Hey, welcome everybody. We still have a couple more minutes before the top of the hour and uh we’ll wait until then to make sure that uh we don’t start too early and people can’t uh it didn’t so that people didn’t miss the beginning of it. But I appreciate everybody being on time here. I know it’s a uh something that I try and do is to be on time, but we’ve still got another minute left. Uh, I will tell everybody, and I’ll probably re-emphasize this, uh, I’ve got a pretty good thunderstorm rolling in here. I usually don’t have any issues with power outages or internet or anything like that when a thundtor thunderstorm comes in. But, um, you just never know. It’s supposed to be a pretty big one. Um, which would be good cuz, uh, we desperately need some of the rain here. But anyway, we’ll go ahead and get started here in just a little bit. Uh it is Wednesday. It’s actually I will be out of the office the rest of this week. Um normally I’m in, but it just happens to be that I am out for the rest of this week. So um I will uh talk about that a little bit later on. Um so see Lang, you’re hearing it echo. So, if if anybody has any any questions or or comments or anything like that, go ahead and put it in the either the chat, the webinar chat or the uh Q&A. And I see that uh somebody says that they’re hearing an echo. Is anybody else hear an echo?
Um let me see here.
I don’t have anybody else that’s hearing an echo. Uh, yep. No echo. No echo. Yeah, I’ I’ve Yeah, so far everybody else has got no echo. So, I um Sorry about that. Uh, and maybe you could try to resign in or something if you’re hearing an echo, but nobody else seems to hear it. You know, I do I get that quite often where one person will have an issue and nobody else does. So, I don’t know how that is. So, it seemed like everybody else is okay with it. So, all right, we’re at the top of the hour here. Let’s go ahead and get started here. Uh again, thank you everybody for joining me uh today on this webinar here. Um this is about Roth conversions. Uh before we get into that, let me uh just talk a little bit of um uh housekeeping. So again, as I just mentioned, if you have any questions as we go along through this webinar, if you have any questions, please put the questions down in the chat or the Q&A and at the end of this uh webinar here, I will answer all the questions. I will I I encourage everybody to stay to those questions because maybe somebody else has got something that might uh pertain to you that maybe you hadn’t thought of. Um but we’ll get into we’ll get into those here in a little bit. So with that being said, let me share my screen here with you. There we go. Whoop. Share there. Okay, perfect. So we’re talking about Roth conversions. This is something that is a really big topic. I I I talked to many people and they and many people have heard about them uh but they are not sure exactly how the best way to go about it is how much you should do in a Roth conversion or anything. So let me get into that here. The first slide here um it talks about the different uh websites that we have here at Alliant Credit Union. Uh the webinars, we got so many different topics and they’re all complimentary which is really awesome. and you can go to that website and take a look at all the different topics and and click on the ones that pertain to you that might help you out. I’ll be honest with you, we have our invests podcast. It’s we haven’t put out any recent uh podcast recent uh recently. Um and so the information there is still pretty important, but uh but it’s not been a a big topic for us to do. But then we also always have the Aerys website and the blog uh that talks about my division here. So Aerys stands for Alliant Retirement and Investment Services. That’s the division that I work for uh here at Alliant. I’ve been with Alliant now for almost 13 years. I love it. Um I hear quite often how much uh people appreciate our our credit union and I’ll be honest with you, working for the credit union is just as good if not uh if not better. So, and then just a little uh sidekicking. Unfortunately, this is very proprietary and we just ask that you don’t record any of the information on here. Uh we would have to get compliance all involved in everything and and we try and keep compliance out as much as we possibly can. So future the problem is is with our uh current situation with taxes and and our debt is the future of the tax environment is going to be. This slide here is quite uh quite a few months old. The last time that I look at our national debt, we were up to $39 trillion and it just continues to grow and grow and grow and it doesn’t seem like it’s ever going to uh that it ever reduces down. Uh so you know what’s going to be the future uh tax consequences on this uh we don’t know but by doing a Roth conversion it doesn’t matter because we know what the taxes are now. Our current tax code is now good until the end of 2028. The one big beautiful bill uh put it in until 2028 and then after that we’ll just wait and see what Congress does if they extend it come out with something different or if they just let it lapse and it’ll go back to whatever it was. But um our current uh national debt is at uh 36 excuse me $39 trillion last time I looked and that’s been a little while. So we could be up to 40 41 at this point in time. I’m just not sure. But you know our deficit obviously has been rising quite a bit and it just seems like it continues to grow. So over the last 10 years, um it’s just uh it’s just been out of control and and uh uh and I don’t I don’t see it changing anytime soon, unfortunately. Because if we take a look at our entitlements, you know, your Medicare, your Medicaid, uh Social Security, those are entitlement programs. At some point in time in the near future, just our entitlement programs alone are going to be 100% of what our revenue brings in from taxes. Uh and you know, and the national defense isn’t part of the entitlement program. So then where do we cut back? What do we need to do with that? Um, again, the really the only way that I can foresee us getting out of the debt that we have is by raising taxes. Now, we’re in a very low tax environment um period of time right now. We’ve had bunch higher taxes in the past and many times it’s been after World War I and World War II where they raise the taxes to pay off the debt. Uh, we just hopefully are finishing this war with Iran. Um, but I I don’t see them raising the taxes to help pay for that. They’ll just put it on the bill and and make our kids and grandkids pay for it down the future. So, the question is is how do you get out of paying the taxes so much? There’s three different ways you can diversify taxes. either either you can get taxed now um by investing in mutual funds, index funds, mutual funds, e uh EFT, uh ETFs, sorry, uh individual stocks, CDs, savings accounts are taxed now. Uh so whenever you earn interest or dividends, you’re taxed on those. Tax later is your 401k. A pre-tax 401k or your traditional IRA, meaning that as the money grows, you don’t pay any taxes on it until you take it out of that. Annuities are the same way. As the money grows over the years, you don’t pay any taxes on those, but you do when it comes out. And the tax never, those are the ones that I love. Uh the Roth IRA and MUN bonds, not a big fan of MUN bonds. Their bonds since they don’t pay a whole heck of a lot. Uh and HSA’s accounts are are taxed never, but let me put in a caution in there. The Roth IAS are never taxed as long as you meet certain require requirements. And we’ll get into those uh two requirements coming up here in a little bit. And same thing with HSAs. Now, as we move uh forward in the future, you know, a Roth conversion is something that might really benefit you, excuse me, and could really save you on taxes over the rest of your life. And we’ll get into those uh coming up here in a little bit. So, here’s our agenda. We’re going to talk about all four of these different topics here. I’m not going to read them. So, we’ll just get into the top uh the number one, and that’s uh the basics. So, what is a Roth IRA? So, with a Roth IRA, any contributions that you put into the Roth IRA are not deducted from your income for that year. Now your contributions can be taken out at any point in time without acrewing any penalties or or taxes. But any of the earnings that you uh do gain from those contributions, they have to be taken out after 59 12 and after 5 years. Now the five-year rule starts on January 1st of the first uh amount that you put in. So, hypothetically, let’s say you add you open up a Roth IRA today and add money to it. The 5-year rule started January 1st of this year. So, you basically have 6 months already under your belt. So, you really only have to hold it in for five and or 4 and 1/2 more years. Again, as long as you’re 59 and a half after those 4 and 1/2 years. So, with a Roth IRA contribution, now I just want to I want to clarify this here. There’s a difference between a contribution and a conversion. So, a contribution is money that’s not in an IRA, not in a retirement account, and being added to a Roth IRA. It’d be like money coming out of your savings account. Okay? So, there are limits on how much you can do as a contribution for the year. If you’re under 50, if you’re under 50, 49 or younger, the maximum contribution you can do into a Roth IRA is uh $7,500 this year. And if you’re 50 or older, it’s $8,600 is the maximum contribution. Now, that’s for all your IAS combined together. So, if you have a Roth IRA out there and a traditional IRA, if you put 5,000 into the Roth, the maximum you can put into the traditional is 2500 if you’re under 50 or 20 or 3600 if you’re over 50. So, again, it’s a it’s a total com combination into IRA contributions. Now, with a Roth IRA contribution, there is there are income limits. So, for example, I’m married. I’m going to look at that one. If I earn $242,000 or less, I can do the full $8,600. 80. If I earn anywhere from 242 up to $252,000, I can’t do the full $8,600, but I can do some depending on the income there. And if I earn more than $252,000 in a year, I cannot do any contribution directly into a Roth IRA. you can get around it and we’ll talk about that but in a direct contribution you cannot do that because of an income uh the income limits with a traditional IRA there are no income limits but also with a contribution you have to have an income getting a W2 at the end of the year if you’re not working you don’t have any income the government kind of frowns and says how are you doing a contribution if you don’t have an income coming in now let’s say I’m working part-time time. I’m semi-retired. I’m part-time and I only make say $5,000 a year helping out a buddy of mine. Then the maximum contribution you can do that year is $5,000. So it’s whatever your income is up to a limit of8600 or 75 if you’re under 50. Now my wife doesn’t work but because of my income we can still do a contribution for her. Okay? So even though she doesn’t have an income coming in uh W2 or anything like that, we can do a contribution based upon my income. So if uh with that being said, I I’d have to make 17,000 uh 86 $17,600 uh a year in order to do a maximum contribution into both of those. Okay, now let me jump uh slides a little bit or topics a little bit. This is a Roth conversion. So, a Roth conversion is money that is already in a traditional IRA or a pre-tax 401k. Okay? So, it’s not adding to your retirement plan overall. It’s just moving it out of a traditional IRA over into a Roth IRA. So, with that, you can do it at any point in time. There’s no income limits. There’s no uh age limits. There’s nothing like that. Now, when you do the Roth IRA, excuse me, the Roth conversion, it has to happen or you get taxed on it that year. So, whenever you do a conversion, you are going to be taxed. You got to claim that as income and pay taxes on that. I’ll give you an example coming up here where it wasn’t um the best thing for them. You don’t have to do the entire traditional IRA. You can do partial uh to fill up to a different tax bracket and we’ll get into that here. Um but uh there’s again there’s no age limit, there’s no income limit and there’s no limit as to how much you can do as a conversion. So oop I went wrong way. All right. So, as I said, any of your distributions, so any if you add money to it as a contribution, you can take that contribution out at any point in time. If you do it as a conversion, you’re still going to be taxed on that conversion amount. Even though you might think, okay, well, if I convert $100,000 over from a traditional IRA and you want to take out $5,000 later on, if you haven’t met the two requirements, the 59 12 or the 5-year rule, you’re going to be taxed on that 5,000 that you take out. So, a conversion is different than a contribution. Okay? Just want to make sure. So, who can do a conversion? Anybody can as long as you have a traditional IRA to do that. Again, there’s no age limit, there’s no income limits, high or low, and there’s no requirement that you have to be working to do a conversion. So, often times people do that in their retirement. You know, again, social security does not count towards an income limit or or or being classified as having an income. Uh so if you’re on social security uh then you can’t and that’s it. You can’t do a contribution but you can do a conversion because there’s no limits there. Now as I was talking about earlier um I’ll give you an example of how it can kind of anyway let me give you an example. Years ago prior to working at Alliance here I work for a big nationwide bank. I had some people come in to me all in a panic. The the uh the wife had lost her job and the husband thought he was doing the right thing and rolled it over into a Roth IRA. They were fairly new. They came out in the late 1990s. Roth Roths did. So, uh he thought he was doing the right thing. Well, when he went to do his taxes, his accountant said, “Congratulations, you owe the government $40,000 because of that conversion.” So, at that particular time, they that’s when they came into me all in a panic. I was able to work with the uh old 401k company. We got the money moved back to the 401k company and then they transferred into a traditional IRA with me and we and and by sewing do doing so they didn’t have any uh any tax consequences but the tax cuts and job act the TCJA stopped being able to take it out of the Roth conversion. So if you do that after 2018, you’re stuck with it. You cannot move it back and roll it into something else. If you do a conversion, it’s going to stay in the conversion into the Roth. Okay. Now again, the cool thing about Roths also since it all comes out tax-free, there’s no RMDs, there’s no min uh required minimum distributions. And also in retirement, when you take money out of the Roth uh the Roth account, it doesn’t count towards your Irma. And Irma is if you earn enough money in retirement, you will have to pay extra on Medicare Part B and Medicare Part D. And we’ll get into that coming up here in a little bit. But Roths don’t count towards taxes. They don’t count towards Irma. And they don’t have any required minimum distributions. So, the RMDs for traditional IRAs, if you were born uh um 1959 or earlier, if you’re not taking out RMDs right now, then you’re then your RMD age is at 73. If you’re born in 1960 or later, they increased your RMD age to 75. So, either at 73 or 75, you’re going to have to start taking money out of a traditional IRA, whether you want to or not. it’s just the requirement. But with a Roth IRA, there’s no requirement to take out because there’s no they’re not going to get their taxes. So they they allow you just to leave it in there and let it go. So again, as going back to our national debt that we have, we just don’t don’t know what the future taxes hold. So by, you know, being in a very low uh tax environment right now, it might be better to do a Roth conversion now versus later on when you have to do your RMDs and who knows what the taxes are going to be at that particular time. Now uh so traditional IAS 100% of that counts towards your income when you have to do RMDs or just taking it out in general. It also adds to your provisional income and again it could be uh held against you in your Medicare pricing depending on your modified adjusted gross uh income for that year. So that’s a traditional IRA. in a Roth IRA, none of that applies, which is kind of nice. So, let’s take a look and see, is it beneficial for you to do that? So, let’s say you’re in a pretty low tax environment right now and you’re paying 12% taxes and you’ve got a $100,000 in a in a traditional IRA and then you decide that you want to do a Roth conversion here and you get a in both the traditional and in the Roth, you get a 5% return. So, if you’re in a 12% tax bracket and you convert over uh um uh $10,000, and if you take the taxes out of that $10,000, you start um uh investing at $8,800 cuz that other $1,200 went towards taxes. Now, later on, let’s say that you have to start doing your RMDs and because of your RMDs, you’re at a higher tax bracket at 24%. So, if you don’t do a conversion, your $10,000 will jump up to 16,289. But if you’re paying a 24% tax bracket, then your after tax value is only $12,380 versus if you do the Roth conversion now and you start out with a little bit lower of amount at at $8,800. Again, it’s assuming the same 5% annual return. your b your uh amount value in 10 years will be at 14,334. So it would save you almost $2,000 which would give you 15.8% more in your after tax value. So again depending on where you’re at in your tax brackets it might be really beneficial for you to do that. So again, our future tax uh situation, we don’t know what the taxes are going to be after 2028 and but today we do. So you can take it in and convert it and as I mentioned earlier, you convert it up to a certain tax bracket or tax bucket here, excuse me. So when I do that, I talk to uh people to see what their current tax bracket is. And let’s say you’re at the 22% tax bracket. And so you can do some Roth conversions up to stay within that tax bracket and not affect any of your taxes. Now, if you slip over a little bit into the 24% tax bracket, you’re only charged on the amount that’s within that uh 24%. You’re not It’s not like your entire income is being taxed at 24%. it’s only for the amount that’s within that particular tax uh bracket uh and everything. So, as I mentioned earlier, you could be paying more if you have high enough income coming in in retirement. So, I’m going to again I’m going to talk about myself uh married filing jointly. If our income of everything combined is at $218,000 or less, then I don’t pay anything extra for uh Medicare Part B and part D. If I have from uh uh 218,000 up to 274, then I’m both me and my wife are going to pay extra for Medicare Part B and Medicare Part D. it’d be $28084 extra versus um uh and and then also 37.5% extra for um uh for Medicare Part D. You know what I like to say here is congratulation for being successful. The government wants more of your money. And again, if you have the income coming in in retirement, then you’re going to pay extra and Medicare Part B and Part D. Part A is free. That’s just pure hospitalization. So, it doesn’t uh it doesn’t hurt you at all. So, when you’re doing a Roth conversion, you’d kind of like to look for maybe a low income year. you know, when you if you’re a business owner and you have a little bit unusually low in sales or whatever, or if you have some high expenses that you can write off on taxes, or even if you’re not a business owner and you do have some tax deductions that you can take and drop down into a a lower tax bracket, that might be a really good idea to decide to do a a Roth conversion at that point in time. Now, let’s talk about the original IRA owner. So again, with a traditional IRA, you have to do RMDs because whenever you added money to the traditional IRA or the pre-tax 401k, the government gave you a discount on your on your income that year based upon the amount that you contributed to those. So you have to start doing RMDs at 73 or 75. I talked about that. And that has to come out. And so for, you know, the fail failure to take out your RMDs, it could result in a 25% uh penalty uh when you, you know, the next year when you do taxes. Now, the RMDs aren’t a huge amount. So, it starts out at a fairly low amount at 3.78% if you’re at 73 years old, or if you’re at 75, it’s just a little bit over 4%. So, it’s not a max uh a a a mass amount, but it’s still it’s money that you have to take out whether you want to or not. And you can see here that every single year it’s the the amount the percentage that you have to take out slowly increases. Okay, year-over-year. Okay, so item number three is the surviving spouse here. So, let’s take a look at this here, Adam and Jane. And let’s say that overall with social security and IRA and pensions and everything, let’s say that they both uh have a total combined income after taxes of $110,000. Well, that puts them in the 12% tax bracket. But one thing that a lot of people don’t understand and realize is that when one of you passes away, we’ll say statistically men pass away at first. It didn’t happen in my case. my mom passed away first and then my dad later on. But let’s say that Anne wants to maintain that $110,000. So obviously they’re going to lose one of the the lesser of the two social securities and uh but then an is going to have to start taking more money out to maintain that $110,000. She’s still going to have to do her RMDs if she’s at the age of doing an RMD, which is pretty much going to be about the same, very close if you’re close enough in age and everything. But because she’s now filing as a single filer and has an income of $110,000, instead of being at the 12% tax bracket, she’s at the 24% tax bracket. So, by maintaining the same amount, it’s going to increase her taxes and give her less overall to be able to spend on on whatever she spends it on. Now, let’s talk about beneficiaries. The rules changed. Excuse me. Sorry about that.
The rules changed in in um in 2020. So, it used to be that if you inherited money prior to 2020 from somebody who was not a spouse, so for example, mostly like a parent or whatever, the old rule is that you could stretch that out for the rest of your life. Okay? So, let’s say that you earn that you inherited a million and but you did have to take out a minimum amount every single year. And so in Carrie’s situation, she’s taking out $25,000 a year. That was the old rule in which she could do that now. But under the new rule, all traditional and Roth IRA have to be taken out within 10 years. And again, not a spouse. So a spouse, you can assume it as your own, but if you’re a non-spouse, then you have to take it out over uh everything out over 10 years. So, if she’s getting an average of a 5% return prior to taking the money out, she was at a a lower end of the 22% tax bracket. If it gives a 5% return and she wants to deplete it completely over the next 10 years, each and every year, she’d have to take out $123,000. That’s going to bump her up into a higher tax bracket. Okay? So, she’s going to pay more taxes on on each each tax bracket that she’s in because she inherited a traditional IRA from somebody who wasn’t her spouse, typically a parents. But after taxes on that million, well, she’s going to pay taxes on that million of roughly $310,000. So, that million she’s really only going to get about uh 700,000, a little bit less, 690,000. Now, Roth IRA conversions, things to consider. Again, there’s no limits uh income limits on it. So, you can do as much as you want. Doesn’t matter. And if you do a contribution, let me jump back to the contributions. If you do a contribution, you can do it for a prior year up until when taxes are due, up until April 15th, typically. Okay? Now, but if you do a Roth conversion, you can’t do it for a previous year. You’re going to be taxed on it the year that you take it out. Okay? There’s no pre-aged 59 12% tax uh penalty. So, if you take money out of a a retirement account, IRA account, and you’re under 59 a.5, you have to pay an additional 10% towards your taxes. Okay? But, you know, it it could have an unintended consequence by doing a large amount uh as a Roth conversion. Again, you’ll have to claim that as income and pay taxes on it. And again, if you do it in retirement, uh you could you could end up paying more for Medicare uh premiums because of the Irma, the IRMA, IRMA. So there’s a few limitations, potential limitations and risks of doing a Roth conversion. So there’s no guarantee that the Roth will do the same as the uh as a traditional IRA. If you invest in the same things, then yes, the accounts will grow the exact same. Um but we don’t know uh if any rules, the Roth rules are going to change down the road. So right now, and this is the way they have always been, but they’re not written in stone that there’s no taxes on the Roth as they come out. I can’t imagine that the government would ever change that, but there’s a lot of things the government does that I can’t imagine and they go ahead and do anyway. Okay. So, with a Roth conversion, it you do have to claim that as income and it can can uh you have to pay taxes on that and everything. So, the cool thing about this is, you know, as I mentioned, there’s a lot of people that do it a little bit here, a little bit there. We have a complimentary program here that we can run each each individual their particular situation to see if a Roth uh conversion is the right thing for you and for how much you should do in a Roth conversion. And I’ve ran many many many of these, hundreds of these and it it it never ceases to amaze me the difference from one person to the next. So, this is the an example of the report that we can run by doing a Roth conversion and and helping you determine to see if a Roth conversion is the right thing to do. And it does a lot more than just Roth conversions. Basically, it’s going to tell you, do you have enough money uh to last you through the rest of your life through retirement and everything like that. So, part of this report that we run here, it gives us our our uh uh our our income. So in this particular situation here, the dark blue is social security, the light blue is a pension plan that they had. And in this situation here, the orange is the uh the the uh RMDs out of a traditional IRA. The red line there is their expenses. And you can see the expenses jump up quite a bit once they do their RMDs because your taxes are going to increase because of the RMD that you have to take out. So, it’ll give you a lifetime portfolio asset that that you will be able to pass on to beneficiaries, but then it also gives you a cumulative tax on how much you will pay taxes for the rest of your life. And then when we do run the report, it can tell us how much you would save in taxes, if there’s any savings, or how much it’ll cost you extra in taxes based upon your situation to see if it’s the right thing to do or not. And it will also tell you the portfolio assets left to beneficiaries. Uh if it is a positive amount, meaning it’s higher than this 4.2 million here, or if it’s a lesser amount because you’re paying taxes at a higher tax bracket. It’s really cool how it all breaks down. Now, we can do a Roth conversions here by doing it over a set number of years. So, for example, in this one here, they want to do $60,000 a year for the next eight years. and it will spit us out a report to tell us what that will do. So in this particular situation, it would reduce their taxes over the [ __ ] accumulatively over their lifetime. It would reduce their taxes by $140,000 and it would then increase their assets to let to leave behind to their beneficiaries by $828,000. So that’s the kind of report that it will tell us. Is it the right thing to do? Was it not the right thing to do? And what I like to do here, and again, this is example. If we do say 60,000 over the next 8 years, I I think it’s more I I usually do it filling it up to a different tax bracket and filling up to the different levels of of taxes that you have. Again, this report will tell us where your expenses are and if you will need to take any extra money out of your assets or when your RMDs kick in. Do you have enough or whatever. It’s a really cool report and everything. And again, it will tell you what it will be, you know, based upon your assets, what it will be throughout the rest of your life and kind of how much you can kind of expect to to pass on to beneficiaries. Obviously, if there’s any deviation for the plan that we put in here, that’s going to affect everything. Could be worse, could be better. We just never know. But then, as I said, we can also fill it up to a set tax bracket here. So, in this example here, we want to fill it up to the 22% tax bracket, and it will kick in and tell us what the report is. So, instead of doing $60,000 for the next 8 years, we can do it up to the 22% tax bracket. So, based upon the base information of not doing any Roth conversions, this would give us by doing it up to the 22% tax bracket, it would give us uh it would save us $116,000 in taxes over our lifetime. And then it would add an additional $250,000 um to your bene to your base when you pass on to beneficiaries.
And one of the reports that isn’t on here that I really like to take a look at is what type of an account will your beneficiaries then receive. Again, beneficiaries not including a spouse. So, for example, I’ve got three kids. It will tell me at the different tax brackets and everything, how much they would be able to receive in both Roth IRA money or traditional IRA money. And, you know, then we can kind of, you know, take a look and see what the expectation is. is how if there’s any traditional IRA money left over, how much uh they will then have to pay taxes on it and everything. So again, if we do it up to the 12% tax bracket, it it would show us the different ages. And one thing that also on another report here gives us our break even age also. So up until a certain age, it may or may not be beneficial to do a Roth conversion. um you know up until like uh say ‘ 86 it would be better if you left your money in the traditional IRA for you not for your beneficiaries but for you but then let’s say 86 is a break even point and from 86 there on after it’d be more beneficial to do a Roth conversion so in conclusion here we don’t know what our future taxes are going to be so while we do know what the taxes are now it might be a really good idea to do a Roth conversion. Um because again with our national deficit going up, the debt is just skyrocketing, who knows what future taxes are going to be. Okay? And we have a very effective tool here to determine to see which is the best way to do a Roth conversion for you. if it is the best way. Uh the the longer of a time frame you can do uh the Roth conversion and leave it in the Roth, the more beneficial it is for you and for your beneficiaries, which is kind of nice. Okay, we can also take a look and see which is the most taxefficient way to do a Roth at which tax bracket. You know, I did a plan a couple of about a month or so ago and for that gentleman, it was better if he did it all at one time. Now, the unfortunate thing is if he decided to do that, he was going to pay $1.5 billion towards taxes for that year, but it would stop his Irmas that he’s currently paying and leave all that money as Roth beneficiaries to uh all that the Roth money to beneficiaries so that they didn’t have to pay taxes on it and everything. So, we’re here to help. There’s so many different ways that we can help. It’s not just the the Roth IAS. We have so many different options that are available to you. You know, how can we help is we do estate planning here. Part of this wealth vision report. That’s the uh that’s the report that I run here with a Roth conversion. It’s just part of it. It’s a wealth vision. We do estate planning here. We look at all different types of financial uh planning and and investments and everything. But you know, why Aerys? Why Aerys over say somebody down the street or whatever. So what we like to get here as Aerys is we like to get to know you and design a plan specifically for your needs and what you’re looking for. And then we use a team approach to take a look at your situation and make sure that it’s the right thing to do. And then we like to build a lasting strategy and for a rel excuse me for a relationship for the rest of your life. The cool thing here with Alliance is you would be working with me or any one of our other financial uh consultants and any question you have, you call us directly. I you’re not calling a toll-free number and hoping hoping that you don’t get somebody just fresh out of training. But we all have many many years of of experience here. As I mentioned, I’ve got 13 years of experience here at Alliance and prior to the big bank, I was there for about 10 years. So, I’ve got uh almost a quarter of a century of experience of investing and I’d love to help you out here. So, with that being said, let me uh get to some of these questions here. Um,
hold on a second.
Here we go. Okay. So, let me get to some of these questions. Let me do this here for if anybody would like to have a um contact me directly. This is my phone number here. Um and if for if there’s anybody on the uh on this webinar here on the telephone, let me give you my direct phone number here. Uh my phone number here is 773 462 861 uh 8 8 73 462 8612. Sorry about that. Um, I will tell you, as I mentioned very early on, maybe before some of you uh joined on, I uh this is my last day in the office this week. I will be out the next two days. Uh so if you call me uh and leave me a voicemail, my voicemail said will say that I’m out of the office here. Um then um I will be back in the office next week. Um and that’s my direct email address. Uh bbaker.lplantcreditun.com. lplatantcreditun.com
and let me get to the questions here. Uh we’ve got many of them here. So first question is a retirees pension considered enabling income uh for a no it is not for a contribution a pension 401k does not count as income for you to be able to do a contribution. You can again there’s no income requirements at all for a conversion but a contribution it does not count towards that. Uh haven’t inherited traditional IRA from when my father passed. The trust has me take out RMDs. Okay. For the last 20 years. Yep. I I won’t be 73 for 6 years. So I am confused. Are they already taking out RMDs? Should they not be doing that? No, that is correct. they should be taking out RMDs. So since your father passed away prior to uh 2020, you do you you have needed to take out RMDs every single year. Again, roughly about 4%. Um but again, the government then realized that they probably won’t see all that money for a very long time and that’s why they changed the rules. So since he passed away 20 years ago, taking it out every single year was the correct and appropriate thing to do. Uh I have some small 401k accounts less than 8,000 per account. Uh I understand taking any of them out and converting to a Roth will be a tax event. I have to declare as income the year converted. Yes. Can I convert partial amounts out of the 401ks to a Roth? Yes, you can. So, you don’t have to do the entire amounts. If you’ve got a a an $8,000 account, one of your many that has an $8,000 account, you could do any partial amount of that and leave the rest of it in the 401k. Uh, so you’re not taxed on it. Do you have a table showing age, income, tax brackets, and where there would be a cut off point where the conversion is no longer worth doing? Um uh if you just want to Google uh 2026 tax income brackets, you can find that again based upon whether you’re married or single. Um and the report uh that I the complimentary report that we have here um would tell us whether it’s good or not to do that. In fact, let me launch this out here. Let me send this out here. If you would like to have a one-on-one conversation with me, or if you would like to have that Wealth Vision report that talks about whether you should do a Roth conversion or not, uh please hit yes to this here. I will not be able to reach out to you until next week, but I promise I will reach out next week and uh then we can schedule a time to do to talk about the the Roth conversion or any other questions that you have with that. Uh let’s see here. I have an inherited traditional IRA from Oh, answer that. You did it in both. Uh, I have a small for Okay. Uh, Katherine, you did it in both. Okay, good. Uh, can you explain how a backdoor Roth IRA would work? A backdoor Roth IRA and a Roth conversion is the exact same thing. So, a backdoor Roth IRA, so again, if you have an income limit, well, I’ll give you an example. Back when I was at the big nationwide bank, I had a client of mine who was a an anesthesiologist for two hospitals in Chicago, made buku money, way over his income limit that he could do as a contribution. So, a backdoor Roth IRA is basically the same thing as a uh Roth conversion. He would come in every single year, add money to his traditional IRA because there’s no there’s no income limits on on when he would not be able to add to it and then we would convert that traditional IRA over into a Roth. And by doing that, you can still get money into a traditional IRA or excuse me, into a Roth IRA. You just have to do it through the back door or a Roth conversion. It’s the exact same thing. Um and with that that is all the questions that I have. So again thank you everybody for joining me today. Um again if you have any questions please feel free to give me a call. For those who answered yes on the questionnaire I will reach out to you next week and I will give you a call first and if I don’t get a hold of you I’ll leave you a message and I will also shoot you an email. And in my emails, you will have access to my calendar and uh you could schedule a time so we’re not playing phone tag back and forth. But I hope uh this was helpful uh to everybody and I hope you have a great uh rest of your week and have a great weekend. Take care. Bye.