So again, good morning everyone and my name is Baptiste Brunner. I’m one of the financial consultants with the credit union with Alliant um based here in the great state of Texas and just part of this team of financial professionals. We give regular educational webinars to assist our credit union members in understanding the ins and outs of retirement. Again, like to start by thanking you all very much for joining me this morning. I know it’s Saturday, college football starts in about an hour. try to get us in and out of there real quickly. Um, but today we’re going to be talking about, you know, learning about taxes in retirement, ways to save money on taxes and avoid some costly mistakes because taxes more than likely will be or could be one of the biggest expenses that you have in retirement. And there’s a few things that you can do to avoid those to at least lower or mitigate your tax implications, future RMDs, etc. And of course, as always, I’m going to reserve time at the end to take any of your questions. Oh, I’m seeing that there’s an echoes. Everybody else exper Anybody else experiencing that right now?
We can go ahead and go in the webinar, the Q&A section, let me know. Okay. Hopefully, it’s better. I’ll get a little closer to the computer. Maybe that’ll be a better Thank you very much. But those folks already found it. But at the end going to answer some questions uh for you if you have any Q&A section, chat section, either or. I’ll get to those questions of course.
All right. And before we dive in, um quick housekeeping item. Please don’t put your AI based or AI recording tool in here. We can’t do that. It’s proprietary information. So I can’t allow you to put in your AI noteaker in here. However, I can’t stop you from taking photos of any of these screens at home. I’m not insinuating that you do that. I might actually at one point, but can’t stop you from doing that. Just let’s keep the AI note takers out of here, please. All right. And some upcoming webinars that I have on Wednesday, October 7th, going to go over estate planning titled estate matters. Hey, you don’t have to be a millionaire to have to set up a will or a trust or figure out ways to best plan your legacy. So, join me for that one. It’s Wednesday, October 7th, 2 central, 3 Eastern. And after that, Roth IRA conversions. We’re going to cover those a little bit today. Um, but today’s webinar top two, this is the other top two one. If you really want to find out how to pay less in taxes down the road, maybe solve a tax problem that you’re going to have. We’re going to cover that today. But one of the best tools to reduce your RMDs, to reduce future taxation, to create a better legacy Roth conversions. And that’s going to be Tuesday, October 13th. It’s going to be a night one at 6 central, 7 Eastern. And of course, again, our team at Alliant Retirement Investment Services. We’re focused on helping you, our members, understand the ins and outs of retirement. You know, ways to save for retirement and much more than that. But go ahead and take a look at our website. That’s a ris.creditun.com.
Plethora of information there. Give you a quick second to take a photo of this slide if you want to go on the website and check it out. But have a podcast. Our events page in there is going to show you all of our webinars. I might be the most, you know, the best looking guy on our team, but there’s 10 other financial advisors to the credit union who are also doing webinars. Go ahead and check out theirs as well, but we’re here to assist. And then we have a website, blog, a resource center. Check it out. And so before we dive into our presentation, we’re just going to warm up with a little bit of a tax brain teaser. And it’s about Bill. Guy’s name is Bill. It sounds fun. So, after working hard for his entire adult life, Bill is now 63. He’s finally retired and he’s going to go to a lot more concerts than ever before. That’s his way of doing things. And Bill has $58,688 in taxable income, which includes $37,500 of Social Security benefits this year. And as you can see, Bill’s $58,688 of taxable income puts him in that 22% tax bracket because it’s more than $50,41 and it’s less than $105,700. But toward the end of the year, Bill decides to take an extra,000 out of his IRA for a trip to go see old Willie Nelson. He’s playing in Austin. So, how much is Bill going to be taxed on that extra,000?
So, the logical answer is that for every dollar of IRA money he pulls out, he pays 22 cents in federal income taxes. And therefore, if he took out $1,000, he should owe $220 in federal income tax. 22% tax, right? Simple enough. Wrong. In fact, he’d owe $47 in taxes. That’s a 40.7 federal tax rate on that income. So, thanks to the madness that is our tax code and the unique formula that determines how your social security benefits are taxed, the real answer is that bill owes $47 on that extra income. We’re going to get into it more, but everyone’s tax situation is different. You should always consult with a qualified professional tax advisor to discuss your specific tax situations, especially about these topics here. traditional IAS the tax deferred one you must pay taxes on distributions or conversions at ordinary federal and state rates and then your Roth IRA which is the non-deductible you paid taxes before and now it’s taxree that money grows taxfree and earnings may be withdrawn tax-free in accordance with IRS rules you know state taxes this presentation does refer refer to federal taxes so you may still face state taxes if you’re in Texas or for a different story. But just check with your tax pro. So again, I I’m a financial consultant. I do not prepare taxes. I don’t provide tax advice. We do tax planning. We can show you ways to get better tax deferral. Put yourself in a better tax situation, but I’m not the one that’s going to be preparing your taxes at the end of the day. So that’s what we do. We help people understand how the tax code and other rules could impact their financial planning, their investments. And then we’ll develop a plan to take into account many of the odd things people encounter, especially around taxes and retirement. And our goal here is to help you understand that the retirement distribution game, spending assets in retirement, is much different than the accumulation game when you’re saving for retirement. You know, the previous 40, 50 years. And chances are you’ve been in the accumulation phase of your life for multiple multiple decades and you’ve been working hard and trying to save money and hopefully your accounts have grown. But now as you enter prepare for retirement, you’re in an entirely different phase now. It’s the opposite to the distribution phase. And the distribution phase has new strange rules that can catch people way off guard. And along with those new rules, there are often many changes in your own personal life that can have a big impact in your taxes too. You know, for instance, your your children are grown and that means no more child tax credits. Your house may be fully paid off and that means no more mortgage interest deduction. Um, under the one big beautiful bill act, you should be aware of the phase outs for certain credits and deductions and changing tax rules as well.
So that brings us to a simple problem or a simple statement about the problem we’re here to discuss. Simply put, people often pay more taxes in retirement than expected because a confusing system treats various income types differently and contains hidden taxes and penalties. So in that accumulation phase, people build their assets in several different forms. stocks, bonds, real estate, pensions, 401ks, IRA, cash buried underneath a tree in the backyard. In the distribution phase though, your regular wages stop coming in. So, you have to take the money you’ve saved and use it to fund your retirement, which can go on for decades with good health on your side, God willing. And that’s challenging because you’ll need to make informed decisions about the tax implications of tapping different accounts. And it can be costly in retirement. Your tax rate can vary dramatically based on decisions you make, such as the timing and order in which you use different sources of money to pay for your expenses. So those poor choices through misunderstandings or ignorance of the rules can result in people paying more taxes than necessary and as a result they may see their savings drop faster. And that can mean less to leave to their kids and their grandkids. Of course, we don’t want that to be you. And the fact that you’re here today means to me that you’re willing to work towards a solution, which is an important first step. And because your tax exposure will change throughout four stages of retirement, you’ll need a strategy that anticipates both traditional taxes and possible taxes, search charges, penalties related to social security, Medicare, possibly a possible increase in tax rates in the future, and other income sources as well. And that means you’ll need an informed and proactive plan that addresses how you create your income in retirement. So my goal is to introduce you to the major aspects of such a a strategy, show you the challenges we all face, and then explain what makes up a workable solution to our retirement tax problem. And the first step is to develop an understanding of the types of taxes. And you know, I’m talking about all the costs that can increase as your income does, including some that aren’t actually called a tax. So to me, if your cost goes up as your income rises, it’s a tax in my book. You also need to understand the retirement expenses you’ll face. And you’ll need to create a strategy that will help you decide which of your assets to have first, how much you should be taking from those assets, and when those distributions should occur. And getting this right will help you pay as low a tax rate as possible. So before we go on, here are four stages of retirement we’ll discuss. And these are rough ranges and descriptions. Your experience may differ. Of course, everybody’s different. This is just a framework for discussing our topic. But first, there’s pre-retirement, the final stretch, the work and save years of 50 to 60. Then next, the early years of retirement, 60 to 70, the go- go years, the golden years. People often have grand plans for this time like traveling, volunteering, starting new hobbies, working part-time, and spending more time with their family. And then next you reach the middle years of retirement, 70 to 80, 75, 85. Those are the go slow years, which bring more financial decisions such as how to deal with required minimum distributions from your IAS and other retirement accounts. And then finally, there’s the later years of retirement when your health may not be as good and you’re thinking about your legacy and your state. The no-go years starting around age 80. My dad’s case, he’s 84 and he still hasn’t hit those yet. So, hey, God willing for all of you, you live to be 120 and those years don’t come about for some some time. But as you’ll see, there are a wide range of issues that must be planned for in each phase. And this can be a lot harder than it seems because retirement is full of surprises. And even the best planning will divert from reality at some point. One future unknown is inflation. People tend to view the their future costs and current dollars and they don’t always anticipate how those costs grow with inflation. So, think back about 30 years ago to the cost of a gallon of milk or a gallon of gas or a visit to the emergency room and think about those costs today and what they’ll grow to over the next 30 years when you’re not working. That’s inflation. Or how about your longevity? Many people end up living far longer than expected and that requires more money at a time when it’s difficult to work. How long do you think you’ll live? And many people also underestimate how much money they need to maintain a pre-retirement standard of living. And who wants to see their standard of living drop to be honest? And then there are healthcare like all this. That’s the 10,000lb gorilla. That includes your out-of- pocket payments for services and drugs plus Medicare and Medigap and insurance costs which just keep rising about triple of what typical inflation is. But for many retirees, taxes could be their largest expense in retirement. And it’s not often discussed or addressed with a thoughtful with a thoughtful plan. So at this point, you may be thinking, okay, so what’s the first thing I need to understand about retirement taxes? Well, here it is. Our first key, you have to know what your after tax retirement savings picture looks like before you actually retire.
Because a half a million dollar 401k or IRA balance isn’t really half a million dollars. Government has a claim on part of that money because the taxes were deferred. You haven’t paid taxes on it yet. And they’re going to get their share when you’re forced to start your required minimum distributions. More than likely, it’s going to be 73 for those born before uh 1960. It’s 75 for those born after. But the Secure Act 2.0 pushed back those RMDs a couple years back. So obviously the higher your tax rate in retirement, the less you’re actually your accounts are actually worth. And here’s an example. This chart shows you the cumulative after tax value of a half a million dollar IRA earning 6% per year at various tax rates. And as you can see, the lower your tax rate, the more you keep. Simple in theory, but it’s difficult in practice. And by the way, of course, this presentation applies to both pre-retirees and retirees. So don’t worry if you’ve already started your retirement. Tax planning is important throughout your retirement. And you may be thinking, okay, my accounts may not be worth as much as I thought, but I’ll have a steady flow of benefits from Social Security to supplement my income, and I’ll have Medicare to pay my health costs. But one thing you need to understand when creating your retirement tax strategy is social security and Medicare have their own tax traps that you need to plan for as well.
Which brings us to our next topic. So let’s go back to Bill from our tax break tease earlier. We want to understand why he paid such a high tax rate on the extra money he took from an IRA to go on a concert road trip. So remember, Bill has $45,000 of IRA income. It’s part of his adjusted gross income of $65,538 and he has $37,500 of social security benefits. So that does put him squarely in the 22% bracket and he also will take that standard deduction. But when he took that extra,000 IRA distribution, he got hit with a nearly 41% marginal tax rate on that $1,000. So let’s break down how this actually happens. First, let’s remember the only difference between our two scenarios here is that Bill is taking an additional $1,000 from an IRA. You see that in after concert trip column, he has $46,000 in the IRA income box. So, we see here that by adding that additional $1,000 of actual income, it increased both his adjusted gross income and his taxable income by $1,850. So that means your every dollar of income he actually received, he’s being taxed on a $1.85. What? How? When? Here’s the deal. Depending upon how much other income you have, the amount of your social security benefits that are taxable varies. For instance, if your other income is low enough, all of your social security benefits will be income tax-free at the federal level. On the other hand, if your income is high enough, up to 85% of your social security benefits can be taxable at whatever your personal rate is. And Bill here finds himself in the latter scenario. At his current income after the concert trip, for every dollar that he takes out of his IRA, he not only adds $1 of IRA money to his taxable income, but he must also add an additional 85 cents of taxable social security benefits. And if you add that up, that’s a dollar each not taxable as 22% rate for every $1 of additional IRA income he actually receives. And if you do the math on that, comes out to 40.7% real tax rate on the additional $1,000 income. That’s the so-called social security tax torpedo. And it can impact single filers and married couples with even fairly modest income during any stage of their retirement. And it’s one reason planning taxes and retirement is so important. And let’s look at another aspect of social security and taxation and how people approach retirement. Now during those go-go years, those golden years stage, some people retire altogether, but other people enter into a sort of semi-retirement. Sometimes it’s a continuation of a previous job just with fewer hours. Others use semi-retirement to explore an interest in a new field. Still others use semi-retirement to pursue non-paid rewarding volunteer work as well. So working retirement can in fact impact your planning and taxes in a number of ways. Some good, some bad, and some just downright ugly though. But let’s look at how working during these years can be a good thing. Chances are you have researched what your social security benefit might be at various stages. And if you haven’t, sa.gov, make an account, click on your statement, you’ll find it there. But you may not know that your social security benefit is calculated using your highest 35 years of inflationadjusted earnings. Well, what if you started working late in life? Or what if you left work to raise children? You may not have 35 years of earnings history. So suppose you have only 28. The remaining seven years count as big fat zeros when they calculate your benefits. And if anybody here ever missed a homework assignment or a quiz in college or a test, you know that you can have an A in perfect grades, but that one zero is going to really bring you down. So imagine having seven in this case with this example. But there’s good news, though. Earnings at any age can help you increase your Social Security benefit. And thanks to how Social Security calculates benefits, replacing several years of zeros with even low modest earnings can really positively impact your benefits. Now, let’s look at how working during your go-go years can be somewhat bad if you’re already collecting benefits and unaware of the Social Security earnings limits that applies to your prior reach prior to you reaching your full retirement age. So, here’s how that that rule works. If you start social security, be it your own retirement benefit or spousal benefit, prior to the year you reach your full retirement age, so that’s 67 for most. For every $2 above a certain amount that you earn, which is $24,480 for this year, Social Security will withhold $1 benefits. So for every two, they withhold one. Keep in mind that we’re talking about earnings here, like a W2 salary or self-employment. It’s not pensions. Doesn’t go against interest, dividends, capital gains. They don’t count and won’t reduce early social security benefits. But let’s do an example. Let’s say that you earned $25,400 in 2026. That’s $2,000 over the limit or now it’s about $1,000 over the limit. Therefore, under the $1 withheld for a $2 earning rule, Social Security would withhold $1,000 of your 2026 benefits. And these benefits are not truly lost. When you turn full retirement age, your benefit will be adjusted to make it as if you had applied at full retirement age with respect to those withheld benefits. So, in other words, your benefit going forward will be a bit higher. Also, in the year you reach full retirement age, there’s a separate higher earnings limit. Okay, so we’ve talked about the good and the bad. Now you get the ugly. And we’re here today to talk about taxes and retirement, but there are other taxes that you may face, too. For instance, while you’re working, you’re subject to the 7.65% Social Security and Medicare taxes. But in addition, that’s in addition to your Medicare taxes. in addition to your income tax, but the self-employed pay twice that amount, 15.3%, because they have to cover the employer’s contribution, too. So, you’re contributing half, your employer’s contributing half. If you’re self-employed, you have to cover both. Now, these taxes don’t go away if you’re working past your full retirement age or even if you’re collecting social security. Worse, if your go- go year earnings don’t make it into your top 35 years, those social security taxes go into the trust fund and do not increase your benefit.
And let’s get into Medicare and taxes. Now, this is a pretty big portion of two. So, Medicare um sometimes referred to as Irma. Now, just if you meet with me later, if you ever have a meeting with me, we refer to it as Irma. that’s necessarily that’s kind of the fancier abbreviation I’m sorry um not abbreviation the other word but it can impact some couples and Irma can really affect couples in their go- go years and beyond but what is it and it stands for income related monthly adjustment amount and the emphasis is on income because it is a monthly tiered search charge again it’s another kind of tax that is tacked on to people’s Medicare parts B and D onto those premiums But it only happens if you have income over 109,000 for single filers or 218,000 for married couples filing a joint return. So let’s take a look at what this means in action. Here we have George and Martha. They’re a high earning married couple. Both are Medicare Part B and D participants. Irma charges affect income from two years prior, too, by the way. And this couple was on track for $342,000 of modified adjusted gross income back in 2024. But on December 1st, 2024, George decided to sell a stock that he bought for 10,000 in 2007. And he sold the stock for 11,000, resulting in just $1,000 capital gain at that 50 15% long-term capital gains rate, plus an additional 3.8% net investment income sir tax for a total federal tax bill of 18.8%. 8% and that 3.8% net investment income sir tax is another tax that comes into play when your modified adjusted gross income exceeds $200,000 for single filers, 250,000 for joint. So George and Martha now owe $188 of tax on the gain from their sale of that stock, right? 18.8% of a,000. Or do they?
So look at this part BMA chart. That extra $1,000 gain pushed their AGI into the next premium tier that starts at $342,01. So now instead of owing $45.80 each for their monthly Medicare Part B premiums, George and Martha will now owe $527.50 per month each. an extra $122 per month just about times two. So, it’s about $244 extra a month for an annual total and additional income related monthly adjusted Medicare Part B premiums of $2,920.
And it’s not over because Medicare Part D Irma charges are also impacted. George and Martha will each pay another $22.90 per month for their drug plans and an extra $550 for the couple over the course of a year. Adding all the Hermes charges together for that year, George and Martha will each owe an extra $14460 a month or more than $3,470 a year for of combined additional charges for the year. So now combine that amount with the $188 of actual federal income tax they’d owe on their stock sale and the total tax owed on $1,000 of gain comes to $3,65840.
So that’s a tax rate of $337%. Let me repeat that. A tax rate of 337%. I’m just going to do a quick review. They sold the stock for a,000 in income gain. Stock sale tax is $188. That 15% plus the 3.8 from the net investment income tax. The extra income from the stock sale triggers new Irma tiers that total Irma charged amounts for the year to $3,470 for George and Martha. So the $1,000 extra income triggered taxes of $3,658 for that $365% tax rate. Didn’t mean to say 377, but 3675% tax rate. So you see, being pushed into a higher Medicare part B and D premium range is worse than being pushed into a higher tax bracket. That’s cuz if you go over a regular tax bracket by even a single dollar, only those dollars above that tax rate are going to be taxed at that higher rate. But if you go over the Medicare Part B and D income levels by even a single dollar, you move into the next premium tier. And it doesn’t matter if you exceed the limit by a dollar or $10,000. That’s why they call it the Irma cliff as well. So, we have the Social Security one and we have the Medicare one. But keep in mind, your Irma payments aren’t determined by how much money you made the previous year, but rather from your modified adjusted gross income from two years ago. So, if you’re starting Medicare next year in 2027, it’s going to be based off of what you made back in 2025. It’s another tax thing that catches people by surprise and you need to plan for it. So, making sure that you enroll in Medicare at the right time is a critical decision. If you bungle it, you’ll get hit by a lifelong penalty as well. So, to help you understand, meet Jim and Ann here. They’re our next example. They’re both 68. Jim retired at 65. Anne retired at 66. Prior to her retirement, the couple had health insurance through Anne’s employer. and they continued that after Anne retired because her employer offers retirey health benefits. Unfortunately though, they didn’t know they had to enroll in Medicare Part B as soon as Anne retired. And even though Anne’s employer offers retirey health insurance benefits, those benefits are generally paid secondary to Medicare after retirement. But Jim and Anne didn’t realize the mistake until it was way too late. And thanks to the way Medicare enrollment periods worked, they weren’t able to begin coverage until the next year. Now, in a worst case scenario, this might have resulted in a gap in coverage for Jim and Ann if they had a major medical need. But even in a best case scenario, because Jim and Anne missed their deadline to sign up for Medicare Part B, they will each owe a 10% Medicare Part B base premium penalty for life. Not just for one year, but a 10% Medicare Part B base premium penalty for the rest of their life. And you can see how much that translates to in real dollars. They owe $486.96 extra in 2026. And historically, we can estimate that premiums will be higher. So that 10% penalty will continue to grow and grow and grow. And over the course of lifetime, that could translate into a $10,000 plus mistake for the couple. So, for simplicity sakes, pardon me, for simplicity sake, we’re assuming that Ann’s retirey health insurance covers prescription drugs, so they don’t have to sign up for part D. Just know there’s a penalty for that, too.
And we’ve seen how Social Security and Medicare have their own tax straps and unique rules and penalties. So, if you’re like some who’ve seen this presentation, you may be asking yourself, “Wow, are there other tax traps we’ll face in retirement?” Well, the rest of what we’ll cover isn’t like what we’ve seen with Social Security tax torpedo or the Medicare Irma cliff. The public generally isn’t aware of those tax squeezes. What we are going to see now is how the tax code of plain view snags retirees, especially when there’s no planning. And that brings us to our third key. You must plan how and when you will use taxable, tax deferred, and tax-free assets to manage your income and tax brackets efficiently. And you can’t be halfhazard about you tapping your tax deferred savings. Timing is everything. And if you don’t plan carefully through all stages of retirement, you’re going to encounter unintended tax consequences. So, let’s take a look by first addressing a question I hear often when doing retirement planning. which accounts to spend from first. Which ones do I pull from first? Now, we’re off to our next couple here, Sam and Mary. They’ve been great savers. And as you can see, they’re looking forward to spending their retirement years traveling and seeing their grandchildren. In addition to social security benefits, though, they have $450,000 each in an IRA. They both have a $60,000 Roth IRA, and then they have 300K in a joint bank account. and they want to spend about $8,500 a month or just over 100k a year. Where would you take money from first? And most people think first take the after tax money in the bank, then take tax deferred IRA money and then take the taxfree Roth IRA. And this is conventional wisdom. It has been promoted by many big investment firms in the past for some time. And it’s not a bad plan, but we know conventional wisdom isn’t always the best approach. That’s just saying it’s a cookie cutter strategy. And not surprisingly, this topic has drawn the attention of academic researchers specializing in financial planning. They’ve conducted multiple studies on how to prepare for retirement using a combination of social security, taxable bank accounts, tax deferred accounts like IAS and pensions and tax exempt Roth accounts. And you can see some study titles there. And you can see some of the uh the study titles there. Take a photo of this if you’d like. You know, look into them yourself. But their research has shown that the conventional wisdom approach probably isn’t ideal.
And here in an alternative approach, there are two key elements in the early years. First, use the taxable bank money for expenses, but also during the same period, accelerate IRA distributions during otherwise low income years and putting that money into Roth accounts. And this is the filling your tax bracket approach, which we’ll discuss in a second. But this alternative approach gives you more flexibility to use that tax-free Roth money strategically in future years. So does it make a big difference? I surely think so. Our plans surely show so in many cases, but some academic research suggests this approach may improve portfolio longevity under certain assumptions. And that is how long your portfolio assets will last without requiring you to take on additional risk. The big takeaway here though, folks, is of course is that you’ve got to plan all the way through retirement, especially around how you handle your tax deferred assets. And of course, I’m going to say this a few more times, see your tax professional for tax advice. But one way to help manage your income both before and during retirement is to utilize Roth IRA conversions. mentioned earlier, we’re going to cover these, but a Roth IRA conversion is a simple process that allows you to move money from an IRA or other pre-tax retirement accounts like a 401k to a Roth IRA. In general, the amount that you convert is added to your income for the year and will be taxed at your normal tax rate. So, for example, if Jill converts $100,000 from her IRA to a Roth IRA, she’ll have to add $100,000 to her income. conversion is then income. Uh the conversion is now counted as income. It’ll be taxed at Jill’s rate. For that reason, it’s recommended that you speak with the professional before making any of these decisions. And our financial planning software can show you what to do and how this can work too. Happy to go through that with you. But a conversion doesn’t need to be all or nothing though. One helpful conversion approach is called filling up that bracket, filling up the tax bracket. And often you may find yourself in the middle of one of the tax brackets with room to add more income without pushing yourself into a higher tax bracket. So for 2026, the 22 the 22% tax bracket for married couples filing jointly ranges from approximately 100,81 to 21400 of taxable income. Now, if a couple’s taxable income is $150,000, they may have approximately $61,000 of room remaining before reaching that next bracket. And this may create an opportunity to evaluate a partial Roth conversion while staying within the same marginal tax bracket. And if you file a joint return and your taxable income is 110,000, that means that you could add another 100 grand of income without going into the next bracket. Making a Roth IRA conversion like that could possibly make sense. You don’t have to fill up the bracket though, folks. In most cases, you probably don’t want to, but you might want to stay in your bracket. And we got to keep the ear uh brackets in mind, too, as well as your social security, so on and so forth. A lot goes into a Roth conversions plan. You just don’t want to dive into it, say, “Fill up the bracket for me.” A lot of times, there’s an optimal fixed amount. We can help you come up with that. But if you plan to convert a large IRA, this approach is often more tax efficient than converting the full amount in one year. Instead, you can make smaller Roth IRA conversions over a number of years, filling up your bracket each time. And this can help reduce the average tax rate you’ll pay on your converted money and also spreads that tax bill out over a much longer period of time.
And Roth IRA conversions can be especially powerful in years when your taxable income is low, such as having a high non-recurring medical expense deduction or a low sales year for a business owner. It’s also common for people who retire early and are not yet receiving social security benefits, pensions, or IRA distributions. they may have a low tax bracket that year and making it, you know, possibly a good opportune time to complete a Roth IRA conversion in those pre R&D gap years.
So, this is a good time to spell out the crux of things. You must know whether you’re trying to keep income below a bracket threshold to avoid bumping up to the next highest tax rate or whether you’re trying to increase income to fill up a bracket to take advantage of that tax rate. And some tactics you could use in managing income around tax brackets could include withdrawing taxfree money from life insurance policies to keep that income low, selling highly appreciated stock for low or no capital gains, taking distributions from IRA or 401ks to take advantage of a lower tax rate. And as we’ve seen, you can also consider partial Roth conversions to fill up those lower tax brackets. And there are also two other pre-retirement strategies to consider, but they don’t apply to all people. First has to do with how you use a health savings account. This would only apply to people who are covered by a high deductible health plan. And the second has to do with small business owners. Those who want to be extra tax savvy and saving for retirement can fund a company pension plan, which for certain high earning business owners can increase their ability to claim the qualified business income deduction. But both of these features of the tax code could be used to manage your tax exposure and provide significant tax favor benefit throughout retirement. And if either or both of these apply to you, go ahead and note that now in the questions area of your evaluate or I’m sorry, forget about that. I didn’t do one of those today. But you know, if if you think this applies to you, take a note of it and ask me a question about it at the end or send me an email here at the end.
So we’ve seen throughout our pres the presentation today the critical importance of managing our tax divert accounts because at some point you’ll be forced to take out required minimum distributions or RMDs. That’s if you have pre-tax funds and that can be trouble very troublesome to your tax bill. But many people make charitable donations supporting their favorite nonprofits with annual gifts. Um, you know, let’s look at how your RMDs and charitable giving may work for you with some planning. So, next example, we have Albert and Shirley here. They’re in the 24% federal income tax bracket. For this example, we assume their income is high enough that they do not qualify for that enhanced senior deduction available under current law. That standard deduction for a married couple filing jointly this year is $32,200. And if Albert and Shirley claim the standard deduction, they may also qualify for the additional charitable deduction available under current law subject to applicable rules and inflate and limitations of course. But Albert and Shirley already have approximately $15,000 of itemized deductions from sources such as state and local taxes, deductible medical expenses, and mortgage interest. So what happens if they make a $5,000 charitable gift? Even though they make the contribution, they still do not exceed the standard deduction amount and as a result contribution may not provide any additional federal income tax benefits for them. However, if you’re over 70 and a half and you have an IRA or an inherited IRA, there’s another way to give to charity than simply writing a check. And it’s called a qualified charitable distribution. I’ll refer to it as QCD moving forward. But let me explain how it works so you can see why a QCD can be so powerful. First, some rules. If you’re 70 and a half or older, you can make a qualified charitable contribution of up to $111,000 for this year from your IRA. And if you’re married and both of you are over 70 and a half or older, and both of you have an IRA, you can each make the $111,000 qualified charitable contribution from your own IRA. Second, any qualified charitable distributions you make counts towards satisfying your required minimum distribution for the year. So when you make the however though when you make the distribution from your IRA, it has to go directly from your IRA to that charity or you can receive a check from your IRA custodian made payable to that charity. Third, this is the odd part. Even though you gave to the charity, you get no income tax deduction. So, why would I suggest a strategy where you get no uh Pardon me folks, it’s Saturday. Why would I suggest a strategy where you get no deduction for giving to a charity? It’s because when you make a qualified charitable distribution, the distribution from the IRA is never counted as income when you compute your taxes. So, let’s see how that could actually help Albert and Shirley. Let’s suppose that they do what many retirees would do. Albert takes his RMD of 5,000 at the beginning of the year and deposits it into the bank. He’s done with his RMD for the year. Now, being charitable people, they donate 5,000 to the charity. The end result is that the charity gets 5,000. Everybody understands that. But let’s look more closely. By virtue of giving to charity this way, Albert and Shirley’s $5,000 contribution will cost them a total of $5,720. Why? because that $5,000 RMD that went into Albert’s checking account at the beginning of the year still has a tax cost. Remember, the couple is in the 24% tax bracket, 24% of 5,000 equals 720. So $720 of additional tax that Albert and Shirley must pay when they file their taxes means the total cost of that donation is $5,720. Remember though, the gift didn’t impact their standard deduction. The RMD behind the gift just added to their income. Now, ouch. But let’s see what happens if they gave it through a QCD to that charity. So, instead of requesting a $5,000 distribution from his IRA to go in his bank account, Albert simply has his IRA custodian, transfers that 5,000 directly from his IRA to the charity. It satisfies his RMD because he’s 73. Now, the charity is still getting $5,000 and they still gave $5,000. Even though they received no deduction from making a contribution, their IRA distribution is excluded from their tax return. Therefore, they owe no income tax in that $5,000 distribution and their total amount of money that they gave to them was still $5,000 and they saved themselves $720.
But we all know charity starts at home. So, it’s a natural question to ask, how does retirement tax planning fit in? And it’s a very good question because the government still wants its share of those tax deferred assets when you pass away. And like we’ve seen, how you set things up really matters, which leads us to our final key number four. Organize your assets for your family’s benefit. Estate planning still matters here. And remember, that’s one of my upcoming webinars. Join me for that one. Estate planning is always a relevant topic. Even though people don’t like to discuss death, it’s depressing. It’s morbid. But we’re not going to discuss it in the traditional way. That’s because the new tax law excludes states valued at up to 13.99 million from the federal estate tax. Meaning only the tiniest fraction of people need to worry about estate taxes. But per the one big beautiful bill act that was signed a few years back or last year, the exclusion was made permanent and is increasing to $15 million per person in 2026. It’ll be indexed for inflation going forward. Still very important tax issues remain around how your assets are received by your beneficiaries after you pass. One example is making sure married couples plan for their available step up in basis. That’s quite a tax term, right? Simply put, a step up in basis is a tax rule that readjusts the value of an inherited asset. So, its value is not what your spouse or your destin paid for it initially. Instead, it’s stepped up to its price on the date of their passing. And this can make a big difference as we’ll see. So, what I mean here though is if you bought a house for 150,000 and now it’s worth a million, you have 850,000 in gains. Whereas if you sell your if you pass away and gift the house, those your beneficiaries, their cost basis is a million at your passing. Whatever it’s worth in your passing. Quick example. It’s likely that most assets you own other than your retirement accounts and annuities will be eligible for a step up in basis. Well, so next example, say hi to Phil and Mary. They live in a separate property state. They’re married and own a variety of taxable investments in a joint account known as joint tenants with rights of survivorship. You may have heard of that. And the investments have long-term capital gains of 120,000. One day, bad news arrives. Phil’s diagnosed with terminal cancer. He has eight 18 months to live. Let’s see how this works with two scenarios. In the first, Phil and Mary make no planning changes to their assets. So, when Phil passes, Mary will receive a step up in basis on Phil’s half of the joint account, which is 60,000. she’ll still face a future $60,000 of unrealized gain on her half of the account. Simply put, that means if Mary decides to sell all the assets, she’ll owe tax on her $60,000 of gains. Now, suppose that upon Phil’s diagnosis, Mary and Phil move all the investments into one account in Phil’s name. Then, as long as Phil lived longer than one year, Mary would receive a full step up in basis on the entire $120,000 account. So, simply put, Mary could sell that account and pay no tax as opposed to paying on $60,000.
When you sell your investments, would you rather owe tax on $60,000 a gain or none at all? And let me say, playing around death is hard, but that is where a professional can help because they’re they’re emotionally removed from the situation and can assist you to make good decisions that may seem pretty hard at time. Now, maybe you’re someone who has managed to save up quite a bit in your IRA or 401k. You feel pretty confident that you’ll be comfortable in retirement and you’re hopeful that you’ll leave behind the account to your children. In the past, we have recommended that because with the right structure, your heir could withdraw that money throughout their lifetime, possibly decades. That changed with the passage of the new secure act back in 2019. So now beneficiaries of inherited accounts with some exceptions must withdraw all of the money within 10 years of the owner’s death and pay taxes on that money. So the restriction on what was called stretch IAS shines a light on how important tax planning is. Laws can change at any time. So you need to have a plan and revisit that plan regularly. So let’s look at Pamela and Kyle as an example of what choices beneficiaries have when they inherit IAS and no longer can stretch distributions over their lifetime. First scenario we have involves Pamela and her son Kyle. Pamela unfortunately passed away at 70 years of age leaving the full IRA pre-tax IRA to her son Kyle. And he’s an only child. He’s healthy and this sole beneficiary of the IRA. And we know that Kyle has a maximum of 10 years to withdraw the IRA monies to meet those RMD rules. And Kyle likes the regular distributions. So he chooses to take equal distributions of the funds over 10 years. And the IRA earns an average 6% rate of return annually. So this payment would calculate to be $54,347 to Kyle each year for 10 years. Kyle would have to add this amount as income on his tax return for 10 years, too. And the second scenario for Kyle looks a little different. Kyle lost track of time. He’s already reached at year 10, the required minimum distribution window. And since it’s year 10, he must now take out the full distribution in one year. Assuming that same 6% rate of return we mentioned earlier, that’s earned annually on that $400,000 IRA, we can now calculate that IRA balance. Has it grown to $716,339?
And now Kyle has to take the full amount as a distribution in year 10 and pay income tax on that amount. Kyle’s going to be in the top tax bracket now, paying 37%. So enough about death, though. Let’s let’s move on from that. One thing I do want to mention, we mentioned Roth conversions earlier. Roth conversions are exempt from those RMDs. So the money that you have that’s in Roth accounts that does not have to be stretch taken out over a 10-year period. Your children get to take that on. Your beneficiaries get to take that on tax-free, penaltyree, and they can hold on to it for the rest of their life and give it to your grandkids. But let’s move on from death. Let’s talk about long-term care. This is not a long-term care presentation. It’s just about retirement and taxes. But believe it or not, there are a number of tax breaks associated with long-term care insurance. For example, long-term care premiums may be a deductible medical expense at the federal level and possibly eligible for deductions or credits at the state tax level. On the other side, if you’re receiving long-term care benefits, in many cases, those benefits are tax-free. For instance, benefits received from reimbursements, reimbursement style policies are taxfree. In addition, cash benefit style policies are taxree. if they don’t exceed the higher of your actual long-term care cost or an IRS daily limit of I think it’s currently $430. Choosing how you pay for long-term care is cost so can have a big impact on your state and your heirs. In recent years, non-traditional long-term care policies that blended together some long-term care insurance and life insurance that become quite popular. Often the first inclination of the insured here is to tap the policy to pay for long-term care costs, but that’s often a tax mistake. So, moving on to Florence here. She’s a widowed woman who qualifies for long-term care benefits and lives at home with in home care, but her yearly care costs are about $60,000. And Florence’s social security benefits $20,000 annually, which covers her basic expenses, but not long-term care. She also has a $400,000 IRA and a life insurance policy with a long-term care provider that will pay half a million dollars to her children upon her passing. Alternatively, Florence could use up to $10,000 per month for long-term care costs and any amounts used for long-term care will reduce the life insurance death benefit. Just note that this is an example we’re going through here. Suppose that she’s infirmed for five years and uses her policy to pay for long-term care expenses. You know, that’s why they why she bought it in the first place. But here, Florence pays little to no income tax during this period because she’ll have such large unreimbured medical expense deductions. So, the half a million dollar policy pays out $300,000, $60,000 per year for 5 years. That means your kids will inherit taxfree life insurance of $200,000. the remainder, which is the remainder of that half a million dollar policy. And in addition, her children will receive the $400,000 in her IRA, and that will be taxable to them because she didn’t convert it. She just left it in a tax-free account. Now, let’s suppose Florence lives for the same 5 years, but uses her IRA money to pay for the long-term care expenses instead. Well, Floyd still pays minimal income tax per year because of her high medical expense deduction, but now the kids will inherit half a million dollars of life insurance completely tax-free, as well as roughly $100,000 of remaining IRA money, which will be taxable. But different story now, because of how she distri distributed it, her children are now getting a half a million tax-free and only $100,000 that’s taxable. So comparing the scenarios, the ultimate net benefit is unknown because it depends on Florence’s children’s tax rates. But it’s hard to imagine a scenario where paying for her care with $300,000 of taxable money with minimal cost of Florence is not a better option than paying for her care with $300,000 of tax-free money. And in the second scenario, we’re preserving the taxfree money for the heirs and paying for the long-term care with Florence’s taxable IRA money. Okay, so we’re towards the end and you’re probably thinking, goodness, how in the world will we ever manage this? It’s a good question. Let’s just bring it all together. So, we started with a clear statement about the problem. Retirees often pay more taxes than expected because a confusing system treats various income types differently and contains hidden taxes and penalties. So, let’s do a quick review on what we’ve learned in the context of the four stages of retirement. under the pre-retirement heading saw the importance of understanding the after tax values of your retirement savings before you retire. We also saw that in those pre-retirement years it’s critical to consider your tax deferred savings and start taking advantage of funding Roth accounts to fill your brackets something you do throughout your early retirement years in low tax years maybe in your pre-retirement years. We also looked at social security and taxes plus the importance of couples having benefits their benefit strategy that considers a serving sp um the surviving spouse. And we saw Medicare has its own tax-like structure that can push you off the Irma cliff. And we saw the importance of signing up for Medicare on time right in the middle of those early go- go years. That’s cuz starting in your middle retirement years, you’ll be confronted with required distributions. And we’ve seen the importance of planning your income needs before then and the tax issues involved. Then we saw the importance of setting up your assets and managing them during the later years of retirement so you can preserve the most for your heirs and leave them with the most tax flexibility. All those items together lead us to this obvious solution to our original problem. So, because your tax exposure will change throughout retirement, you need a strategy that anticipates how and when you tap assets to cover your personal expenses. It understands the range of taxes you’ll face at various stages and manages your actions so you pay the lowest tax rate possible. So again, by attending this presentation, you’re indicating that you’re preparing to leave the accumulation phase. Congratulations. And you want to move into that distribution phase, i.e. retire. you guys have been working long enough. And we’ve seen that the distribution phases are way more complicated than working and collecting a paycheck. Managing your tax rate through the four stages of retirement is part of the challenge of retirement planning. We’ve seen the cost of these mistakes and naturally we want to be efficient with our savings. There are strategies to reduce that tax burden. But as with many things in life, this takes education and planning and advice. It’s a lot to think about and our tax code is complex and the rules keep changing, but what doesn’t change is that you need a plan. So, I’d be happy to help everyone here out with this. I’ll go straight to the back back page. This is my information here. Feel free to scan that QR code if you’d like to set up an appointment with me. I’m also going to send out a poll here in a second. These meetings cost nothing. We don’t charge our members to do financial planning. We’re here to create a plan for you. Show you how to avoid these pitfalls, these costly mistakes to not go off that uh hit the social security tax torpedo or the Medicare gaps. How to come up with a good distribution strategy. We’re here to help you out with that. It costs nothing but your time. We’re here to help. We’re just the greatest credit union on earth and that’s why we do this. But we’re here to educate our members, show them what else we can do for them, too. If you’re coming up on retirement, get a plan made. If you said yes on the web on here, and thank you very much to those who have. Um I will be following up with you hopefully today, but the um my colleague who puts all this together for me might still be working. We do work on Saturday sometimes, too. Um if he’s not, I’ll be in touch with you on Monday via phone or email. Just here to help. If you have any other questions, though, feel free to say no or not at this time. It’s perfectly fine. You know, it doesn’t hurt my feelings. But if everybody could answer the poll, it makes me look good. Um, I have the highest numbers on our team as far as participation and rates of response. It just shows that I’m keeping everybody’s attention. I’d really appreciate if everybody can answer. Even if you’re saying no or not at this time. Again, doesn’t hurt my feelings. I’m just happy that you’re here today and I hope you learned something. And if you want to learn more, QR code or click yes right here. We’re here to help. With that, I’ll get through some questions, get you guys off. We have two minutes until college football kicks off today. One other thing I want to make a note of. I’m gonna make a point of this whenever we have our estate planning webinar in two weeks. Trustw.com. Um, we are able to give access to our clients to this website uh at no cost. This is where a website where you can make your own trust and make your own will online. We have a membership to it that we’re allowed to give to our clients. But yes, you have access to attorneys through this website as well with this platform to ask them questions, see if you’re missing anything, have them review it. It’s a great platform. Really is. If you have more questions about this, send me an email. Again, here’s my email. I don’t like that phone number that goes to my office line in Chicago and I’m in Texas. Um, but feel free to call it, but really email is best right now. Be happy to go over this with everyone, but let’s go through some questions here. Feel free to ask away too. Um, if this person’s still in, I’m sorry they were late. They said, “Is webinar recording?” We’re not allowed to record these webinars. Uh, we do one webinar a month that we are allowed to record, but this is finance. We deal with people’s money. There’s a lot of rules and regulations, so we’re not allowed to record these without going through some serious scrutiny. But if anybody is on here late, I’d be happy to go over this information with you on a one-on-one, too. Just let me know what I can do. All right, let’s see the questions. Is there an RMD for a Roth IRA? All right, I made that comment earlier, but no. Correct. Um, I didn’t get to it when you asked though, but there are no RMDs with Roth IAS. So, if you have a million dollar or $100,000 in a pre-tax and $100,000 in a Roth account, post tax, you’re going to have to take out money from here because Uncle Sam wants his cut come your R&D age, whether it be 73, 74, 75. You have to take money from this. If you don’t need the money in your Roth account, let it sit. Let it sit. Let it grow. Give it to your heirs if you want. And it’s taxfree to them, penalty-free to them. Whereas this $100,000 pre-tax um IRA, when you give it to them, they have to take it out and they’re probably going to have to take out 12 grand a year. And now as opposed to you being able to convert it at maybe a 12% tax rate, your heirs are going to have to pay 22 to 32% taxes on it depending on what their tax bracket is. But see it all the time. There’s ways to get around it. It just comes with planning, planning, planning, planning.
So for QCDs, you’re still getting the RMD, but the taxable amount is reduced. Yes. So, with a QCD, if you take out your, let’s say you take out your RMD, I’m just going to go over it again. Take out your RMD and they give it to you. It’s $5,000. You give that $5,000 to the charity. Because it hit your bank account, though, it’s counted as income towards you. So, now you have to pay taxes on it. Whereas, if you had that $5,000 surpass you, where your IRA company writes the check out directly to the charitable organization, it’s $5,000 that the charitable organization receives. you gave it to them, but you don’t get taxed on it and it’s it counts towards your RMD for the year. I hope that answers the question.
It’s not necessarily that your tax correct. Correct. Your taxable amount is reduced technically.
Uh information needed to prepare for a meeting with you just to have a good understanding of your current position. I’d like to know what your when you plan to retire, if you’re retired, what your current spending is. Um, how much you currently have in different accounts because we just showed the importance of knowing the difference between your IAS pre-tax and your Roth accounts and if you have money over here in some stock funds, uh, capital gains because it all comes together and it’s all taxed differently. So, a plan needs to be put in place, where you reaching where and how you approach everything. But just have a good understanding of your positions right now when you want to retire as well. And if there’s information missing from there, I’ll give you some homework for the next meeting.
Okay, here’s a good question. Did I understand you correctly that when you go over into another tax bracket, the only amount that will be taxed at the higher rate is the amount you went over and not your total amount. Correct? We are in a marginal tax rate society. So, let’s say just for the sake of making it easy, uh 12% is the $10,000 range and anything from 10 to 20 is 22%. If you make $10,01, only $1 is taxed at 22%. That’s how it works. Marginal tax rates. Um, I could pull it up here real quick, but I’m going to get to the other questions.
How about RMDs for an inherited Roth IRA IRA by the ninth year? I don’t understand the question, but you can push them off until the 9th or 10th year, but keep in mind that account’s just going to keep growing and going to be more and more money. It’s going to be taxed at a higher rate. So, if you take it out over a 10-year period, you might be in that 22% tax bracket, but if you take out $700,000 all in one year, now you’re in the 37% tax bracket. There’s a strategy whenever it comes to these inherited IAS too to make sure that your beneficiaries or if you’re the one receiving an account uh as a beneficiary. There are strategies to make sure you don’t just burn through that money. That’s what happens a lot in these cases. You know, people just live off of that 54 grand each year and then they deplete the account. whereas you could go ahead and do other things with it. Live off of your other income um or just live off of most of, you know, live off of some of it, but then put the mo rest of it away. You get to switch it around a bit. We can talk about that, too. Can you convert to a Roth after RMDs kick in? You can convert to a Roth for the rest of your life. Um it’s just whenever RMDs kick in, now you’re pulling out another 20 grand over here from the RMD. that raised your income level. But there’s workarounds. Everybody’s different. I can show you exactly how it works. Our planning software is fantastic to where we can see what room you have without jumping Irma, Social Security, or federal income tax brackets. We can review that with you. It’s pretty nice. Um, I appreciate it. Roth is not tax correct. Therefore, that’s why it is not there’s no RMD with it because you already paid taxes on it. Uncle Sam doesn’t get the double dip. at least not in this era.
Do you do Zoom meetings since you’re in Houston? Yeah, most of my meetings are via Zoom. Um I I live in a very hightraic area of Houston. Um I really wouldn’t if a client wants to meet with me in person and they do. Um at times it’s just I I don’t want to put them through the traffic behind me. But yeah, I do Zoom meetings and um if you can only meet on Saturdays, I can make a special circumstance. Uh better to meet sooner than later and depends on when LSU plays and if it’s deer hunting season. But I’d be happy to meet with you on a Saturday. We just have to plan that out ahead of time. All right.
Once you start Medicare Part B and D, if you go back into the workforce, can you stop the benefit and restart later? Remember what we said earlier though, Medicare Part B and D, once you start taking them, it becomes your primary insurance and your work insurance more than likely will become less expensive because it becomes supplemental insurance in that case. So, you more than likely want to stay on it and just keep your workplace plan, but as opposed to it being 200 bucks a pay period, it’s going to be 50 bucks or 100 bucks. Those are rough numbers. That’s what I’ve seen with some other clients. But generally speaking, your Medicare will become your primary and your workplace plan will become your secondary and become less expensive.
Is it best to wait to claim social security until 70? And I’m sorry to say this. It depends on the person. Um, generally speaking, I love to see when people do it at 70, but I’ve had three clients I spoke with this week where I’m trying to tell them to go earlier at 68. And that’s rare, but it just sometimes there’s just tax implications that’ll be involved and she could retire earlier and you go from she doesn’t need the $100,000 that she’s making each year. She only needs 40 to live off of. She has all this room and now we have room for conversions by retiring two years early. Everybody’s different.
But yeah, we can help you come up with that social security number of one might be best. That’s another webinar I do. Social security planning is just as important as tax planning. So, make sure you don’t make a costly mistake by going too early, but there are people who can. If you stop working, but don’t claim social security for 2 years. Does that help with taxes? And again, it depends on like your other provisional incomes that you’re taking in. But it it comes down to your current income situation. And also, do you you know, one thing I see whenever people do retire early but wait to take social security, you might be depleting that 401k or that IRA really quickly just from living purely off of it for two years rather than using it to supplement your social security. But again, I see people regularly who can do that. It just comes down to the person and your financial situation. Folks, I got about six more people that need to answer the poll. If you don’t mind, I’d appreciate it. Do you need current actual spending or estimates? Has been working on this, but too much time consuming. Thank you. I can do some current actual. Yeah, good estimates. Good estimates. And whenever somebody says I live off of 70 grand a year, I say 75 or 80. I like to be conservative with it. I’ll say more than you tell me as far as spending. I’ll give you less returns than what the market’s been doing. And if your numbers hit, great. If you spend less or you earn more, we’re in a better financial situation. But I like to use not necessarily a doomsday scenario in financial planning, but um postrecession, you know, early postrecession recession numbers. And that way we’re really planning for the nitty-gritty and making sure that hey, I’m going to be fine even with all these bad scenarios thrown at me. Great. That’s good planning right there. All right, I think that’s all the questions for today, folks. Games just kicked off 9 minutes ago. If you’re not a college football fan, I’m sorry for making all the references. If you are, um, hoping you’re I didn’t hold you back from first quarter of your game today. Everyone have a wonderful day. I I love doing these webinars on Saturdays. I really do. We have a great turnout um for them and we’re going to have I’ll be doing these about two or three times a quarter, I think. But join me for my next one. Uh we got estate planning and then Roth IRA conversions. If you have any questions, there’s my email. Take a photo of it. Send me a question is your questions at any time. I work six days a week and I check my email seven. So here to assist you guys with any questions you have. You are a credit union member. If you didn’t know this, that means you own the place. We’re not owned by stockholders. We’re owned by the members. You guys get to vote. So, there’s any questions I can answer my, you know, answer. Any way I can help my bosses, let me know. You guys have a wonderful weekend. It’s a beautiful day out here in Texas. Hope it is a beautiful day where you are located, too. Have a wonderful day, folks.