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Joe and Big Al spitball on paying the tax on your Roth conversions: if you take the money out of your retirement account, what does Joe mean that you’ll be “paying the tax to pay the tax to pay the tax”? Can you pay it from the Roth account itself, or from your monthly pension tax withholding? Are the fellas wrong on this whole topic altogether? They also spitball on withdrawing Roth 401(k) contributions that were rolled to an IRA, those infamous 5-year rules for withdrawals from Roth accounts, when to do Roth conversions, saving to tax-deferred, taxable, or tax-free accounts, and how long-term capital gains taxes fit into the picture. Plus, consolidating individual stock investments, the fate of the home office deduction, and what Joe thinks about the Apple Podcasts reviewer who says he’s “checked out”.
As we continue marching towards a new year, there are several important things to keep in mind regarding your financial planning. These items may or may not make sense for you, but they are topics you should generally evaluate each year. Maximize Retirement Plan Contributions It is important to remember that while IRA and Roth […]
Can Bauer in Illinois retire at age 57, and when should he collect Social Security? More importantly, can he afford a $300,000 motor home? Can Brad in Michigan coast for the next 10 years and still reach the promised land of retirement somewhere around age 53? Plus, it seems weird to Elizabeth in Connecticut that nearly all of her $5M is in taxable accounts. Is that good or bad? N&N in the San Francisco Bay Area have $10M liquid. Should they make Roth contributions and Roth conversions now, or wait until they retire?
Should Suzanne in Michigan do Roth conversions in 2025 and 2026 since she’s widowed and won’t be married filing jointly? How should she pay the tax on her conversions? Jennifer in Washington state is 55 and her husband is 70. Should she retire now and do aggressive Roth conversions before her husband passes? We’re talking about the widow’s tax, today on Your Money, Your Wealth® podcast number 501. Plus, answers to questions from our YouTube viewers: what’s a brokerage account? What’s a good way to pay RMD taxes? How does the 10 year rule work on inherited IRAs? What are extended market index funds? The fellas also spitball on the 4% rule for retirement withdrawals.
Hawkeye and Elle are age 61 and in the 32% tax bracket. How should they get money into their Roth accounts for tax-free retirement income? Clark and Ellen are 69 and 68, expenses will pretty much be covered by their fixed income, but they’d like to leave Roth money to their kids. Should they keep converting to Roth, or use required minimum distributions for their living expenses? Tom and his wife are 73, and fixed income will cover their retirement spending too. Is it advantageous to them to make three huge Roth conversions beyond their marginal tax bracket to reduce future RMDs? Should they keep things simple by leaving their money in an S&P 500 Index Fund?
Should David in Ohio use 457 funds to do an in-plan Roth conversion in his 403(b) plan, and should he hire a financial advisor? Chris in DC needs a retirement and Roth conversion spitball analysis, and he needs help getting out of a variable annuity. Kim is anxious that she made a mess of her finances and she wonders how much she should convert to Roth. Plus, what’s the best way for Alissa in Cedar Rapids, Iowa to make tax-efficient retirement withdrawals from an inherited IRA?
Joe and Big Al spitball on three different listeners’ strategies for paying the tax on a Roth conversion now, to have lifetime tax-free growth on that money in the future: should “Neo” convert to Roth at the beginning or end of the year in his plan to make quarterly estimated tax payments on his conversion? Is it a good strategy for Tim to use reimbursements from his health savings account to pay Roth conversion taxes? What do Joe and Big Al think of Samantha’s plan to convert to Roth and pay the tax with her IRA money? Plus, the fellas answer questions from our YouTube and Spotify followers on required minimum distributions from Roth accounts, reasons to put retirement withdrawals in a brokerage account instead of a Roth, choosing pension options, the difference between commercial annuities and pension annuities, and their thoughts on single premium immediate annuities (SPIA).
Can Alanis retire early at age 60? With Barney and Betty’s spending patterns, can they retire ASAP? Daisy and Donald need retirement income for 40 years. Can they retire now? Plus, we review the results of the 7th Annual YMYW Podcast Survey (congratulations to jemart for winning the Amazon e-gift card!) And Joe and Big Al take on some critical YouTube comments from Keith, following their interview with Ed Slott, CPA.
What is an exchange fund and is it a good thing if you have a lot of capital gains, like Bryan in New York? What should be the timing and ordering of Billy Joe and Bobby Sue’s Roth conversion strategy to help them achieve 33 years of retirement income? Is Boston overspending or underspending in retirement? Should Andy keep life insurance policies for her kids with ADHD? How does the 5-year rule for Roth withdrawals apply to inherited Roth IRAs for Karen?
Can Claire and her husband retire early at age 60? Joe and Big Al spitball for them and explain how to calculate how much you’ll need in retirement. Plus, should Jeff invest his pension money more aggressively, and should he save to his thrift savings plan or his Roth? Should Paula save to her brokerage account or her 401(k)? When and how much should Ken and “Fume Guzzler” each convert to Roth? The IRS charged Lex late fees for not paying estimated taxes throughout the year on her Roth conversion – find out how to avoid that yourself. Finally, how can Ken get out of an annuity? And is it harmful for Sarah to advise co-workers with little financial experience?
The single biggest retirement planning mistake to avoid, the problem with tax professionals, and answers to some of the most frequently asked retirement questions we get on YMYW: should you name a trust as beneficiary on your retirement accounts? What’s the break-even point on a Roth conversion? What if you don’t have the money to pay the tax when you convert to Roth? Plus, find out the eye-opening amount of money good tax planning can save you! Someone has to be very knowledgeable, entertaining, and special to make it as a guest on YMYW these days. Today “the IRA guru” Ed Slott, CPA from IRAHelp.com joins Joe Anderson, CFP® and Big Al Clopine, CPA to discuss all of these topics, along with changes to stretch IRAs and required minimum distributions from the SECURE Act and SECURE 2.0 Act. Finally, don’t miss your chance to get a free copy of Ed Slott’s latest book, The Retirement Savings Time Bomb Ticks Louder.
Is timing the market when withdrawing money from retirement accounts or doing Roth conversions an effective strategy for YMYW listener Robert to minimize tax and maximize returns? Should Doug change his 60/40 asset allocation, and should he start a solo 401(k)? Jefe plans to withdraw from his retirement accounts beyond the top of the 24% tax bracket for the first few years of retirement. Is there any reason to put it in a brokerage account rather than converting it to Roth? The fellas also spitball on Roth conversion methods and strategies for Srinivas, Todd, Debbie, and JZ in California, and they spitball on JZ in New York’s “bucketing” strategy for early retirement withdrawals.
Should Terry and his siblings take out a whole life insurance policy on their parents before they inherit their folks’ $10 million worth of farmland? Is Terry on track for retirement? Plus, should Fred and Wilma use their 401(k) money for living expenses to bridge the gap until they collect Social Security benefits? Should Glen claim his Social Security at age 65 and use it to fully fund his wife’s Roth IRA? When should Bill take his Social Security and should he do Roth conversions? Finally, should Maya include home equity in her retirement savings? Should Jack pay off his mortgage or stash his cash in a brokerage account and refinance his house later?
How is Kimberly’s strategy for reducing her retirement taxes by doing Roth conversions and qualified charitable distributions? Is Patrick’s tax loss harvesting transaction a wash sale? At what marginal tax rate should Brian stop making Roth 401(k) contributions? Joe and Big Al are back this week to answer these questions. Plus, spitballing on the importance of international stock in John in Seattle’s diversified investment portfolio, David and Terri’s Roth conversion and I bond strategy, Blake’s severance package, and the impact of a new home purchase on John in DC’s retirement spending.
He’s 56, she’s 32. How does this 24-year age difference impact retirement plans for “Bonnie and Clyde”, and what strategies should they implement now for the most tax-efficient retirement possible in the future? While Joe Anderson, CFP® and Big Al Clopine, CPA are on vacation, Your Money, Your Wealth® podcast producer Andi Last enlists the help of Pure Financial Advisors’ Managing Director Jake Greenberg, CFP®, ChFC® for a video case study (complete with visual aids!) on YMYW Extra number 6. Into which types of accounts should Bonnie and Clyde save for retirement? How much of their savings should they convert to Roth and when?
