax planning is we can save some tax dollars.
Josh McAlister (24:27): Yeah, we teed you up just to say like, "Hey, W-2s are wrong." Unfortunately, I mean, we prepare all the tax returns for our clients as well and in conjunction with the tax planning. And this is something where whenever we bring on a new client, the first thing we look at is their previous year's tax return, and see, did the previous CPA do duty days? And duty days is the technical term for what Jess was just talking about. I'm not knocking other CPAs. I guess the question should be, why would you even assume that the W-2 is wrong? Well, here's the reality; teams don't keep up when players are injured. So when they're on the injured list, they could be rehabbing in the Tiger situation in Lakeland, Florida at their spring training facility. That matters because the team's just going to allocate income based on the schedule. If they're playing in California while the player is hurt, they are going to withhold California state taxes, which is at 13%. That shouldn't happen, right? And then spring training is the biggest one, right? Teams do not incorporate spring training into their duty day schedule, which is how they produce the W-2. So if you think about it, more days to Florida, less days New York, less days California, more dollars to you.
Jess Skubal (25:48): Yes. It sounds very trivial, but if you're on a big contract, three days in California make a big difference from three days in Florida, and that's money to your family. Again, like you said, you can do something else maybe with that money that you saved in that [inaudible 00:26:06]. But it's not a common thing that you would know off the top of your head. I didn't even know about it when we came over to Josh and were rookies, or while we were rookie, he was a rookie last year, but still like major league minimum. So is it as impactful right now to us? Yes. But especially as you go down the line, it's going to get even more so.
Josh McAlister (26:28): Last thing I want to talk about from a tactical, tangible standpoint, and then we'll wrap up and close is something called a Roth IRA. Okay. Because I also like tax free stuff. I think we can all get on board with tax free, right? But I mean, here's the kicker. If you look into your investment accounts, like log into your app, and if you don't see a Roth IRA, appropriate planning isn't taking place. And if you know anything, I'm going to just give the quick little 30 second teaser, most people would say you make too much money to contribute to a Roth IRA. Which is factual in the standpoint of, yeah, you can't contribute directly to a Roth IRA. A Roth IRA is the golden goose to investment accounts and retirement accounts, in my opinion, because once that money gets in there, it's tax free forever, right? I shouldn't say forever. For the rest of your life, right? We don't need to get in the details there. But, I really like investments that grow tax free. That's a beautiful thing if you can, in 70 years have tax free investment growth, which doesn't happen in pretty much any other account. So Jess, talk to me on something called a Backdoor Roth IRA that is available to players.
Jess Skubal (27:47): Josh is testing me on my skills here. No, but I do very much like Backdoor Roth IRA. So it's like the Grand Supreme for wealthy people, in my opinion. It's where you take your contributions that you made to a pre-tax IRA, and then you pretty much tax them. You pay the tax on them and then you roll them into a Roth IRA. So it grows tax free. And then when you pull it out, it is also tax free, which is music to everybody's ears. No one wants to pay tax later, if that amount grew to some great amount, which if you have Josh as your financial guy, hopefully it does. But it's a great way to grow your money and not have to worry about the tax implications later. It's you do it now, you roll it over now, even if you're above the income threshold and you just kind of put it to the side and let it grow and wait till you see that hopefully large balance in your retirement account later. But it's just so important. And to me, that's kind of a reverse example of tax planning, is you're paying the tax now, but you're benefiting from no tax later, to where a lot of the things we were talking about save you taxes right now.
Josh McAlister (29:04): Correct. And it's something to the point of where the savings that players and families have are in excess of what you can contribute to the Roth IRA, right? It should be, so just to give easy numbers, if you're married, you should have $12,000, $6,000 a piece in two separate Roth IRAs. If you're not $6,000 here. And you may be thinking, well, that's just not a lot of money. That doesn't matter. No, no, no. It matters because if invested appropriately, that should grow to hundreds of thousands of dollars with every year's contribution. This is an annual thing that you have to take advantage of. And if you don't take advantage of it, you lose it.
Jess Skubal (29:49): I agree with you, there's so many avenues to one, have tax savings, but also build your income for when you retire or your financial future. So if you don't take advantage of each option, I think you're kind of doing a little bit of a disservice to yourself. So Backdoor Roth is something you should mention in a lot of your conversations, if you can. Just ask about it, they might be doing it already, you can say great, but if not, you should look in.
Josh McAlister (30:18): Well, Jess, you've given us a lot of good nuggets. Thank you. Yes, no, it's been fantastic. And it's been music to my years. Hopefully it was beneficial to the listener, which I know it is. Last thing I'm going to ask you to give to the listener is, and I'll just ask the question that we kind of always end with here is broadly speaking, what advice would you give to other baseball families that are in your specific situation?
Jess Skubal (30:50): I feel like I've kind of, I guess, alluded to it or maybe even said it a couple times, but I just think asking questions and taking like little pieces of information, like we said, the Backdoor Roth and asking those questions to your tax advisor or your financial advisor, just kind of bringing up the topics. You don't need to be an expert on these items in order to start the conversation. That's why you have CPAs. That's why you have planners and stuff like that, is a lot of things I believe get missed because we're afraid to ask questions, thinking maybe we'll look dumb, or oh, they won't know anything about it. I have seen so many people miss opportunities, miss huge financial savings, or even if they would've come to us sooner, we could've saved them all of the heartache, headache and money too on a lot of their transactions and a lot of their things that happen in their lives. So I would say, always ask the questions and I think you can do a lot with that.
Josh McAlister (31:53): Well, Jess, thank you for your time. Gave us a lot of good insights. So just to recap, one, prep is different than planning. Tax prep is different than tax planning. Two, there are baseball specific things that families can take advantage of, which we will put a link in the show notes too. And Jess' as advice is ask the question and hopefully you work with somebody who can receive the question well. That's part of the thing is like it's a personal issue that many in my industry don't give our clients the space, nor make them feel empowered enough to do so. But I encourage you to ask the questions that you should be asking.
Jess Skubal (32:32): Especially the wives, because I know they take on a lot of the brunt of collecting the data, collecting all of the things. So pose the questions. I don't think I have never heard of a really dumb question. They are simple questions maybe to us, but to you not so much. But they're important to your lives.
Josh McAlister (32:51): Absolutely. Well, Jess, thank you very much.
Jess Skubal (32:54): Yes. Thank you.