The Bond Market That Built America

July 6, 2026 | Season 8 | Episode 21

The Fourth of July story most of us learned leaves out a powerful driver of what America becomes next: debt. We walk through how Revolutionary War financing creates the earliest U.S. bond market, why war bonds and debt certificates start trading at deep discounts, and how that breakdown in public credit helps ignite Shays’ Rebellion in Massachusetts. When farmers and veterans can’t pay crushing taxes and creditors demand hard money, the “bond market” stops being an abstract concept and becomes a force that can reshape laws, leadership, and the country’s future.

From there, we bring the lens forward to today’s markets. We talk through what we’re watching as earnings season kicks off, how leadership can rotate even when indexes look calm, and why rates and the Treasury market still matter more than most headlines admit. We also dig into two underappreciated AI risks: the growing national pushback that blocks or delays data center construction, and the exploding cost of tokens inside corporate AI budgets, especially with reasoning models and AI agents that can burn through usage at unpredictable scale.

We close with two practical takeaways you can act on. First, why buying individual municipal bonds can deliver better tax-exempt income flexibility than one-size-fits-all muni bond ETFs, including longer-term yield opportunities and tax swapping. Second, a crucial retirement planning check: new 401(k) catch-up contribution rules may require higher earners over 50 to route catch-up dollars into Roth after-tax accounts, so it’s worth verifying your pay stub and plan settings now. If this helped you think more clearly about bonds, AI stocks, or your 401(k), subscribe, share the show with a friend, and leave a review.

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. 

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Transcript

Welcome And Why Bonds Matter

Alan Eppers 0:00

And now introducing Mr. Keith Lanton.

Keith Lanton 0:03

Good morning. Today is Monday, July 6th. Hope everyone had a happy and safe 4th of July. Here we are this morning, kicking off the second half of 2026. I want to also wish the United States soccer team or football team, depending on where you're from, success this evening. Hope everyone enjoyed the the weekend of some fabulous World Cup games. We are going to discuss this morning the independence of the United States and how the bond market, yes, the bond market, not the stock market, was the catalyst for the United States as we know it today, how the bond market was instrumental in creating the Constitution and the laws and systems that we have in place today that we look back on and celebrate and often think of that the United States, when it was founded in 1776, had this infrastructure in place when, in fact, as many of us learned in school, but often forget that it wasn't until 1787 that a constitution was drafted that became the framework for how government would work here in the United States, and Declaration of Independence could be said to be our mission statement. So we're gonna talk about the bond market and how the bond market encouraged the creation, and we'll talk about how that took place. And once again, very relevant to thinking about the bond market, which often doesn't get the attention of the stock market, but when the bond market roars and the bond market sh roars, it creates earthquakes. When the stock market roars, it creates storms. So it's important to make sure that you've always got your eye on the bond market. It may not create that earthquake every as frequently, but when it does, it's it's it's monumental. And then we'll talk about what's going on here this morning. We're kicking off second quarter earnings season already. So here in the third quarter, we will get the second quarter results, and those will start coming in fast and furious over the next two weeks. And that, of course, will be a significant influence in markets because of after all markets are really a sum of cash flows and earnings results that dictate the prices and everything else in between is interesting, but you've got to put up the numbers, you've got to deliver in order to justify your stock price. So we will get more clarity as the week progresses. So let's get

War Bonds And A Weak Government

Keith Lanton 2:38

started. Let's talk about the bond market, the impetus for the drafting of the Constitution, forging a central government, catalyzed by the nascent colonial U.S. bond market. And we can take a look here, comments from Secretary Bessent, Treasury Secretary Bessent, stepping into the position that was created by the founding father Alexander Hamilton. He is now Treasury Secretary. And when asked about the appointment of Kevin Walsh, just to bring this to the present day and Chairman Walsh and his talk about higher rates, after all, President Trump had been pretty emphatic that he wanted a Fed governor to come in and impose lower rates. Fed Governor Walsh has come in and the talk has shifted to higher rates, although he hasn't uttered those words, but that's what the market is interpreting. , when asked about this, Treasury Secretary Besson said, Look, the president understands. He and I have talked about it quite a bit, he said. But he also said the bond market has taken out more governments than howitzers. So I believe that he has complete confidence in the Fed chair to do the right thing. He went on to say, with respect to the bond market, that he believes that ultimately the bond market and the president will see the world in a similar fashion and that the policies and pr and and laws that have been put in place will, by the recent administration, will lead to continued economic success. Now sticking with this bond market thought Treasury Secretary Bessant said about the howitzers and taking out governments. you may remember James Carville said, I used to think there was reincarnation. If there was reincarnation, I want to come back as the president or the pope or as a 400 baseball hitter. He said, but now I want to come back as the bond market. You can intimidate everybody. And Treasury Secretary Bessent suggesting that even President Trump may be paying attention to the bond market. So let's go back to the very first bond market here that the United States of America or at the time, the colonial states that didn't necessarily have an official name, but needed to raise money in order to fund their war efforts. And in order to do this, the new government issued war bonds, and they were issued both by the Continental Congress and individual states. And they did this because neither entity had a reliable system for raising cash through taxes, so they had to rely on borrowing to fund the war effort, and this led to a massive amount of debt at the conclusion of the war, as you can imagine. So the Continental Congress established continental loan offices in 13 states to issue these bonds. And initially they sold these bonds to wealthy investors. They promised to pay 6%. They were aimed at wealthy, patriotic Americans who could afford to lend hard currency for the cause. But as the war went on, it was only so much that wealthy Americans could afford to purchase war bonds, and the Continental Army needed to be able to pay for all of the supplies and all of the soldiers that were fighting against the British. So what they did is they began issuing what were called involuntary debt certificates to ordinary citizens. So if the army needed your horse, your lumber, your grain, they took them and they handed you a certificate promising you that the new government would pay you back later. And when the army couldn't pay their soldiers later in the war effort, what they did is they paid them in these certificates, and this occurred because the soldiers also were very reluctant to continue to take any money from the Continental Army and the paper that they were printing because it was becoming worth less and less. So at the same time, there was a lack of confidence in this new continental government and the ability to pay back their debts. At the time, remember that states viewed themselves as entities in their own right. Wasn't clear, right, until until much later that states would even be joining a federation of states to form the United States of America. So individual states were raising their own militias and buying their own military supplies. they didn't have confidence in that Continental Congress paper money, so they issued their own state-level debt certificates. So Massachusetts, and we're going to talk about Massachusetts, obviously instrumental in where the Revolutionary War started, but also re instrumental in the creation of the Constitution, and we'll talk about why that was the case as well. So Massachusetts was the first state to issue its own loan certificates starting in 1776. In fact, things got so bad eventually that Massachusetts started issuing what some would say might have been America's first inflation-protected bonds because individuals were so reluctant to accept the currency because it was depreciating so quickly. In other words, inflation was running very high. So the Massachusetts started issuing certificates known as commodity certificates to its to its soldiers. So instead of promising a specific amount of cash plus interest, those bonds promised that when the war was over, the soldier would be paid the equivalent of the value of basic goods like five bushels of corn or sixteen pounds of leather. So what happened fast forward is the United States or America at the time was victorious against the British, and now the American public was holding millions of dollars of this debt. And the government, under the Articles of Confederation, was too weak to pay them back because the value of these bonds was plummeting because they were too weak to pay them back and they were trading at 10 to 20 percent of their original face value. So this is where the bond market really enters the story in full force. So what happens here as these individual soldiers are unable to pay back their debt? Well, these soldiers coming home to their farms, think of this, they've got these certificates in their pocket, they are unable to support their family, the British are refusing to buy American goods. So, what do they do is they take these certificates, which they view as virtually worthless, and they sell them off to wealthy merchants. I mean, in the Massachusetts case, the wealthy Boston merchants for pennies on the dollar. So now these wealthy merchants have these bonds, bond markets trading at weak levels. They have a very strong incentive, and they are very powerful politically, to increase the value of these bonds that they are speculating on. So, what these merchants do is they pressure the Massachusetts state legislature to pass crushing taxes to pay off the state-issued bonds at 100% face value, but they must be paid off in gold, not in the in the currency of the state or of the union. And what this does is this is a crushing act. It's causing many farmers to go completely bankrupt. And remember, if you're going bankrupt back in the early earl early 1780s, you are winding up in debtor's prison. Many of these farmers are soldiers. One

Shays’ Rebellion And Elite Panic

Keith Lanton 9:52

farmer who is a former soldier who feels that this is an injustice and is not a career radical, is a gentleman by the name of Daniel Shays, humble farmer and a highly respected military officer. Born to poor Irish immigrants. He worked as a farm laborer before the war. When the war broke out, he joined the local militia and he fought with distinction at the Battle of Bunker Hill, the Battle of Saratoga, and the Battle of Stony Point. He eventually rose to the rank of captain in the Continental Army. He was presented with a honorary sword by Marquis de Lafayette for his bravery. But when he returned home to Pelham, Massachusetts in 1780, he found himself facing the same grim reality as his neighbors. He was broke, unpaid by the government, being sued in court for overdue debts. Because of his military background and natural leadership, local farmers looked to him to lead the resistance. Now he didn't act alone, he was one of several leaders, but the movement carried his name, and they were well organized, and they took up arms against Massachusetts and refused to pay back this debt and created an armed insurrection within the state of Massachusetts. Now, there was no federal government. The state of Massachusetts needed to quell this disturbance among their angry populace, and what they did is the wealthy merchants were now extraordinarily concerned. They bought up all this debt and they see this uprising occurring. So the wealthy merchants put together a militia and they tell this militia, we will pay you in gold. And ultimately, this militia puts down the rebellion. But this rebellion sowed the seeds. This rebellion sowed the seeds of the future of the American Republic and of the creation of the constitution. Because what this rebellion did is it scared the Bejesus out of these wealthy merchants, not necessarily just in Massachusetts, but throughout the Union who are seeing this uprising, seeing the inability to quell the uprising because there is not a central government, see the disorganization that's taking place because there is not a unified currency, there is not a unified system to issue debt. So the political elite is virtually terrified, and they realize that if they don't offer some relief, that this will lead to anarchy and chaos into the newly created United States of America. And what ultimately happens specifically in Massachusetts is Massachusetts votes out the existing governor whose name was Bowdoin, and they replaced him with another gentleman, you may recognize this name, of John Hancock, who was more sympathetic to the rural poor. And what John Hancock did when he got into office is he immediately backpedaled, he cut taxes, he halted the aggressive collection of taxes, passed laws protecting a farmer's basic tools and lands livestock from being seized by creditors, and he issued blanket pardons to nearly all of the rebels, including Daniel Shea. So the ultimate economic relief of these farmers actually came from the next step, which actually happened in almost in in virtually in about six months, something that had not been able to gather momentum previously, and that was the economic relief ultimately came from the creation of the U.S. Constitution. And once the Constitution was ratified and Alexander Hamilton became Secretary of the Treasury, the government took over all of the state's wartime debts. This drastically lowered the tax burden on ordinary citizens, and we can see how the creation of the initial bond market and the market and the reaction of the populace to paying off those debts and the reaction of the wealthy and the elites both to get their money paid back, and then ultimately seeing the terror in what they were doing in instituting the policies in order to pay that back, ultimately leading to the creation of a more central government and the creation of the U.S. Constitution, which is something that we celebrate here on our 250th anniversary and every July

Markets Snapshot And Earnings Season

Keith Lanton 14:03

4th. So, with that background, we're gonna take a look at what is specifically going on on this July 6th, take a look at what's taking place in financial markets, and also talk about some of the stories in Barron's Barron's talking about artificial intelligence and what may threaten the artificial intelligence boom here in the United States, what we need to be watchful for, especially as the artificial intelligence stocks are the stocks that are leading the rise in the markets here in 2026. So futures this morning pointing to a mostly higher open SP futures and Nasdaq futures higher, Dow futures pretty flat, actually down about 30 points right now. NASDAQ futures leading the markets up 360 points, SP is up about 33 points, so NASDAQ up about 1%, SP up about half a percent. So volatility across semiconductor stocks is remaining elevated, renewed leadership from megacab growth stocks, strength in software, something that we had seen a lot of weakness in previously on concerns about AI, and solid showing from other pockets of the market, had been offsetting some of the weakness to chip makers this morning, chip stocks leading the move up in the NASDAQ. Analysts talking about the fact that chip stocks, which were off last week and markets still climbing higher, as a positive bullish signal about broader distribution, and we'll talk about that a little further as well. Other good news for the markets oil staying below $70 a barrel, oil down 38 cents this morning to 68.31. Bloomberg reporting that shipping along the U.S. protected corridor in the Strait of Hormuz is seeing signs of recovery. Markets overseas in Asia began the week on a mixed note. Japan down slightly, China, Shanghai down slightly, but the Hang Sing up over 1%. in India, the markets are up about three-quarters of percent. Korea, where we've been seeing lots of volatility due to the heavy influence of chip stocks down about half of one percent. European markets trading near unchanged. , one laggard is the Spanish market, which is down about one percent. Taking a look at the bond market, 10-year treasury is at about a 446. That's down from about a 448 on Thursday. Natural gas relatively flat. Gold this morning getting a boost up about $40 an ounce as gold has been holding north of $4,000 an ounce, trying to maintain that as a support level. Silver also climbing this morning up almost 2% to $62.50 an ounce. Other news this morning: Iran and Oman have submitted proposals to charge administrative fees to maintain the Strait of Hormuz. This model, if instituted, would be similar to what is used in the Straits of Malacca and Singapore. Bloomberg reporting that President Trump is considering ways to remove members of the Fed's Board of Governors this after the Supreme Court decision last week regarding removing certain individuals that were appointed by the President, although carving out a special situation for members of the Federal Reserve, although not clearly defining what that special situation is specifically. Also, CNN is reporting that House Speaker Mike Johnson is saying the House will pass a voter ID bill through a budget reconciliation process, which will allow the Senate to pass it with 50 votes. So, talking about markets, mentioned broader distribution in the financial markets. Barron's highlighting that small cap stocks had their best first half since 1991. And Barron's suggesting, in their opinion, that perhaps the rally in small caps is not over. Last week, shortened week because of the holiday, it was a messy, volatile week. But looking at the headlines, you might think it was business as usual. NASDAQ was up 2.1%, Dow up 2%, hitting a fresh high. SP was up 1.8%. But if you looked under the hood, market is undergoing a significant ship shift. Chip stocks actually tumbled last week. Semiconductor ETF dropped 3% on AI capacity concerns. So where is the smart money going now? Well, say hello to small caps. The small cap Wrestle 2000 took a breather last week. It sank four tenths of one percent, but it just did wrap up a blockbuster first half of 2026. Small cap stocks put up their best half since 1991, skyrocketing a massive 22% versus a gain of just under 10% for the SP 500. So as traders are seeking growth outside of the crowded AI trade, they are finding it in smaller domestic companies. Now you might think that investing in small cap stocks feels risky when the Federal Reserve is threatening to raise interest rates. Markets are pricing in a 50% hike in September, but history shows that a hawkish Fed is actually good news for smaller players. On average, small stocks gain 10% in the six months leading up to a rate hike, and they consistently outperform large cap stocks because the Fed only raises rates when the broader economy is strong and accelerating, and a strong economy is

Small Caps Rise As Chips Slip

Keith Lanton 19:40

rocket fuel for those small business earnings. So Wall Street is forecasting 16% small cap earnings growth by the end of this year. So perhaps this 35-year historic rally isn't a fluke, and it's a sign that the bull is widening out. Now, talking about the potential for the Fed to raise those interest rates, well, on Thursday last week, Thursday as opposed to Friday due to the holiday shortened week, the June Jobs report was issued, and it perhaps silenced calls for the Fed to hike rates. U.S. economy added 50,000, 57,000 jobs in June, half of what economists expected. Sharp drop from the 129,000 that was seen in May. Surprisingly, the hospitality sector actually lost 61,000 jobs, defying expectations of a hiring boom because of the World Cup tournament. And if you look at the headline number, the unemployment rate actually ticked down to 4.2%. But don't let that fool you. It didn't drop because of booming hiring, it dropped because the labor force shrank by over 2.5 million workers over the past year. Prime age workers are simply stepping to the sidelines. Now this isn't all negative news. The sky is not falling, layoffs remain near historic lows, job openings are ticking up. So what economists are suggesting is that the labor market is settling into a lower gear, not rolling over into recession. So some would view that perhaps as a Goldilocks scenario. So

AI Boom Risks Data Centers And Tokens

Keith Lanton 21:18

I mentioned markets, small cab stocks, artificial intelligence has certainly been rocket fuel for financial markets, especially here in the United States for the better part of a year. But Baron's talking about some issues that could potentially trip up artificial intelligence stocks, one of which is the build-out of data centers. And Americans are starting to take on the position that data centers and artificial intelligence is a great tool and really enjoy having access to it. But those data centers, they're great somewhere else. But I don't want them in my backyard, is starting to become the rallying cry. So the artificial intelligence boom, in order for it to continue, we'll need the continued build-out of artificial intelligence data centers, and these data center construction projects are running into a wall of furious American neighbors. In the first quarter of 2026, 75 data center projects worth $130 billion were blocked or delayed by local opposition. That matches the number of projects for the entirety of 2025. So it started as local movements has now snowballed into a coordinated national grassroots movement. So why are people so angry? Well traditional cloud centers have been around for years, but AI facilities they say are a different animal. They are large they consume huge amounts of electricity. Some say they emit a constant low frequency hum that close neighbors describe as psychological torture. Polling numbers are also swaying against AI data centers. Recent Reuters poll found that 44% of Americans oppose data center construction in the U.S. But when you ask people if they want one in their own community 57% say absolutely not. 14% approve. States like Arizona, Illinois, and Ohio are rolling back tax breaks. New York is even considering a statewide moratorium on large-scale bids builds this isn't just a headache for local town halls. It's a concern for the stock market. AI enthusiasm has been largely responsible for the SP's 84% rise since 2022. Goldman Sachs projects that AI will drive half of all corporate earnings growth over the next over the next two years. Tech giants are projected to spend $800 billion on capital expenditures on this year alone. But if you can't build the infrastructure you can't realize the growth so concerns about building out those AI data centers, something for investors to keep an eye on and at the same time investors also need to focus on the expense to corporate America of artificial intelligence and the reality that corporate America is waking up to in terms of the cost for their workers to use artificial intelligence. So we are starting to see corporate America start to put breaks on the amount of spending that they will permit their employees to engage in utilizing artificial intelligence. So this reality check on growth of AI is all over something you might not even realize you're using. It's something called a token. Tokens are the building blocks of artificial intelligence. When you type a prompt the computer chops your words into chunks of meaning one token is about three quarters of a word. So for those of you who are individual users using a monthly plan you might be paying $20 a month. But for corporate America tokens are the volatile new currency of the tech age and managing them has become a financial nightmare. So welcome to the world of tokenomics so right now if you're at a big tech company you have an enterprise budget and that budget is melting because of two massive shifts. Number one first came reasoning models reasoning models don't just answer you they talk to themselves internally up to 30 seconds to work through a problem and that burns through thousands of invisible tokens before a word is typed. So the AI is doing research that research is is eating up tokens and then it spits out an answer to you which also encompasses tokens. So you only see what was spit out to you that does not include all the tokens that were expended to get you that answer. And as many tokens as that may chew up the real budget killer is AI agents. So AI agents unlike humans can perform complex chains of tasks completely on their own. So a study from Google and Microsoft found that AI coding agents generate over 1,000 times more tokens than a human does for the exact same task. So it's like giving a an employee at your company a credit card where neither you nor your employee nor the AI itself has any idea how much that item's cost will be until the bid bill arrives. Kind of like those of you who may use a corporate lawyer suddenly get a bill at the end of the month and say to yourself, well I only spoke to the lawyer two hours this month about this specific issue. But in the background the lawyer says he was doing all sorts of work about this issue so you didn't get a bill for two hours, you got a bill for 15 hours. It's like that the AI is doing all this work that you're not necessarily seeing to give you the answer that you are asking it to solve for. So this token explosion explains why the physical world is pushing back. Tech giants are desperate to build infrastructure to support this massive compute load yet we are seeing these data centers being pushed back against in these local communities. So Wall Street is starting to digest not just tokens but some of the concerns regarding the massive utilization of these tokens and the cost just last week Tesla said that they were going to limit the amount of tokens that most of their employees can use and utilize thereby putting the brakes on some of their artificial intelligence use. We're seeing this at more and more companies chief technology offices getting these surprising bills and then this figuring out and needing new tools in order to manage artificial intelligence so we will see the ramifications and the repercussions of this over the next six months, one year, two years three years, but something that we all need to be cognizant of because we've seen all of this great boom and explosion in artificial intelligence but we've got two items here to talk about just this morning that we need to be aware of that could be dampers on this enthusiasm and we will see exactly how relevant these dampers become all right I'm going to shift gears back to the bond

Why Buy Individual Municipal Bonds

Keith Lanton 28:33

market. But we're not going to talk about the general bond market we're going to talk about the municipal bond market and we're going to talk about something that Brad Harris who has been on our call many times sharing his insights on the bond market well Brad often talks about the benefits of individual bonds and we're going to talk this morning about a Barron's article entitled The Case for Buying Individual Municipal Bonds. So municipal bonds are bonds that are issued by municipalities that are very often tax exempt meaning that you do not pay tax on the interest. If you buy a bond that is within your home state very often you would not have to pay a state income tax on that bond either or if it's in your home state and you have a city within that home state you may not have to pay city tax on that bond either if it's from a bond within your home state. So if you're looking for tax exempt income many investors have started shifting their thought process to models and model portfolios and buying ETFs and mutual funds and we've seen the emergence of low-cost municipal exchange traded funds or ETFs with incredibly attractive fees as low as 0.03% but what you are purchasing when you buy this bundle of municipal bonds and you do get the benefit of those low fees is you're purchasing a diversified portfolio of lots of bonds. But Barons is saying that you may be able to engage a lot more customization and I think Brad would agree if you have 25000 or more to invest buying a one size fits all municipal bond strategy might mean that you're leaving serious money the table. So welcome to the world of individual municipal bonds. Now Vanguard founder Jack Bogle famously said that instead of looking for the needle you should buy the whole stack and he was talking about exchange traded funds, the S P 500 talking about equities but when you're looking at the muni market buying the whole stack means that you might be buying a lot of dead weight. So because of how they're built municipal ETFs are forced to buy the biggest most liquid bond issues to track their indexes because the indexes are made up of the biggest largest issues and they have to buy these bonds regardless of whether or not these bonds are actually good values. And right now those massive index-driven portfolios are packed with short-term bonds offering poor returns. For instance a top grade two-year municipal bond yields around 2.33% even for an investor in the highest tax bracket that equals about 3.9% taxable yield which is actually less than you'll earn on a garden variety U.S. Treasury notefolio you could avoid the liquid but low-yielding trap of ETFs and gain three major advantages. Number one, you could take a look at longer-term municipal bonds, which is where Baron says the real magic happens a yield of about 4.14% on a high grade New York or California issue going out 25 to 30 years. That can translate into a 9% tax equivalent yield for investors in the top tax bracket. Number two, you can engage in strategic tax swapping. What that means is unlike stocks individual bonds allow you to execute tax swaps. So you sell a bond that is declined in value, you lock in the loss, which beautifully offsets the capital gains from your winning stocks and you can buy a bond that looks very similar although not identical but very similar to the bond you just sold. So economically you're roughly in the same spot you were before but you sold bond A, bought bond B, and recognized a tax loss which is very valuable in the current market environment that we are in. And finally you can cherry pick quality you can avoid you can avoid sectors that you view as risky. You can avoid segments of the market that you view as not offering attractive returns and you can become much more of a sharpshooter than someone who is just lobbying grenades.

New Roth Catch-Up 401(k) Rules

Keith Lanton 32:51

Last topic for the day we're going to move on to something that is important for any working American and that is having to do with your 401 and specifically this has to do with older Americans Americans who are over or equaling the age of 50 and this has to do with the catch up contribution on your 401k. So starting this year there is a change to the catch up contribution for Americans who are earning over a specific amount that is about $150,000 and we'll talk about the specifics of how that is calculated and who may fall into that category. So if you are a high earning employee over the age of 50 planning to fund the catch-up contribution number one take a few minutes to make sure your money is going to the right place because this is the first year that high earning employees need to funnel their catch up contributions. Now the key word there is high earning which we'll define they need to take those catch up contributions and place them into an aftertax Roth account instead of the traditional pre-tax allocation. So this includes both the $8,000 allowed for people over age 50 and the $11,250 allowed for workers over age 60 to 63. Now the majority of workplace plans already offer 401 Roth accounts and ideally once you max out your annual contribution limit in pre-tax funds any additional contributions should be automatically designated as Roth catch up contributions but it may not be so seamless for every plan as it is up to the employer to get it right. So given that this is the first year that the IRS mandates this extra money goes to a Roth, you should double check it as being allocated to the right account otherwise you may end up with a big surprise tax bill come next April. So what should you do? You should start with your most recent pay stub or log into your 401k or 403B account and look up contributions by source which should be labeled pre-tax or raw if you have already started to fund your catch up contributions and they notice they are going into your pre-tax account you need to notify your employer because if they catch this early they can retroactively fix it through payroll filings and correct the allocation before your W-2 is issued in January of 2027. Now importantly new Roth catch up rules won't apply to all high earners they are based on the prior year's W-2 wages so 2025 W-2 wages from your current employer. So if you earned more than 1500 last year you will be required to have your catch-up contributions go into a Roth option. If your plan does not offer a Roth option you can't make catch up contributions you'll want to talk to your employer about adding a Roth which they can probably get done for next year if they start now. If you earned less than $150,000 last year you do not have to make your catch up contribution to the Roth. You can, but you are not required to so make sure you check make sure it's being done properly each plan has its own unique nuances so you should make sure that your plan is doing what you want it to do for you. That's everything I've got

Where To Listen And Disclosures

Alan Eppers 36:30

Thank you for listening to Mr Keith Lanton this podcast is available on most platforms including Apple Podcasts Spotify. For more information please visit our website at www.heroldlantern.com

Sophie Cohen 36:39

Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Pest performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice, or trade recommendations.