Show Notes

• 00:00 –  Intro
• 01:02 – Timing of Roth Conversions – and Paying Quarterly Estimated Taxes (Neo, San Clemente)
• 06:37 – Is Using HSA Reimbursement to Pay Roth Conversion Taxes a Good Strategy? (Tim, MN)
• 08:44 – Complete Roth Papers Package – free download. Financial Blueprint – calculate your retirement readiness for free!
• 09:39 – How Is Our Plan to Convert to Roth and Pay the Tax With IRA Money? (Samantha, Northern California)
• 19:15 – What Happens to Your 401(k) & IRA at Retirement? Watch YMYW TV, download the Retirement Readiness Guide
• 20:01 – RMDs for Roth Accounts: Clarification for Solo 401k (Andy, YouTube)
• 21:43 – Joe and Al walk into a bar… (Tony, YouTube)
• 22:44 – Any Reason to Put Withdrawals in Brokerage Instead of Roth? (Globe Trotter, YouTube)
• 23:35 – How to Decide Between Pension Options? (Frank, YouTube)
• 25:40 – Is a Pension Annuity a Bad Thing? (Invictus, YouTube)
• 26:47 – Are SPIAs the Best Annuity for Lifetime Income? (1212482970, Spotify)
• 29:23 – Outro
• 30:58 – The Derails

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Transcription

Intro

Andi: Today on Your Money, Your Wealth® podcast number 495, 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 in San Clemente, California 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 in Minnesota to use reimbursements from his health savings account to pay Roth conversion taxes? What do Joe and Big Al think of Samantha in Northern California’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, or SPIAs. I’m producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Timing of Roth Conversions – and Paying Quarterly Estimated Taxes (Neo, San Clemente)

Joe: San Clemente, California. “Hey, Joe, Big Al and Andi. I’m Neo.”  Is that like from-?

Andi: Yes. His wife’s name is Trinity.

Al: Yeah, I think so.

Joe: Oh, Trinity.  “My name is Neo.  66. I’m about to retire at the end of 2024, driving a 2014 BMWI3, which the kids call the spaceship.  My wife, Trinity, 63 already retired. Drives a 2021 Tahoe. As for the drinks, if I’m on the first tee, I’ll probably crack an 805 or maybe a  Kona Big Wave.If I’m at dinner, and like Joe’s Tang in Malibu-“oh man, remember that story. That was disgusting.  “-I’m opting for a little Ketel One Collins.” Okay. “Trinity likes a nice cold glass of white wine. I’ve been listening for about 6 months now, bringing shows- binging shows during my daily walk on the beach trail in San Clemente while I recover from brain surgery.” Wow. “Motorbike accident. I’m okay, but they wanted me to avoid strenuous brain activities like reading on the internet. Basically, find something that requires no brains at all, and your podcast seems to be the perfect solution!”

Andi: Dang! Shots fired, as Joe would say!

Joe: Perfect!

Al: I don’t know if that’s a compliment or not, but I guess we’ll take it.

Joe: Bring in this activity. I think we’re going to take this to some hospitals.

Al: And people will go right to sleep.

Joe: Yeah, we’ll just go in the old brain ward.  Calm your brain down. Listen to this garbage. Alright. “My question is about timing of the Roth conversions and making estimated tax payments to pay for them since I’ve never done them previously. I have about $1,200,000 in rollover IRA and 401(k), about $35,000 in my Roth where the mega BD Roth from the 401(k) is flowing into. And about $525,000 into a brokerage account. I got no debt, house is paid off, Trinity’s pension is $78,000 a year. And my Social Security at 70 will be $58,000 a year.  We spend about $125,000 outside of taxes. I have a massive spreadsheet, 25 tabs-”

Andi: Oh my gosh.

Joe: Oh my gosh.

Al: Wow.

Joe: That’s, no, what, that’s not brainless activity there, man. That is seriously brain-

Al: You’re going to have to put that down for a little bit, I think.

Joe: “-that tracks projected income, expenses, tax payments, required portfolio contributions to cover the gap for every year between 2023 and 2038 when I turn 80. I’m going to do Roth conversions into the 24% tax bracket until 2026 and 28% for 3 years, and then 25%.”  How much does he have in retirement accounts? He’s got a $1,200,000. Why is he going that crazy?  All right. I’ll just keep going here.  “I’m gonna use the brokerage account to bridge the income until I turn 70 which is between $75,000 and $100,000 needed to cover the taxes because of the Roth conversion. So from what Big Al has said, I could provide Form 2210 for my first conversion, which I’m going to do in December, so I won’t have to pay an unpayment penalty for the 2024 taxes, which I’ll pay with capital gains at 2025. But should I make a 2025 conversion early in 2025 to let the earnings build up tax-free, but have to make estimated taxes around the 110 in fed and state taxes?  We’ll wait until December each year to do a Roth conversion. Any other options? Love the show. It makes my 4-mile hike fly by.” Oh, that’s cool. You do the conversion in the beginning of the year, because you want the compounding tax-free.

Al: Yeah, and more often than not, the market goes up two years out of 3. So, on balance, you want to do it at the beginning of the year. So let me, let me sort of recap, I think, what Neo is saying. And that is, if you do Roth conversion right at year-end, and if you had been required to make quarterly estimated payments, 4 years starting in April, the last one being in January, if you do that Roth conversion in December, you can file that Form 2210 and not have to pay any penalties. But before I even go there, first of all, Neo, you said you are retiring at the end of 2024, so I’m assuming that your income in 2024 is similar to 2023. Maybe you have enough withholding in 2024 to cover 2023’s tax or depending upon your income level 110% of last year’s tax. If that’s the case, you don’t even have to make the, the, any estimated payments until you file your tax return or extension April 15th. So there’s two ways to avoid penalty. One is if you have enough paid in from withholding, right, from the prior year to cover last year’s tax, that’s number one. It sounds like that may be your case. If you don’t have that, which would not be the case in 2025, then you make your, you do your conversion in January because you want to get it in early. And now you make quarterly estimated payments. You make 4 of them. You don’t have to do it all at once. You make, you make a quarter of it in April and then June, then September, then January the following year. So that’s how you do it. You do want to make it earlier in the year to get more compound growth.

Joe: All right. Good question, Neo.

Is Using HSA Reimbursement to Pay Roth Conversion Taxes a Good Strategy? (Tim, MN)

Joe: “Hey Joe, Big Al, fellow Minnesotan here and CPA.” All right, Tim.

Al: Nice.

Joe: “My wife and I have a traditional IRA that has been the landing spot for old 401(k) balances of $140,000. I would like to convert half of this in half in ‘25 before tax rates go up of about $100,000 of room remaining in the 24% tax bracket. I also have about $50,000 fully funded each year and HSA money with $20,000 of medical bills not being reimbursed from the HAS. Current home me- Current income. I’m sorry me 39, $200,000. Wife 38, $80,000. Other accounts, current Roth $175,000. My 401(k) is about $115,000, about 55/45 Roth and traditional max contributions, contribute to a traditional 10% of salary. Wife 403(b) $5000, a Roth plus TRA pension, brokerage $10,000-“ crypto Hello crypto “- $5000.”

Al: Right.

Joe: Hey, here’s the question.  “Would it be smart to convert some of my IRA money and use the HSA reimbursement to cover some of the tax or just pay the cap, pay with cash?  Thanks for the spitball. Drive a 2013 Accord, 2023 Palisade.  He’s also got a 2013 Ford F150.”

Al: Of course.

Joe: “He’s got two dogs, 13-year-old Springer and a one-year-old Lab. Arnie Palmer drinker.”

Joe: I love a good Arnie Palmer.

Al: I know you do.

Joe: All right. I would pay it out of cash.

Al: I would too.  But he also says he’s got medical bills that have yet to be reimbursed, which could come out, and that’s fine too. I mean, the thing about HSA, as long as you’re not paying a penalty, if you got the, if you paid medical expenses and need to get a reimburse- I mean, to me, it’s pretty similar, same same. But yeah, I, like the concept. I like the concept of going ahead and converting, while the tax brackets are lower, do it over a couple years, as you said, makes sense.

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Andi: It’s important that you really understand Roth accounts, so you don’t pay penalties and excess tax! Download the Complete Roth Papers Package to learn how to take full advantage of their tax-saving benefits. Click the Complete Roth Papers Package link in the description of today’s episode in your favorite podcast app to get your free copy. Also, we have a new quick and easy way to find out your likelihood of retirement success – with a free Financial Blueprint! Input your details for an analysis of your current cash flow, assets, and projected spending for retirement, and it’ll calculate three scenarios to help you determine your probability of retirement success. This detailed report even includes strategic investing, future taxes, and actionable steps you can take now to achieve your retirement goals. And it’s all yours, for free. Click the Financial Blueprint link in the description and take control of your retirement future!

How Is Our Plan to Convert to Roth and Pay the Tax With IRA Money? (Samantha, Northern California)

We got Samantha from Northern California. She goes, “Hello, Andi, Joe, Al, this is Samantha.  I discovered YMYW last year and have now listened to episodes going back to 2016.”

Al: Wow.

Joe: Wow.

Al: That’s amazing.

Andi: That’s a lot of Joe and Al.

Joe: “That knowledge and willingness to outline the pros and cons of taxes and investment strategy for your listeners.  I’m ready to ask you your thoughts on our potential Roth conversion plan.” Oh, saw that one coming a mile away.

Andi: Are you surprised?

Joe: No. “I’m 58, husband, Noah, 60, no kids, no need for legacy. Our plan is to retire in 2025, at 59 and 61. Our question, should we rip the band aid off next year when I retire? And convert a big chunk from pre-tax to Roth, given the plan reset to the tax brackets in 2026? Here’s the stats. Retirement savings, total $1,100,000. Retirement fixed income, they’re both eligible for lifetime pensions with 100% survivor benefit. The pension payout will be $180,000 per year with a 2% COLA.  My husband’s Social Security is going to be $22,000 annually if they take it at 62 in 2026. I plan delaying Social Security until my age 70.”  Why is Noah taking it at 62 and she’s delaying?

Al: I think he wants little income is what I’m guessing.

Joe: All right. “I’m eligible for health care for life.” Man, she’s got some really good benefits.

Al: Yes, she does.

Joe: “Premiums are more expensive prior to Medicare age but drop significantly after that from $12,000 per year to about $2000. Estimated retirement spending is going to be $200,000 a year.” So, you want to spend $200,000, your pension’s $180,000, and you got $1,300,000 in your, okay, I think everything’s kind of adding up here for you.

Al: Looks pretty good, yep.

Joe: All right. “We want a larger percentage of our accounts in Roth, but I can’t begin converting my pre-tax accounts until 2025 as my plan restricts in-service conversions until age 59 and a half. My husband will turn 63 in 2026.  So we’re facing the IRMAA cliffs.  We don’t have any way to pay for the conversion with cash once we retire. So how much do we convert given that we need to use some of the converted funds to pay the taxes? Converting $60,000 next year would give us AGI of about $280,000 and a taxable income of $250,000. The combined California, federal, state of $250,000 would be $57,000, an effective rate of 24%.

This would move our accounts to 22% Roth and 73% pre-tax. Or should we convert even more? Then go to the top of the 24% tax bracket in 2025 even if we must pay the taxes from the converted funds. The additional $135,000 of converted funds would have a marginal tax rate of 24% federal plus 9.3% state plus 3.8% net investment income tax.” No, that would not.  “So, more than 37% of any additional conversion would go to pay the taxes. Question. I believe that 2025 will likely be our lowest income year for the rest of our lives.  Should we be taking advantage of it?  Given our lack of cash on hand? Or is the tax hit too high?  The final piece, is that we are likely to have some inheritance coming our way in the next 10 years.  One asset would be a parental IRA with the estimated value of $600,000. It would add to our taxable income on top of the pensions and the two Social Security checks and on top of our investment withdrawals. Thanks so much for any spit balling or thoughts you have for us. For Joe.”  Yeah, single me out. All right. Perfect.  “I drive a little 2019 Toyota RAV4 hybrid.”  Oh, she’s got a little moonroof-

Andi: -panoramic moonroof.

Joe: Oh, that’s sexy. Like moonroofs. I wanted a moonroof.

Al: Do you have one or no?

Joe: I think I do have a moonroof. Yes, in my car.

Andi: You think?

Joe: No, I know I do.  “My husband drives a 2021 Chevy Bolt. Fully electric.  We both enjoy a little glass of wine with dinner, or occasionally little Mai Tais or margaritas on the deck when the weather’s warm.  Al: Okay. So, the main question she’s got, she’s got money in a retirement account. She’s going to have a very nice pension and Social Security. They don’t have any liquid assets outside of the retirement account.

Should she convert and pay the taxes within the retirement account? This is going to be potentially the lowest tax year. Another caveat is that the old inheritance, they’re going to inherit and inherit more retirement dollars and so they’re going to have to disperse that and that’s also going to add to their taxable income  that makes their tax issue even worse.

Al: Correct. Yeah, I think, Joe, the way I kind of think about this is what their fixed income of hers and his, call it $200,000.  You kind of figure out how much of an IRA would you need to have to be commensurate in that income. You divide that $200,000 by 4% or multiply by 25, you get the same number and you get $5,000,000. Does not mean they have $5,000,000 in an IRA, but that’s how much they would have to have at one point to create that much income. So when you’re, when you have that much ordinary income, which is great you have, but there’s nothing you can do about it. It is what it is. But what you can do is the IRAs that you do have, 401(k)s and so forth, 403(b)s, is think about converting those. And so I agree with converting, especially in 2025 when tax rates are low. The problem is there’s not enough cash to convert. Usually we recommend you pay out of your own funds. This is a case, Joe, where I would actually go ahead and convert to the top of the 24% and I would use converted funds because they’re going to be in such a high tax bracket. So that’s, that would be my thoughts on this one.

Joe: Okay. So what do they have for retirement accounts? $1,300,000.  All right. And they’re how old?

Al: They are around 60.

Joe: 60, you know, so they have a couple 15 years roughly for RMDs. So that $1,000,000 that they don’t necessarily need because there’s no spending need here because their fixed income is going to cover their $200,000 of living expenses, with the pension and Social Security. So this money’s going to continue to grow. So if you have $1,000,000 over 15 years at 6%, you probably have close to $3,000,000.  Something like that, give or take. I could do the math with my calculator, but I’m too lazy.  And then your RMD roughly is going to be 4% of that. So 3 times 4 is 12. So $120,000 is going to be the RMD. Let’s call it anywhere from $80,000 to $120,000. Really depending on what happens to the market or if they don’t take any distributions from that. So what do you have to calculate is what do you think the RMD is going to be? What is what bracket will that push you in? We have no idea because it’s 15 years from now. The tax brackets could be 50% or they could be a lot less. It could be a flag tax. It could be consumption tax. So there’s a lot of assumptions that you would want to use. Would I convert and pay the taxes within the IRA? I don’t know. That’s a tough one. I mean, the math will work out depending on how long that you live, because the compounding the tax-free is always great. But then you have the caveat of mom and dad’s money coming to you. And then you’re going to have to pay tax on that. I don’t know. I don’t think I would go to the top of the 24%. I think I would probably stay in the 22% tax bracket, maybe convert. And take some money out. I don’t know. Is there- is there a way that they could- I wouldn’t probably refinance and take money out there from a HELOC given today’s rates at 8%.

Al: Yeah, I wouldn’t do that. I mean, that’s really the answer is yes, you should convert, but the secondary part is, how do you pay for the taxes, right? Do you pay for the taxes with what money you have outside of retirement, or do you actually use some funds in retirement?

Joe: Because if they owe $60,000 in tax to do the conversion, they have to pull out $90,000 to pay this, to pay the tax, to pay the tax, to pay the tax, right? You got this kind of, funneling effect. I agree with you, Al. I think it makes sense to convert to get some of that money out of there. But it’s $1,000,000 bucks. Maybe they could slowly draw it out paying the 22% tax bracket. See what happens with tax rates. But I mean it’s a gamble either way. If you’re betting that tax rates are going to go sky high, then yeah, I would probably convert some of that money. If you think tax rates in that area are going to stay the same for some time, maybe you slowly start dripping the thing out.

Al: Yeah, I do think you keep dripping it out, but the thing is that 2025 will be their lowest income tax year. At least that’s what they think. And then the second part is 2026. We get our old rates back and based upon the income that they’ve told us, they’ll probably be in the 28% bracket subject to Altman. So anyway, those are reasons why I might be inclined to convert to the top of the 24%.

Joe: All right.  Good luck. Well, it’s a great problem to have.  Thanks for the question.

What Happens to Your 401(k) & IRA at Retirement? Watch YMYW TV, download the Retirement Readiness Guide

Andi: You’ve been saving to your workplace retirement account for your entire career. So don’t shatter that retirement nest egg when you punch the clock for the very last time! This week on Your Money, Your Wealth TV, Joe and Big Al explain your options for accessing the money in your IRA, 401(k), or other retirement accounts when you leave your employer, while avoiding the common mistakes that could cost you thousands if not tens of thousands of dollars. Watch What Happens to Your 401(k) & IRA at Retirement? On YMYW TV and download the Retirement Readiness Guide to find out how to control your taxes in retirement, create income to last a lifetime, make the most of your retirement investing strategy, and much more. You’ll find links for both the TV show and the free guide in the episode description.

RMDs for Roth Accounts: Clarification for Solo 401k (Andy, YouTube)

Joe: We’ve got some, some questions and comments.

Al: Oh, we do. Okay. Let’s see here.

Joe: You wanna do some of this?

Al: Okay.

Joe: We’ve got Andy writes in, he’s got Retirement Pop Quiz. He’s, he’s talking about our TV show.

Al: Yeah. Right.

Joe: Guys. Oh God. Any time it starts with guys, you know, we blew something up.

Al: Probably.

Joe: Way to go, Aaron.

Guys, according to the IRS website, designated Roth accounts in a 401k or a 403b plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required for designated Roth accounts. You must still take the RMDs from the designated Roth accounts in 2023.

including those with a required beginning date of April 1st, 2024. So I assume solo 401k accounts are not subject to the RMDs for 2024, correct?

Al: And that would be a correct statement.

Joe: Yeah, so the designated Roth 401k Accounts before I had to take a required distribution. They finally cleaned that up because Roth IRAs do not have a required distribution They do still have a required distribution for a couple years, but then in 2024 Which is what if your required beginning date is this year?

Al: Yeah. Yeah,

Joe: we’re good to go.

Al: That’s all true statements. I think he’s referring to our television show where we said that later there’s no RMDs, but we didn’t identify the year, because up the top of our head, we didn’t remember. How about that? Just being honest.

Joe: Yeah. It’s that crack, crack research.

Any Reason to Put Withdrawals in Brokerage Instead of Roth? (Globe Trotter, YouTube)

All right. Globe Trotter writes in he’s great video, which video?

Andi: it says right there. Formula for Retirement. YMYW TV.

Al: Okay.

Joe: If we withdraw from a qualifying account (401(k), traditional IRA), is there ever a reason to transfer those funds into a brokerage account instead of a Roth? Thanks. I don’t. Unless you need the money within a year or less. So he’s saying hey, I’m taking money from a retirement account I’m gonna pay the tax Is there ever a reason to put it into a brokerage account versus a Roth?

Al: Yeah, I think, and we talked about this before, I mean, generally no. Because you’re going to pay the same tax either way, whether you do a Roth conversion or take the money out and put it in your brokerage account. If you need the money within the year you’re in, I mean, it just is simpler. Otherwise, you’re doing multiple distributions.

But anyway, uh, yeah, typically, typically the answer is no, unless you need the money currently.

Joe and Al walk into a bar… (Tony, YouTube)

Joe: All right, this is an interesting comment from the same TV show here. Joe and Al walk into a trendy high end lounge. Joe buys drinks for four beautiful women next to him and sitting down at the bar, all right?

The women then get up and sit at the table with the big man, Al Clopine.

Al: Well, I will say I am married, but, um.

Andi: So’s Joe!

Joe: Yeah, so am I.

Al: Yep. So it probably won’t happen, but anyway.

Joe: I don’t understand what, what, the reference, was it because of something we said in the TV show?

Andi: No, I think it’s just because you, you have the reputation historically as being a player.

Joe: Ah, got it. He’s listening to some older episodes.

Al: Apparently. Yeah.

How to Decide Between Pension Options? (Frank, YouTube)

Joe: Right. Okay. We got Frank. He goes, Joe and Big Al, any chance you can cover the method of deciding between 50 percent and 75 percent based on the mortality age of the beneficiary? More than likely. My mind is set on a lump sum, but I’m curious how a person who prefers annuity would choose between their pop up joint survivor options.

I appreciate your instructional videos very much. You guys make it very easy and understandable and enjoyable to watch. So he’s got a pension, it sounds like, and he’s going to take a survivor benefit. Do you take 50 percent or 75 percent when he passes to the surviving spouse?

Al: Yeah, or he didn’t say, but you could take 100 percent or you could skip it altogether.

Take a lump sum.

Joe: So how do you choose that? Yeah, well, I think it’s the income need of the surviving spouse and what other fixed income sources are going to be there and what other assets are going to be there. So I think there’s a little bit more math included to, to, to figure out what benefit, or if he’s looking at.

You know, maybe he’s saying, how do I maximize this the most? If I live until life expectancy and what’s the math between a 50% and 75%? We would need to know the numbers, you know, because if you take a hundred percent survivor, you’re gonna receive a lower benefit. Right?

Al: Right, right.

Joe: ’cause if you die, the spouse gets a hundred percent of the benefit.

Al: Mm-Hmm.

Joe: if you get 50%, you’re gonna receive more because then the spouse gets half as much. And then 75. So you could do the math there to figure out, all right, well, what is the appropriate mouth give giving certain life expectancy, one of their assets that you have and see if you want to maximize, you know, the overall pension.

Al: I will say something in my experience.

Joe: Yep.

Go a hundred percent.

Al: Yeah. A hundred percent because you pass away. The last thing you want your spouse is pissed at you for, for, for not leaving her or him the, the, the higher amount. That’s, that’s just, that’s, that’s a non financial answer, but I, I don’t think you can go wrong with that one.

Joe: All right. That’s a Big Al life answer.

Is a Pension Annuity a Bad Thing? (Invictus, YouTube)

Andi: All right. So this next one, you guys had answered a question about annuities and Joe, you said that the annuity was terrible.

Joe: Okay. Sure.

Andi: So I think the confusion here is that this is in reference to a pension lump sum or annuity.

Al: Yeah, that’s the same word. So it is confusing.

Joe: Yeah, it is very confusing. Invictus?

Andi: Invictus.

Joe: All right.

Andi: One of our biggest fans.

Joe: I’m confused on the annuity comment. Being a Fed employee, my pension will be a lump sum or annuity with rises with COLA. I thought the annuity would be the best way. So, yeah, my apologies. There’s a commercial annuity and there’s a pension annuity.

Commercials, you go to a life insurance contract or you go to a life insurance company and you buy an annuity contract. Um, Annuity stands for income, right, so it’s a guaranteed income stream, so either the company is going to provide it for you or you buy it through a life insurance company. So, yeah, being a federal employee, if you want to get the fixed income and take the annuity, that could be the very best way.

Al: So, in a lot of cases, it’s a great way to go because it’s, you know, what the income is going to be and someone else is managing it and you can count on it.

Are SPIAs the Best Annuity for Lifetime Income? (1212482970, Spotify)

Joe: Yep. We got a Spotify question.

Andi: This is from our numbered listener on Spotify who keeps commenting in.

Joe: 1 2 1 2 4 8 1 2 1 2 9 7.

Andi: Yeah, pretty much.

Joe: That’s his name.

Al: Okay.

Joe: What about SPIAs?

Al: Okay.

Joe: Are they the best type of annuity if someone wants guaranteed lifetime income? By the way, that caller about annuities was calling all bonds high risk due to recent fluctuations, 2022 and recent low returns, 10 to 15 years.

Andi: I think he’s referencing somebody had said that you guys have recommended high-risk bonds and you both said no, we would never recommend high-risk bonds. And the Spotify commenter is saying, I think the person was saying all bonds are high-risk.

Al: Okay, got it.

Joe: What about SPIAs? Single premium immediate annuity. Um, yeah. If you want a guaranteed income, that is the annuity of choice. So basically it’s immediate annuity, single premium, you give the insurance company X amount of dollars and they’re going to turn that into a guaranteed income stream for the rest of your life.

That’s the cleanest annuity. That is true income insurance. Um, all these other variable, you know, deferred annuities have these little bells and whistles on it, and the internal rate of return, in my opinion, is just not worth it.

Al: Yeah, you’ve always said that. That’s, if you’re going to do an annuity, go that way.

Joe: Yep. Single premium, immediate annuity. If you want a guaranteed income. So your rate of return on the guaranteed income is pretty low.

Al: Yes.

Joe: Which is fine. It’s a guarantee. Yeah. No, but, but here’s what, what bugs me is that people think that they’re getting like six, seven, 8 percent rates of return.

Al: Right. On the variable.

Joe: Right. Or any annuity. It’s like, no, I’m getting 7 percent back on my money. Well, it’s including your principal.

Al: True. Good point.

Joe: So you’re getting your principal back. Yeah. And whatever rate of return. So just, just understand the math before you get sold into that. But yeah, I’m down with that, 12124822970.

Outro

Andi: Mr. Anderson from the Matrix, heavy beers for the golf course, Joe’s dog succession plan, and Samantha’s Mai Thai recipe for Big Al in the Derails, so stick around.

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The Derails

Joe: You know how many times people say Mr. Anderson, and then they’ll say Mr. Anderson?

Al: I would say probably a lot.

Joe: Have you ever got that?

Al: I don’t get that on Mr. Clopine. That doesn’t seem to come up.

Joe: On the first tee I’ll probably crack an 805 or a Big Wave, Kona Big Wave.  That’s a little heavy for the first tee there,  Neo.

Al: Those are, no, those are pretty light. Come on.

Joe: 805? Isn’t that like an IPA?

Al: No, no, no. That’s a lighter beer.  No, no.

Joe: It’s dark though, right?

Al: No.

Joe: It isn’t?

Al: Well, it’s darker than a PBR, I’ll put it that way.

Joe: Okay, got it. So he’s got two dogs. One’s 13 and one’s one.  You think he’s thinking the Springer is, I’m just saying, because I’m in a similar situation.

Al: You’ve got an older dog and-

Andi: You’re saying you’ve got a replacement dog, Joe?

Joe: I have a, yeah-

Andi: You’ve got a succession plan for your dogs?

Joe: Well, one’s like 17 years old.  It weighs like 4 pounds.  So like the thing’s-poor dog sleeps, I’m like, Oh boy, is it moving?  Yeah. And we get two small kids that absolutely, I love the dog more than, I’m probably the biggest fan, but I’m just saying, well, then we have this little puppy that just drives me nuts.

Andi: And I’m sure the 17-year-old is like, just get that small thing away from me.

Al: Yeah, we’ve got a- Well, I guess, still a puppy, two years old. So that still counts, highly energetic, but we just have the one.

Joe: For you, Al, you can make your favorite Hawaiian cocktail at home in San Diego. Aloha! Samantha’s Mai Tai recipe.”

Al: Wow.

Joe: “Shaken and served crushed over ice. The recipe makes two very strong cocktails.  You got one cup of little dark rum, three eight cup of lime juice,  two ounces of Caraco-“

Andi: Curaçao?

Joe: Curaçao. Curaçao.  Crackle or carousel.

Andi: I thought it was Curaçao.

Joe: Curaçao. I think you’re right.

Al: I think Andi’s right.

Joe:  I think you’re right. Curaçao.  “One ounce of-“

Andi: – that one I don’t know. Orgeat?

Joe: Orgeat Almond-

Al: -Tarani syrup.

Joe: Tarani syrup? One ounce simple syrup.

Al: Okay, I’m bookmarking that. I’m gonna try.

Joe: Yeah, I wonder if she had one of these when she wrote this out.

Al: That’s very possible.

_______

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