Category: Alliant Webinars

  • 05/19/2026 – Alliant Webinar – Savvy Social Security Planning – What Baby Boomers Need to Know About Their Retirement Income

    Hello and good evening. I’m going to get started in just another minute or two. I just want to make sure people have a chance to get logged in. I will be right with you. Thank you. Well, good evening everybody. Thank you so much for joining me tonight to talk about what baby boomers need to know about their retirement income, social security planning. So, this is one of our popular topics that we uh uh me and my my whole team that we present. I pro I do this once a quarter. So every three months or so I do this presentation and it’s a very popular one. So we will keep on doing these and hopefully um if you’re seeing this for the first time again thank you for joining me. Hopefully you’ve seen some of our other presentations that we have done as well. I do topics like Medicare uh retirement planning uh market updates. I do many different topics. Long-term care uh you know just annuities I just did not too long ago. So uh but yeah, various topics important for financial education. So it’s something that I do. My name is Joe Gaspari. I am one of the financial consultants here at Alliant. I’ve been with the credit union for almost about 13 years here doing uh investment related uh I’ve been licensed for doing this for a little over 20 years, about 22 actually. Uh so doing this for a good long time. uh talking about investments and putting people’s money to work and mostly planning uh a lot of retirement planning. At the end of this presentation, I’m hoping that you and I could have a conversation one- on-one. I’ll be putting up a survey at the end of the presentation to see if you would like to discuss this topic. And what that means is basically many times when I’m talking to someone, if they say, “Joe, here’s what I have. Here’s what I want. Am I on the right path for retirement? Here’s how much social security I’m going to be getting. Maybe there’s a pension. How much spending are you planning to do in retirement? And this social security presentation is a big part of this uh especially with that retirement plan. Is social security enough? Probably not uh to live on in retirement, but we can certainly put a whole plan together. Um, so I do have actually someone just threw up a question on here and let me get I think it’s right on the next screen here. Uh, so this uh so we are cannot record these presentations for compliance purposes. Uh, and also because other people have tried to record uh these that we can track uh we are not able to have these recorded or we are not able to record this presentation. um for further information. I’m hoping that you and I could have a one-on-one conversation or you can certainly look out for this presentation again, maybe from myself or one of my co-workers might be doing this. So, but unfortunately, yes, we are not able to record and uh distribute these presentations again for compliance purposes. So, what else do I have coming up? I’m going to be doing tax planning. This is a big one for uh that we do uh quite a bit as well and it’s not so much filing tax planning. This has to do with taxes in your retirement or moving forward of what types of accounts, traditional IRA, Roth IRA, um savings, just regular brokerage accounts. How are things taxed? Some might be taxed now, some might be taxed later, and some things are taxed never like life insurance proceeds as an example, Roth IRA distributions. So, there’s many things like that and digging into what taxes mean to you in your retirement. And then with retirement, the seven things to do before you retire, another popular presentation that I do. So, uh, hope you hopefully you’ll see, um, I’ll see you on some of these presentations coming up. You do have access also to, uh, webinars, uh, to see what other topics are available. If you want to grab your camera and take a screenshot of this, uh, so you can have the websites, uh, at your fingertips. Then, um, Invest have a podcast you could listen to and check out our Aerys website and blog. and Aerys meaning Alliant Retirement and Investment Services. So, um you can see uh who we are, what we do, what types of products and services we offer. I can let you know that we do offer and I do offer full financial services from advisory accounts to some things that may have no fees if you’re just looking for guaranteed interest rates maybe better than what CDs can offer. uh many different things if you want to be ultra-conservative, ultraaggressive, or most likely somewhere in between there. Um there I certainly do offer that. But tonight, let’s dig into social security planning. So, we’ll dig into that. People are hurting their retirements by making terrible, costly decisions about social security. Uh things to know, uh you have many claiming options. decisions have far-reaching consequences. If you’re going to take it early, uh as early as you possibly can, then um it’s certainly something you’ll take a reduction in that payment. We’re going to talk all about this. Or if you wait as long as you possibly can, you’re going to get the highest paycheck, but of course for a shorter term, for shorter period of time. Uh choice impacts both spouses. Uh system is not bankrupt, not a Ponzi scheme. benefits are likely to um uh helped a family member and your friends aren’t the experts. One of the things I hear many times is if you were talking to a friend, a neighbor, a relative or someone that might be in the similar age group as you, but uh maybe they decided to take social security early and you might say, “Ah, that was a smart person. Maybe I should take it early.” Um they seem to know what they’re doing. Um or they took it later. Maybe I should take it later. uh what is your situation? This is not a cookie cutter where everybody should do the same thing. Some people might be forced to take theirs early at a reduced amount and some people can afford to wait and take a bigger paycheck later and depending on when you’re would like to retire, what’s your health status and what’s the best for your specific situation. And that retirement plan that I’m going to keep talking about a few many times throughout this presentation is going to help you decide that, you know, based on your specific situation. When I look at how much spending you want to do in retirement, what assets that you have, what other income do you have, including social security, and that will help us determine when you should take it. And if you took it earlier or if you took it later, the plan that we do and we do not charge for this plan. This is a complimentary service that we offer. So, it’s certainly something that I would encourage you to do is say yes at the end of this presentation on that survey. And it is a no cost uh no obligation uh consultation that we could do. And it is a very comprehensive retirement plan. you’d be pretty amazed on what’s uh what information you might get out of that. Uh I will mention also that uh you do have access to the chat box and the Q&A box, the question and answer box. If you do have a question throughout the presentation, ask away. Type it in either one of those, the chat box or the Q&A. And uh if you think of a question, go ahead and type it in. I’ll be taking all of those questions at the end of the presentation.

    So, will Social Security be there for you? How much can you expect to receive? When should you apply for Social Security? And how do you maximize that benefit? And will Social Security be enough to live on in retirement? So, understanding the value of Social Security first, will it be there for you? Here’s a little bit of uh dollars of uh you be might be shocked if you haven’t seen these numbers before, but we have um basically 6.2% 2% of everybody’s paycheck. If you have a job and you’re getting your, you know, your um social security and taxes taken out of there, um 6.2% of your paycheck goes into social security. And if you are working for a company, your company matches that 6.2. So 12.4% of your income. If you happen to be self-employed, you could be paying all 12.4% 4% of that goes into this trust fund and all that money piles up and then money goes in, money goes out. Uh if we looked at, you know, quite a few years ago, there was a lot more money coming in than there is going out. But look now, so I’m going to look in at the very top there, trust fund balance as at the end of 2024, $2.721 trillion. And at the bottom, the trust fund balance at the end of the year is 2.561 trillion. So that balance is lower at the end of 25 than it was at the end of 2024. And we could see that total income in the box there of 2025. $1.449 trillion coming in. You would think that would be a lot of money, but it’s not enough. We have 1.609 609 trillion going um uh going out. So there’s more going out than there is coming in and about $160 billion difference. So big difference of uh when we see that trust fund balance ticking down. Now here’s a little chart to show this. And you see the blue line is the money coming in. That’s out of our paychecks. That’s all the workers and uh everybody 6.2% of their income. The orange line, if you look at the very far left of that, it was lower than the blue line, which means more money was coming in than there was going out. And then at the end, look at it’s a kind of weird that that jumps up in 2008 2009. A lot of unemployment going on at that point. The financial crisis was going on there and a lot of stuff was happening. So uh uh a lot of people retired started their social security during that financial or after that financial crisis time it jumps up and now it’s even going to be increasing. Baby boomers are retiring more than people are coming into the workforce. So we now we have in that 2010 to 2020 where that orange line is higher more money going out than there is coming in. And now then we look at in 2034 2035 range, we’re looking that this might run out. That balance might go to zero. That doesn’t mean social security is going to stop. But if nothing is done in 2034, you could see at the middle box at the bottom there, 2034 where it says 81% basically little over 80% of benefits will be covered by income coming in from all the workers projected at that time starting in 2034. Um, and but will there be a 20-ish% uh deduction in payments? That’s certainly a possibility. So, uh, um, unless something is done and we’re going to look at what are some of the fixites for this. So, we’ve been seeing that more money going out than there is coming in. And as long as there’s people working, there will be uh that tax taken out and it will be funding. But again, starting in 2034, there could be a potential reduction. So, here’s some of the fixit that could uh that could happen. Right now, if you make um up to 184,500, 6.2% of your income goes to social security. If you make anything above that, so let’s say you make 200,000. So we’re talking 15,500 that is not taxed. So you stop paying into social security if you exceed that 184500. Will they eliminate that? Will they be uh will they raise it to maybe 250 or 500 or a million or whatever they might do? Will they change that uh currently and that creeps up every year that number goes up? Just about 2 years ago it was about a 164 164,000. Will they raise a normal retirement age? Currently it’s age 67 for those born 1960 or later. There was talk maybe or should we make it 68 uh or 69 or even uh 70 to get the full retirement amount. Will they lower benefits for future retirees? Will they reduce the cost of living? Currently, there’s an average of about a 2ish% cost of living increase each year. Now, over the last 5 years, there’s been more than that. When we look at 2023 after the big uh inflation year of 2022, inflation skyrocketed that next year in 2023, we saw an 8.9 or 8.7% increase in social security. Uh everyone got that was a massive increase, but considering the inflation we were going through, it kind of matched that with prices increasing. And then there was a 5.9 the next year. Then there was a 3.2 two the next year. Now, these are, of course, now we’re back into the twos again and we’ll see what happens next year with wherever inflation ends up this year. Usually October, early November, they will announce what the increase will be for that next year. Uh, but if I go back the last 25 years or so, back to about two 2000, it’s about a 2% annual increase. Will they take that away or reduce it or will they revamp that somehow? So, we don’t know what’s going to happen in the future. It seems like every election cycle we talk about social security kind of on the table, but it doesn’t ever seem like much gets done with it. So, the bottom line for baby boomers, if you’re already on income right now on social security, most likely not going to be affected, but what’s going to happen with some of the younger folks? So, what’s a clearer way to think about social security? It is an inflation protected income. you paid out of your paycheck uh for all these years. So, you want to be smart about how and when you collect. So, how much could you expect to receive? Um we’ll certainly talk about how your number will be calculated. But social sec social security um offers income you can’t outlive if your monthly benefit is 2,000 today. As we talk about these inflation adjustments, you could see at the bottom where it says assumes a 2% annual cost of living adjustment. If you’re getting 2,000 a month today, right now, $2,000 a month in 10 years, you’ll be getting with two 2% average increases 262,000 plus uh in total income. 20 years on social security is 583,000. 30 years or more, you can be talking very close to that million that you could be taking out of social security. All depends. I don’t know what what our expiration uh each of us individually how long we’re going to be here, but it’s certainly uh something that if you can get a gauge of if you’re 67 and you take it and if you pass away at 77 that’s 10 years or 87 and 20 years when people are living longer. But uh you know again what is your plan? Uh if your benefit is 2,000 today and you do get these 2% average cost of living increases, in 10 years that 2,000 will be a little over 2400. And in 20 years it’s almost 3,000 a month with those 2% annual increases. And in 30 years a little over 3,600.

    How much can you expect to receive? depends on your working career, how much you’ve earned over these years, and the age that you start taking it. So, at age 62, your earnings are uh are calculated, and it’s your highest 35 years of working. Your uh average index monthly earnings uh is what that aime is. Uh so, highest 35 years. So, if you started working at age 16 and let’s say you’re 66 and you have 50 years of working and uh it’s your highest 35. So, if you’re 16, 17, 18, you’re going through maybe school still, maybe in college, and you’re working part-time, uh those lower numbers probably will be falling off as you work more and more years. So, it’s your highest 35. It’s not the last 35. It’s not the first 35. It’s the highest 35 years. And if you are earning higher income now, every year you earn a higher income, a lower number falls off and your average increases. And your final number is calculated at age 62. I could say it won’t go down after that, but it could potentially go up if you continue to work and your average uh keeps increasing, but your number is calculated at that age 62. Um and it could be be increasing over the years with the cost of living adjustments. This is a calculation on here. But basically what this screen why uh it just shows if you worked the maximum and you put in the maximum into your so into social security every year of your working years. The highest that you could earn right now is $4,216.90 a month. So that’s, you know, if you maxed out, if you uh had very good income, maybe you’re going to be in the 36, 38, 3,900 uh range. And if you just maybe average income or lower income or took many years off, maybe raising children, maybe you’re at the 2,2, you know, 22500, but it all depends on how much you’ve earned over the years and again how many years uh and uh what uh age that you do start taking it. So, good to know, but why shouldn’t I claim it as early as age 62 instead of delaying for full retirement age or even age 70? So, if you take it early, your monthly benefit will be reduced. Uh, it also be reduced for taxes, potential taxes. We’re going to talk about how that all works. and Medicare premiums. Medicare, if you are on social security and Medicare, your Medicare payment comes out of your Social Security payment. Uh it’s an automatic that does happen if you are on Medicare, but you are delaying Social Security. Let’s say you start Medicare at age 65 and you don’t take Social Security till 67 or maybe even wait till age 70, you have to send in payments then. And currently Medicare is at I believe it’s 20290 $22.90 for Medicare that comes out and that increases pretty much every year. Uh when should you apply for benefits? Uh I’ll talk a little bit about my dad’s situation for example when we talk about health status, life expectancy and need for income whether or not you plan to work and survivor needs. Uh so my parents situation my dad uh his I think his first heart attack was at age 49. He had a bypass at 51. He had heart attack heart attack heart attack and another bypass at 64. He passed away at age 75. But when he turned 62 he did start his social security early. Kind of a health decision to retire or he did work a part-time thing. He was actually a deacon for the Catholic Church and uh he did uh you know get some part-time income for that but uh um he had to be limited because he did take a social security early. He had to limit what income he could receive but uh he ended up passing away at age 75. Financially it was still a decent decision. Um the easy number if someone said well should I take it early or should I wait? what if I live, you know, a shorter lifespan or what if I live a much longer life? And that age 78 to 80 range is kind of that break even. So if you’re saying, should I take it as early as 62 or should I wait till let’s say 67? Uh what you know what’s going to win? If you live past let’s say age 80, I’m going to say wait to take it. If you say I’m not going to be here until that late, I’m going to I might pass away earlier. So, I’m going to say then maybe you could take it earlier. But of course, we don’t know the expiration date. If we had our birth certificates had an expiration date on them, we can maybe know that and then I could tell you exactly when to take it. I can certainly do some calculations and figure that out. But we just have to put our best educated guess and I could tell you when I do the complimentary retirement plan. If you want to take it earlier or if you want to take it later, I plug in different scenarios. take it at 62 or wait till 67 or maybe even take it at 70. I can run those three different scenarios to see if you took a lower income but you had five more years of income or if you took the higher income at 67 and but that’s less years that you’re taking it or even 70 at a much higher income and even less years where’s that break even now when I do the plan at least it’ll give you a guide to say well whatever I choose if I take it at 62 or 67 or even wait till age 7D. I could show you in the plan that if it does work either way, all three scenarios might be, yep, you can do that if you want to. Then we can make a good educated decision on when you should take it. But at least you will know by doing this plan of at least I know that if I want to take it or maybe a health reason you have to take it earlier, I would be very comfortable in saying, “Yep, all three scenarios. Now, let’s kind of figure out what you want to do. At least we know you can do whatever you wanted to as long as all three of those scenarios do work when we do that plan. Will Social Security be enough to live on in retirement? Again, uh probably not. Um, you know, let’s look at the full retirement ages. So, right now, we’re pretty much done. Everyone aged 1943 or 54 that was at 66, they’re already well beyond that right now. And right now we’re getting into that 1959 age group. Later this year, if even you were born December of 1959, uh your social security, your full is is 66 and 10 months would be this coming October. So right now we’re talking mostly that age 67 and beyond is people that are not on it yet. And uh um so to take it as early as 62 would be that 1964 or later uh would be people that would be take making that decision. So depending when your birth year is uh if you and I are going to work up a plan for you and we can figure out is it even worth taking it at 62 let’s figure it out is uh but the answer might be let’s wait a little bit. If you have longevity in your family, we can help you uh really put pencil to the paper and not just guess when you should take it. Uh what if you apply for benefits early? So, we’re going to concentrate on the right column here. So, you could see at age 62, 63, all the way through 67. That’s age 67 in this example is 100% of your your full benefit. You get it all. And if you take it a year earlier, you’re getting about 6.7% taken off. If you take it 65, 64, 63, 62, you’re losing 30% of your benefit if you take it as early as 62. So 67 you’re full to 62 would be 30% taken off. And once you start that, you’re that’s for life that you are taking a lower number. Now, you’ll still get those potential average of to 2% cost of living increases, but those cost of living increases will be on that lower amount. So, I’m going to throw a reminder again that if you do have any questions, if you something you think of, uh, go ahead and type it in the chat or the Q&A box and I will get to those at the end of the presentation. What if you wait until after your full retirement age? And so, if you are uh let’s look at the right side again. Uh if you want to look at the middle, if you’re in that uh age 6 uh born 1958 59 range, um actually many people can be looking at this, but right now if you are age 66 uh full retirement age, you get four potential increases of 67, 68, 69, and 70. You can get 32% increase in your social security by waiting until age 70. If your full retirement age is 67 then it’s you get three increases so 124% so 24% more if you wait until age 70 so that is that you know reason of why would I want to wait that long if you do have longevity the plan will certainly show that if you do live till 80 85 90 95 plus um it’s going to be well worth it you’ll see a big difference in uh that paycheck and how much you’re going to be receiving by getting a 32 or 24% increase in your social security for that 20 plus years. Uh how to estimate your social security. I’ll give you the easy ssa.gov. So that’s the bottom one where it says ssa.gov planners bene you know b um um benefit calculators and but ssa.gov gov will get you to the main site where you can navigate and if you have not created a profile. You will create a profile. It goes through those kind of those credit report questions where it says which of the following cars have you owned in the past? Which address is associated with you? And it might have an address from 20 years ago. But uh you have to go through that list of questions verifying who you are and then you create your account and you can see your numbers and it’s a very intuitive site that if your full retirement age is 67 and you see you get 3500 a month and if you took it at 68 it’ll tell you that number. If you take it at 66 it’ll tell you that number. 65 64 or you could even say what if you took it at 67 and 6 months uh 6 months later you’ll get a little bit more. it’s recalculated monthly uh on this, but ssa.gov will get you to that uh to setting that up. And I do get alerts. In fact, I think my latest alert was within the last month. So, after I file taxes, um I had to pay a little bit. So, I toed mine probably April 13th or so. uh just a couple of days before the the 15th and uh so filed and I just got an email probably within the last you know 30 days from social security saying your new numbers are calculated you know view them now uh so you do get alerts or reminders every year to see your updated numbers so why delay benefits when we look at dollar amounts so let’s look at um you know so this again I’m going to go on the left side here, age 67, go down to 67 and go across where it says 100%. That is, so this is an age 67 person that we’re talking about. Uh, and the full monthly benefit for this specific person is 3,000 a month. And, uh, with cost of living increases, we’re going to get to that right column in just a moment, but so we’re talking about a 67 uh, is the full benefit uh, age for this person getting 3,000 a month. If that person decides and says, “I want to take mine at age 62,” that person will get 2100 a month. And 2100 a month, you could see the numbers all the 63 all the way up to age 70. So if that 3,000 a month person wants to defer until age 70, they will start income at 3720 a month. So big difference from 2100 the soonest you could take it to 3,700 the latest you could take it. That’s a it’s a 1,600 a month compound 2% annual increases for let’s say 20 years. Uh big difference in income over time. So why delay benefits? Again uh more income later on. So let’s say the person started income if claim at 62. So we’re going to look at that column right now. And if that person, that 3,000 a month person, um, they took it at 62, again, remember that was 2100 a month, but with a 2% cost of living increases, that income would be projected to be 2,460 by that time, by the time that person reaches age 70. by the time 75, 80, 85, all the way up to 100. I’ll even go with the 100 number for this example. But if you live to 100, you’d be that person would be getting 4,457 a month. If that person waited till age 67 to get the 3,000 a month, by the time that person is 70, 2% cost of living increases. Uh then we’re talking 3500 a month at age 70. And look at age 100 6,300. We’re talking almost 2,000 about 1,900 more uh a month uh by waiting uh for that uh at that age 100. Again, how many of us are going to live to age 100? But this is just I’m showing you the extreme example here. So if that person waited till age 70, he took the maximum income at age 70 4359 and then by the time that person is 10078.95. So age 62 age 100 4457 to 70 uh78.95. We’re talking a big difference. So again the longevity means a whole lot there. Again, I don’t know if your life expectancy is going to be 65, 70, 75, 90, 100, 100 plus. Who knows uh what specifically will be, but again, just knowing these income differences might make a difference in your retirement plan, especially depending on how much you would like to spend in retirement. How do you maximize your benefit? Uh examine your records and uh making sure everything is accurate. Log into the website. You can actually see every year you file taxes. Mine it goes back to my age 16 and I made probably $1,500 maybe that first year. Um, and then it’s going on and on and through all the years of increasing income over time. And uh, but you could see every year you file taxes and certainly see if anything is missing or incorrect. Applying for social security at the optimal time. your uh consider your income needs both now and in the future, your life expectancy and if you are married filing joint, your spouse’s life expectancy, too. So, we’re going to look at an example or two about that as well. So, taxation of benefits. So, the first one that we’re looking at here is if you decide to take your social security before your full retirement age early. So if your full retirement age is 67, then if you took it at 66, 65 all the way down to 62, if you take it early at all and you are getting that income, if you decide to work, you can’t make more than $24,480 a year without this $1 of every two. And what that means is that if you make more than that, every $2 you earn, $1 goes back into social security. Uh so, um it’s certainly you want to be very cautious of uh how much income you’re getting, you’re earning if you decide to take social security early. Some people will say, “I need it. I need the social security income and I need my job income.” I know it’s all going to kind of correct. You could see the benefit will be adjusted at your full retirement age. So, you’re putting money back into social security. You don’t get a lump sum back when you’re hit your full retirement age, but you do get um like a prrated increase in income for that, but not until your full retirement age. So, again, don’t let the earnings test discourage you from working. Sometimes you have to do what you have to do. And to avoid the earnings test, wait until full retirement age or later. If you do take your social security at your full retirement age or later. There is no $1 of every two going back. You can work. You can make as much as you want. It doesn’t matter. There’s no penaltyish. I’ll use the word penalty for that. It’s only if you retake your social security early and continue to work. Taxation of benefits. So this is how are you taxed on social security. You don’t have to have a lot of income for your social security to be taxed. You could see that if you are married filing joint if under 32,000 then you do not pay social security uh or taxes on your social security. If you make between 32 and 44,000 up to 50% of your social security can be taxed. Over 44,000 up to 85 of it is taxed. But I can tell you the nice way to say it, 15% of your social security will not be taxed. So, but up to 85% of it can be. And you could see the income for a single filer. It’s not much lower than that. And uh um again, married filing separate, there’s uh you’re paying tax uh on it. If you are married filing separate, you’re paying 85% of it. It will be taxed. Now, there’s we got this thing going on right now and I’ll use the term the big beautiful bill that was uh passed earlier um well last year when we talked about uh what uh you know the the no tax on social security didn’t really go through the way it was anticipated, but they did this $6,000 credit or deduction in addition to standard deduction or other itemized deductions that if your income is below a certain level, it’s below $75,000 000 if you are single or 150,000 married filing joint. If your income modified adjusted gross income is below that, you get an additional 6,000 credit or deduction for uh um if you are 65 or older and you can uh typically it wipes out the taxes you would pay on social security if you do get that full deduction. then there’s some phase out and then if you make a higher income you might not get that uh additional deduction. So that goes through 2028. So who knows what’s going to happen. Are they going to extend it after that? I’m sure who was ever in the administration at that point. We’ll see where we go at 2029 and beyond. But uh you know we’ll see through 2028 if you’re under those income limits enjoy some uh additional deductions to wipe out taxes on your social security. Uh ways to minimize taxes on social security is reduce other income of course. So if you’re not working uh you you know so it’s certainly something you’re putting yourself in a lower bracket. Uh anticipate IRA required minimum distributions RMDs. This is very important especially if you are not withdrawing from your retirement accounts prior to age 73 or age 75 if you are born 1960 or later. So I’ll just say age 73 for this example. If you are let’s say you’re 66 right now and you’re you want to defer taking any withdrawals from your uh your 401ks. If you happen to have some sizable balances in 401k or traditional IAS and you’re going to be mandated to take the required distributions, I’ll use an example of a million retirement account. A million-doll traditional IRA, you have to take out in the range of about 38,000 um from your IRA. Little it’s actually just a hair under 3.8%. So when you’re 73, so you might say, man, if I have a $2 million IRA, that’s over 70,000 that you have to take out. So if you are blessed with big balances on those, part of the retirement plan that I will offer, we’ll talk about taking either withdrawals or converting to a Roth IRA prior to those required distributions. And so we could start to spend those down a little bit so you don’t have such big required distributions at age 73. Big thing that I do with a lot of people, especially toward the end of the year when we figure out where your income is for the year and how much you uh you you know would like to maybe convert from a traditional to a Roth staying within certain tax brackets. Some might say I don’t want to exceed the 12% bracket or the 22% bracket. Uh but it’s certainly something that you and I can look at. Again, it’s a complimentary thing that we do. The full-on retirement plan with Roth conversions may be in there prior to uh your required distributions. So that’s that convert to a uh IRA to a Roth. Delaying social security to reduce the number of years. So if you’re looking at I don’t want to pay tax on social security. I’m 66 or 67. maybe wait until 68, 69 or 70 if you can afford to. And that’s part of the plan, too. What if you did spend more of your own assets at age 67, 68, 69, and then took a bigger paycheck for social security at 70? Can will the plan support that? And it certainly is something that this plan will certainly do. It will tell you that yeah, you can afford to live off of your own assets for these years based on the spending you would like to do and then take a bigger check later, then you’re spending less of your assets once you do start that bigger social security income. Reducing expenses or pay down debt uh and adopt a simpler lifestyle. That one might be a little easier said than done. Uh but it’s certainly something to consider there. Continue to manage taxes throughout retirement. um Medicare. So, here’s that 20290 that I mentioned earlier for Medicare that uh comes out of Social Security and looking at to assume a 2600 primary insurance amount PIA at age 67. We look at what that percentage is. So, if you’re at if you take it at age 62 and you’re getting a lower paycheck, that 2290 is a bigger percentage of that lower paycheck, but it’s a much smaller percentage the longer you wait and the bigger that paycheck is. Uh, that 20290 is a smaller percentage. So, but just know that 20290 does come out of your social security check or payment. Um, when to apply for social security? If you apply early, your benefits start lower and they stay lower for life. Uh cost of living adjustments, colas, magnify the impact of early or delayed claiming. And again, a a 2% average cost of living increase on a lower number or a higher number. Again, those compounding makes a big difference over time. Your benefit may be taxed and or reduced to cover Medicare premiums. Don’t let that earnings test, again, if you have to file early, start social security early, and you’re still working more than that 24,000, uh, you have to do certainly you have to do what you have to do. Like I said, uh, and delaying benefits may give surviving spouse more income. So again, we’re going to talk about spousal benefits coming up here in a moment. I’m not going to live so long, so why shouldn’t I just claim my benefit when I can? For couples, you should always maximize the higher earnings benefit to protect the sur protect the surviving spouse. Here’s an example of how social security works with a higher income earnner and a lower income earner. So, let’s say John has a primary insurance amount. Again, his age 67 I’ll use uh is 2,000 a month and Jane had a lower income, maybe a lot less years working or just part-time work. Uh but her her benefit on here her full retirement benefit is is 800 a month. So if Jane applies at her full retirement age her benefit will be a th000 not the 800 because she is guaranteed to get 50% of John’s at least. So she could take her own. If her she was getting 1,200 she would take her 1,200. But because it’s lower than J’s 50%, she can not take the 800, take a thousand because the law says that she can take 50% of John’s, assuming John um you know waits his full retirement age, too. So the primary worker must have filed for benefits for her to get that 50%. He has to file for her to get that. The spouse must be at least 62. But if she she can get that spousal benefit, but it will be the 50% minus an age adjustment. So it won’t be the full 50% because in this case, if someone took it at age 62, it would be reduced because she decided to take it earlier. There’s no delayed credits for on spousal benefits. So, if John waited until age 70 to take it um at a higher than 2,000, she would only get that based on that uh that full retirement age, that 2,000. So, 1,000 would be her benefit. She doesn’t get increases by waiting until 68, 69, or 70. Well, I’m already widowed or divorced, so how does that impact the Social Security? If you are widowed or divorced, divorced, you might be eligible for survivor benefits, divorced spouse, survivor benefits or uh divorced spouse benefits that can increase your monthly check. So, uh we’ll come up with a we’ll see a couple of examples coming up here. So, survivor benefit will depend on the age the deceased person started claiming. So if the deceased person started their social security before his or her full retirement age, the survivor benefit will be limited to the higher of the deceased spouse or the uh deceased spouse’s benefit or 82% of his primary insurance amount. If deceased claimed after the survivor benefit will include delayed credits. So that this one as a survivor that you could get that 68, 69 or 70 higher benefit.

    So if the spouse dies while both are receiving benefits, the wid widower uh widow or widowerower may switch to the higher benefit. So here’s an example. Joe and Julie are married. Both are over full retirement age. Joe’s benefit is 3600. Julie’s benefit is 1,800. If Joe dies, Julie notifies Social Security and her 1,800 benefit is replaced by the 3600. She gets the better of the two. So in this case, if Julie passed away, the 1,800 would go away and Joe would just keep his 3600. But in this case, saying Joe passed away, she gets the 3600, but the 1,800 goes away. So either one if one of them passes away that the bigger benefit remains but the lower one will go away. So that’s something in planning purposes is when two people are still alive and you’re getting you know a much higher income because both of you are getting it if one of you passes away the low even though it’s the lower benefit one social security benefit goes away. So again, another reminder as we start to get toward the end of the presentation here, uh questions, if you do have any, fire away and type them in at any time. Uh and they will save to into the presentation. I know we have some already, but uh if you do have a question, go ahead and type it in there. Uh so Joe and Julie are married and uh Joe’s is 3600. Joe delays claiming until age 70 his benefit. Now that 3600 would be 4464. So in this case, Joe’s instead of taking it at 66 or 67, uh, he waits age 70. And this is so his new benefit is now 4464. If Joe dies, Julie’s survivor benefit would be the 4464, not the 3600. She gets those age increases. by him waiting till 70, he passes a higher paycheck uh to his surviving spouse. So that’s one of the reasons even though Joe might say, “Well, I’m not going to live long. Why don’t I just take it as early as possible?” In this case, it helped the survivor couple must have been married at least 9 months uh at the date of death. Uh and survivor must be at least 60 for reduced benefit. So if a survivor is 60 and gets that uh that survivor benefit because it’s not under the full retirement age, you can take it legally at or as early as age 60, but it will be a reduced amount. Survivor benefit is not available if the widower or widow or widowerower remarries before age 60 unless that marriage ends. So if that person did get remarried but it it end up divorce or deceased uh um other spouse again then uh it could happen but if that person is married then that widowerower uh benefit is not available. Divorced spouse survivor benefit. So even a divorced spouse the survivor benefit will be but they would have to be married for at least 10 years. Same as spousal benefits. Uh so divorce spouse benefit married for 10 years. So you now we’re talking two living people uh but but divorced the marriage had to be at least 10 years. The person receiving divorce spouse benefit is currently unmarried. She can’t get remarried. Uh the expouse is at least age 62 and if divorce was more than 2 years ago the expouse does not need to have filed for benefits. So that means so let’s say Mister is the higher income earnner in this case and they get divorced and Mrs. now is uh is let’s say 62 and she wants to take a spousal benefit. If they if there they’ve been divorced at least 2 years but they were married for at least 10 then he does not have to file for her to get that sp that exspousal benefit. So that certainly can uh um could be in play. More than one expouse can receive benefits from the same worker. Benefits paid to one expouse do not affect the worker or other current spouse or expouses. Uh divorce spouse uh benefits stop upon remarage of spouse collecting benefits. Uh so I’m going to tell a little uh goofy little story that I say at the end of this presentation every time that I heard actually when I went to a social security from someone from social security went to a webinar I don’t know 15 to 20 years ago somewhere in that range a long time ago but I heard this and I’ll share that with you in just a moment. So this is really more comp complicated than I realize. Would it be better if you took it early? Should you delay? Again, the complimentary retirement plan will help us determine that. Will you pay a penalty or get a bonus? People are hurting their retirements by making terrible costly decisions about Social Security. And Social Security offers an inflation protected income. Your monthly benefit will be be reduced if you take it early. Couples should always maximize the higher earners benefit for the surviving spouse. And if you’re widowed or divorced, you may be eligible for benefits. Uh so again, I hope you and I will have a conversation about your specific situation and uh considering if you do have pension, if you have IAS, 401ks, Roth IAS, required distributions, how does all this stuff work in your plan? The retirement plan that I’m talking about takes every single thing here into account of what spending you’re doing from various types of accounts that you have. And I would get the whole list of whatever you assets that you do have. What’s that order of operations for withdrawals? Should you take savings out first? Should you take traditional IRA out first? Should you take tax-free Roth IRA out first? And then we can certainly talk about the order of operations as well. So, Social Security can certainly estimate how much you’re going to be receiving, uh, but they won’t project and they won’t do a plan for you as far as tell you what to do or how to do it or what does this mean for all of your other stuff. Uh, you can certainly get numbers from them, but please use us here. It’s a complimentary thing that we do to help you figure out when you should be taking Social Security. So, when should you apply? What if you want to keep working? What if you’ve already applied? How much will your benefit be? Can you coordinate the spousal benefits? What’s the best long-term strategy? And what do you do next? Say yes to the survey and you and I can certainly have that conversation. So, very quickly, I’m going to say this little story and then I’ll get to some of the questions at the end here. Uh but basically when we talk about the surviving like spousal and expousal benefits and things like that, the story this person said was let’s assume a 25year-old man uh gets married and she is 25. Every person on here they’re all the same age. So let’s say he gets married, he’s 25, marries a 25year-old and 10 years later they get divorced. let’s say 10 years in one day just to say that they were married that 10 years that she needs uh they need to be. So they get divorced at age 35 and he immediately gets remarried at 35 and that ends at age 45. So married for 10 years again. So we have two expouses now and he gets remarried at 45 and gets divorced at 55. So now we have three expouses. He gets remarried at 55 and now let’s say they are 66. Let’s say they were at this full retirement age. So he’s got three expouses and one current spouse. Let’s say he’s getting ready to get his social security and he qualifies for a $3,000 a month benefit. Now the expouses, expouse number one, 2, and three, they were all married for at least 10 years. So they get the spousal benefit which is 50%. 1,500 1,500 1,500 for the three ex spouses and then current spouse gets 1,500. So, let’s assume that none of these uh the the three ex’s and the current spouse worked. They let’s say they never worked a day in their lives and they didn’t contribute to social security, but the law allows them to take one person gets 3,000 a month and then 1,500,500,500 for the ex’s 1,500 for the current spouse all on one worker. Kind of one of those kind of wow wonder why social security is kind of so messed up here. But, uh, just a goofy little story just, uh, to to show that, yeah, there’s a lot of different things that could happen with Social Security. But, uh, so with that, uh, my information is up on the screen here. I’m going to put up the survey in just a second. I’m going to take some questions and but you also see a QR code. If you happen to have your phone handy and you do want to set up a time, you can actually put your camera on that. you’ll click on the little yellow thing that comes up and you’ll get to my calendar and you could schedule appointment if you want to do that right the second or certainly uh if you say yes on the uh survey here then I will be reaching out scheduling a time for you and I to meet. So with that I’m going to put that survey up here right now. So, you’ll see that hopefully you see that up on your screen right about now. And uh so, please respond to that while I’m going through the questions. And hopefully you and I will have a one-on-one conversation. So, let’s go through um let’s go back to Joe. Are all the the services free? So, um services free. So, basically everything that I do, uh, whether it’s just a consultation and you want to just talk about, here Joe, who are you? What do you do? What do you offer? Um, if you want to do the full retirement plan, not a dime. We do not charge anything for any of that. We do even have some investments that don’t cost a dime. We do advisory accounts though. That might be the percentage of an you know like I’ll use that 1% that many you know Schwab Meil Lynch all these big companies that do advisory accounts do where you might pay a 1% advisory fee based on the amount of assets you invest. There are certainly accounts that like that that we do. So it’s not everything is is free but to figure everything out we’re not going to charge you a dime. If we do some investments after that, we can certainly talk about some fee structures on some of the things, but not everything does have a fee. Some things don’t have any fees at all. Uh with the talk of uh cutting benefits to save for social security, do you see uh some clients claiming early in the hope of uh locking the benefit prior to Hang on, let me scroll down to new legis uh legislation. Should existing recipients be uh grandfathered from benefit haircuts? Uh I hate to say, but there’s no guarantee on any of that. So some people, yeah, they might say, I’m going to take it while the taken’s good. Uh you know, my dad uh was in that sim situation, health reasons that I’m going to take it to 62. I don’t know how long I’m going to be here. But in the case of I don’t know if social security is still going to be here, I’m going to take it while the taken’s good. Sure. Yes, some people are doing that. uh but be because they are taking it are they grandfathered from any reductions? No. Uh so there’s certainly that opportunity that if nothing is done by the year 2034 35 and beyond that could people currently on social security see a reduction they could. Uh we don’t know what’s going to happen but uh there’s no guarantee no uh no grandfathered in on that. Um

    So, okay, I came in late. Uh, so unfortunately, someone that came in late, uh, so we do not have recording I mentioned at the beginning of the pres presentation. So, uh, please, I do have your information here. I hope uh, please say yes on this and I would love to have that one-on-one conversation with you uh, just to go over what you might have missed at the beginning. So, but unfortunately, yes, we were not able to record that. Uh, do most people spend their social security check or save it? I asked because I say uh I save it. I may earn more than 8% and um taking early. Any problems with uh that thought? So, no. I I actually do have people that uh might not need the income if they’re taking it and they’re saving it and growing their their money. Uh no, I I have seen that many times. So, some people will say that that’s part of the uh if you decide to take it a little early, but you’re not going to spend it. You’re just going to take it and bank it and grow that money. That’s certainly something to consider. uh many can’t afford to do that. But if you’re able to afford to um you know, you have other income or other assets and you don’t need that uh that income, but you decided to take it early, uh yeah, that’s a wonderful thing that if you can’t make that money grow and if you got it in the market or if you’re just getting interest rates on that, that’s certainly something that some people will do is that I decide that I decided to take it early, but I’m not spending it. I’m banking it and let it keep on growing. that does compound and uh save. That would be a good reason to take it early again if it fits in within your plan. So, yeah, great for uh for you that you’re able to save that. Uh let’s see. I know there was uh how far in advance can I apply for social security retirement benefits? Um up to four months before the date uh you want to start the benefit. So, yeah, typically around that uh two to three, you know, two two to 3 months. I mean, it used to now that everything’s online, it does move faster than when it was paper applications years ago and you had to do it, you know, many more months, but uh at least a couple of months before that you want to start applying for benefits. Um just so you’re geared up for when you want it to start. It’s there’s no delays in that. Um that you can certainly do that, but a couple of months in advance, you would want to start doing that. Uh how do I know the time is right to take social security? So again, when I do that retirement plan that uh figuring out what is the the right time, if you just say, “What if I took it at 65 or waited till age 67, which one is it wins?” It’s going to be very close. It’s not a huge huge huge long-term difference, but there is a little bit of a long-term difference where the longer you live, I’m going to say wait till 67 if you can. But uh when is the right time for you? That’s why I do the plan. I plug in 65, I plug in 67, and we look at the results of the plan. And uh maybe you decided to take it early and not spend it. Just like the last question, you wanted to bank that. Let’s plug that in and let’s see what uh what wins. Um you know, what balances you’ll have. And it takes taxes into account. It assumes that if you have higher income or lower income, it takes a lot of the tax situation in there, too. uh looking at the you know Roth IAS or traditional IRA withdrawals and conversions and the whole the whole thing uh that we can certainly do. So um figuring out when is the optimal the best time for you to do it? Let’s let the plan help us figure that out. Um how do I determine what the break even point is and that’s going to be between age 68 to 70. Uh, and the plan helps us figure I do actually have some other spreadsheets that I I’ve done for people of figuring if you take a lower paycheck at 62 or if you take a bigger paycheck at 67 by but you get five more years of that lower income that break even is going to be between uh 78 to 80 range is where that break even is. Uh let’s see if anything else came across. That was all the questions there. I’m at 702. Sorry I went 2 minutes over. Uh, but thank you all so much for your time and attention uh today. If you did say yes, I’m going to certainly be reaching out to you and scheduling a time to meet. Thank you all so much for your time and attention tonight. Have a great evening.

  • 06/04/2026 – Alliant Webinar – The Good, The Bad And The Ugly – Annuities

    Well, we’re going to go ahead and get started. My name is Malcolm Horn and we have Kim Kennedy with us. Also, um again, thank you. Thank you for taking time out of the day to attend our webinar regarding an annuities. Today’s going to be very educational. Uh we’re not going to dig into specific companies, products like that. This is today’s webinar is going to be very educational regarding the you know the pros and cons of annuities, the bad, the good and the ugly. Common question that Kim and I get are, are we employed by Allian Credit Union? And yes, we are. We’re part of the retirement investment services division of the credit union. We are located in Denver, Colorado with offices in Lakewood and DTC. Anybody that’s joining from out of state, we do virtual meetings. Also, of course, if you live in Colorado and you’d rather do a virtual meeting, we’re happy to do so. At the end of today’s webinar, we’re going to answer any questions that you might have. So, make sure to put that in the Q&A and chat box. Also, if there’s anything specific that you want to kind of understand regarding annuities, put that in the chat box, too. And we’ll make sure that hopefully we cover all that. But, you know, again, there’s a lot of moving pieces when it comes to annuities. So, we want to make sure we’re answering those over the next week. We already call everybody just to kind of touch base, make sure your questions were answered. Also, we have some upcoming webinars that we want to make sure that you’re aware of. And that’s going to be on Thursday, June 18th. We’re going to be talking about Irma. Irma has to do with Medicare and the amount of income that you make and your Part B and D premiums may increase depending on your income. So, again, we want to make sure you’re aware of this. more and more people are being affected by this and they’re like, “Why is my Medicare much higher than than what they’re saying it is? It’s because of Irma.” We also are going to be talking about tax planning, you know, ultimately showing you and discussing ways to help you reduce what you pay to the government in regards to taxes. So, again, very educational um but very good. Both these are very good topics we like to talk about and we implement when we work with our members, our clients. Um are we are not the only ones that do webinars. There are other financial consultants that do webinars. You can look at the schedule and feel free to attend any of those. We also produce a podcast on various financial topics. Our website has a lot of financial information if you’re looking to learn more about a specific financial topic. So with that, we’re going to pass it off to Kim and she’s going to jump into annuities. Thank you again for attending. Well, thanks Malcolm and welcome everybody. Appreciate you spending a little bit of time with us. So let’s just dive in and uh talk about annuities. So here’s our overview for today. What is an annuity? What are the different types? But I heard they’re bad. How does the taxes work with annuities? What’s in it for them? Do I get a free meal with that? How do I know if the annuity I have is any good? Can I get out of my existing annuity? And who can benefit from annuities? Well, first the definition of what is an annuity is it is simply a contract between you and an insurance company where you contribute money upfront and then receive payments back over a period of time. And you can choose to have those payments come back in a variety of ways, including a lump sum or an income stream that lasts your whole life. Some of the reasons people buy an annuity is they want principal protection. They want a fixed rate of return. You might want long-term growth or long-term growth with some downside market protection. You may be looking for income for life where you’re kind of creating your own pension. Or if you’ve got money in savings that’s nonretirement, you’re just looking for tax deferred growth.

    There’s a couple types of annuities. There’s immediate annuities and deferred. So, let’s dig into each of those. An immediate annuity is funded with a single lump sum of money. So, you’re basically handing a pot of money over to the insurance company and in exchange for that, they’re going to give you guaranteed monthly payments. This is an income now strategy. You can choose how to receive that money over a certain time period. Maybe you want it over 5 years or 10 years, 20 years or your lifetime. You can use IRA or nonIRRA money to buy an immediate annuity. There’s also something out there called a QAC. It stands for qualified longevity annuity contract. And this is a way where you can put some of your IRA money into one of these contracts. and it basically defers your required minimum distribution until 85. There’s some catches that go along with that in terms of the growth of the contract and there’s a maximum. The most you can lock away in that type of a contract is 210 grant. Deferred annuities, these are more income oriented as well as accumulation oriented and these come in a couple different flavors. a fixed annuity, fixed indexed, variable, and structured. So, let’s look at these in more detail as well. So, a fixed annuity, think of it kind of like a CD. You’re going to get a guaranteed rate of interest for a specific period of time. Your money is principal protected. The difference between this and a CD is your interest earned is tax deferred until you withdraw the money. Right? If you have a CD at Alliant, you’re getting a $1099 every January and you’re paying tax on the interest that you’re earning on that CD. With a fixed annuity, that’s not the way it works. It’s deferred. There’s no annual fee for a fixed annuity, and you’re able to purchase these with IRA or nonIRRA assets. There may be charges and a tax penalty for early withdrawal. Tax penalty is if you’re pulling money out before 59 and a half, you’re going to get dinged an IRS penalty. And early withdrawal simply means if you bought a five-year fixed annuity and you want to bail after two years, they’re going to charge you a penalty. And just to give you some ideas of rates, I mean, you can see the rate rates of CDs on Alliant website. We’re still under 4%. I’m looking at a three-year fixed annuity, 100 grand or more. We just got some new rates today, 5.05%. A fiveyear is 5.4% and a sevenyear is 5.5%. So all those are $100,000 deposits. So we’ve seen with, you know, the the war causing oil prices to go up and inflation to go up, we’re actually seeing interest rates tick up a little bit. We don’t know how long it’s going to last. Uh, but those are some pretty good rates, especially if you’re a conservative investor for at least some of your money. So, here’s an example. If you just were to say, let’s go all the way down to the bottom on the left, 4%, which is a little low compared to the rates I just told you, but if you put a 100 grand in at 4%, they acrew daily, they compound annually. At the end of the five years, your 100 grand is 121,665. just kind of gives you an idea of uh how it grows. A fixed index annuity, these are usually five, seven, or 10-year contracts. Malcolm and I are generally in the five to sevenyear range. These are also principal protected. So, you are protected from market downturns. You don’t have a stated guaranteed rate of interest like a fixed annuity. You get interest earned based on a market index like the S&P 500. The amount of interest you can earn is capped uh certainly based on the return of the market. So for example, right now the best cap rates we have are 9 and a quarter 9 and a half%. So let’s say you owned it today. They take a snapshot of the S&P 500. You’d wait a whole year on the anniversary. They’ll take a snapshot again. Let’s say the market’s up 12%. You’re capped. You’re only going to get nine and a half or nine and a quarter in my example. Let’s say the second year the market does six. You get six. Let’s say the third year the market’s down 25%. Well, you don’t get any interest that year, but more importantly, you do not lose a penny. So, the concept with a fixed index annuity is you’re willing to accept part of the market gains in exchange for never taking a withdrawal. Same thing. Interest earned is tax deferred. So, you know, if it’s IRA money, obviously it’s always tax deferred. But let’s say you took money out of a savings account or something that was nonretirement. You’re not paying tax on that interest until you withdraw it. No fee on this contract. Unless you decide to add on a special benefit. There are ways where you can turn these type of products into lifetime income streams or you can add an enhanced de death death benefit feature if you’re looking to beef up beef up a death benefit for a beneficiary. Same thing, you can use IRA or nonIRRA money for this type of product. And same thing about, you know, charges, tax penalties, and early withdrawals. That’s kind of consistent. All right, here’s an example of what I just described in the previous slide. Um, so let’s say you can see the market is the dotted line. In year one, the market goes up, you got gains. In year two, the market goes up that you locked in some gains. Year three, the market goes down. You see the dotted line dropping down, but notice your annuity value is staying level. And then at that three-year mark when the market goes down within the fixed index annuity, you do get to reset at that lower index value going into the following year. You don’t have to make it up. You just get to reset, which is really a nice bonus. Uh variable annuities, these are the ones that generate all the bad press and all the negative connotation that annuities are bad. Well, let me tell you why. So the time periods uh 3 to 10 years, I’ve seen some even longer than 10, 12 to 14 years. You do have the ability to invest in multiple stock and bond investments. You do have risk based on the underlying investment that you select. I mean, on the good side, you get all of the upside of whatever those investment options do, but on the downside, you get all of the negative market performance as well. There is a a benefit in there called a death benefit. So, for example, in a variable annuity, if you put in $100,000 and the market tanked and your h 100,000 dropped to 50,000 and you passed away, your beneficiary would get the hundred. So, the way it works is is your beneficiary gets the current value or the original deposit, whatever is greater. And it sounds wonderful, right? But there’s a cost to that. Um, gains are tax deferred until you withdraw. Nothing different there. Several annual fees apply. And those fees apply whether the market’s up or down. And we’re going to talk about fees in a few slides. Again, IRA or nonirra money is fine in this type of a contract. And then there’s something called a structured annuity. Um, and it’s kind of in between. It’s a blend of a fixed index and a variable. These are six-year contracts. You know, the the regulators came in some years ago and standardized a lot of this stuff and uh really focused more on accumulation, but this these are six-year contracts, as I said, a blend of fixed index and variable. You are able to track or invest in market indexes like the S&P 500. So you’re able to get marketlike returns and you do have some downside market risk. However, you can add some protection. Now some of the things now, you know, you might get all of the upside or 90% of the market and 20% protected on the downside. I I’ll show you some examples of that in a minute. Same rules apply. Gains are tax deferred until withdrawn. No fee on this contract either, unless you choose to add an additional benefit such as an income writer or an enhanced death benefit feature, either type of money, IRA or nonIRRA. Okay, so let’s take a look at one of these structured annuities. So they have cap rates just like the fixed index did. Um, so let’s say in example A, the market did eight. So you see that in the teal blue. So you get eight. In example B, let’s say your cap rate is 10. Um, in example B, the market did 12. So you see the blue is above that cap line. Well, you’re going to get credited the cap rate of 10. So you are leaving some of the upside of the market on the table potentially. Now if the market is negative, you may receive a negative uh hit to your account but only when it’s greater than the buffer or the protection level. So let’s look at uh example C. The buffer is in this case let’s say 10%. That means that the insurance company would cover the first 10% in losses before your account had any negative performance. So an example C, let’s say the market was down eight. You see that in blue? Notice you you’re down zero because the account is down less than 8%. So you don’t lose a penny. Now, example D. Let’s say the market’s down 15%. Now the buffer covered the first 10. So in green your account is down five. So a buffer means that the insurance company will cover the first x% in losses. So generally we see those buffers 10 15 20 even 30%. Obviously the more protection on the downside the lower your upside is. There’s also one other strategy within these structured annuities and it’s called participation rate. You know, this slide shows that it’s 130% participation. And what that means is if you pick the six-year option on the S&P at the end of the six years, you’re going to get 100% you’re going to get over 100% of whatever that index does. This slide is saying 130%. Those rates aren’t that high right now. I mean, we’re around 10 105% to 110 depending on the carrier and rates are changing all the time. But in this example, if the index over six years did 60%, so that’s 10% a year, at the end of the six years, you’re actually getting 130% of that. So you would make 78%. So it’s a way to earn more than the index performs. they still have that level of protection, you know, a 10% or 20%. And again, more protection that you choose, the lower the upside is. Also, a lot of these companies now are offering a performance lock feature. Let’s say you purchase this one on the screen and it’s a six-year contract and after five years, the market has just been on fire. or you’ve had a lot of gains, you’re very happy with the performance, you got one more year left. Maybe you’re close to retirement or close to needing the money. You have the ability to lock in those gains and then you can move the money to something that may have a higher downside protection. So, some of these companies allow you to lock once a year, some multiple times a year. There’s one company that offers 24 locks per year. We would never use that many, but it’s nice to know that um you have multiple lock options available. And why is this participation rate strategy important? Well, obviously on the on the positive side, earning more than the index performs is always a good thing, right? We always want more. But what if you’re coming off a negative market? And if you just look at this chart, the top level, if if your account is down 10%, people think, well, I’ll just get 10% the next year and I I’m back to a break even. Well, you actually need 11.2% in that second year to get you back to where you were because you only have you lost 10, so you only have 90% of the money working for you. So, you need 11.2 to break even. And if it’s a big loss, let’s go down to like a 30% loss, you actually need 42.9% the following year just to break even. So it just gives you an idea of how those uh participation rates can be very powerful. So this chart is showing you how annuities fit in with other investments that you may be uh that are more common to you. So starting on the left, lowest risk, cash, money markets, CDs, and then we have fixed annuities and fixed index annuities. And then you see the gray risk line. So any investment to the left of the gray line, your principal or premium deposit is protected. So you don’t have any risk, downside risk to the money that you put in. To the right of the risk line, bonds. bonds have risk. Uh variable annuities, mutual funds, stocks, and if we went further, it would be sector stocks and commodities and crypto and you know, some of the crazy stuff on the far right. What you don’t see on this chart, and I’m going to kind of add it for you, is those structured annuities. And I would say those structured annuities fit between bonds and variable annuities. meaning you have upside you do have some downside risk but there’s that buffer there’s that safety net that you can choose you 10 15 20% so less risk than 100% stocks for sure okay uh I heard annuities are bad right fees that’s usually the most common thing that Malcolm and I hear is well I don’t want to pay all those fees annuities are terrible well Not all annuities have fees. I just gave you several examples of annuities that have no fee. Holding period or the surrender charge, this is the length of time that you need to leave your money in the contract before you can pull it out without a penalty. So, a surrender charge is a penalty if you pull out before the end of the term. And lastly, they’ll keep all the money. Well, that’s not really true. and we’ll we’ll walk through all that. So, let’s take the first one, fees. So, as I mentioned earlier, variable annuities are the ones that give us the bad rap for the fees. So, the first fee you see on on this slide is mortality and expense. We call it the me and fee. Remember that example I told you that variable annuities have this really cool built-in death benefit that you put in 100, the market tanks to 50 and you die and your beneficiary gets 100. Yeah, there’s some built-in insurance there, but it’s not free. You’re paying for that. This says one and a quarter% probably. I would say closer to 1% is what we’re seeing in products today. the subac account fees. Uh I said that you have the ability to invest in multiple stock and bond options. You know, within the same annuity, you might be able to pick a Fidelity fund, a Vanguard fund, a T-roll price fund, and an Invesco fund. So, you’re able to access multiple investments within one platform. Well, that’s not free either. On average, the fee to use those investments is about 1%. Now, an international fund is probably a little higher than 1% and a bond fund is a little lower, but on average, we use 1% for subac account fees. And then writer charges, if you did add the lifetime income or one of those enhanced death benefits, they charge for that, too. So, in this example, the fees could be three and a half% per year. Now, if the market’s up 25% and you only got 22 and a half, right, you’re not going to notice it. But if the market’s down 20 and you’re al now you’re down 23 and a half, you’re going to notice that, right? So, the fee applies whether the market’s up or down.

    The holding period, the surrender charge, it’s it’s actually called a CDSC. It’s called a contingent deferred surrender charge. It’s the amount of time you’re required to stay invested in the product before you can walk away with your money without a penalty. Most of them, well, all of them basically have a declining schedule. Meaning, if you bought a five-year product, this is showing that well, if you bailed in the first year, they ding you a 5% penalty. If you bailed in the second year, they’d hold back four. So, and it kind of declines down and once you meet five years, you move it. Well, you know, Malcolm and I work with this all the time. And when we’re building plans or investment strategies for people, we’re clearly not going to put a 100% of somebody’s money in something like this that if they need it, they’re going to have a penalty, right? So, we need to diversify that out. And generally, when we’re building uh proposals for folks, annuities are not the bucket where you’re going to take your money f from. We’re going to have a liquidity bucket or multiple liquidity buckets where you could get money from. Um, holding period, like I said, ranges from three to 15 years. Malcolm and I are generally between three to seven depending on the type of annuity and the need for the client. And even though these things have surrender charges for three, four, three, five, seven years, almost every single company that we work with allows you to take out 10% of the contract value each contract year penaltyfree. So there is some liquidity um in these types of products,

    but they’ll keep all my money. That’s another thing we hear often and that’s not true. I mean a deferred annuity equals walk away. Whatever you put, whatever the account is worth minus your withdrawals is what you walk away with. It’s also your death benefit, right? Um and then there’s income products that have lifetime income. If it’s your IRA and you have a spouse, you could set up joint lifetime income. even though it’s your IRA, the money can continue to your spouse. You can set it up for a certain number of years. Some of the companies allow um or have level income, you turn it on at a grand a month, you get that forever. Or increasing income, you start lower, maybe 700 a month, and it increases each year as interest is credited back. So the point is is they don’t keep your money. Your money comes back out in a variety of ways. Let’s talk a little bit about taxes. Now, I’m not talking about IAS. Obviously, anything you invest an IRA money in is tax deferred until you take it out. But let’s talk about let’s say money that’s nonirra. Say you took a 100 grand from the from Alliant, right? You buy a CD over there, you’re getting a 1099. You buy any other type of annuity, you are not getting a 1099. In fact, you are getting triple compounding. You’re getting earnings on your principal. You’re getting earnings on your earnings, right? Most of these things um compound annually. So then your earnings earns money. And then you’re also making earnings on the taxes that you’re not paying. So that’s the triple compounding effect. and and let’s say you bought a three-year fixed annuity and at the end of the three years you didn’t really need the money and you don’t really want to pay the taxes on the interest that you’ve earned through the three years. you can move it to another type of annuity and that process is called a 1035 exchange. And if you were to do that, there’s no tax liability. And to illustrate for you, some of you may be may have heard something similar with investment properties called a 1031 exchange where you owned a rental property and you sold it and you don’t want to pay taxes on the gain. So, you take the proceeds and you invest it into another rental property. um that taxable piece of the gains moves forward. Well, this is the same concept relative to annuities. And if you’re somebody that doesn’t want the tax deferral and you just want to pay taxes on the interest or the earnings each year, just take it out, right? You can do that withdrawal up to 10% a year and that will trigger a 1099 to come your way. So, what’s in it for the insurance company? Well, some of the annuities as I as I mentioned have fees. I mean the CDSC that surrender charge all of them have that. So if somebody does bail before the end of the term then they’re going to keep some percentage of that as the penalty. The me fee that’s that mortality and the expense fee that comes with uh variable annuities. The writers if you add the lifetime income or the enhanced death benefit there’s a fee for that. And then the fees that are on the investments again that’s a variable annuity uh fee only. Uh so yeah they can make they clearly will make money on fees uh depending on the type of annuity you purchase. But the main thing they what’s in it for them is your time, right? Let’s say you bought a five-year fixed annuity of 100 grand and you’re getting 5.4% and you’re not taking it out before the end of the five. They didn’t make any money on your fees, but they had your money for five years. So, they take that money that you invest and they go buy some kind of a corporate bond paying more interest than what they’re paying you, right? So, that’s what’s in it for the insurance company. Now, some of you may get postcards in the mail to come have an a dinner at some expensive steak restaurant and they’re pitching can’t lose products, your money doubles in 10 years. If it sounds too good to be true, it probably is. If it doesn’t pass the smell test, there’s a reason. Um, most of those products have high fees. They have longer surrender periods. These are the 10 to 12 13-year type products and they’re usually paying the advisor a high commission. So, you know, don’t don’t get sucked in because of a stake. Okay? Make sure and if you go to one of these and you get some information and it sounds good, call us. Malcolm and I are happy to walk you through what is really being sold to you at these dinner seminars. Excuse me. Okay. You already have an annuity. Now what? Malcolm and I will do a no obligation review of what you have. We’ll explain what you have. We’ll offer recommendations. Annuities have changed a bunch over the last 10 years. all the regulators came in and they’re trying to um revise them and reduce fees and shorten surrender periods with they’re placing a much higher emphasis on accumulation products meaning how do you earn money more than just turn on an income stream. So it’s like maybe safe accumulation, those kinds of things. Fees have been very much reduced and in some cases to zero. And if you have an investment and it has income and you’ve sat on it for 15 years, um you know, maybe it makes sense to turn it on. You know, you’re paying for that income. And we run into people and and some that were our clients that were 15 years ago based on their financial situation, it made sense that they thought they were going to need lifetime income. And then we get 10 years down the road and their job changed or their financial situation changed or they inherited money and they really don’t need that income anymore. And maybe it did make sense to reposition that money out of a product that you’re paying for a benefit that you no longer need. So, but if you do need it, maybe it makes sense to turn it on because you’re paying for it. And depending on what you have, it may be an option for you to move it somewhere else through that 1035 exchange process, not take a tax hit in making the move, and you might be able to reduce the costs and fees, increase the benefits, get a higher rate of return or upside potential, or more protection on the downside. So, it’s really just that costbenefit analysis of does it make sense to keep what I have and kind of do the pros and cons of that versus what’s available in the marketplace today. So, who can benefit from these types of products? Well, are you looking for tax deferral? So, I have have a client that some years ago he uh and his wife were selling a farm and they were going to be in a huge tax bracket year selling the farm. Then the second year they were going to sell the farm equipment. So, another big tax year. And then the third year they were going to sell the crops from the farm. So he was looking for ways to make his income as low as possible for the next handful of years while he went through this transition process. So we put as much as we could in kind of a laddered approach of you know three year, five year, sevenyear so that he could pay tax on that interest down the road when he was in a lower tax bracket. Maybe it’s you’re going to sell a business and you’re going to take a big tax hit. Maybe you’re in your high earning years and if you’ve accumulated a bunch of money at Alliance and the the taxes on the interest you’re earning is is pushing you to a higher tax bracket. Those are some ideas, too. Higher fixed rates, like I said, the credit union CD rates, I think the one-year CD is 3.99. I think it’s right around 4%. I didn’t look it up before the webinar. Sorry about that. But as I said, we have a three-year fixed annuity that’s 505, a fiveyear that’s 5.4, and a seven-year that’s 5.5. So if you believe that interest rates are high because of inflation and increased oil, and you believe they will come down, maybe it makes sense to lock in some of your money at a higher rate for longer. Again, this assumes that you don’t need it or don’t need more than 10% of it per year. Um, growth potential with some downside. Maybe you’re getting close to retirement or you’re transitioning into retirement and you want to be in the market, but you don’t want to be 100% exposed to the downside of the market. This is where those structured annuities can come in where you can say, “Yeah, I might get all the upside of the S&P, but I also have a safety net of about, you know, 10 or 20% depending on the option that you select.” Guaranteed income. If you’re if you need um you know your own personal pension to kind of cover your your needs in retirement or you don’t have that much saved and having a fixed income that comes in for the rest of your life or you and your spouse’s life, maybe that makes sense. Death benefit. Now, this doesn’t come up too often, but a couple situations where it has come up. I had a client that um was diagnosed with a really rare lung disease and he wanted to take some of his money and add the biggest death benefit to it to it he could. His life expectancy was like two to four years. He wanted to ratchet it up so he could pass on as much money as possible to his two daughters. And we did that. We went out and found the one that had the biggest death benefits. and he did pass away in about three years and therefore we passed on um more money to his daughters. The other situation that Malcolm and I see with death benefits is just people are saying I am never going to use this money or all this money and they may take a chunk of money and just try to ratchet up that death benefit for no other purpose than for their beneficiaries. And are you looking to avoid probate? All annuities have beneficiary designations. No different than your 401k, right? You put a beneficiary on the annuities and any account that has a beneficiary on it avoids probate, which is always good. You don’t want to pay the courts and the lawyers to go through all that process. So, is an annuity right for you? We know they’re not right for everybody, but they can be a valuable part of a diversified portfolio. Not only if you need guaranteed income, but think about that. If you’re somebody that does need guaranteed income, how do you know? Well, what if you don’t have a pension? You all you have is social security and that’s not enough to cover your basic living expenses. Wouldn’t it be nice to take a chunk of what you’ve saved and create enough guaranteed income coming in that you could pay all your essential bills and not have to worry about the market going up and down? Also, and this is a question we hear often, um, or a concern I should say, if you think you might live a long time and you could potentially outlive your savings, that might be, um, a concern. All of these companies that we work with that provide lifetime income, once you turn that income on, it generally goes to zero in about 12 to 14 years. But once your account has gone to zero, the insurance company is still on the hook for paying you that check for as long as you live. So if you live to 103 and your account’s been zero for 20 years, they’re still cutting you that check each month. And then lastly, if you want to reduce risk on part of your portfolio or protect fully part of your portfolio, these make sense. There’s ways you can do it with no fee. That also makes sense. Okay. Fact versus fiction. Well, they’re too expensive. Well, I’ve shown you several options that are well, this says low cost, but I’m going to say no cost options available. They have hidden fees. Well, again, the regulators came in and requires fees to be made transparent. Malcolm and I are looking to build relationships with people that are going to last, you know, decades down the road. We’re not going to go sideways over a fee. We’re going to explain all of that. um they have high commissions. Again, most of that has been reduced. Um however, you know, feel free to ask Malcolm and I. We’re happy to share with you what we get paid. But the most important thing that you need to understand about commissions with annuities is they’re not paid out of your money. I mean, if you invest a hundred grand, a hundred grand goes to work. the commission that comes to us or our our back office comes from the insurance company. And you might ask, well, how can they do that? Well, they know that they’re going to have the money for five years and for example, and they also know that so they’re okay in fronting that commission knowing that they’re going to be compensated. And they also know if you bail early, they’re going to res receive a penalty. So, um I can’t touch all that money. Well, as I mentioned, nearly all the annuity companies allow you to withdraw some amount of money during that surrender period, and it’s it’s typically 10% per year penaltyfree. Every now and then, there’s a company that might p a higher rate if it’s 5% or they might p a higher rate if you have to and you might have to wait till the second year before you can take that out. Uh, they’re too confusing. Yes, there’s a lot of things out there, but that’s where Malcolm and I come in and figure out what’s appropriate for your needs. Are you looking for income? Are you looking to just have some of your money at risk and some not? Um, that’s our job. That’s that’s why we’re here to help. So, what we offer folks is we call it a discovery session. It’s basically a complimentary retirement plan or financial plan. And I’m going to run through a quick example with some annuity income to give you an idea of how this works. So this is uh Richard and Deborah. They’re 62. He’s going to work till 67. He’s got some health issues. He thinks he might only live till 85. Deborah wants to retire a little earlier at 65 and she thinks she might live till 95. They each are contributing contributing the maximum to their 401ks. Each of their employers is matching them at 3%. They’re each making about 150 a year. And Richard’s social security, if he turns it on at age 67, is just under 41,000 a year. And Deborah is planning to turn hers on early at 65 in conjunction with when she plans to retire. And you can see it’s a it’s almost 35,000 a year. And Richard has a little pension. So he’s got some money coming from that about 9500 a year. Expenses. So living expenses. These are the basics, right? Food, clothing, gas, utilities, cell phone, internet, uh all the basics to run your household. They want 90 grand a year in their pocket to cover their spending. Food, out to eat, all that. We’re going to put an inflation factor on that. We know everything costs more each year. In addition to that, um we’ve got some health care expenses for them and we’re going to use a different higher rate of inflation for health care. We know those costs go up faster than others. And then travel. They want to do some traveling in the early years of their retirement. Maybe not until they’re, you know, 85 and 95, but they want to frontload their retire retirement with some travel. Uh, our software pulls in the actual IRS tax tables. We can pull in any state taxes and utilize that in your model. So, here’s the cash flow. And basically what you’re looking at, if you see that red line that goes across the screen, those are their expenses that we just went through. And how we’re going to cover those expenses is determined by the color in the bar. So you can see on the far left um they’re at that t teal blue is their salary. So you know for the first three years both of them are working. You can see that the salaries far exceed their planned expenses. After three years Deborah retires. So now we’re down to Richard’s income. But she turns on her social security. That’s the navy blue. Then a couple years later Richard retires. Now there’s no more salary. Social Security is the dark blue. Richard turns on his pension. That’s the mint green. And the yellow means that they need to withdraw money from some of their investments to shore up what they plan on spending. Then you go out about six or seven years and you see some orange and that is required minimum distribution. So our system is calculating that. Uh we help our clients manage that. Um, and if it works exactly like this, and it probably won’t be exact, but if it did, and Deborah made it to age 95, at that point, she would still have about $583,000 left in her portfolio. Now, this is saying that the probability of success is about 74%. So, let’s dig into that. Um, the expense coverage, total expenses are covered at about 49%. essential expenses at 59%. So that’s the basics, right? And we want those to be covered maybe at a higher level just because we don’t want you to pay your energy bill based on what the market does. So what if they repositioned a portion of their assets into an annuity that has lifetime income that would provide a higher certainty of expense coverage. So in this case we move some of the money to annuities and now you can see the probability of overall success has bumped up to 99%. Total expense coverage at 68 but that essential expenses jumped all the way up to 80. So that just gives us a little bit more comfort that uh they’re going to be okay. Okay. Uh, with that, I’m going to give you one more analogy before we start taking your questions. So, I know that was kind of a quick short presentation, but hopefully you’ve got some good questions out of that. So, the the analogy is retirement planning compared to mountain climbing. So, if you’re a mountain climber and you’re prepping for a big hike or climb, what what are you doing? You’re training. You’re learning to um use your gear. You’re you’re working out. You’re doing all those things to get ready to climb the mountain. When you think about retirement, what are we doing? We are saving money in our 401ks and IAS. We’re trying to pay down our debt, pay off our cars, pay off our credit cards, pay off or down our home, get our kids through college, all those things. So when we get to the top of the mountain retirement, we’re we’re in the best shape possible. Well, with mountain climbing, sometimes the trek down can be the most dangerous, meaning you could slip, you could fall, you could, you know, trip. Uh, in fact, I believe the guides that help people go up Mount Everest say more deaths and accidents hurt happen on the way down as opposed to the way up. Now with retirement, what are the things that could hit us during our retirement years?

    So that’s a lot of things, right? I mean, and hopefully not all of those things come our way, but uh we try to kind of stress test the plan and what if those things, you know, what if if you’re married, what if one spouse passes away early? What if you have a long-term care event? Uh what if health care goes up higher than we think? What if you have an unplanned expense or event? We’ve had clients come to me, hey, my daughter’s getting divorced. I need to take out 40 grand to cover a lawyer. my son’s in needs to go to rehab. I need to pay for that. So, some of those spending shocks can can uh hurt you, too. But, you know, we try to model and stress test whatever we can and get you, you know, the strongest uh situation as possible. So, that’s what we have for you today. And I think Malcolm’s going to come back on and uh start a poll and then we’ll take your questions.

    you. There’s the poll. We’re going to call We’re going to reach out to you anyway, but if you want to hear from us sooner than later, say yes and we’ll reach out to you then. So, let’s get some questions. All right. Um, apologies. We we did not record the webinar today for complianc’s purposes. We just don’t uh we will do this again. So if you’d like to attend a later time, please do so. Is there a minimum for setting up of an annuity? Um there are they’re pretty low. It kind of depends on the company and the type of annuity. I mean, some of them have a $10,000 minimum, some of them have a $25,000 minimum. Some can be even lower than that. But depending on what you’re trying to do, I mean, opening an annuity for three grand doesn’t buy you much.

    Once you have an annuity and are collecting it from collecting from it, can you end the annuity and collect the remaining money? Are there penalties to do so? Well, once you complete that surrender charge, that surrender period. Let’s say it’s a let’s say you bought an income annuity. It’s a seven-year surrender. you turned income on in year three. When you get to year seven, if you don’t want that anymore, whatever’s left in the contract, you can absolutely move without a penalty.

    Someone said, “Haha, I like mountain climbing, but not that hardcore.” Yeah, me neither. Yeah. Um, let’s see here. That’s all the questions that we have at the moment really. So, yeah. So, I mean, four over here. Okay, there was four and then two. You got all those looked at? Yeah. Okay. Yeah. Yeah. So, yeah, kind of good. You know, again, again, we’re going to reach out to everybody and just kind of make sure that if you have additional questions, we answer those. Um, what else do you want to say, Kim? I was just going to say, I mean, that, you know, this is what we do to help our members plan for retirement and put together a, you know, certainly a no obligation plan, um, and no obligation proposal, too. We think we’re doing things right enough and have a good mix of options for people to at least consider that might be a little more diverse than what you’re able to get within your 401k. So, you know, give us a shot. you’re not obligated to do anything with us, but it’s it’s a pretty good process. I think um most of the people I think I saw a couple people on here that are we already work with and I think they would probably agree that the process has been worthwhile. Yeah. Hey, and the other thing that I’ll say is like we we hold ourselves to a fiduciary responsibility. We’re here to build long-term relationships with our members. So, you might run into advisors, but they’ll set up an annuity for you and you’ll they’ll disappear. you’ll never hear from him again. That’s not the case when it comes to us. I mean, I think we come in, we want to build long-term relationships and we’re always doing what’s in your your best interest. Um, there is a question, is there a fee to use your service? We don’t charge a fee for the planning and the analysis of your situation. I mean, we really believe that that’s your opportunity to get to know us a little bit and, you know, make an opinion of whether you think we know what we’re talking about. I mean, if you did decide to become our clients and move forward with any of the investment recommendations that we’ve offered, you know, we talk through those, you know, in terms of, you know, if it’s managed money, how much that cost would be, etc. Are monthly funds received taxed? Well, if it’s an IRA, for sure, right? I mean, if that money hasn’t been taxed, if you take out a monthly income, yes, taxable. But usually we set those up to withhold taxes on the front end and you get a net amount a into your um bank account.

    Um okay. Hey um what if I have a financial advisor would like to meet to discuss what your strategy going forward may help us as members. So, I was kind of question is like, yeah, I’m a financial advisor, but are you willing to kind of Yeah, go ahead. Yeah, we hear that a lot, right? I mean, people want a second opinion. Sometimes we run into people that have had a financial advisor all these accumulation years, but they’re making a switch over to retirement and they’re not sure they’re with the right person. You know, sometimes people advisors are good at just picking investments, but planning and answering questions around social security and taxes and RMDs isn’t it. and people don’t feel comfortable that they have a game plan going into retirement. Yeah, we we do second opinion type meetings all the time. So, we’re happy to do that. Yeah. So, can you turn on lifetime income? Can you have that transferred into a traditional IRA with any tax consequences? So, I think the question is if it’s an IRA, you turn on lifetime income and can you have that income transferred into the to another traditional IRA, I guess. Um, does that make sense? No. Turn on lifetime income and have that transferred into an IRA without a tax consequence. Uh, so I mean you can do a transfer from one IRA to another whether it’s an annuity or not, but I think the income is truly a distribution. I don’t think you set up lifetime income as transfers. I’ve never done that. Have you, Malcolm? I don’t know if the carriers allow that. No. So, so again, annuities have been around forever. Um, and I’ve run into Aliance had a really old annuity where the only way you pulled out that money is you took an income stream over a 10-year period. And so what we did with that annuity was we turned on that income and every year they transferred a certain amount into the client’s IRA and it was considered a a transfer. So that was a one way we unwind one of those old annuities. That’s Yeah. Yeah, that’s true. We’ve run into that with TIAA CF. Um they they have um some of their products, not all of their products. The only way you can get your money out is a 10-year transfer payout annuity. So, we do set those up for people and you’re just turning it on and transferring basically 10% a year from their IRA to another one with and transfers are not taxable as long as you set it up correctly. Yeah, it looks like this person has the Alian 222. Yeah. So, you’re not going to be able to you’re not going to be able to turn the income on until 10 years after purchasing that account. Yeah. The 222 it’s it’s kind of a nice thing in that there’s no fee for that lifetime income, but your fee is you got to wait 10 years before you turn it on. And if you got the time, that’s one thing. Man, I know. I don’t know how long you’ve had it, but they’re they’re they can pay some pretty good bonuses up front, but you got to wait a long time to get it. Yeah, exactly. So, what else? All right. Well, that’s it. I mean, yeah, we got it. We got everybody. So, well, thanks everybody. We appreciate you spending a little time with us and we look forward to talking with you all soon. Thanks so much. Yep. Bye.

  • 06/04/2026 – Alliant Webinar – Roth IRA Conversions – An effective retirement tax strategy for your clients

    Hello, welcome. We’re going to get started in a moment. Um, if you can hear me, can you just respond yes for the the folks on the webinar so far? Uh, so I can know that the audio is working. Appreciate that. Okay, terrific. Got a got a response here. Audio working. Uh, great, great news. So, um, I’ll be back in a moment. We’ll get started. Okay, good afternoon. Uh, welcome everybody. Let’s get started. Uh, thank you so much for joining for our webinar. My name is Christian Chaplua. I’m a financial consultant here at Alliant Retirement and Investment Services. So, we work with members throughout the United States. Uh many of you have joined for multiple webinars. So, really appreciate you kind of checking back in. Um, you know, we we are thrilled to um offer financial planning, help clients reach their goals, talk about investments, uh whether you’re a line credit union member, you work with one of our company partners, um uh in general, we’re just thrilled that you’re here to kind of uh learn more about Roth conversions for today’s agenda and all the other information and webinars uh that we provide on a weekly basis. Just a quick introduction about myself. Uh so I’ve been in wealth management on the personal side uh for 15 years and uh previous to this I was a fixed income research analyst. Um so kind of bring all that experience uh to every client’s personal situation. Uh personal finance it’s very personal. Uh it’s more personal than it is financial in fact. So kind of understanding all the different uh subsets and subcategories of financial planning and uh investments. It’s so important for us to kind of succeed and reach our goals. I mean, the world is just more complicated and quicker than ever and we’re seeing the pace of technology uh just rapidly accelerate and the impact on financial markets and then you know ultimately our retirement accounts if we’re invested our 401ks, IAS and everything else. So, I think you made a great decision uh investing an hour today to learn about Roth conversions. Uh this is one of our most popular uh webinars. So we’ve got a you know huge RSVP list. Uh so yeah, please do uh consider this as an introductory uh webinar to the topic of Roth IRA conversions. It’s not meant to be kind of a do-it-yourself um you know workshop. it uh it’s really supposed to introduce you to the the concept and then if you’d like to learn more you’ll have an opportunity book a meeting with myself uh just uh kind of get into a one-toone discussion if that makes sense talk about financial planning and other ideas as well like I mentioned there’s a lot of information um so I’m going to be going through the slides quickly uh just want to mention this up front so this presentation intended for educational purpose only it’s proprietary We uh have a huge investment in these webinars to uh to get them to you, get the information to you in a kind of clear, concise manner. Um we kindly ask that attendees do not record, reproduce, distribute any part of this presentation, including video, audio, screen capture, AI based tools, etc. So really appreciate your cooperation on that. Two upcoming webinars, tax planning changes, that’s happening Thursday, June the 11th at 2 p.m. our regularly scheduled time. So, just talking about tax planning as it relates to retirement planning and your financial plan, not so much kind of your um you know your W2 and your uh you know 1099s, more about you know financial planning and um and how it relates around your investments investment account. So, if you’re interested in that, please do join us. Estate planning, uh super important topic, six steps to legacy planning. June 18th is when we’re going to be presenting that. So, um we encourage and and try to promote estate planning as much as possible um in just about every financial plan and through these webinars cuz uh you know it’s tough to um you know to pass on our our wealth and and everything else without a good plan. Um we don’t want to make it difficult for our beneficiaries. So um if you need to get your estate planning done, please do join us on Thursday the 18th. In addition to our webinars, we’ve got our Investsavvy podcast. Over 20 episodes available on our website, also through Apple and Google. And then we’ve got our Aerys website and blog. Lots of tools, templates, information, articles, plenty of resources for you get smarter about financial planning. So hopefully you be have a chance to uh log in. That’s the AIS website. Aerys is aligned retirement investment service.

    Here’s how we can help you. So um a couple things to mention. uh financial planning. That’s kind of the the foundation of everything that we do here. So, a basic plan, foundational plan available to everybody. There’s no charge for that. Um I’m going to give you a couple invitations. Take me up on that and get a financial plan done. Uh please do get it done at some point in your life and and get it done now if uh this is the year that you want to get it done. It will help you with retirement planning, getting to all your goals in retirement, uh knowing how to maximize your um your nest egg for retirement, all the above. Uh advanced plan planning is also available. That’s available to clients. Um that includes Roth conversion analysis, tax planning, cash flows, cash management strategies, all the above. Um so the reason that we uh reserve that for clients is because it’s more time inensive the tools everything else that we’re using um kind of more sophisticated. So uh that’s for clients. Uh we really encourage and promote the idea of becoming a client that’s the best way to take advantage of all these strategies. So advanced plan if you’re interested in that do let me know respond yes when I launch the poll a little later on. Estate planning we have a digital estate planning service. Uh I’ll summarize that a little bit later. do you take advantage and then investment management so traditional portfolios um but you know lots of different strategies uh active passive strategies dividend portfolios and then income strategies like annuities and market CDs uh all of the above all available to you uh please do take advantage and and get in contact with me um to kind of learn more about these ideas and see if it can help you with your goals and your financial plan.

    Okay, with that introduction, let’s talk about uh Roth conversion. So, uh a big part of our Roth conversion is uh taxes and you know the the future tax environment. We get lots of information about uh you know the national debt uh thinking about what tax rates might be in the future and uh lots of kind of uh legislative decisions through Congress. Um so it is uncertain. You know, we’ve got a lot to to manage in terms of information flow, budget deficits, entitlements, taxation, Roth IAS, all the above coming at us kind of quite quickly, especially in today’s kind of technology age. Um the national debt today is around $36 trillion. That’s around $100,000 for every single person in America. Uh so quite a big number. Uh something to consider. We’ll see how um the federal government manages that. Um and then also you know how the federal government’s going to be managing budget deficits in the future you know with all the different categories of spend uh in the budget. So defense entitlements Medicare uh etc. So this is a chart kind of going back you know back to 2015 so about 10 years just thinking about the federal deficit. Um they have been rising. We all know that you know the the yeartoday uh year-to-year fluctuation that’s one thing but just in general it’s adding to the national debt. So this is kind of a a concern for retirees, a big concern quite frankly. You know, all the polling that we do, all the, you know, surveys that are done, um, you know, shows that this is a a concern for retirees and for savers because it’s going to impact a lot of different things. It’s going to impact capital markets. Um, it’s going to in impact government spending. It’s going to impact uh, you know, inflation, um, interest rates. The list goes on and on.

    in terms of entitlements. Um, so we’ve got social security, Medicare, Medicaid. Those are the major ones. Um, interest payments on those debts. You know, all of that kind of adds up in terms of, you know, the spending um that that’s provided in terms of all the benefits that we receive. Um, by 2035, you know, that that’s about 10 years from now. Uh it’s estimated that entitlements such as social security, Medicare, Medicaid, and debt interest payments will account for about 100% of government revenue for by 2035. So 10 years from now um we’re going to be uh you know faced with this uh you know increase in spending and you could see from the the chart the crossover around 2035. Um so this is a reality that we all have to deal with uh that the federal government needs to deal with. Um and so hopefully we’ll we’ll see a positive outcome. There are some scenarios that you know can give us a positive outcome and others a not so positive more kind of negative situation. Uh but we’ll see what happens. But in terms of getting prepared for that you know the Roth IRA conversion is one tool to kind of help mitigate uh the concern in terms of you know uh rising debt rising uh payments to all those different categories etc. This is a chart uh for all the or sorry the top income tax rates uh throughout history kind of the last 100 years or so. So you can see kind of in the war war years um you know the top marginal tax rate climbed to 90%. Um for the last 40 years it’s kind of been in between 30 and 40%. Um so uh most of the time status quo remains the same but we all have to be ready for different kind of tax environments as as this 2035 date approaches. Um you know the taxes are high uh no doubt about that. Um many of us are you know thinking about state income taxes. We’re thinking about federal income taxes and you know hopefully that uh you know the budget and the debt will be managed in such a way that these marginal tax rates stay kind of in the same range. But again, this is kind of to be seen and and we’ll see what happens with all those entitlements and everything else. When we think about our uh taxation, you know, when we think about the economic backdrop that uh we just went over, um there’s there’s three basic different kind of tax um tax environments that u our accounts going are going to be exposed to. And so one is the uh kind of taxable uh type of account. So that includes like index funds, stocks, CDs in a in an investment in a brokerage account or maybe it’s um you know interest earned from a savings account. That’s kind of the tax now category. Tax later is our um uh second category. So that’s retirement accounts basically that includes uh IRA, 401ks, annuities. So we’re taxed when we withdraw for those tax later uh types of accounts. And then thirdly there’s the tax never category. Uh so that includes Roth IAS, municipal bonds, HSAs. Uh so money goes in often uh after tax basis. Uh but because of the tax code, uh there’s no uh no tax on the gain. So these are three categories to kind of keep in mind and then uh just understand for your own financial planning, you know, how to kind of optimize and make it work in terms of your goals, your cash flows. Um and because we’re all exposed to these three categories, you know, tax now, tax later, tax never as we move towards retirement, uh we’re going to go through the the Roth conversion strategy, and it’s definitely something to consider. You know, um most of the scenarios that we run are positive. That being said, there’s no guarantee about the, you know, the future of the success of a Roth conversion. You know, tax diversification, account, retirement account diversification, all of that makes sense. But the key point there is diversification. Uh so yeah, you want to be thoughtful about any Roth conversions that you do and kind of sequence them accordingly and go through all the variables situations that we’re going to touch on uh shortly. So again, can be effective strategy to create that kind of after tax uh cash flow in the future. Uh so we’re going to go over the basics. We’re going to go over IRA owners, spousal strategies, and beneficiaries. All of the above needs to be considered in terms of you know a good decision for a Roth conversion.

    So many of you probably know that there um there is a Roth IRA. A Roth IRA is similar traditional IAS in many ways. Uh but there’s some different differences that make them special. So one of the differences is that you don’t get a tax deduction when you make a Roth IRA contribution. Uh once your money is in a Roth IRA, it grows tax deferred kind of like in a traditional IRA. But the big benefit of a Roth IRA though is that um you know distributions can be taxfree in retirement in the future. Now there’s a couple of rules that you need to remember. There’s a 5-year rule for every contribution and a 5-year rule for every contribution that you do. And as long as you kind of abide by the 5-year rule, uh withdraw your money after 59 and a half, then those gains can be taxfree in that tax never category. Uh so, you know, big picture, that’s how a Roth account works. And there’s a little bit of a difference between a contribution and a conversion. They both begin with the letter C. So, make sure you’re distinguishing between them. Um, but as long as you kind of abide by all the rules that you could take advantage of this uh retirement strategy,

    a few other rules. So, you must have compensation and generally that’s earned income from self-employment or wages, something like that. It cannot be passive income. Um, there are some limits in terms of what you can contribute to your Roth account. So, if you’re under 50, it’s $7,500. If uh you’re 50 and above, you can do a catch-up contribution. Uh that’s $8,600 total. Uh the good news is that there’s no age limit. And um and then but you do have to abide by the income limitations in terms of contributions. Um so, you look at your modified adjusted gross income for it’s kind of a different number for single filers and married uh couples filing jointly. Uh and here the number is basically up to single for single filers up to 168,000 for married couples 252,000. So you can make a Roth IRA contribution if you’re below those uh thresholds and if you are filing accordingly either single or married. So that kind of, you know, gives you a little bit of an intro in terms of, uh, making a contribution. And, uh, especially for young kids, uh, you know, in their 20s, their first job, you know, they’re going to be thinking about these, um, these contributions for early retirement saving. Um, and, you know, as we kind of in our 40s, 50s, if we could take advantage of this strategy, uh, we want to be taking advantage of it as much as possible, maximizing our contributions first and then thinking about, you know, conversions second. There’s also the opportunity to do a spoiler Roth IRA contribution that allows your, you know, the the working spouse to make uh contributions for the non-working spouse in the household. Um, you have to meet all the other requirements, but it’s just another place to to save for retirement. Here’s an example of a Roth IRA conversion. So, I’ll go through this um kind of step by step. Uh, when you do a Roth conversion, remember please that the tax is recognized in the year of the conversion. So, in kind of uh, you know, simple terms, a Roth conversion is when you take it um, out of a traditional IRA and put it into a Roth IRA. You take an account balance um, you take funds from your uh, traditional IRA and move it over to your Roth IRA. You can do that with a a 401k potentially as well, depending on the plan documents, but we’re just going to stick to the uh, the IRA situation for today’s purposes. So when you do that, when you move money from an IRA to a Roth IRA, you’re basically recognizing income because you’re effectively doing a distribution from your IRA. The great part is is that you’re moving it to uh another retirement account, but um you do have to recognize that income on your tax return. So in this case, Jill is going to convert $100,000 from her IRA to a Roth IRA. Um she’ll add that $100,000 to income. Um, that’s a big conversion all in one year, but in our example, Jill’s decided to do that. And then she’s her conversion will be taxed at Jill’s rate. So, she’s going to have income on her tax return an extra $100,000 and then pay taxes accordingly depending on her bracket.

    There’s lots of reasons why you want to do a conversion. Um, and basically the the main one, the one that people think about the most is that you pay Uncle Sam now so that you can own your retirement account free and clear for the rest of your life. Um, and then you have those opportunities for uh future taxfree withdrawals. Everything else remain the same um out of that account. So, if you’re over 59 and a half um and you’ve got that Roth IRA, you’ve had it for more than five years, um then you could start to um you know, pull out that money uh tax and gain uh uh gain uh gains and the initial amount kind of tax-free. And then um again, for conversions, there’s a 5-year clock, a 5-year rule that’s applied for every conversion. So again, as long as you abide by the rules, um you got a nice um uh opportunity for um paying for living expenses and all your other goals in retirement. Let’s talk about who could do a Roth conversion real quick. So um the good news is here there are no restrictions on who can do a Roth IRA conversion. Uh and so doing a conversion again, taking from your Roth from your IRA, moving it to your Roth IRA, um there’s no minimum account. Um there’s no like uh income threshold. Anybody can uh do a conversion. No requirement to be working. Uh no age limits. Um you know, Uncle Sam basically the federal government encourages conversions to a certain extent because um you know, it’s it’s uh tax revenue for the federal government sooner. Uh so uh that’s a big you know reason that people are thinking about it that the federal government kind of tracks it uh but doesn’t mind if you do a conversion and totally allowed in terms of tax code.

    Another thing to remember is that tax cuts and jobs act uh eliminated reccharacterizations for Roth IAS made in 2018 or later. So basically once you do a Roth IRA conversion um you uh it’s a permanent conversion. You’re stuck with it. Um, so there are a few circumstances where people want to kind of unwind it uh because you know their tax situations change, but just remember um it’s irrevocable. Once you do it, you’re kind of uh committed to it. Uh there’s no way to unwind it as of 2018. Another good thing about Roth IAS, um they have no required minimum distributions. So you basically decide when you want to take the distributions. There’s no RMDs to track. Um it allows your account to grow un uninterrupted taxree for life for your lifetime and also uh for your kids’ lifetime um uh part of their lifetime and uh you know can provide a tax-free inheritance to your beneficiaries to your heirs.

    The biggest reason that people want to do a Roth IRA conversion is this hedge against rising taxes in the future. We saw the tax charts previously. So again, nobody has a crystal ball. As much as you might be convinced that you can kind of predict the future, I would strongly advise against that. Um, and that’s where usually diversification helps. But, uh, the main reason that, um, people want to consider a Roth IRA conversion is this hedge against future rising taxes. Um, future tax rates are unknown. Uh there’s lots of things that are unknown for the future, but uh conversions allow you to pay taxes at today’s tax rates. And then again, helping you to manage some other costs that are tied to your income to your modified adjusted gross income, which include Social Security benefits, Medicare Part B premiums.

    So, Social Security, Medicare, touch on that real quickly. So, your IRA income um when you do withdraw money from an IRA through a distribution, whether that’s required or prior to RMDH, 100% of that is going to be taxable. Um it’s also going to be included in provisional income. And then, um also included in Medicare pricing. Your Roth IRA income on the other hand on the right hand side of the chart, not taxable time distribution after you paid the taxes for doing the conversion potentially or you just contributed to the Roth account. um it’s not included in provisional income and it’s not included in your modified adjusted gross income for Medicare pricing. Uh so you know some benefits down the road to kind of be realized um in terms of u you know doing those thinking about those Roth conversions. I’m going to go through a quick example here. So uh again you know the idea is to help you keep more money after taxes have been paid. Uh so this example here looks at uh you know someone over the age of 59 and a half considering a Roth IRA conversion of $10,000. We’re going to assume that the marginal tax rate now is 12%. Tax later rate is going to be 24%. So there’s a delta there’s a big difference between the tax now and tax later. 12% versus 24%. And this is the secret of this conversion and whether or not it becomes a success. It’s the delta the difference in tax rates. So, if this individual uh doesn’t complete a Roth conversion and just continue to let the money kind of pre-tax money grow for another 10 years, maybe at 5%, they would have approximately $16,289. If they take the money out, pay their taxes of 24%, they would have $12,380 left over. So, that’s scenario one. However, if they choose to complete a Roth IRA conversion, they would have to pay uh 12% of the money in taxes and then only $8,800 um uh dollars in the um and have $8,800 in the Roth IRA. So, assuming annual growth of 5%, you know, per year for 10 years, they would have about 14,334 that they can access income tax-free, you know, at the end of that term. So, that’s potentially a almost $2,000 difference or 15% more if they complete the Roth IRA conversion, all other things being equal. Um, and pay the income tax now instead of keeping the money pre-tax in the retirement plan or IRA, you know, paying the income tax later when they withdraw the money. So, this is a great simple inver conversion uh example. $10,000 converted. Uh pay tax now at 12% uh potentially avoiding a 24% tax rate in the future. And the difference between the two kind of all other things being equal um you know is close to $2,000. So $1,954.

    Um so keep this example in mind in terms of um you know whether or not this is something that you want to consider. This chart can also help you understand, you know, how a Roth IRA might help given different tax brackets both now and later. So, as you can see, moving across the top where you find the current marginal tax rate. Let’s say it’s 12%. Now, you move down uh on the left hand side from there, um Roth IRA conversion, kind of a 24% tax rate in the future. And then this is where you end up with 15.8% more uh in terms of benefits. So kind of top axis, left axis, kind of zero in on that 16% number. So this is the basic math about how how a Roth IRA conversion works. Once you have this down, you’re in a much better kind of position to know um you know whether this is something uh that you want to consider. But uh please remember that this is just kind of the starting the starting point. there’s a lot more work and analysis that you need to do and ultimately software really really helps um with the idea of whether or not a Roth conversion will be beneficial for you because again everybody’s financial plan is very personal um it’s different there’s complexity there and you really have to run the numbers uh to get to a good decision we can help you with that so another you know part of today’s discussion is encouraging you to kind of reach out get help get assistance with this Roth IRA conversion Um, and again, there’s no obligation to become a client, but if you do become a client, then we will share everything, all the numbers so that you’re in the best position possible to make that decision. And if you don’t become a client, that’s okay, too, cuz we’re going to offer you all the information for you to kind of uh to help crunch the numbers and then for you to be in a better position to to make a good decision. So, I highly encourage you to kind of book a meeting when I launch the poll a little bit later on. But this is an example of kind of the the numbers and the analysis that we go through in order to decide whether or not whether a Roth conversion makes sense. So, you know, looking at total gross income, federal income tax rates, capital gains taxes, other income taxes, your effective income tax rate, uh was it going to be now versus later, the near-term in the future, your longevity, life expectancy, inflation, you know, uh all the above. So this is a snapshot of some of the variables that we’re going to be using in the analysis, but it kind of gives you a window into what uh the number crunching that goes on. And in our example here, you can see that, you know, there’s a big uh jump in federal income taxes paid up front. Um and then there’s a retirement horizon and then down the road um there’s less income tax paid. And so this is the whole concept. Again, getting back to those kind of previous two charts to um but you, you know, highly encourage you to do your homework to so that you know um you know how much to convert, whether this makes sense for you because not everybody should be doing a conversion. Um it sounds like a good idea, but again, you have to kind of have the right setup and the math has has to make sense for this to be a good uh positive outcome.

    So again, like uh like we described with the the future chart, you’re looking at your future tax situation, today’s situation, and then everything else that’s involved. So income taxes, Medicare premiums, uh investment, income tax rates, um the 3.8% sir charge, uh all of the above needs to be factored in. Let’s talk about um you know the opportunity to uh again reduce those taxes uh in the future uh potentially increasing uh increasing the potential for more money um and go through this you know quick example. So here we see you know how much ordinary income a married couple both over age 65 can absorb in the various tax brackets. um you know $57,50 before moving to the 12% bracket, 130,000 before moving to the 22% tax bracket and 239,000 uh before moving to the 24% tax bracket. So uh this is all about the the opportunity to reduce those taxes uh you know creating the potential for more money again to be paid in uh in retirement expenses or pass along to beneficiaries. And this is, you know, the amount of tax that can be absorbed before moving to the next tax bracket. And this tax bracket management or kind of filling up the bucket, filling up the bracket. Uh there’s lots of different names for this strategy. Um but this, you know, this graphic kind of illustrates it all. You know, you want to fill up your bucket up until the next tax bracket. So this is a very important concept just to understand because it’s going to help you in terms of spreading your conversions over a number of years. And that decision is going to be based on you know what tax bracket you’re in, what tax bracket you need to be getting to um you know and all the other factors that go into your financial plan. So most of the time people are looking to convert up into the 24% tax bracket. Once you jump to 32% your break even for a Roth conversion is much more difficult. You’ve got 10% extra in taxes that you’ve paid that you’ve got to overcome in the future in order to make this conversion work. So again, be you want to analyze your tax brackets before and after the conversion. You know, typically you want to stay in that 10, 12, maybe up to 24% tax bracket when you’re doing it. Uh kind of watering um you know, the bucket uh but filling up the bucket or the bracket as much as possible to take advantage of that uh and not overpaying taxes. So hopefully this uh this this concept, this example illustrates the the idea to you. Uh but if you’d like more information, again, do set up a meeting. Here’s a quick chart on Medicare parts B and D. Uh so if you’re eligible for Medicare, there’s two premiums that you’re going to be paying. Uh Medicare part B and part D. Uh D for prescription drug coverage. Uh and part B is for hospital um or medical services. Your part A is a hospital uh services. uh there’s no charge for that premium, but your part B premium if you’re on Medicare is going to cover those doctor nursing services. So, how much you pay for part B and part D um is going to depend on your income. We actually have a whole webinar on this topic, but this is a good summary chart. Um so, if you’re an individual or if you’re a couple um you’re going to be paying you’re starting at a premium of $22 each per month uh to pay for Medicare Part B and $14 to pay for Part D. Now the bad news is that the more you make the more you pay and once you multiply that you know per month uh per spouse uh each spouse has to pay their own premium the dollars can add up pretty quickly. So, you know, uh, married filing jointly, uh, folks that have a, you know, modified adjusted gross income that’s greater than, you know, $342,000 up to $410,000. You they’re paying $527 each for each spouse. That’s $1,000 just in part B premiums plus $60 each uh, in part D premium. So, you could see where the stats add up. and these Irma brackets, these income related monthly adjustment amounts, this is a big reason why people want to do Roth conversions. So, um again, but you got to do the math. Um good problem to have, no doubt about it. Uh but just another cost for you to consider in terms of the break even u and Medicare parts B and D. One thing we encourage uh for folks um you know in the right situation is be on the hunt, be on the lookout for lowinccome years. And what that means is uh opportunities for you to do a Roth conversion in a low income tax bracket. So again filling up those brackets but filling up those lower brackets maybe 10 12%. So that can be uh you know business owner with low sales one year high expenses uh situation where family has uh you know non-recurring medical bills so their income is low that year or maybe uh in between jobs um kind of disability issues um you know taking a sabbatical uh just taking a couple years off changing careers like all of these are opportunities for low-inccome years but you have to be very thoughtful about it you have to be able to kind to consider, you know, the opportunity for a Roth conversion and kind of get to know this when the um you know, when the uh opportunity presents itself. So, um if you do have that low income year, um uh in the near future, then you want to give this again more more consideration because you have a bigger opportunity there. We’re going to talk about IRA owners. We’re about halfway through the webinar, so bear with us. It’s a long one, but there’s lots of information. Uh so IRA owners required minimum distribution. So remember for um you know traditional IAS for 40 401ks you basically have to start to withdraw from those accounts at age 73 or 75 if you’re not currently taking money out um if you’re currently not doing your um your your RMD. So, if you if you’re not required to take out money uh right now, uh age 73 or 75 will be when you start to uh when you’re required to take money out of that IRA or 401k. There’s penalties if you forget if you don’t take that IRA. Um you might be able to kind of appeal the decision, but it can result in an up to 25% penalty. Uh so, you know, you don’t want to be late. You want to be up to date on your RMD, your RMDs and your IRA balances. Your financial institution will let you know. it’s not going to be a surprise. Um, you found out about it today, so there’s no reason whatsoever to kind of not do your RMD, but again, age 73 to 75, that’s when you want to be on the lookout and start to plan for that. In terms of the percentage of your account balance that you’ be taking out, um, it’s about 4% to start at age 7375. So again, um if you’re the type of person that likes to worry about the decimals, then um you know, it’s 3.78% at age 73. I kind of look at as like 4% when you start. By the time you’re 80, it’s 5%. By the time you’re 90, you’re looking at somewhere around 8%. Uh so, you know, you’re going to be in taking out more uh as time goes on, but again, once you get once you get started, you’ll get used to it. And this and you’ll be an expert, you’ll be a pro at it. But uh just remember that it’s about 4% to start at age 73 to 75

    since the ARM RMD age has increased to 73. Um you know some folks they’re kind of delaying those IRA withdrawals. But you just want to be thoughtful about that too. There’s always a consequence. there’s a domino in terms of uh you know delaying versus taking now um you know your uh your source of withdrawals to pay for expenses whether that’s coming from taxable tax deferred or tax-free accounts. This graph illustrates those, you know, requirement distributions at various ages. And the takeaway from this slide is the idea that, you know, as you have a bigger account balance as it’s growing at some kind of kind of normal rate of return over time, you know, from age 65 and into the future, um, you’re going to have some kind of a RMD uh, that’s payable down the road. So, at 73, depending on your, you know, uh, your account size, you know, you could be of a $56,000 or $150,000 RMD, depending on how much you’re starting with, whether it’s maybe a million or $2 million. It sounds like a big number, but um, you know, with inflation, with rates of return, with a good stock market, um, you know, lots of folks have, uh, IAS that are in these dollar amounts. Uh but even if you’re you know half of this then you still got to be just you know aware of this uh tendency for you know bigger RMDs as you age uh get into age 83 age 93 and above. And um you can see that you know in in this example the biggest number uh age 93 with a $2 million account you’re looking at you know almost $300,000 uh RMDs. And that’s where you’re being impacted by Irma. you’re being impacted by um you know part B higher part B premiums higher social security taxes all of these things again good problem to have but a Roth IRA gives you a chance to mitigate some of this impact this graph illustrates that the increase in RMD when compared to inflation so you’re assuming that the initial IRA balance is $1 million age 73 um inflation rate of 2.5% and then uh if we assume the tax brackets uh um you know deductions are adjusted at the rate of inflation. If the ARM RMD amount is increasing faster than inflation, it could push this taxpayer into a higher tax bracket. And so this is kind of the watch out, you know, again, inflation RMD amounts pushing up into the next tax bracket. Just something to be aware of and the chance for an RMD um you know, reduction and Roth IRA conversion to help with uh this entire thing. Again,

    this is another example snapshot of the software that we kind of used to to go through all these different scenarios. So, looking at your sources of income, uh social security, other income, your RMDs, which are going to be income, uh on your tax return from your investment accounts, looking at your expenses, looking at your goals, everything holistically. And then if you do, you know, the probability of success with a Roth conversion, we want to estimate that as well. you know, is it a low probability, high probability? What are the cumulative taxes that you’re potentially going to be saving? What’s the impact on your total portfolio? Uh that’s going to be contingent on a bunch of different variables. But these are all the things that you want to consider for a Roth IRA conversion. This is kind of a snapshot of the data input. You know, looking at um you know, the um how much we’re going to be convert converting um over what time frame, uh the growth rates inside, etc. uh this is all the analysis that kind of goes into um goes into the data input to give us a good you know uh a good idea whether or not we should consider this this conversion more seriously or whether we should go forward or not. So again another chart illustrating the example in this case um you know after the Roth IRA conversion uh it was a positive impact so that’s good news. uh probability of success is 100%. Uh cumulative taxes went down by 140,000 in this example. Um and then to total portfolio assets actually increased by almost a million up to $5 million. So again, high net worth family. Uh good candidate to consider a Roth IRA conversion, you know, with thoughtful application. Um got a good probability of success and potentially saving money on taxes. Uh certainly nothing to sneeze at. $140,000 savings and then an increase in total portfolio assets for their beneficiaries.

    Going to mention this also um in terms of again Roth IRA conversion and kind of uh you know a survivor strategy. So the whole idea is is that um when there’s uh you know two spouses in a family uh one passes away there’s a survivor because of the differences in um tax uh tax rates because of kind of the the change in income coming into the household it could have a big impact on um you know how much tax is paid to kind of generate the same amount of income. So left and right side of the screen, uh we’ve got Adam and an uh you know when they’re both um both alive, they’ve got, you know, pension income, social security for both of them, uh taxes that they’re paying and then after tax income of $110,000 and that puts them in the marginal tax rate of 12%. So, you know, this is something to be very aware of because, you know, if Adam passes away, Ann is on her own. Um, she’s going to be filing single at that point and then in order to generate that after tax income of $110,000, she’s got to pull out $98,000 in IRA and pension income. So, that’s going to be increase in her IRA withdrawal. Now, she’s also um on a solo social security um cash flow uh or platform. So, she’s only getting social security for herself, not for the both of them. And so, um, you know, unfortunately with this situation, Ann is now going to be looking at, you know, $18,000, uh, almost $19,000 in income taxes, um, in order to kind of have the same after tax income. Uh, so a big increase in how much she’s got to take out of her IRA and just, you know, um, a simple kind of change. You’d think that the the impact wouldn’t be so dramatic, but it is when you just think about, okay, you want to keep that after tax income the same, but you know what actually changes? And the two things that actually change are the amount of income that she needs to pull out and also her tax rate. So, food for thought again to think about that Roth IRA conversion, uh, you know, increase in taxes and, uh, and everything else. So here we have just kind of summarize appropriate Roth IRA conversion before the first death could be a viable strategy to help keep more money uh after income taxes have been paid. This slide demonstrates what it looks like when comparing tax brackets between married filing jointly versus single. Uh so again as you can see the single filer brackets are compressed when compared to married brackets. Um, you know, one reason for this is, um, you know, after the first death, the surviving spouse often retains all the assets and the increasing RMDs. Um, and but they’ll also be at higher tax rates. So again, something to remember, something to consider. Um, as a result, you may want to think about again whether or not this makes sense for your Roth IRA conversion. Uh, just taking advantage of that lower tax rate.

    And then in terms of estate planning, uh beneficiary strategies, um remember that uh when children inherit a IRA, um they need to kind of uh empty that IRA within 10 years. Uh so if they’re the beneficiary personally, so here we have an example of Carrie, age 45. Uh assume she inherited $1 million IRA from her deceased mom. Um she doesn’t need the money. Uh so that’s good. And she doesn’t want to increase her taxable income. So, under the old rule r rules, she could actually stretch this uh IRA um only needs to take $25,000 in RMD in the first year, but there are some new rules. Um with this, uh you know, if she were to withdraw evenly over 10 years, she does have to empty the account. Uh she would take out $123,000. Uh so some some differences in terms of cash flows, taxes paid um you know depends on um you know what this money is earmarked for. And so Carrie, she does need to kind of be thoughtful about her financial plan, whether or not she wants to kind of take out the money sooner, maybe buy a home, uh maybe have it this money to start a business or some other purposes or whe whether she wants to kind of stretch it out over 10 years. Unfortunately, she cannot stretch it out over her lifetime, but um you know depending on her goal, she was to maximize and pay the least amount of tax possible. Uh so again um in this hypothetical example, you know, if uh if there was a a Roth IRA considered kind of could act add to her um after tax income and um you know again she’s single, she’s got taxable income of $9,000 a year without the inherited IRA. um she’s looking at 22% tax bracket. Um but again, her tax bracket’s going to change depending on how much she pulls out that she could jump into a 24 or 30% um tax bracket. So again, she just wants to be thoughtful about this. And this is the point of this whole kind of example. You know, uh understand what your potential taxes are for the future, understand what your goals are, uh and minimize taxes accordingly. Another example here, mom and dad, you know, IRA with son as a beneficiary. Uh they’re in the 12% tax bracket, son’s in a 24% tax bracket. So the uh the opportunity kind of jumps off the screen here in terms of a conversion for mom and dad save money uh on taxes, giving their tax rate and u versus the son kind of uh pulling money out in a taxable uh tax deferred account down the road uh and getting that 12% difference, saving the money on taxes.

    Again, this beneficiary strategy could end up to be, you know, $50 or $100,000 difference. Depends on the size of the account. But, uh, the important thing is do the math. Uh, understand the differences in tax rates and see if there’s a good opportunity for tax planning.

    Okay. And uh you know again we’ve got um you know some things to remember for uh the Roth IRA conversion. So remember uh no income limitations. Um your tax at ordinary income tax rates. Uh another thing that I didn’t mention but uh the deadline is December 31st. Uh so it’s basically a calendar year. You need to do that conversion within the calendar year. You can’t wait till the next year. Um sometimes you can wait till the next year with some other items like RMDs. your first RMD for instance um or doing a contribution but not so with a Roth IRA conversion the deadline is December 31st uh remember that magic number 59 a half uh that’s when you can start to pull out uh the money um taxfree as long as you met all the rules the 5-year rule for contribution from your first contribution or a 5-year rule from each conversion and then also be aware of all those unintended tax consequences that we described. You know, this is not a complete list, but uh kind of gives you insight into the impact on Social Security, Medicare premiums, and uh other things to consider. Goes without saying, but we’ll say it anyway. No guarantee that a Roth IRA conversion will achieve intended results. Um the rules might change. Uh hopefully not. Um but, you know, we got to figure out a way to pay for these taxes accordingly. You know, sometimes we have folks that uh clients that have all of their assets uh and it could be a big amount. It could be a, you know, average amount, but all of their assets in in their retirement accounts and u you know, they don’t have money in their savings account to kind of pay for the taxes. So, uh when you take money out of your retirement account, then the break even um analysis, it takes longer to break even if you’re taking out money from your retirement account versus paying for those taxes in a savings account or a brokerage account. So again, all part of the planning process, the mechanics of this to make sure you get it done right. Uh make sure that you understand the numbers and the risks. And again, another kind of summary charts to to drive home the point, you know, add up all your income, think about your RMDs down the future, your portfolio assets, total taxes paid, um etc. Think about your longevity, um you know, do the math, do the number crunching. Let’s use the software to help us get to the right answer. see if we could have a positive income in this case. Again, another positive outcome. Um 116,000 and $250,000 increase in total portfolio assets.

    Okay. Well, that takes us to the end of our presentation. Uh so uh if there are any questions um please start to think about that and kind of uh you know put into the chat, put into the Q&A and I’ll do my best to uh answer your questions. Um but in conclusion um you know again Roth IRA conversion um it’s a great planning strategy definitely worth consideration you know make sure you’re doing your homework make sure you’re you’re utilizing all the tools and technology available to you. you know, do book a meeting with us if you’re seriously interested in this. Um, again, looking at tax diversification, looking at RMD management, um, estate planning strategies and benefits, um, and just again holistically in terms of your overall financial plan. Um, we’re here to help. I keep saying that because it’s worth mentioning. Uh, we want to be your first call in terms of financial planning and investment management. Uh, avoid any mistakes and and things like that. And these are all the ways that we help members, clients, and basically, you know, the whole idea is to increase your confidence. That’s our value ad. Um, you know, you know, we, uh, it’s a full-time job to kind of keep up with all the information, all the changes, whether through tax code or innovations with various strategies and concepts and, you know, active passive strategies and maximizing returns, minimizing fees, all of the above. Uh, so if you’re interested, uh, we’d love to help you with any of these topics. estate planning, your financial plan, uh your your investment management. Uh again, we’ve got lowcost passive strategies. We’ve got uh um separately managed accounts available to you, boutique money managers. Um the list goes on and on. Uh and here as I close up, um you know, this is kind of a summary of the digital estate planning service that we have available to you. So, this is tremendous value just in itself. highly encourage you to take advantage of this. Um, if you’re a client of ours, we can help you get your estate done, uh, no charge. Um, your estate planning done, no charge. Uh, it’s a complimentary benefit uh, for being a client of ours. Um, you know, doing this work with an attorney is $3,000. Uh, and then we can help you uh, get it done uh, no charge uh, through this uh, digital estate planning service. get your living trust done, your uh PA, power of attorney for financial medical done, HIPPA authorization, etc. Everything that kind of a basic estate plan needs. If you’re more complicated, we can help you with that, too. Um, you might need to see an estate planning attorney if you’re, you know, um, more complicated, but that’s okay. The benefits are worth it, but I will take you through the, you know, the things to think about and whether which direction to go. So, again, another great reason to give us a call and set up a meeting. Here’s my contact information. Uh my cell phone 213-320860. That is my direct number. So please do call any time. At this point I’m going to launch the poll um to give you a chance to set up a meeting. So would love to hear from you um and uh and just kind of help you with all your goals or even answer any questions. Uh so do uh please respond and then I see some questions coming up. So, keep those questions coming and um you know, we look forward to uh again helping you with this, you know, this idea of a Roth conversion, but remember, it’s just one thing. Um it’s one part of your plan. And um there’s probably 12 things that you need to consider inside of your financial plan. And I’m sorry it’s so complicated, but you know, with tax code, um, with investment management, with all that’s happening in your personal family, you know, long-term care, estate planning, income planning, tax minimization, fee, uh, minimization, return maximization, like all of these things that you want to consider to get the last dollar out of your uh, financial plan if possible. Okay. Uh, so uh, sorry I talked quickly. Uh I wanted to get through all the material uh for you and uh uh we’re just under an hour or so kind of going to questions so we made good time. Okay, let me get it set up here please. U it’s just me and uh kind of reading through these questions uh and uh I just want to make sure that I understand your question and uh answer it uh and then we could always book a meeting if if uh if helpful for you. Okay, first question. uh what age is recommended to start a conversion? Uh so the recommended part is going to depend on uh your uh your personal financial plan and uh your family situation, your income, um your expenses, your assets, all of the above. So, I can give you a guideline, but the agent to kind of start a conversion or start thinking about um you know, the sooner the better as long as you can kind of be confident in what your future is going might look like. And when I say be confident, you don’t have to know with certainty, but you can start that process in your 40s, you can start it in your 50s, but it’s not too late even in your 60s to do a conversion. the sooner the better. Uh because you get to uh you have more of a time horizon to break even and there’s also um you have control of those assets longer to kind of help your family um to to to follow up with the strategy so that you get to the kind of intended uh destination and have the intended result. So the answer to your question, you know, what age recommended to start a conversion, it all depends, but you could start in your 40s, like late 40s is probably the soonest that people do it. Um, you know, most people that are in their 30s, they’re doing direct contributions. They haven’t built up that IRA or 401k that much yet. Um, you know, people are typically doing that in, you know, later on their career as they increase their salary, as they increase their retirement assets. Um, so, you know, late 40s probably the soonest that I’ve seen. Uh, 50s is kind of the sweet spot sweet spot because you’re you’re really putting time on your side, but 60s totally worth it. as you get into your 70s, um it’s a little more difficult to break even, but that doesn’t mean you shouldn’t be do doing it. It really depends on your goals. Your estate planning strategy becomes more important at that point. Uh so those are all the kind of age brackets to to think about. Another question here, uh can you clarify if one does multiple Roth IRA conversions in one calendar year, doesn’t the 5-year clock start in January of that year? Um, so my understanding is that it starts when you do the conversion, not so much that month. Um, uh, I could look that up and confirm that and, uh, you know, but my understanding is that it’s the 5-year clock from when you do the conversion, not just like January of that year. Um, so um, if you, um, if I find your name, uh, you know, maybe we can kind of revisit that, I can ask a couple of other advisors or we can look that up in terms of, uh, the conversion rules. But my understanding is that you start in July, you got it’s July to you know July 5 years later. That’s kind of the clock that you’re uh you’re faced with um in terms of each conversion. Um it might be all like uh you know most people are not doing multiple conversions in one year but really you know at the end of the day it doesn’t make that much difference either because um you know a few months difference is not going to change the decision making uh for a conversion and you’re just waiting a few more months to kind of get those cash flows out. So uh but we can clarify that uh if that’s helpful. Another question here how do we determine the break even point? Okay great question. So that kind of comes to the the crux of the decision around a Roth conversion and break even is basically when you take your your um withdrawal which becomes taxable income you need to pay taxes on that and then after you’ve paid taxes after um you’ve got a lower u you know um you know total net worth um then you have to kind of factor that into your new account um because you pay taxes upfront But now you’ve got a new Roth IRA uh with the opportunity to start um uh generating returns and then in the future to kind of uh save in taxes. So that’s the break break even math that we’re talking about. You know, it’s all the upfront cost versus the um the down the road future benefits. And at some point, your Roth IRA conversion is going to hopefully uh become profitable because you’ve kind of you’ve made up that uh early um early tax liability payment. Um so your uh account value is larger. You’ve kind of uh made up for that that early payment. You’ve got a bigger account balance in your new Roth IRA. And then your future account balance benefits from um you know, no taxes. So you’re com you’re comparing your basic, you know, after tax um returns uh holding it in that IRA versus your after tax returns uh in the Roth IRA. And that’s the break even math. I hope that simplifies it, but basically there’s a bunch of variables that go into that. Looking at taxes, looking at cash flows, timing, and when you’re going to break even and ultimately be profitable.

    Okay, another question here. Uh I talked about the free service. Um what exactly does that include? Uh so I’ll quickly go back to that um slide. Uh so this is the uh the summary. We use a digital estate planning service called trust and will. Um they’re very well established. Um, you can, uh, once I set you up, uh, on my dashboard, uh, you’re invited to, uh, set up an account, no charge, uh, as a client of ours, and then you can get your, uh, living trust, your will, medical, financial power of attorney completed. Um, you get a binder shipped to you. Uh, you have that notorized, and then it’s, uh, in effect fully legal, uh, throughout the United States. So, that’s how it works mechanically. The only thing that we ask to take advantage of this great benefit is that you become a client of ours. Uh so we make a big investment to have this to offer this uh to our members to our clients. And so we ask you to to kind of uh you know work with us, partner with us so that we can help you uh you know build on all the great information that we’re helping you with today and uh and get your financial plan done. Your estate plan is part of your financial plan. It’s so important. uh you know over the years I’ve been doing this a long time and then unfortunately you know people do pass away prematurely um it could be a crazy accident like a diving uh you know a diving expedition in Hawaii or it could be something else or falling off your roof and you know these things happen you know both younger and after retirement. So having an estate plan if you have younger kids um if you’re a grandparent and your kids have kids and you have grandchildren everybody needs an estate plan uh because you don’t want to leave it to chance. You do not want to leave this to the uh the state that you reside in state of California or anywhere else. Uh you want to have control and you want to leave your estate in good order so that your beneficiaries can benefit. So those are all the things that kind of uh you know play into the estate planning uh process and again uh no charge if you become a client. So hopefully you take advantage of it. Thanks for the question. Another question here. If uh if you pay taxes out of pocket, invest the whole conversion, the gains will make up for the taxes paid tax-free. Yes. Um so that’s that’s kind of the idea. um you’re paying for taxes out of pocket. And what we mean by that is out of your savings account or your taxable investment account. You’re not generally 99% of the time people are paying for their taxes out of their non-retirement accounts. And the reason for that is because they want to keep their retirement account uh as big as possible to realize those gains and those benefits down the road. Because if you’ve taken if you’re paying for taxes out of your traditional IRA, your Roth conversion is going to be smaller. So when your Roth conversion is smaller, it’s got, you know, uh it takes longer and it takes more return in order to get back up to your original balance and then, you know, to build up a nest egg that’s even bigger so that it kind of makes all of this worthwhile. Um, so that’s the whole idea of uh break even math uh for uh Roth conversions. Thanks for the follow-up question. Another question here about estate planning. After the plan is notorized, would you need to get it funded? Uh so the answer is yes. That’s part of the the steps in terms of estate planning. So if you have a a new living trust, for instance, then you might want to retitle your real estate in the name of your uh living trust. uh you have a choice in terms of your taxable accounts whether or not you want them to be titled in the name of your living trust or personally and attach beneficiaries to them. So you can go either way. Uh there’s no wrong answer in terms of that. But yes, you do need to fund your estate plan. And what that means is basically uh make sure all of the titling, all of the beneficiary designations are up to date so that uh you know the right people inherit your money. there’s nobody that’s being disinherited uh from your estate and it’s funded uh you want to fund either your accounts or your trust uh accordingly with your real estate and the reason is because you know on your deed on your title for your real estate there’s no line that said this is the beneficiary you know you know with the county that you reside in so you need a living trust to avoid probate um otherwise the the state that you reside in state of California or elsewhere they’re going to make the decisions and then it goes through the courts It goes through the attorneys and the judges. All of that is extra time, cost, and complexity adds to potential frustration for your beneficiaries. Uh so getting your estate plan done up front. Um it’s just a tremendous value. Makes a world of sense. Uh but the whole idea is to get completed.

    Okay, I think that’s all the questions in the chat. Uh got a couple questions in the Q&A, so let’s keep going. um what software do you utilize for these projections and analysis? So, we use a software called e-money um internally through our broker dealer. It’s called Wealth Vision, but it’s basically the same uh planning software. Um it’s institutional grade. It’s uh probably the, you know, one of the best planning software uh platforms available. Um it again, it’s institutional grade, so it’s fairly expensive, but uh we do all the data input. uh you know we’re very familiar with the software so we can get it done quick. Uh you know the whole process is you send us your statements uh you know we input the data uh we get together have a meeting make sure it’s all correct we do all the number crunching and then share the results and then send you a deck at the end of it all and that’s your financial plan that’s your Roth conversion you know all in a in a very concise and usable format. Um, so the software is super handy because, you know, it’s audited. You can rely on it. And I have some clients, you know, they’re very good at Excel. And what they’ll do is they’ll they’ll do their own financial planning with Excel, but they’ll use, you know, our planning process to confirm all of their numbers. Um, so because we all need checks and balances with Excel because there’s so many calculations and so many variables, uh, because we’re looking at tax rates and tax code and everything else and, um, you know, it just makes more sense to to to use planning software that’s able up, you know, up to the task uh, for a Roth conversion to get us a good answer and whether or not this is worthwhile. Another question here, your complimentary services provide help with setting up a trust. Um yeah, absolutely. So again, it’s on the screen. Um if you contact me, if you become a client, um we will uh for a no cost um service uh help you get your living trust done, your will done, um your power of attorneys completed. Again, you need to get it notorized, but then it’s, you know, in effect legal, executable, and uh and will help your family. So absolutely, uh we just started offering this this year and uh tremendous value. this in itself is worth becoming a client. But I know I’m biased. So, you know, don’t hate me for that or excuse me for that. But, you know, we just try to, you know, provide all the benefits we can to help people uh get value.

    Okay, last question. Uh, should a Roth IRA be invested with more equities u or something else? Uh, good question. So, that’s asset alloc asset allocation. Uh, there’s two parts to that answer. One is yes more equities generally but it depends on your risk tolerance. It depends on your financial plan. It depends on your kind of confidence in the markets your time frame but more equities is generally the rule of thumb and uh you know fixed income kind of more to be avoided. Uh but you want to be balanced. We have fixed income alternatives actually that you should really investigate especially for a Roth conversion because you want a growth strategy. you want to capitalize on that uh that u you know beneficial tax bracket, no tax situation um you know getting you know you know potentially converting at a lower tax bracket and having uh you know savings and and uh extra gains that are not taxed down the road. So uh you know equities are an important part of that having equity allocation and uh and make sure you break even on the tax liability that you had up front. So going back to that break even math. So the answer is yes. uh equities definitely need to be considered but again in terms of you know what type of portfolio whether that should be aggressive growth a dividend portfolio some other growth strategy a balance strategy and the all the asset allocation that goes within each of those port portfolios or the money manager approach. So it can get a little bit of uh you know complicated but you know within like 15 20 minutes of uh you know a good description then you kind of get it entirely and then kind of you know move on to the next uh the next uh part of the process in terms of understanding you know the conversion mathematics

    just mentioned uh great webinar so thank you for saying that. I love uh I love the shout outs and they make me feel good. Um, one more question here. Uh, great response, by the way. Great group. Uh, so you keep the questions come coming. I love that. Um, it says, “When you have a 10-year age difference between spouses, so maybe 60 and 70, the younger one wants to do a conversion married filing jointly, does that affect the Irma for the older spouse?” And um, you know, the answer is yes. And also keep in mind that uh you know your Irma will uh for the younger spouse that Irma calculation will kick in in a couple of years. So uh really all depends in terms of you know what point you want to do the conversion for your your financial plan. But you know whether you’re 60 or 70, you’re kind of in the zone for doing a conversion. Um you know whether or not you have kids that’ll ultimately impact your decision. But, you know, there is a 2-year look back uh in terms of Medicare calculations and looking your at your modified adjusted gross income. Um, you want to factor that into your decision. Uh, the 61y old, you’re going to be eligible for Medicare by the time you’re 65. So, that’s in four years. Um, so again, it’s all going to depend, but um, you know, there will be definitely Irma consequences uh, for both of you. If you’re putting on um, you know, more income onto your income tax return by doing a conversion, that that’s going to impact your Medicare costs because that’s going to impact your modified adjusted gross income. So, um, that’s my best answer for that. Uh, but again, you want to do the planning and kind of talk that through. Okay, with that let’s pause. Uh thank you so much everybody. Uh again here’s my contact information. Uh please do give me a call. Look forward to seeing you at our next webinar and uh that’s on tax planning and then the next one after that uh estate planning. Uh so with that uh thanks again for all your participation. We really appreciate it and look forward to uh seeing you at our next event. Take care.

  • 06/03/2026 – Alliant Webinar – The Good, The Bad, And The Ugly – Annuities

    interest rates or inflation was at you know eight or nine%. So if in if if inflation stayed at 8 or 9% and you got a 6% fixed rate, it may not, you know, it may not have been such a great deal over time. And now let’s take a and we don’t know where interest rates are going to go in this case. I think ultimately anonymous I don’t think this is necessarily a bad annuity. The thing is is who knows what the next 10 years are going to bring. If you locked it up for 10 years in 2019, you would have been making about 3 4% and you would have been really bumming today. So that’s why I say don’t lock it up. Usually I say don’t lock it up for more than 7 years because if you locked it up for 7 years, you get s you got 6% for 10 years. Well, and again I’m speculating cuz I don’t know what annuity you got, but if you got a 7-year annuity, you probably would have gotten in the range a couple years ago of five and a half, five and three/4er. So for that extra half or quarter percent, you’re getting three years back on your, you know, god forbid if if rates didn’t go, you know, if rates didn’t go down and they went up, well then, you know, you wouldn’t have been tied up for and you’re only giving up a little bit of your interest. So that’s why it’s riskreward. So, in this case, if you want me to take a look specifically at your the terms, I’m happy to, but um but I mean 6% isn’t that bad. I just don’t I don’t recommend putting it out for 10 years. Um cuz I can I can usually if you give yourself 10 years, there are other ways where you can make more money without, you know, cuz then you have time you have time to make up for it. So, there are other ways to protect your money. Um, but that being said, I’m not saying you got a bad annuity. I’m just saying for me, my usual guidance is I usually don’t like annuities that are more than 7 years. That’s why because I don’t want to lock my money up for too long because in a way it’s too much risk from a time standpoint. That’s why. All right. Hopefully I answered your question, anonymous. Uh, the next question is okay. Um, could you explain more about uh Joe asks could you explain more on the differences between structured annuities and indexed annuities? Okay, indexed annuities, there’s no risk to your principal. The risk is to your interest, not to your principal. The interest is based on what the index does. If it’s the S&P 500, the S&P 500 goes up. you get whatever the index gets up to a certain point. Typically, it’s called the cap rate. Okay? If the market goes up beyond that, well, then you’re not going to get more than that because they’re taking the risk. Now, if the market goes down, you don’t earn any interest that year, but you also don’t lose any of your principal or any of your, you know, any of your earlier interest. your your once it locks in your account can go up. It’ll never go down. It’ll never go down below the amount that it’s at. That’s an indexed annuity. A buffered annuity is essentially you’re getting you’re taking a little bit more risk, but you’re getting a higher ceiling. So, the cap rates are usually higher. Uh sometimes there are no cap rates. You can get whatever the market goes on the upside, but you have some sort of protection on the downside. Now, okay. Well, wait a second. They’re going to give me downside protection, but they’re not charging me a fee. How do they do that? Well, you’re locking up your money for a certain amount of time. So they know that they have enough time to make up for it and they they figure out what their risk is going to be. So they’re going to they manage that risk for you and they know that over time the risk is the more time you give it to them, the less risk there’s going to be for them. And that’s essentially what they do is they’re managing the risk so that you can make a more you know you can make more money but then they can also min minimize their risk as well and they they’re they’re making money. So you know any relationship’s got to be win-win and certainly insurance companies got it dialed in that they’re going to they’re going to work out where usually they don’t lose. It’s our job to make sure that you know you win and you have someone who’s representing you. All right, so hopefully that answered your question, Joe. Um, all right. Uh, Mary asks, um, what about um, what about if I can I get an annuity with me and my spouse? Uh, absolutely. And you can do it where you can do an annuity with just yourself. You can also do it with you and your spouse. You can get one for each of you. It doesn’t matter. You could set it up any way you want. Typically, what’s going to happen is when you if you get it with income, well, then what’ll happen is it’ll go between both of your lifetimes. So, um you know, you it depends on what your situation is. If if your beneficial, you know, if your if your spouse is more than 10 years older than you, I would say for the most part, you know, it get it on get it on whoever’s life is going to pay you more income typically. You know, that’s usually what I would say. Uh that being said, you know, it depends on your personal, but yes, can you get it jointly held? Absolutely you can. So, alrighty. Uh, I don’t see any more questions here. Um, but I’m going to stick on for a few minutes longer if uh if anybody does have questions. Um, I realize that I’m at the hour mark. So, I usually try and cut these to an hour and and and value your time. So, I’d let you get back to whatever you’re doing this evening. Um, guys, I thank you for your uh I thank you for your time. Uh, and hopefully you got some information that you can take action on. So, with that, um, I’m going to be on I’m going to be, uh, I’m going to be on for a few more minutes to see if there are any straggler questions. Come on. I’ll also open it up if anybody wants to say hello. I’ll open it up for that as well. So, other than that though, have a good night everybody. Thank you for Thank you for joining us.

    Okay, let’s see. I’m going to let Oh, if you guys do if you do want to say hello, just um you’re very welcome, Mary Ellen. Uh good to see you. All right. Uh let’s see. And if you do want to say hello, you can basically just hit there’s a there’s a there’s a little menu at the bottom of your screen in the lower leftand corner. There’s a little microphone. You can hit the microphone and it will uh it’ll allow you to talk.

    You’re very welcome, Brandon.

    Yep, I do see it. Kimberly, I I’ll follow up with you and I’ll uh I’ll make an appointment with you.

    By the way, I didn’t say hello to you earlier. Eveina,

    hello. Welcome. Uh, Aura, welcome. R, good to see you again. You’re a regular here. Um, Sue, welcome.

    Anyone else I missed? Welcome. Okay, I didn’t see that. Hey, Sue. Hey. So, yeah, I got distracted. Yeah, I don’t know when I I know I need to talk about um I uh I actually just had a my quarterly thing with my financial advisor and asking what to do about you know uh the person previous to her um who is my person sold me this variable annuity and I and you know anyway it’s I’m not thrilled um and uh we talked about it yesterday and So, I guess I would I’m still not even sure. It’s a a deferred variable annuity anyway. And I I’m well past the period of time that I have to keep it, you know, but um it’s just annoying because I I remember reading through this uh multi-page document trying to figure it out, you know, and I’m I’m college educated, so I understand things, but it was so comp it was so complicated, so complex. I you you need a you need an actuarial degree and a law degree to a lot of times read those contracts. Yeah. Well, I I’m a I’m very good at what I do. I’m a musician. Okay. Well, hey, and I’m but you know, that was like So, yeah. And it’s not exactly uh the most exciting reading in the world. So, thankfully I you know, I do it all the time. So, I translate uh lawyer and actuarial stuff. So, yeah, if you ever want me to take a look, the real one page you everything you need to know about that annuity is typically on one page. Oh, on the front. You mean my statement because I have that, you know. No, it’s the contract page. But from your statement, I could probably get a lot of the information. But if you have a copy of the contract that they originally sent you, there’s a there’s a contract page that’ll give you all the details of your, you know, the surrender schedule, which you said you’re already beyond the SK surrender schedule. Um, the thing you really want to know with a variable annuity is you want to know what the fees are. Yeah, I know the fees are horrible. I’ve looked that up before. And so when you’re doing, I’m going, “Yeah, I got everything. I’ve got the worst possible thing because I know I’ve got tons of fees. Um Okay. And so, you know, that’s the kicker. Um now, what did the what did the new You just met with your advisor yesterday. What did they say about it? Oh, she said, ‘Well, if I don’t need the money right now, um, I’m living off social security and my $1,200 a month from United Airlines from my husband. Um, you know, after the bankruptcy, things didn’t go well. You getting any money. Um, but, you know, my house is paid off. You know, I don’t I pay off all my, you know, I don’t owe anybody anything. Um, so she said, “Well, if you don’t really need the money, you know,” she said, “Leave it in.” She says otherwise if you want you can roll it over into something else. That’s what she said. But she said for now um you know but I am I am curious as to what it really you know she said well there’s so many different products. See she inherited this from Bonnie my the one who the lady who sold it to me who I trusted. We played on a volleyball team for many years together. So, you know, um I didn’t and she knew my kids and anyway, but then I go, “Okay, yeah, she was making money off me on that thing.” Um, so I It’s necessarily a bad thing as long as it’s Listen, nobody works for free, but there’s got to be value. like you got to get something out of it beyond like and and you got to know what you’re getting and know that you’re getting value for what you’re giving up. So, you know, I’m not opposed to fees per se, but they got to be reasonable, one, and two, they got to be able to get you something of value to make sure that you’re getting, you know, cuz otherwise any relationship if if if if I win and you don’t, well, then that’s not, you know, that’s not going to be a relationship that you’re happy with. Yeah. You know, and that’s that’s the thing. any relationship whether it be advisor, client or friends, you know, friendship or family or, you know, whatever, romantic, anything. Whenever you have a relationship, it’s got to be mutually beneficial for both people. Otherwise, it’s not going to work. So, with that, um, yeah, if you ever want to Where are you located? Are you in California? I’m Yeah, I’m in Union City. I’m, you know, okay. Yeah, I’m in I’m just north of the airport. Yeah. Oh, you’re you’re what? I’m local. I’m uh I’m in I’m in San Francisco. So, my airport? You’re technically San Bruno or somewhere else. I am. I’m in South San Francisco. I’m in Oyster Point. Oh, okay. No, that’s because my husband worked there for years. So, I Yeah. Anyway, and we spent many of time like flying Well, not flying, driving there in the middle of the night, as the kids would say, to get on a space available flight. Anyway, yeah, I hear you. Um, so yeah. So, um, being said, if you ever want me to come, I mean, I go down to I go to the East Bay all the time. In fact, uh, ne, uh, next week I got to be in, uh, late next week I got to be down in Castro Valley. So, I go over there all the time, you know. So, if you ever want, you know, if you want to come to me, you’re happy to come to my office. If you want to do Zoom, we can do Zoom. If you want me to come to you, I’m happy to come to you, too. Okay. All right. I got to dig that up. I mean, I know. I read it and I go, I don’t know where it is right now. And um I had some pretty serious spine surgery a year and a half ago. They u I’m 513. Okay. Uh and they I had um with severe scolios, they they basically attached from the nape of my neck all the way down neck all the way down to the tailbone. Um, and so and it’s not that that’s been an issue, but somehow it kicked off arthritis and did all this other stuff and I can’t get my Yeah, usually that’s what happens with things like that. Yeah. Well, yeah. I can’t, you know, I’m working on my quads, but apparently when you’re long and lengthy or long and lengthy, then you know that’s you don’t do as well at that. So, me getting around, I mean, I’m not even driving. I don’t know if I’ll be able to drive again. So, it would have to be you coming to me. I’m telling you. Okay. Yeah, I’m happy to do that. um or or Zoom. And I got to find I’m telling you, I got to find that contracted. And like I say, I’ve got to I have somebody coming in a couple times a week because I cannot reach down. I can’t get things. Um and I think I know what box it’s in. I could, you know, dig it out and you know, but um anyway, um yeah, and it may not happen in the next month because theoretically I’m my kids are dragging me off to Santa Cruz. I don’t know how that’s going to work. Um but how old are your kids? Oh, well, kids. Um, let’s see. 44 and 41. So, you know, with the grand I’ll always be your kids. Well, yeah, I know. But I mean, the point is, you know, the grandkids and all that stuff. I hear you. So, um, anyway, so I have your I have your email and and all that. So, I need to I need to find that because, you know, I I’m the type of person who prepares if I’m going to do it. I don’t want to at least photocopy something. So, you’ve got an idea what it is. Well, if you do have your if you do have your statement, we can call the annuity company. As long as you’re on the line with me, we can get the I I know what questions to ask, get the details we’re looking for. Um, you know, we can easily call them um and get the information to do a review. It doesn’t take very long other than, you know, depending on who what annuity company is it? This is Alons. A L L I Alian. E. Yeah. All right. Aliance is a big company. They’re a They’re a big German insurance company. Oh, German. Uh, a lot of people call us Alian. We’re actually Alliant. Well, no, I hope you are. I know. No, I know. But but I in fact this this same webinar I was, you know, I come on early and let people say hello and do all that. And some people said, “Oh, yeah. I’m I’m new to Alons.” you know, I’m like, well, we’re reliant, but you know, we get it all the time. So, yeah, Alian is there. So, the good news is they’re not some fly by night company that could be, you know, that’s in Florida or Texas that could be gone in, you know, a year or two if you know, if something happens. Aliance is a they’re a very, very large insurance company. So, the good thing is it’s safe. So, you don’t have to worry about that. Um, if you do have a statement, we can, you know, we can do it via Zoom or I can come down and we can just get them on the phone and get, you know, get the information. That’s not going to be a problem. Yeah. Well, I know I’ve got them on the phone before when I was um uh you know, reading through all this stuff and wanting to get it clarified. And I have all these notes and now if I looked at the notes, if I could find them, I won’t even know what they said. So, Anyway, yeah, there’s, you know, Yeah. Okay. I’m happy to help if you ever want to or if you want to do a plan, I’m happy to, you know, we don’t charge. We don’t charge for any of that. So, yeah, I’m here to help. Okay. So, so I’m going to do this. I hear you’re you got a lot of activity over there with other calls and quacks and whatnot. So, I’ll let you go, Sue. And then So, I want I’m just curious. Are you still there? Yeah. So, usually, you know, I hate that alien thing. So, is there a way for me to So, can you You can’t see anybody. That’s how it’s set up. Is that it? What do you mean? I can’t see anybody. So, I can use I can see you, but when they show me like right now when I’m talking, they show that little alien thing because you didn’t put on your camera. You can put on your camera. I don’t see where it is. I usually know it’s at the bottom of the screen. There’s a little uh there’s a little video. No, it’s right next to the mute. Right next to the microphone is video. Click on that. No, it’s not. There’s mute. Raise hand. chat question and answer show captions. More is it more? Nope. No, it’s over from Okay, there’s you see participants. You see the audio? The little microphone that you clicked on. I see a microphone. I clicked on that earlier. Okay. Right next to that microphone should be a video. Well, there isn’t because I usually find it and I know. But it’s okay. Curious if I just didn’t there. No, that’s just telling me what it is. That’s telling me who you are. That’s Nope. All right. Well, anyway, sometimes when you click on more, it’ll let you give you some options as far as that. Yeah, but normally it should be right next to the right next to the audio microphone. There should be a little camera. There usually. No. So, more just gives me captions and translations or disconnect audio. Okay. Nothing there. Anyway, I was just curious because like, well, how come you’re you know? Okay. Well, anyway, um All right. So, uh so you I guess you have my name and email and all that stuff so you know who you’re talking to. So yeah, I’ll uh I’ll shoot you an email if you and uh you’ll have on my email will be a link to so if you you know if you don’t really have the you don’t know what time you want to make right now um I’ll shoot you an email and on the email will be a link to my calendar as well where you could just click on that whenever you’re ready and then just make a time that works for you. Okay. All right. All right. Thank you. I went I came to one of yours before and there was you know I go oh it’s this guy he knows what he’s talking about and you know um and I didn’t start last Tuesday. No no no no you didn’t and and my husband started at United Airlines in 1975. So Whoa. Yeah. So we were when it was United Airlines Credit Union, he would walk in, you know, to the big the Yeah. maintenance base in San Francisco and there’s an actually actual office and you’d get checks and bring the checks home and all that kind of stuff. Yeah, I was uh I got here two years after they closed all our branches. I was actually just at the airport on Friday because uh they had the international international flight attendance day. So I was there as a partner because yeah, we started off as United Airline Employees Credit Union back in 1935. So we were we were with a line we were with United since the beginning. Yeah. Um you know but uh after 9/11 they figured hey you know what it may behoove us to serve more than just airline employees. So they changed their name to Alliant and now United Airline Employees is still by far our biggest our biggest market segment. But in addition, we’re also the credit union for Kaiser Permanente, Google, Tesla, Blue Cross Blue Shield, and uh and Susie Orman. So, like all of Susie Orman’s acolytes were also their credit union as well. So, there you go. All right. Well, thank you. I’m gonna call my daughter back. We So, that’s who that was. All right. You’re very welcome, Sue. Thanks for uh thanks for reaching out and uh thanks for attending and I look forward to seeing you soon. Okay. All right. Thanks. Bye. Have a good night.

  • 06/03/2026 – Alliant Webinar – Roth IRA conversions – An effective retirement tax strategy for your clients

    Hey, welcome everybody. We still have a couple more minutes to go before the top of the hour. I hope everybody is having a great day. It is hump day and uh we are almost uh well, we’re halfway through the week ready for the weekend. I hope everybody’s having a great day and I hope everybody has a great weekend coming up. I uh hope everybody had a great Memorial Day last week. I got a smoker. Before we get started, I’ll talk about my smoker. I love my smoker. My other one broke. And if you’ve never had meat done on a smoker versus a grill, a smoker, hands down, is so much better than a grill. I still have my gas grill, but I’ve told my kids that my gas grill will only be turned on if my smoker is broken. And I went a month and a half before I got a new smoker, and my gas grill never turned on.

    So, uh, anyway, a smoker is, uh, by far so much better in my opinion. By far so much better than a gas grill. But, uh, anyway, I, uh, I love it here. All right, so we’ve got about well, it’s just turned to the top of the hour. So, again, thank you everybody for joining me today. Uh, my name is Bernell Baker. I’m a financial consultant with Alliant uh credit union and the division I work for is Aerys Alliant Retirement and Investment Services. And before we really get into this webinar here, I know that’s the most important thing here, but let me just do a little bit of housekeeping here as we go along here. If there’s any questions that you have, please type them in right away in either the chat or the question and answer the Q&A and I will get to all the questions at the very end of this webinar here. And um I encourage everybody to uh stay for those questions because maybe somebody has an idea that might uh uh uh that you might not have thought about that might pertain to you. And with that being said, we will go ahead and get started here. Let me share my screen here with you. Uh we will go right there. Wonderful. Okay. So again, my name is Bernell Baker, financial consultant with Alliant Retirement and Investment Services here. Um all the all of us that do these webinars here, if you’ve ever go on to the website, we are actual employees of the credit union. Uh there’s many credit unions out there that the uh their financial consultants are not actually employees but we are here at Alliant. Uh let me give you this page here and these are different uh resources to go to. We have the uh top one there is a list of all the different webinars that we have and they’re all complimentary. So as you go through take a look at the different uh topics that are available there. Sign up for them. Um you know the more knowledge you have the better it is. We also have the Invest Savvy podcast that we put out podcasts every once in a while. And then there’s the Aerys website and our blog uh that we have there. So, uh with that being said, let’s go ahead and get um get into this here. Uh you know, this presentation is just intended for educational purposes only. uh and it is part of uh Alliant here and so we ask that uh no recording, reproduction or distribution uh of any of this and if you could just appreciate that um abide by that we would greatly appreciate it and we’ll continue to keep doing these. So getting into the webinar here, the future tax environment. We, you know, obviously we have our national debt that is just constantly growing and you know, who knows what our taxes are going to be in the future here. Um, I see somebody hold on a second. Somebody had a question. I see that I’ve had some issues. Uh, oh, okay. Um, in the past I’ve had some other people that have mentioned that there’s some uh echoing or something like that and it just seems like it’s oneoff. So, if you have any um any uh audio issues, you may need to log out and log back in. But, uh anyway, that’s uh that’s that now. And so, our future tax, we don’t know what our future taxes are going to be with our national debt increasing so much on a regular basis. I don’t know when this was, but it’s quite a while ago. The last time that I looked was actually about a month or so ago. We were at $39 trillion in in in debt. I don’t know how we’re going to get out of it without increase in taxes. I I just don’t know. Um hopefully somebody can figure out a way to reduce the debt, but we just don’t know what what it is. I mean, we know what our tax um uh consequences are right now. You know, we had the uh one big beautiful bill that was passed and we know what the taxes are going to be now and and those taxes are going to be through the um end of 2028. And unless they do something to extend those taxes or to come up with a different tax plan, uh if nobody if Congress doesn’t do anything, then it’s going to revert back and then our taxes are going to be a little bit higher uh than with than what they currently are. But our, you know, at the $36 trillion, that’s $106,000 for every single person here in the United States. I mean, it’s just, it’s just out of control what’s going on. And our budget deficit has been rising. It’s been growing constantly. Now if we take a look at the income that taxes do provide then at some point in time in the in the not too de not too distant future are our entitlement programs the social security Medicare Medicaid and just other debt instruments that we have here they’re going to exceed what our revenue is from our tax stream. So, you know, again, we know what our tax situation is now. It when we pay taxes, our federal tax uh situation is now. Who knows what they’re going to be in the future. Now, we currently are in a fairly low tax environment. It’s definitely been much higher in the past and primarily they raise taxes after we’ve had some wars in the past, World War I, World War II, whatever, to try and get out of the debt that those wars cost, unfortunately. Um, but we’re at a pretty low uh tax rate currently again with this one big beautiful bill. And again, I’m not going to get into politics here. Whether you like it or not, it is what it is. And it’s the same for everybody here. So, here’s how we can kind of eliminate or kind of reduce some of our taxes. It depends on what type of an account you have. We have our tax now accounts. So that’s our our index funds, our our brokerage accounts, you know, stocks, bonds, index funds, uh CDs, uh savings accounts, those are all taxed now, uh because we pay taxes on the dividends and the interest that those um uh occurras,

    our traditional or pre-tax 401ks and annuities were all with all of those are going to be taxed later on. The theory behind the 401ks is that in retirement, you’re going to have a lower income level. So, your tax bracket uh should be lower then at least until you have to start doing your RMDs. And I’ll get into that here coming up here. But uh uh once you hit your RMDs, depending on what your amount is, you may be back up to the same tax bracket. And then the tax never accounts, those are the ones that I love. the Roth IRAs, municipal bonds, uh those are okay, but being MUN bonds, they don’t pay a whole heck of a lot. Typically pay a little bit better than savings accounts, but I don’t know. Our our savings accounts paying pretty good right now. And then we also have HSAs that are never taxed as well. And obviously the number one reason that we’re part here part of this is to talk about the Roth IRA and conversions that we can do in that. And I’ll get into that. Now, if you approach a Roth IRA conversion, it can be a very effective way for you to reduce the amount of taxes that you pay over time and it also can increase the the amount that you have to be able to pass on to beneficiaries. And I’ll get into that. So, here’s our agenda that we have today. And I’m going to not go over each one of these because I’ve got slides on each each one. So, let’s talk about the basics here. So, what is a Roth IRA? So, a Roth IRA, this is money that you put into a retirement account into a Roth IRA after you have already paid taxes on it. So, if you do a contribution for the year, let’s say you make $100,000 and you do a a Roth a contribution into your Roth IRA, doesn’t matter the amount that you put in, you still have to claim income and pay income off of that $100,000 a year. Now, here’s the thing with the Roth IRAs. There are certain requirements that it needs to be met in order to take that money out without any penalties. First requirement is you got to be over 59 a 12. Okay, I am currently 58. I just turned 58 a few months ago in February. So I’ve got another year and a half before I can take out. The other requirement is is the money that you contribute into a Roth IRA has to be in there for 5 years. Excuse me. So, it’s got to be in there for 5 years. Now you can take out your contributions that you do prior to 59 a half and or prior to the 5 years but any of the earnings the dividends and the earnings that it grows up to be is got to remain in there until those two uh requirements are met. And then in retirement you can take it all out. It’s not going to adjust your modified uh adjusted gross income. It’s not going to cause any tax burdens on you. It all comes out to be able to it’s it’s all able to come out taxree as long as you meet those two requirements and everything. So, in order to contribute into a Roth IRA, you do need to have some sort of an income coming in. Whether it’s a Roth or a traditional IRA, you have to have some income for a contribution. So, a contribution and a conversion are two separate things. contribution is brand new money going into your retirement accounts here. Now, there are some limits as to how much you can contribute each year for 2026 here. If you’re 49 years old or younger, you can contribute $7,500 into IRA accounts. If you are 50 years old or older, you can contribute $8,600 into IRA accounts. and into a Roth IRA. There’s no age limit, but there is some income limits. So, if you earn enough income, and for single people, if you earn under $153,000 per year, or for a married couple filing jointly, it’s under $242,000, you can contribute the entire 7500 or 86 depending on the age uh range that you are in. between the 153 and the 168 for singles or the 242 or the 252 for married, you can still contribute but only a a a certain amount and it depends on what your income is between those those uh limits there. Now there is a way to do spousal contributions. So for example, my wife doesn’t work. I still continue to work, but my wife doesn’t work. But she can do a spousal Roth IRA contribution based upon my income. And so we put money into my Roth IRA and we put money into her Roth IRA based upon my income. And that’s perfectly fine to be able to do so. Now, so those are contributions. Let’s get into the conversions. That’s a very different animal. So, with a with a Roth conversion, that is money that’s already in a traditional IRA or a pre-tax 401k, and you’re moving it from one IRA account, traditional IRA account over into a Roth IRA account. There’s no income that is required to do that. You can do it at any age. When you do that though, it is taxed. It it has to be taxed. Okay? So, go money going into a traditional IRA or a pre-tax 401k, you get a tax deduction off of your income for that year. When you do that conversion, you’re you’re going to be taxed on that amount as well. And you don’t have to do the entire amount of the traditional IRA. If your income limit is you want to stay underneath a certain tax bracket, you can do only up to that amount or whatever and you can do that. So, um, so you can do any at any age and there’s no income limits for a conversion. Now, the cool thing about that is when you do that, and again, if it stays in there for the 5 years and you’re over 59 a half when you take it out, 100% of that comes out penalty-free. It’s just awesome. And in retirement, that could make quite a bit of a difference um to be able to take money out. Say you need to buy a new car, you need to do a repair on the house or you have a big medical bill or whatever reason, you can take money out of your Roth IRA account and there’s it there will not affect your taxes or anything like that. There’s also something in retirement called Irma. I m a money and for married people, I’m pretty sure it’s married people. If you make over, you know, up to 200, 5,000, 2022,000, something like that, under $200,000, you don’t have to pay anything extra for Medicare Part B or a Part D drug plan. But if you earn enough money in retirement and part of that money is your RMDs, if you earn $200,000 or more between social security and and pension plans that you may have, annuities or your RMDs, then you may have to if you earn over the 200,000, you’ll have to pay extra for that um uh Medicare Part B and Medicare Part D. So that’s something that you have to take into consideration out of a traditional IRA. Out of a Roth IRA does not affect any of that at all whatsoever. So who can convert to a Roth IRA? As I mentioned earlier, there’s no age limit. You can do it up until whatever age you want. Again, there’s no income limits, either high or low. And there’s no requirements that you have to be working to in order to convert money from a traditional into a Roth IRA. But as I mentioned earlier, you do have to uh or whatever year you do it, that is the year that you pay taxes on it. So I’ll give you an example here, and it’s perfect for this slide here. Many years ago, prior to working for Alliant, I worked for a big nationwide bank. I was a financial consultant there. I had some people come into the office and the wife had lost her job and this was back in the mid ‘9s and uh the the husband thought he was doing a good thing and just rolled it over from the wife’s 401k pre-tax 401k into a Roth IRA. Well, when they went to do their taxes, the the accountant said, “Congratulations, you owe the government $40,000 for taxes because again, whenever you do that, you got to claim that as income and pay taxes on it.” So they came into me into a panic. I was able to work with the old 401k company, get the money pushed back into that and then we took it out and moved over over in into a traditional IRA. Now the tax cuts and jobs act eliminated that ability to do so. Okay, that was back in the ‘9s. Maybe it was early 2000. Anyway, in 2018, they changed that rule so that once you do a Roth conversion, you’re stuck with that Roth conversion. You cannot go back in. So, if you do a large amount and now have to pay taxes on it, you cannot go back in and and remove it again. You’re stuck with it. It is it is uh written in stone at that particular time. So again with Roth IAS there is no RMDs required minimum distributions. With a traditional IRA there is RMD. So if uh if you were born prior to 19 excuse me uh uh uh yeah 1960. So 1959 or earlier you have to start taking money out of a traditional IRA at age 73. If you were born in 1960 or later, it bumps your age up to uh 75 and you have to start taking money out of traditional IAS at that point in time because the government allowed you to reduce your income by the amount you contributed to a pre-tax, excuse me, a pre-tax 401k or a Roth or or a traditional IRA. they say, “Okay, now you have to start taking income out and you got to pay taxes on that.” So, with a Roth IRA, since there is no taxes that you have to pay on that, you don’t have to take money out of a Roth IRA. So, it’s kind of nice to be able to do that. And again, it won’t affect your taxes later on um when you uh file for taxes when you’re retired. you can hopefully stay at a lower uh rate, a lower tax rate by taking it out of the Roth IRA. Now, here’s the thing is we again, as I’ve mentioned beginning of this, we just don’t know what our taxes are going to be, okay, in the future to try and eliminate some of our debt. We just don’t know. And the nationwide debt, we don’t know what they’re going to be. Hopefully, they’ll still be low, but in order to uh pay some of the debt off, I just don’t see any way that uh we’re going to be able to do that without uh increasing the taxes at some point in time. Okay? And again, depending on how much your RMDs are, you may have to pay extra on um Medicare Part B and Medicare Part D if you uh if you uh have Part D. Now what affects your social security and your Medicare. Your traditional IRA is 100% taxable. So that will affect your uh your income which will which could affect your social security and your Medicare. Okay. it uh it also is 100% included on provisional income and it’s also included on your modified adjusted gross uh income for Medicare pricing that Irma that I talked about earlier. A Roth IRA does not affect any of that. It comes out tax-free and um doesn’t affect your income at all whatsoever. Now, if we take a look at doing a Roth conversion, so let’s say you’ve got $10,000 now and you’re in a pretty low tax rate now at 12%. But later on when you’re retired and maybe taking out um RMDs, you may be at a 24% tax bracket. So, if we assume a 5% annual return and if you convert your Roth IRA $10,000 over into that, if you take out the 12% from that, then you are investing 8 $8,800 assuming you take out the 12% from the Roth conversion that you do. Okay? So, if you do no conversion at all whatsoever, in 10 years, assuming a 5% return, you’ll have your $10,000 in a traditional IRA, you’ll have $16,289 in there. If you’re in a higher tax bracket at 24%. After taxes, after you take that 24% out of the 16,000, you will have $12,380 that you’ll be able to use and spend. But like I said, if you do the Roth conversion and a lower tax bracket, granted, you’re going to start out a little bit lower at $18 $8,800. And again, assuming that you get a 5% return, same return after 10 years, you’ll have 14,334. So, by doing a Roth IRA now means that you’ll have more money later on if you’re at a higher tax bracket. Now, what that does is it gives you an additional $1,945 $54, which is 15.8% more by doing a Roth conversion now, paying a lower tax rate versus doing it later on, you know, and that 12% that’s great if you uh maybe lose your job, you’re at a lower income, or maybe you have a a lower than average income year, maybe you’ve got some high expenses that you can write off on your taxes and things like that. So take a look at that if you’re ever in a in a situation for that. Now again, we just don’t know what our future taxes are going to be. So it’s not a bad situation to take a look at and do it now versus later on. Now, when I talk about filling up to a different tax bracket, okay, depending on what your income is is, you know, let’s say you have enough income coming in that, you know, before the conversion, you’re still in the 22% tax bracket, but you’ve still got some room to grow before you bump up into the 25% tax bracket. So you could fill up to that 22% income limit uh without increasing any of your taxes or jumping into the 24% tax bracket. Now our US tax is a progressive. So the amount so if you earn the income in the 10% tax bracket you pay 10% for that. Whatever you f if you fall into the 12% tax bracket you pay for the 12% that’s within that tax bracket. and then the 22% whatever money falls into that category then you pay the 22% taxes on that. So you know I I’ll get into a report that we can do later on that shows you what is the best and optimal tax bracket to be in. But when I talk into filling up a tax bracket, it’s just doing a Roth conversion, adding all your other income to stay within that current tax bracket that you’re in or whichever is the most optimal one for you. Now, as I mentioned earlier, your Irma, your Medicare Part B and Medicare Part D. So, for individuals, you know, in retirement, if you’re income is is $109,000 or less, or if you’re married filing jointly is 218. I was thinking 205 or uh 203, but it’s 218. As long as it’s underneath that amount, then you don’t have to pay anything extra, okay, for uh Medicare. But when you start taking out your RMDs, if you’ve got a decent amount of RMDs you have to do, then you can see that it can uh it can uh increase your your uh premiums for Medicare Part B and Medicare Part D as well. So, not only will it bump you up to a higher tax bracket by taking out RMDs, it could also increase your uh Medicare insurance that uh that you pay for part B and part D. Now, obviously, what you want to do is you want to hunt for those lowinccome years. You know, again, depending on what’s going on when you have a lower income year or maybe high deductibles that you can do for whatever reason, you can do a Roth conversion at that time and stay within the same tax bracket and might really benefit you later on. Okay. So, number two, the original IRA owner. So, this is talking about the person who originally set it up. So again, in a traditional IRA, if you were born 1959 or earlier, you have to do RMDs at 73. If you’re born in 1960 or later, you have to do RMDs at 75. Uh required minimum distributions. And if you don’t do RMDs, you could have pay a pretty hefty penalty. Now, here is the percentages that you need to pay based on and based upon your age. So, you can see at 73 it’s about 3.78% and then it slowly increases every single year because your age increases. Now, it doesn’t increase anything massively, but it slowly increases. the percentage that you have to take out increases and hopefully you’re getting a better than a three, four or even a 5% return so that your R your your your IRA account your traditional IRA account is still growing. So hopefully it’s still growing for you but then also the percentage that you have to take out is growing as well. That’s mandatory and you know it just may increase your RMDs that you have to take out. Now, the cool thing about it is we have a report here that we can run to see is a Roth conversion a a good plan for you. So, here is an example of a married couple, Bob and Mary. And the light or the dark blue down below is uh RM, excuse me, is your social security. The light blue there is uh maybe a pension plan. And then the orange there is their RMDs that they have to start taking out at 73 or 75. So when you do your RMDs off of your traditional IRAs, often times that is and excuse me and the red line there, excuse me, the red line is your expenses. So when you have to do your RMDs off your traditional IRA, often times that’s way more than what you have to or than what you need to survive and pay your monthly expenses. So here’s another example here of this report that we run here is it gives us your your cumulative taxes that you will pay over your lifetime. So, with Bob and Mary here, over the rest of their lifetime, they’re going to pay $832,000 in taxes, but it also gives us a a total portfolio asset when they pass away. And in this situ situation here, it’s $4.2 million. Now, we can throw in a Roth conversion in here. And there’s a couple of ways that we can do it. We can do it as a just a straight fixed amount here. So, let’s say they just want us to straight do $60,000 a year. Then, by throwing that in there, it can tell us uh after we do the Roth conversion of what their income, what their cumulative taxes will be and also their income. And in this particular situation with Bob and Mary, we can show that if they do their Roth conversions upfront, then it would save them $140,000 in taxes over their lifetime, and it would increase their assets to pass on to beneficiaries by $828,000. So, it’s really cool. This report that we can run here is really cool. And one thing um I about that report is it it it is complimentary. It doesn’t cost you anything for us to run that report for you. And it’s really cool. The report and we’ll get into some of the things uh about that report coming up here. Um but uh the report does a lot more than just Roth conversions which is kind of nice. Now their surviving spouse as I mentioned my uh I’m married and my wife um uh is here and everything but if we take a look at taxes taxes is very different in retirement especially after a spouse passes away. So if we have Adam and Annie here and they’re married and they’re filing jointly and let’s say that after all of their deductions and everything like that their income comes in at $110,000. Well, they would be at the 12% marginal tax bracket. But let’s say that Adam passes away and an then is surviving. Her RMDs are still going to be about the same. You know, given the, you know, assuming that she’s about the same age as Adam and everything,

    excuse me. if she wants to have the same after tax uh income, she’s going to have to increase the amount that she takes out of her retirement accounts by 68%. But now that she’s she’s single, her tax bracket is going to be completely out of whack. Even if she still uh maintains $110,000, she’s going to be in a much higher tax bracket, the 24% tax bracket. So that’s going to reduce her income by $40,000 just because she’s at a higher tax bracket. There’s a lot of people that don’t take that into consideration in retirement. When one spouse passes away, it very well could bump up their surviving spouse into a completely different tax bracket if they maintain the same amount of income in coming in. So it is very important to be able to do the Roth IRA prior to the death of the first spouse. Okay. Number four here beneficiaries. So in the past under the old rule prior to 2020 if uh somebody passed away and and had a non-spouse as their beneficiary say a parent passed away and the child inherited a million dollars here prior to uh 2020 they could take out a small amount roughly about 4% which was considered a stretch and all they would have to do is take out about 4% every year for the rest of their life. Okay. So, let’s say Carrie here, she’s making $90,000 a year at her current job and prior to 2020, she took out $25,000 out of the uh Roth, excuse me, out of the traditional IRA. Uh that wouldn’t really be that big of an effect on her. You know, her income then would be uh up to $123,000. Okay. But under the new rule now, uh, excuse me, her income would be $115,000. But under the new rule, after 2020, every traditional IRA and Roth IRA has to be completely depleted within 10 years. So, by doing it that way and again assuming a 5% return over 10 years, she would and if she wanted to take out the same amount to not have one year crazy tax uh high in instead of taking out $25,000, she would have to take out $123,000. So, that definitely would put her into a higher tax bracket. at the $90,000 income, she was probably in about the 12% tax bracket. But if you add that $123,000 over the next 10 years, that’s going to bump her up into a much higher tax bracket. So, it’s going to cause an additional uh taxes on her for the inherited IRA of $310,000. So, instead of her getting um a million, she’s getting a little under $700,000. Now, if we take a look and see, okay, if you’re in retirement and you’re at the 12% tax bracket and you want to do a Roth conversion to save your child from paying a higher tax bracket, so let’s say we’ve got uh two people that are married here and they want to convert $50,000 because they’re in a lower tax bracket at 12% and they want to convert $50,000 annually for the next 5 years then and if they get a 7% return. They can go ahead and do that. And so what that is in the green line here is uh the amount that they would have without doing any Roth conversions. And then the beneficiary after the taxes and everything would be a a lower amount because they would have to pay taxes on it when they took it out if they were already at the 24% tax bracket here. And if you did a Roth conversion, you can see that the parents and the son, in this case, the beneficiaries, their taxes would be about the same. So the parents would be able to do the 12% tax bracket and be able to save money off of their son’s inheritance from the son paying taxes on it. So, by doing a Roth conversion, they could uh increase the benefit by $56,000 and then there would be a difference there of $110,000 if the uh if the son had to do it. So, the son would have to start paying extra money. So, again, it might be uh advantageous to take a look at that prior to the owner’s death because once the parents pass away, the son cannot do a Roth conversion. There’s no way to do a Roth conversion on an inherited or a beneficiary IRA account. So, a few things to take into consideration when you’re doing a Roth conversion. Uh there’s no income limits to do a Roth conversion. Whatever you do it, it is taxed as ordinary income. So, fill it up to a a certain tax bracket. If you want to stay within the tax bracket, you’re you’re in. Uh or again, the plan that we have here uh gives us the the best tax bracket to do it in. It deadlines October or December 31st. In a contribution, you have up until when taxes are due on average April 15th to do one for a prior year. But the day that you do that Roth conversion, it’s taxed that particular year. There’s no changing it around. There’s uh no pre So if you’re under 59 and a half and you take money out of a traditional IRA, you have to pay if you take it out to spend it for whatever you’ve got to pay an additional 10% on on income on your taxes. If you do a Roth conversion, that 10% does not apply. Okay? Now, but again, there could be un uh uh unintended consequences if you do a Roth uh IRA conversion. Again, you could bump up to an X tax bracket and pay taxes on that. Okay. Some limit uh potential limitations in risk. Again, there’s no guarantee if you invest the money. There’s no guarantee that it’s going to grow. If you put it in the exact same investments in a traditional IRA and a Roth IRA, they’re going to grow by the exact same percentage uh and everything. Uh but there’s no guarantee the Roth IRA uh rules won’t change in the future. Again, the the 5 years and over 59 a half, that’s current uh tax regulations. It can always change. It hasn’t so far since the Roth IAS came out. That hasn’t changed, but there’s no guarantee that it won’t u uh change in the future. And again, uh you don’t have any any uh uh RMDs with a Roth IRA that you do with a traditional IRA. So, getting back to the report that we can run for you, again, that’s complimentary. It really tells us uh our income. And you know, again, the red line there is uh is expenses, and it could tell us that in the beginning years, we may have to take money out of assets to pay our expenses. and then your RMDs kick in. It might still have to um take some money out, but um it’s it’s a really um really e extensive report that we can run here. And then also hopefully your assets will continue to grow, especially in a Roth IRA because you don’t have to take the RMDs out and the money can just sit in there and continue to grow. You can take it money out if you need to, but again, most of the time with RMDs that people take out way more than what they actually need. So, they take it out and put it in a savings account or maybe they put it in a brokerage account and invest it there. But, you’re going to pay taxes on both of those because of the dividends and the interest that those pay out. Now, as I talked a little bit about filling up to a tax bracket, again, this report that we can run, we can fill it up to different tax brackets. This one here is up to the 22% tax bracket, the 12%, 24, 32, 35, or we can even figure out if it’s if it’s better to do it all at one time. It really is fascinating to me every time I do the report to take a look at it to see what is the best thing to do. So again, we can look at IRA uh Roth IRA uh conversion outcomes. If we do it for the first five years, again, in this particular situation, their cumulative taxes would be $790,000. But again, by doing the Roth conversions up front, it would save them $110,000. And then again, because they’re not doing the RMDs off of this, then it can just sit inside the Roth IRA and continue to grow if they want it. and it would add an additional $250,000 into their portfolio that they could uh pass on to beneficiaries. And the report that we run actually will break it down how much is in Roth IRA accounts and how much is still in traditional IRA accounts so that you can see what the uh tax burden would be on your beneficiaries. A spouse is completely different. you know, if I were to pass away first, my wife can take inherit all of my retirement accounts, but that’s talking about more about uh being able to pass on to non-spouses. Uh so if either whichever one passes away second, it’ll go to our three children. Um now again it could tell us you know if if reducing taxes um you know how much it would reduce our taxes by and then how much it might possibly increase our net worth. And I’ve even done some plans where it would increase their taxes depending on every situation. It might increase their taxes which wouldn’t be a good thing or it might decrease their uh portfolio because of those taxes. The longer the money can that the longer the money can sit in the Roth IRA typically the better it is for everybody for you and for your beneficiaries. Um usually if you’re older and don’t have a long time frame where you expect to uh to live until usually at that point in time it’s not the best thing to do a Roth conversion. Um, but again, we don’t know that until we run the report and everything. So, again, we don’t know what our future tax burden’s going to tax laws are going to be. Uh, I I just don’t understand how we’re going to pay off that debt without raising taxes because it doesn’t seem like our government can can function within a budget, a balanced budget. We haven’t had a balanced budget for years now. A Roth IRA may be a very effective tool to diversify any tax allocations both for you and for beneficiaries. Again, Roth IAS are not subject to RMDs. When you need to take money out, you can, but you can you can only take out what you need, which is kind of nice. Now a Roth IRA may be very beneficial uh to leave to your your heirs your your children or non-spouses because then they can also take all that money out taxfree. Now again a Roth IRA after 2020 for non-spouses they have to take all the money out and the whole reason for that is taxes. They don’t pay taxes on that upfront when they take it out. But let’s say they inherit quite a large sum. They may buy a bigger house which will help the economy because that helps a realtor, it helps a construction person, you may furnish it, whatever, but if there’s any extra left over, they’re going to either as put it in a savings account or they’re going to invest it. And both of those then they will have to pay taxes on the interest and dividends that that pay that that that uh that those things pay out. So again, they have to take the money out within 10 years and it’s all because of taxes. So the government starts getting more money off of dividends and interest if they don’t spend it. And by spending it, it will help out the economy as well. And again, a Roth conversion may or may not be important to you, but it it very well could be a very good retirement strategy for you. So we’re here to help. And the great thing about Alliant Retirement Investment Services is even if you don’t have an investment account with us, I’ll be glad to answer any questions, give you 100% honest feedback. But if you’re going to do a Roth conversion, definitely take uh consider doing it before um uh before you retire and before having to start taking out Social Security because that could increase your amount. Now that’s not to say that even after you start taking social security it’s not beneficial. We just have to run the plan for you and see. Uh now with Allian Retirement Investment we are a full-fledged uh investment firm and we have all different types of products that we can offer here. And there’s a lot of products we offer here that you may have never ever heard of before. uh because everybody’s familiar with uh with uh uh mutual funds because that’s what you have in your 401ks and everything. Uh maybe some ETFs, those are kind of the same thing as mutual funds, just the newer versions of it. But we have so many other products are available that a lot of people don’t understand. We have estate planning and we have it a such a wide range of investment choices that we can offer here. But why Aerys? Why Aerys above anybody else? Number one, here at Aerys, at least especially for me, I like to get to know you and design a plan specifically for your situation. And then we use a team approach after I gather some information. Use a team approach to make sure that it is designed for you and for what you’re trying to accomplish. And lastly, we want we want to build a lasting relationship for the rest of your life. Uh so that if you have any questions, you have one phone number to call and you get the same person myself versus calling up some of these other brokerage offices where you just get the very next person and you call a toll-free number, you get the next person that just came out of training and you never know if those questions are the answers that you get are accur accurate or not. So, let me give you this is my contact information here. And if there’s anybody here on the phone on this webinar that’s on the phone, let me give you my direct phone number here. My direct phone number, excuse me, at Alliance is 7734628612.

    That rings directly on my desk. Um, I like to tell people a lantern pays me to talk on the phone. So, I do a pretty good job of that. So, more than likely you, you know, very well could get my voicemail. I answer every phone call as as as you know, if I’m available to do that, I will pick up the phone and answer it. But if you get my voicemail, please leave me a message. I will call you back as soon as I possibly can. So let’s get into some of the questions here. So uh let me well before we do that let me launch this here. If you would like to have that complimentary uh Roth conversion report ran for you I would be glad to do it. Uh just answer this question. And if you answer yes on here, I will reach out to you and uh and we will go over the report, the information that I need. Uh I’ll be honest with you, uh the Roth conversions is one of the hottest topics that we have here. Depending on how many of you answer yes, I may just have to send out an email. But if there’s not that many, then I will make a phone call. And if I don’t get you on the phone, then I will I will answer. or I’ll shoot you an email. Uh so uh first question here is how much each year can I convert from my 457 to a Roth and are there any fees? Uh you can convert anything. There’s no limit as to how much to convert per year and if there’s any fees typically it’s a very minimal fee. um you know at Alliant if you have a traditional IRA savings account and a traditional IRA Roth account you want to move the traditional to the excuse me if you have a traditional IRA account savings account at Alliant and a Roth IRA savings account at Alliant I think we charge like 25 bucks to do the Roth conversion usually the fee is pretty pretty small it’s usually not very much uh does rental income count in order to open a Roth IRA Um, you know, that’s a good question.

    Uh, that is a question I’ve never had before. I don’t know. I’m not a CPA. I don’t do taxes. Um, I don’t know that. I don’t want to I I don’t want to give you a yes or no. Um, so I I don’t know what that uh if that will count to open up a Roth IRA or not. I’ll have to look into that and see. Uh, can I have both Roth and traditional at the same time? Absolutely. Absolutely you can. But again, contributions is total. So, $8,600 total. So, if you want to put money into each one, and let’s say you’re over 50 like myself, $8,600. If you put $4,000 into one Roth or traditional, doesn’t matter, then the maximum you can put into the other one is is 4,600. So, it’s it’s uh total contribution, but you can absolutely have Roth and traditional and contribute to both up to a maximum of 86 for the year or 7500 if you’re under uh 50. If doing a partial conversion, does a 5-year Clark start clock start from the date of each conversion? Uh yes, as long as it’s if you’re under 59 and a half. If you’re over 59 and a half and do the Roth conversion, then no, it does not restart. If I am a married filing

    separately, I MFS, I’m guessing that’s married filing separately filer. I can’t contribute to a Roth due to the 10,000 income. Correct. that if you’re married filing separately, your taxes are completely out of whack. Uh, can I do a backdoor Roth? Can I do a Roth conversion? Absolutely. So, whether you’re married filing separately or if your income is higher than the uhund was 156 for single, you can always contribute to a traditional IRA and then convert that into a Roth IRA. Uh at the previous big nationwide bank that I worked at, I had a client of mine that was a anesthesiologist for two different hospitals. Buku money made way more than what he was allowed to make to to made way more money than than uh what he was allowed to in order to convert in order to contribute directly into a Roth IRA. So he would come in every year, we would make a contribution into his traditional IRA, and then we would do a Roth conversion all within the same year. So it kind of washed each other out. Can an RMD from a 403b be added to an already existing established Roth to avoid taxes? Absolutely not. An RMD has to come out of a traditional IRA and go into a nonretirement account. So, if you’re in a situation where you have to do RMDs, you have to take that out and put it into a savings checking or a regular brokerage account. Doing a Roth conversion does not uh eliminate you from taking out the RMDs. Um, should you consider combining IRA and 401k or individual for the married couple for conversions or Roth? Well, first of all, whenever you leave a company, I always recommend that you take the 401k out and move it into an IRA. In an IRA, you have so many more options that are available to you, and you can tailor a plan specifically for what you’re looking for in an IRA with other products besides just mutual funds. Now when you’re doing it as a Roth conversion um then yes you should take into consideration all your income and do it in a Roth conversion. So you what whether you take one spouse and reduce their traditional IRA and then start working on this other spouse that doesn’t matter uh because your taxes are going to be the exact same you know it doesn’t matter whether you take out so but yeah I I definitely recommend that you take uh you combine IAS and 401ks and and then start doing Roth conversions. Yeah. Um I meant to avoid taxes from additional income due to the 401 uh RMD. No. Yeah. So again, if you have RMDs that does and do a Roth conversion, that does not eliminate the need to do the RMD still. Uh how is social security impacted with Roth conversions or IRA withdrawals? So it’s so when you do a Roth conversion, you have to claim that as income. Same thing as as an IRA withdrawal, you have to claim that it’s income. And depending on what your income is, uh you know, after your all your deductions and everything, it could impact uh your social security and or your uh premiums for Medicare Part B and D. Do you have a tax attorneys to answer any questions I may have? Sorry, we do not. We do not have tax attorneys here at Alliance. Instead of having a Roth set up through an employer, can I have one with Alliant and just transfer one large sum uh once a year? Yes, you can. You can have it add Alliance and transfer the money over into it. Yeah. Uh married couples can contribute 17,20 a year. Yeah. So each couple each if you’re married, each person can do 8,600. So, um, that would be the 17,200. Yeah. So, my wife does 8,600. I do 8,600 and we’re good. Um, uh, Tracy, yes, please contact me. Okay, I will, Tracy. Um, I have a large traditional IRA as well as a large brokerage fund full of taxable mutual funds. Yes, these mutual funds don’t report their capital gains dividends until the very end of the calendar year. Yeah, sorry. My challenge is how to figure out the maximum amount that I can roll over from my traditional IRA to a Roth IRA without uh hold on a second. Um

    uh without uh going up multiple Irma levels or even federal tax levels. I failed to mention that my wife and I are 70 years old and retired. Uh Mary finally joined me good and with adequate income. Thanks. Yeah. So unfortunately with that uh those mutual funds paying out capital gains that’s hard to predict. Uh and there’s really not much you can do about predicting that. I mean, the benefit is again with our our tax system, if you go over, say you’re at the 22% tax bracket, you fill up to that, if you go over a,000 or 2,000 or 3,000 or whatever into the 24% tax bracket, you’re only filing uh the 24% on that amount that’s within that tax bracket. It’s not like all of your income then is at the 24% tax. uh level. It’s just that portion that’s within that tax bracket. But if you’ve got mutual funds and there’s no rhyme or reason how they pay dividends, it’s going to be hard unfortunately to to figure that out. Uh another one, our income level is teetering around the threshold for the next tax bracket. Can you do a back door just in case or do you have to wait until you’re physically past the threshold? How should I change my strategy when I’m so close every year? Um, you can do a back door anytime. It’s no big deal. Um, you know, again, whenever you do a backdoor when either a backdoor or a Roth conversion, they’re both the exact same thing. whatever your modified gross uh uh adjusted gross income is for the year, whatever tax bracket you fall in, um that’s you’re going to be tax bracket for that amount or whatever. So again, if you go over a little bit, you’ll just pay the higher taxes for that amount that’s within that. Um but yeah, you you can do it. And again, I would say that report that I run is really fantastic to help you out with that. Um, there was a second part of that, but where did it go? Uh, hold on a second. Uh, did you go over how to calculate your modified address gross MAGI so I know how much I can convert to fill the bucket? Uh, looking online gives you all different definitions. Can you use specific boxes on W2? So your modified adjusted gross income is going to be different for every single person because of the deductions that you can take. So there’s no way for me to do that in this type of a a situation to figure that out. But do both married but do both married people have to have income to contribute 7,200 for a year? What if only one of the two have earned income? That’s my situation. I have earned income. We can do $17,200. My wife can do it based upon my income. Now, let’s say that I’m I’m lazy. I’m just working part-time somewhere. And all I earn is say $10,000. I’m relaxed. I got no big deal. Then $10,000 is the maximum you can contribute. the government, you have to earn more than $17,200 or have your MAGI more than $17,200 in order to do that. If I have all kinds of deductions and everything and I’m down to the $10,000 limit income limit, then that is the limit that I can contribute to a Roth. I can do uh $8,600, but then would only be able to do $1,400 for my wife. Uh, revising my part question, can the taxes that I pay on an RMD of a 403b cover the taxes of the contribution from those funds to already existing Roth? Is it’s the same money. So, when you do a Roth conversion, they will allow you and it depends on where you where the accounts are at and everything, but most places will allow you to take out a percentage and pay taxes upfront on it. I’m thinking that’s what your question is. Um, uh, no. Revising my program. Can the taxes that I pay on an RMD of a 403b cover the taxes of the contribution from those funds to already existing Roth. Uh if you’re doing RMDs either at 73 or 75 depending on if you’re born prior to 1960 or not. I hope you’re not working still. So, and again, if you’re not working, then you can’t do a contribution. Social Security pensions do not count towards income to do a contribution. Um,

    and then if I’m paying taxes on the RMD and again taxes on the Roth, it just seems redundant. So in the Roth, you’re not if if you’re doing a conversion, you’re taking money out of a traditional IRA. You have to pay taxes. Anytime money comes out of a traditional IRA, you have to pay taxes on it. Once it goes into the Roth, then you can take the money out of the Roth and you’re not paying any taxes on that Roth. So hopefully that is the question. Uh I have a large traditional IRA as well as a large brokerage fund full of taxable mutual funds. The mut Oh, this is I got the same thing here. Okay. Um I was reading the chat questions. Now I’m over the Q&A questions and it looks like the same question there. Uh, when does a 403b get taxed? When you take it out of the 403b. 403bs. So a 403b just means that you work for a nonprofit organization. So technically, as I mentioned earlier, I work for a big nationwide bank. A for-profit organization, like a bank or most businesses, you have a 401k. A 403b means that you work for a nonprofit organization. Technically, credit unions are nonprofit. So, at the big bank, I had a 401k. Here at at Alliance, I have a 403b function the exact same way. So, uh, uh, anytime you take money out of a 403b, 401k, or a traditional IRA and move it over into a non-retirement account, well, anytime you take it out of that, then you pay taxes on it at that time. I understand that HSAs are tax-free for health care expenses and that HSAs can also act as a pseudo retirement account. Yeah. Once I start withdrawing from an HSA in retirement, is it taxed? No, it’s not. As long as you use it for uh health care uh things. Does the Roth account just need to be open for at least 5 years or does the new money put into a Roth account have to stay in there for 5 years? If you’re prior to 59 12, every time that you add money to it, that starts the 5-year for that portion. Does not change any prior contributions that you’ve done. So, for example, my Roth IRA account was opened uh over 15 years ago, but I am contributing uh but I still contribute. So, does the new money need to stay in for at least 5 years? If you’re under 59 and a half, yes, it does. If you’re over 59 12, no, it doesn’t. Uh I failed to mention that my wife and I are 70 years old and retired, married filing jointly with adequate income. I think that was on the other thing as well. Does a 5year start from the time you do the conversion for each conversion? Again, depending on your age under 59 and a half, yes, it does. Over 59 and a half, it doesn’t. For a spousal Roth IRA, my husband is retired but works part-time and makes around $10,000 per year. I am retired with no earned income. Am I correct in assuming we can only con only put in a total of 10,000 between both of our Roths? Yes. For instance, if we put 5,000 in

    uh for him 86. Correct? Yeah. So, if your income is $10,000, that’s all you can contribute to your IRA accounts. So, if he does $8,600, then all you can do is $1,400. Correct. That is correct. I want to convert 25,000 per year to stay in a certain tax rate. Does it make sense to roll over 100,000 from my 401k to a traditional IRA and then convert uh the said 25 into a Roth for 4 years or should I leave the 100,000 in my 401k and just roll over 25,000 every year for my 401k? Well, whether you do it if you roll over the 100,000 into a traditional IRA and then do 25,000 a year, that’s the same as if you do 25,000 a year directly from your from your 401k. It’s still $25,000 a year. The government doesn’t care if it if it comes from a traditional IRA or a pre-tax 401k, it’s just $25,000. So, where it comes from, it it doesn’t matter. But again, depending on your age and a lot of other things, again, this report would really be really beneficial. It might even be better for you if you did the entire 100,000 upfront. Again, until I run the report, I wouldn’t know. So, uh, generally speaking, will a single person take a hit no matter what because they are likely to be in a higher tax bracket based on the example you gave where you’re doing the conversion before one spouse dies. Uh yes, a single person is typically going to well their tax brackets are much lower uh as far as income goes. So yes, a single person is probably going to be in a higher tax bracket if you take out the same amount versus single versus married filing jointly. Should you consider combining IRA and 401k or individual for a married couple conversion or RMD? Well, you

    for each so for me and my my wife, we can’t combine our IRA accounts. They are individual retirement accounts. What’s in her accounts, I cannot combine into mine or add into mine until she passes away, then I can take it. But as long as we’re both alive, we can’t combine our two accounts into one account. But you should consider combining them for the dollar amount. Okay? So if I, for example, I have a 200,000 and my wife has a 100,000 in hers, our total dollar amount is 300,000. That’s what you need to consider when doing Roth. But I we can’t combine the two together. uh again until she passes away or I pass away first. Whoever passed away first as a spouse, you can just roll everything into your own. Aren’t there eligible designated beneficiaries since the newer rule was imposed where the

    uh recipient of an inherited IRA can still stretch? No. No. After 2020, a non-spouse has to take all the money out within 10 years. Since I am working and earning less this year, this is a great time to do a Roth conversion. Correct. Yes. As long as you’re at a lower tax bracket. Absolutely. Can you also convert a 401k? Yes. Or do I need to roll it into an IRA first? No, you can do it directly from a 401k into a Roth IRA. Yeah, you can do that. Uh, hi Bernell. Thanks for the presentation. I am retired and am wondering what amount to contribute to convert to a Roth IRA without triggering Irma Social Security and Medicare. Is there a way to calculate? Uh, yeah, there is. So, if you just type in Irma in a Google search, uh, it will tell you what the income limits are and the different dollar amounts. if you reach those income limits, what the different dollar amounts will be that you will have to pay extra. So, just Google search IRMA Irma and you can come up with the uh amounts that you need. I missed a part about the 5-year uh clock. I apologize, but I am at work. Uh no problem. What is a So, the 5-year clock, hopefully I’ve answered it, but I’ll answer it again here. If you’re under 59 and a half, the rules to be able to take out a a Roth IRA without acrewing any taxes or penalties is the money has to be in there for 5 years. You have to reach 59 12 or over. Now, the 5-year uh the 5-year clock starts clock starts January 1st of the year that you do the contribution. So, we’re here in June already. If you excuse me if you start a brand new Roth IRA or just do a contribution and you’re under 59 12 the 5-year clock actually started January 1st of this year. It doesn’t start January 2nd. Are we in January 2nd now?

    Oh, I needed my glasses. Whatever. January 2nd or 3rd, whatever we’re at right now. Uh if you take an RMDS, does that count as income? That means you can now contribute uh to an a Roth IRA even if you’re no Nope. Sorry. It does not. Tanya, that would be great. But unfortunately, that does not count as income. The government’s not that kind to us. My MGI puts me above the limit that I can contribute to an IRA, a Roth IRA. And there there’s no limit on traditional, but to a Roth IRA, I max out my 401k. Fantastic. and make after tax contributions into the 401k. Okay. What is required to convert the after tax contributions into a Roth or the 401k into a Roth? I have a an IRA account with a brokerage and my company does not allow a transfer in into the 401k from the IRA.

    So in in or so you could open up a traditional IRA, contribute to the traditional IRA and then do a Roth conversion. As I mentioned that previous um client of mine um anesthesiologist for two hospitals, that’s what he would do every year. He would do a Roth conver a a contribution into his traditional IRA because there’s no income limits to do that. and then we would do a Roth conversion uh after that. So that’s how you get around if your income limit is is such that you can contribute directly into a Roth IRA, you can put it into a traditional IRA and then convert it. Okay, with that being said, that is all the in all the questions. Um and we’re at an hour 9 minutes, so I appreciate everybody’s uh time and attention here. Hopefully this was helpful to everybody. And then and for those of you that answered that you wanted to maybe do that Roth conversion, uh I I may have to just shoot you an email. I have a spreadsheet that I put together with the information that I need. I may just have to send that to you because we have quite a few people that want to do that and I know my schedule is just super busy. I won’t be able to make phone calls like I usually try to do. Uh, but I will shoot you out an email probably tomorrow and uh with that spreadsheet when you fill that out and send it back to me with all that information, I’ll be able to the Roth uh IRA, excuse me, the Roth um uh uh conversion and we can go over that then in the future. For the rest of you, thank you so much for joining me today. For everybody, I hope you have a great rest of your day and great uh great evening and have a wonderful weekend coming up in a couple of days. Thanks so much. Take care.

  • 06/03/2026 – Alliant Webinar – Savvy Tax Planning – How Tax Planning Changes Through Four Stages of Retirement

    Good afternoon everybody. Thank you so much for joining me today uh to talk about how tax planning changes through the four changes of retirement. Uh so we’re going to talk about uh some tax strategies. This is not so much about filing taxes and uh you know uh things like that, but it’s going to be looking at tax advantaged accounts. Uh how do you save on not paying so many taxes based on different types of of withdrawals that you can do over time? But we’ll dig into uh the presentation about tax planning in retirement. But before I get into there, just a couple of housekeeping things is let’s get to uh first of all, we are not allowed to record these presentations. Just so you do know, uh we cannot record these and neither can any listeners. Uh we’ve had some other uh institutions try to record our presentations and that is certainly not allowed. So, um, it’s only, you know, if we do, uh, have any other questions in the future about this, if some people want to review the presentation again, I would be happy to do a one-on-one with you, uh, to go over anything we do. In fact, at the end of the presentation, I will be putting up a survey question, basically a one question. Would you like to set up a time to speak uh about your specific situation? So, uh, that will be certainly available to, uh, for you at the end of this presentation. I do have some upcoming presentations. I’ll be doing the seven things to do before you retire. Uh, very popular topic that I do Tuesday, June 16th, and that will be an evening presentation. Uh, upcoming webinars. I do have long-term care coming up. Uh, another, you know, certainly how long-term care has changed over the years. If you happen to have or know someone that has a policy from 20, 25 years ago, uh, you know, a long time ago and many times premiums have gone up or the benefits that you have are reduced from what you had originally signed up for or a combination of both of those. So, uh, talking about how long care how long-term care did work before and how policies are very different now, uh, to avoid any of those future problems from happening again. So, as we get into, uh, that coming up in on Wednesday the 1st, that is another 2:00 p.m. Central time in the afternoon, uh, you do have uh, access to some educational resources. You could see what other webinars we have. I am one of about 11 people or so that do these presentations. We usually have three to four presentations a week going at different times of the day, different days of the week. So hopefully there’s some, you know, an interesting topic that you would like to listen to and uh hopefully learn a little bit more about and we do various topics. I do myself probably about eight or nine different topics throughout the year. Some of them are repeated, but uh you do have access to some of our resources. Uh before we do get into the presentation, I will let you know that you do have access to the chat box or the Q&A box. Either one of those is just fine. If you do have a question, uh if you think of something, go ahead and type it in at any time and I will get to those questions at the end of the presentation. So if you think of a question, type it in and it’ll hold till the end there. So to get into the presentation uh first starting with a tax brain teaser. So Bill is retired and has taxable income of 58,688. So we could see based on that that he is in the 22% bracket. If you look on the box on the right, if you see that 22% go to the right of that between 50,41 and 105,700, that 58,688 in that range, this person is in the 22% bracket. This includes 45,000 uh of IRA income, IRA withdrawals, traditional IRA uh assumed, plus another uh 37,500 of social security income, and he goes into his IRA for an additional $1,000 for a concert road trip. So, he wants to take an additional,000 out. How much will he owe in taxes on that? We would think that that would be well he’s in the 22% bracket, but he might have to pay a little bit more. Now, it might not just be federal taxes on here. We’re going to get into why a little bit later on why is he paying a little over 40% in taxes uh on this extra thousand even though he’s in the 22% bracket. More on that to come in just a little bit. So, we’re going to get into savvy tax planning, how tax planning changes through four stages of retirement, seeking professional tax adv um advice. So, um I am not a CPA. I am not uh the qualified tax advisor that you might be filing taxes with. However, we’re going to be getting uh covering some tax strategies. If you do have very specific things on what this means to your specific tax brackets, speak to your qualified tax professional about that. So, traditional IAS that are tax deferred. Basically, money that goes into a traditional IRA has not been taxed typically, especially if it was even in a 401k. How did you put money in a 401k? It came through your paycheck before you paid taxes. So, it was pre-tax money going in. it was never taxed and it grows tax deferred growing growing growing and then you finally start to withdraw from a traditional IRA that’s when you have to pay taxes on those Roth IAS are after tax money going in meaning that you already paid tax on income maybe it’s in a savings or checking now you want to contribute to a Roth IRA you don’t get any other tax benefit you don’t get any deduction by putting into a Roth IRA however all the withdrawals, all that interest and growth that you will get over time is all taxfree. And then this does uh talk about also federal taxes is what we’re going to be touching on. Various states might have their own uh tax situations as far as taxable income or you know when we talk here in Illinois. I’m in Cook County where we might have property tax freezes if your income is below certain thresholds. We’re not touching much on that stuff. If I do a one-on-one conversation with you uh after this, then we can certainly talk more specifically about some of these other tax situations on how to plan for these in the future. Uh new complex world for re uh retirement planning, taxes in the accumulation phase, meaning that’s when you’re putting money into uh savings accounts or brokerage or IRA or 401ks. and then taxes in distribution phase when you start to withdraw from these accounts. Typically, you’re not getting child tax credits as a retiree. You probably don’t have children unless you do have maybe custody of grandchildren or something like that where you can certainly uh take advantage of, but um it’s uh typically most retirees do not uh you know have young children with tax credits. Uh mortgage interest, hopefully a mortgage is paid off when you’re retired. tax-free employer paid medical insurance. So, if you’re uh getting contributions to your health care coverage and you’re getting support from an employer on that, there might be some benefits in there. Maybe you’re not working anymore and you’re not doing that anymore. So, uh and also you’re not contributing to a 401k if you are retired. Social Security required minimum distributions, that is RMDs. We’re going to talk a little bit more about RMDs coming up. uh paying for Medicare and long-term care. People often uh pay more taxes in retirement than expected because of the confusing system uh you know treats various income types differently and contains hidden taxes and penalties. Developing a solution because your tax exposure will change throughout the four stages of retirement. You need a strategy uh taxes search charges. When we talk about possible taxes and sir charges, these are some of things these things. When we talk about Bill and his uh $1,000 extra for his concert road trip, that could be an extra little tax or sir charge that we’re going to talk about some of those things that you getting more income affects other parts of your taxable income. Uh and penalties related to social security, Medicare and other income. So there are four stages. Your pre-retirement, let’s say between ages 50 and 60. Your early retirement if you’re you’re retiring anywhere from 60 to 70. Let’s say uh middle retirement, your go slow years now. Maybe you’re doing some travel between your age of 70 and 80. Maybe you’re still doing some things but maybe have backed off a little and then you’re 80 plus. They termed as the no-go years. I hopefully there’s still some go in uh even in late retirement. But again, our four stages, retirement surprises, inflation is a big thing. One of the things I’m going to be offering at the end of this presentation is our full comprehensive plan, the retirement plan, or I’ll just say future plan. Maybe it’s not just retirement. Maybe you’re looking to save for children’s education or grandchildren’s education or some other maybe buying a second home and how do we save uh maybe some advantages on some of those types of things. Uh so we could certainly get into just basically future planning. But when I do a retirement plan for someone inflation is a very big deal when we talk about spending. So, if someone is 65 years old today and they say, “Yeah, we’re looking to spend 5,000 a month in retirement.” Uh, so 5,000 a month, next year is going to be a little bit more because costs go up next year. And then the following, when we talk 10 or 15 or 20 or even 25 years later, you’re not spending 5,000 a month. You are spending a great deal more than 5,000 a month basically buying the same things that you are. Uh, but just inflation really takes over. So when I offer that you you have this comprehensive plan available to you at no cost. We do not charge for something like this. This is just basically for membership and how we uh with our members on uh education. All these webinars are no cost. anything that we do as far as education resources. I do get a base salary here at this credit union and that’s part of my job is doing all of these maybe retirement plans and future planning. So, please when I put a survey up at the end, would you like to have a one-on-one conversation, please say yes on that and we will dig into just planning for the future, longevity, expenses, health care, taxes, these are all other things that affect your retirement. So what’s the first thing you need first thing I need to uh understand about retirement and taxes start with the end in mind basically what do you want to spend not do what do you want your gross income to be pay taxes and what’s left over we need to gross that up basically so if we’re one of the things I do is if I say what does spending look like not just paying your bills but going out to dinner maybe travel you have property taxes you have insurance costs you have all these different things that we’re looking to sell for and what’s all that need, including all of your entertainment and then grossing that up and looking to see what do we need if you’re going to be drawing out of accounts that you have to pay taxes on and especially even social security potentially partially being taxed. Uh how do you how do we do that? That plan helps us figure all of this out. If you save $500,000 in a 401k or a traditional IRA, it’s not necessarily 500,000 in your pocket. When we look at different tax brackets in here, we can see on the right side here, if you are in the 22% bracket, you’re netting 390,000 of the withdrawals by paying 22% taxes. The 24% tax rate, you get a little bit less, 380,000. In addition, you might have to take required distributions starting at the age of 73. If you are born 1960 or later, those required distributions will be age 75. Uh so they did that in this last uh tax uh uh strategy that we did. They upped it to age 75, but if you are born 1960 or later. So here’s just a simple chart looking at the top uh line. The grayish line is if you had a if you didn’t have to pay taxes on how much money you would be getting out of a $500,000 account over a 30-year period and you’re getting it all because you don’t have to pay any taxes. I wish that was the case, but that’s just showing that illustration of how much you would actually have in accounts. But if you’re in the 12% bracket, the red line, you’re getting less in your pocket. And even if you’re in a higher bracket, in this case, let’s say the 33% tax bracket, you’re even getting less in your pocket. So, when I do that retirement plan or when I’m talking about uh to people about how much to take out of retirement accounts and not going to the next bracket, if you’re in the 12% bracket, can we avoid going to the 22%. If we’re in the 22, can we avoid going to the next one, which is the 24? or up to 32 35 37% is the top bracket. So more years that you take money out, uh are you paying more taxes than you would want to? That’s where maybe we can start to have that strategy of how much can you take out each year without going to that next bracket. But at least I have uh social security and to supplement my income and Medicare to pay my health care. Social Security and Medicare have their own, I’ll call it tax traps, and you need to plan for those, too. So, we’ll dig into Social Security and taxes. So, now we’re going to go back to Bill. Bill in that story where he uh has uh that income of 45,000 uh for IRA income. He’s got social security. He’s got an adjusted gross income. I’m looking looking at the before the concert trip uh column here uh where he has an adjusted gross income of 74,788 and then taxable income after deductions and how much he has to pay in taxes. Income tax 7600 and if he took that extra $1,000 out uh $46,000 on the right side here of IRA income. So instead of 45,000 he took that extra,000. He still has the same social security benefit, but now his adjusted gross income goes a little bit higher. His taxable income and what he’s paying in taxes on here, 8,30. So, here’s where we’re going to dig into, and I’ll certainly just explain what’s going on with this uh certain scenario here. So, we have basically at the uh that Bill is paying an additional $1,850 in taxes uh or actually adjusted gross income of $1,850 more. He took $1,000 out, but he has $81850 more in taxable income. So, what happened here? Social Security. Here’s one of those tax traps. If your social sec, if your income hits certain thresholds, if let’s say it’s below a certain threshold, you don’t have to pay tax on your social security. If it goes up, you have to pay up to 50% of your social security can be taxed. If it goes up to another level, up to 85% of your social security is taxed. So that’s what happened here. Bill took out that extra thousand and he had to pay extra money because his social security now premiums uh went or uh taxes on his social security uh increased. Now that’s where that tax trap was. Not even realizing that he’s thinking he’s still in the same tax bracket. So what’s an extra $1,000 going to do? But that put him over a threshold that he now has to pay a little bit more taxes on his social security income. So again, Medicare, Social Security tax traps are certainly there. Uh so it’s certainly, you know, something we want to be conscious of of when we are taking out of retirement accounts, not just your tax brackets, what is this affecting? Another uh trap that could be here again when I talk about Cook County and Illinois is property tax freezes. If your income is 74,000, let’s say it’s 74,500 and you took out an extra,000. Now you’re 75,500. You don’t get property tax freezes that year because you exceeded the 75,000 limit. So, there’s another uh situation of not just social security taxes or Medicare premiums uh but now we’re talking about more local taxes that could be affected. So, again, he paid a little bit more taxes uh in this social security trap on here because he took that extra $,000 out. Different retirement approaches. retire completely, semi-retire with fewer hours, an existing job, or semi-retire to a passion driven uh passion-driven job or even retire and volunteer. So, are you planning on having income in retirement or no income? Maybe just volunteering. Certainly, having other income certainly can affect your tax brackets and some of these other tax traps that we need to worry about. So, I’ll throw out another reminder. If you do have any questions, the chat box and the Q&A box are both available. Uh, type away at whenever you think of a question and I will get to those at the end of the presentation. So, working and social security, the good your social security benefit is based on your highest 35 years of working. It’s not your last 35. It’s not the last five or it’s not your just the overall average. It’s your highest 35 years of working. So if you work for 40 years, the lowest five don’t even come into the calculation. It’s the highest 35 years. As a caution, if you only had 30 years of working, let’s say you took some years off to of work to raise children or anything that you just did not have earned income coming in uh for whatever reason. If you only had, let’s say, 30 years of working, you have 30 numbers and then you also have five zeros that could affect your average. If you work a 31st year, so 31 years of working, a zero falls off, a number goes on, and your average goes up. So, it’s your highest 35 years of working. This is calculated at your age 62. Uh if you do work uh past the age of 62 at 63 64 65 let’s say your full retirement age is age 67 for social security maybe you’re going to plan to work until age 67. Um your income if it’s lower by chance it will not go down after the age of 62 but it can go up if it does bring your average up if those are higher income years. working in social security. The bad is you do want to be uh caut um have some caution of how much income you have. If you take your social security early, this is what this page is referring to. Only if you take your social security income prior to your full retirement age. So based on your year of birth, it determines how much you um uh when you’re able to get your full benefit. Uh mine for example is age 67. If you were born 1959, your uh full social security is 66 and 10 months. 958 and 1958 is 66 and 8 months. Um and so there’s some just reduction in time uh for all of those years or dates of birth. Uh but if you take it early and you make more than $24,480, every one uh every $2 you earn, $1 is withheld from your social security. Uh so you do want to be cautious of your um you’re getting less benefit by making too much money. If you make less than 24,480 or up to that amount, you can certainly do that. Does not affect your social security at all. Uh but it’s only the amounts above that that uh is this $1 of every two that is affected. Uh and if you uh take your social security at your full retirement age and you decide to keep working, you can make as much as you want. You are not affected at all on that. There is no what they call this earnings test. Uh so you can make as much as you want. This is only if you take it early.

    you still pay social security tax even if you are working in retirement. So what this means is 6.2% of your social uh of your income you pay into social security. So my paycheck 6.2% of my paycheck goes into social security. My employer Alliant pays an additional 6.2% of my income. So technically 12.4% of my income goes into social security. And even so, let’s say if I retire or when I retire and I’m getting social security income, if I decide to keep working, even that I’m getting social security income, if I decide to work, 6.2% of my future paychecks still go into social security. Can I potentially even uh increase my benefit by working? Possibly. if it’s your higher income years. Um if it’s higher income, it can certainly increase your benefit even if you are on social security. So even when you work in retirement, even when you’re receiving benefits uh and working, it only increases your benefit if is one of your top 35 years of earnings. Medicare and taxes. So some tax traps for Medicare uh that we have to talk about. So now we have George and Martha. uh they have adjusted gross income, MAGI, modified adjusted gross income is what that stands for in 2024. They’re both on Medicare part B and D. So technically part A and B is so A is your hospital coverage, B is your doctor coverage basically and D is your prescription drug coverage. So you have to pay for Medicare part B and you have to pay for Medicare part D. So, they have, God bless George and Martha, they have 342,000 of modified adjusted gross income, very good income that they are getting. Uh, but that’s a very specific number here, and we’ll see this on the next page why, but they have 342,000 of adjusted gross income, but now they sold a stock for $1,000 gain. Uh, so now they owe $188, which is uh, you know, 15% tax bracket, $150 plus an additional 3.8% for a net investment income. Uh, that because they have such high income, they have to pay a little bit more tax on that. So, they would have to pay 18.8% is what we’re thinking on here. But here’s what they did. So their 342,000 of income you could see just above uh above the circle here where they have MAGI married joint. So the second column here that uh that threshold of 274001 up to 342,000 they have to pay they would pay if it was $342,000 $45 um for their premiums for uh their social sec uh for their Medicare part B. $4580 each is what they would have to be paying. But because they sold that stock for an extra $1,000 gain, now their modified adjusted gross income exceeded the $342,000 and now they have to pay $527.50 in premiums uh for their Medicare Part B. So they have to pay a lot more and that’s for the following like two years later is when this is affected. But that’s uh you knowund almost $122 more per month per person that they would have to just because they sold that extra stock there and they exceeded that level. Uh so there um that’s where we could see the two brackets there. And then um you know this also affects the Medicare Part D premium over on the far right there where we see they would have been paying $37.50. Now they have to pay $60.40 40 cents each for Medicare Part D just because they sold that extra stock and they exceeded those levels again. So when we look at what does this effect for each of them for George to pay higher B and D and Martha to pay higher B and D, that’s a total of $3,470 for the year just by selling $1,000 worth of stock. So that’s the additional premium. That’s not the premium in uh Medicare B and D. That’s the additional premium that they would be spending. So sold stock $1,000 income gain. The taxes they would pay is that 18.8% and but it triggered the Irma. That’s is the income related monthly adjustment amount uh is for your Medicare part B and D. And the search charge is 34,70 3,47040. So we’re looking at a 365% real tax rate just because they sold that extra stock and it affected their Medicare Part B and Part D premiums. So another example is Medicare enrollment coverage gaps and late penalties. If you are approaching the age of 65 and you are not going to be working, you need to start planning to sign up for Medicare A and B and your prescription drug coverage D. Uh if you opt to go with the advantage plan, Medicare C, that’s certainly something you can uh explore. The majority of people are do traditional, which is A and B, and then the prescription drug coverage D. Uh so in this case in this uh example we have Jim and an they are both age 68. Jim retired at 65 and an one year later retired at 66. They do get coverage through um Ann’s employer who offers retiree health insurance. Now this is not the standard employee coverage that you get. This is retiree coverage, which is certainly something that’s not a bad thing to get. But what they didn’t do is sign up for Medicare because they had thought that the the retiree benefit was good enough or enough for them to have. If you do not have your work plan, you have to sign up for Medicare B and D or A, B, and D um at certain times and typically age 65 or you know if in this case they retired at 66. If they retired at 66, they have to sign up for their Medicare Part B and D at age 66. Um but they are 68 and they didn’t sign up for it, so they’re going to have a penalty. And you could see the missed enrollment penalty, 10% of base premium for life. Uh it’s kind of a cruel penalty that is if you just didn’t sign up in time that every year you’re alive, you have to pay a higher premium just because you initially didn’t start it at the right time. That’s how important this is to sign up for your Medicare A, B, and D uh when you need to. And if you want to dig into your specific scenario, please say yes at the end of the presentation when I put up the survey and you and I can talk about if you need or want to sign up for Medicare A, B, and D and when is the appropriate time based on your specific situation. If you’re still working and have your qualified group plan, that’s fine. You can certainly have that. Um but if you retire and you are not working, you have to sign up for A, B, and D. Then if you do not have coverage, so are there any other tax traps we will face in retirement? You must plan now when you will uh use taxable, tax deferred, tax-free assets to manage your income and tax brackets efficiently uh efficiently. So what this is saying is if people have traditional IAS or Roth IAS or savings accounts or brokerage accounts that are not IAS, what do people draw out of first? What’s that order of operations? Do I take from savings first? Do I take from the traditional IRA first or should I take the tax-free Roth IRA stuff first? Um, so basic, you know, on those order of operations and that’s certainly something when I do that retirement plan that we do talk about. So here’s an example that we have Sam and Mary. Each of them has a $450,000 traditional IRA and then they each have a 60,000 Roth IRA and then an additional $300,000 in a joint account. So they have traditional IRA, they have Roth IRA and then they have some savings.

    So what do they spend first? Conventional wisdom on here is spend your taxable money first, the bank account money, then spend your traditional IRA money, then spend your tax-free money. That’s the uh the general consensus of what do you take out of first? spend your savings first, get the traditional IRA stuff, and then your Roth IRA. An alternative approach is to start planning uh spending your taxable money first. Start converting if you can of staying up your traditional IAS into Roth IAS. If you haven’t talked or even heard about what that means, you can take money from a traditional IRA, pay taxes on it, and put it into a Roth IRA. It’s called a Roth conversion. You can uh do quite a bit if you wanted to. There’s no limits on uh on what you can do uh in converting and you can uh there’s no age limits. There’s no income limits. You can convert whenever you want, however much you want. Uh but there’s certainly a process that you would want to make sure that you’re staying within certain tax brackets. You don’t want to pay too high of taxes. You don’t want to do it all at once. maybe doing, you know, in stages each year. One of the things that I do with some people, and I do this every year, usually typically about Novemberish, we start to get a feel of what someone’s income is for that year. What how much interest have they earned in accounts, dividends, we can start to really dig into where is their income going to be. And if we do a conversion from a traditional IRA to a Roth IRA, it’s all based on all of your income and where your tax bracket is. So we want to stay typically within certain tax brackets. Uh so we don’t want to pay you too much. So you can start to take money out of your savings. You can start converting from a traditional to a Roth and start spending those down. Um and then start uh you know and then you’re digging into especially when you are age 73 or 75 and you’re in those years of required minimum distributions. you have to take money out of those and then you’re spending the tax-free Roth stuff later last. So consider Roth conversions again. In this example, Jill converts a 100,000 from a traditional IRA to a Roth IRA. Jim uh Jill will have have to add that 100,000 to her income. This conversion income will be taxed at her tax bracket. So if she is happens to be in a higher tax bracket and does an additional 100,000 which is all taxable income, she could be even jumping up to another bracket. So should Jill convert 100,000, maybe she should convert a little bit less. It’s all dependent on what tax bracket is Jill in and is this helping her uh plan later as well. So here’s what we call filling up the bracket. So in this top section before the conversion we see that when you are in a 10% bracket or a 12% bracket in 22 24 32 35 and 37% brackets now we see that someone is within the 22% bracket in this case and if someone says well can I convert a little bit more from a traditional to a Roth IRA but I don’t want to go into the 24 I just want to max out the 22% bracket That’s what I do typically for a lot of people toward the end of the year is seeing what tax bracket they are currently in. How much can we convert before we jump up to the next bracket. Uh and if you’re not familiar with that that a tax bracket is a certain range. It’s let’s say 100,000 up to 150,000. If your income, taxable income is 110,000, uh you got 40,000 up to that 150 to maybe convert or do something with so you don’t exceed the 150 to go to the next bracket. Uh so it’s certainly some planning that you and I can do together. Uh so again, I’m going to just throw the reminder any questions uh the Q&A box or the chat box and I’ll be getting to those here shortly. Roth conversions if you especially if you are a self-employed person and let’s say you’re a business owner with a a low sales year or a year that you had higher expenses. Um maybe just you have higher uh medical bills uh to deduct that year. Uh so maybe there’s a few reasons why you might want to do it depending on where income is. And uh so if you had a lower sales year or just a lower income year for whatever reason or more deductions, things like that, then we could certainly talk about Roth conversions doing a little bit more.

    You must know whether you’re trying to keep income below a bracket threshold or avoid bumping up to the next one just like though filling up the bucket or whether you’re trying to increase income to fill up a bucket uh bracket or take advantage of that tax rate. Other possible approaches to managing tax brackets with withdrawing tax-free money from life insurance policies. If you happen to have a life insurance policy, and certainly something that I could do for you is life insurance reviews. I do have many sources that I can find out about your policy and exactly how it works if you do have cash value, especially significant tax uh uh cash value in a policy. How do you start to get money out without having to pay taxes? Basically, you’re borrowing from your life insurance policy. Many people do this, especially more wealth. Uh people with wealth that have a significant cash value. You’re not withdrawing that money, which could potentially be a taxable event, but you are able to borrow cash value from a life insurance policy tax-free. Uh there are certain limits on how much you can borrow on there. So, it’s certainly uh again, we can certainly do a life insurance review to uh to dig into that a little bit. But there are certainly some tax advantages by borrowing from a life insurance cash value for future planning. Uh selling high appreciated stock for low or no capital gains. So if you happen to have a low income year and the under certain thresholds you might not pay any taxes on capital gains. Or if you’re in a modest income level maybe you’re going to pay up to 15%. If you’re in high income you could pay up to 20% on capital gains. So many of us uh you know in an average range are going to be in that 15% uh bracket for capital gains uh taking distributions from IRA or 401ks uh to take advantage of lower tax rates. So if you happen again to have a lower income year and you want to start drawing from uh from retirement accounts to live off of, some people will actually defer taking social security. They won’t take it at all. Excuse me. they will just live off of their own retirement account assets, withdrawing, staying within lower tax brackets, and then starting social security later. So, that’s certainly a strategy that our retirement plans do take into account. We look at Roth conversions. How does that affect your plan? Is it worth it? Uh we look at should you live off of your own assets first then take higher social security later or should you take a lower social security income sooner and draw from your accounts later. What wins? The retirement plan that I do helps with this decision. Two other pre-retirement strategies is use your health savings account strategically and use your qualified business income deduction after funding a company pension. If you are a self-employed person, we can certainly dig into that uh charitable giving and tax planning. So, here’s where we’re going to look at how do people give, especially in retirement. And if you are at the age of required minimum distributions, RMDs, let’s look at Albert and Shirley. They’re in the 20 to uh 4% bracket and they give $5,000 to a charity, 15,000 to existing uh existing itemized deductions and 26 uh 2026 uh standard deduction is 32,200. So married filing joint, they have a standard deduction of 32,200. Uh 5,000 donation, they have no federal tax benefit. So they don’t even get to deduct that. Why? Because they they can write off. It’s either you itemize or you take the standard deduction. In this case, the standard deduction for them is 32,200, but they have uh 15,000 of deductions. And if they give to a charity, another 5,000, that is 20,000 of deduction. Since the standard deductions already at 32,200, they don’t even have to itemize anything or they don’t itemize anything. Uh so they do not get that deduction on that charitable giving. So up to 111,000 you can do what is called a QCD, a qualified charitable distribution. What this means is that you give to a charity directly from your IRA. your traditional IRA is what we’re talking about and you can give directly from there, especially if you are in a required minimum distribution age range. If you’re age 73 or higher and you’re taking money out and uh you can give to the charity, it counts as what you need to take out, but you don’t have to pay taxes on it because it goes directly from the IRA directly to the charity. So, um, there’s no taxes that you have to pay. Just so you do know, that check has to be made payable directly to the charity from your IRA. And I do this with people all the time. Every year, I have people that do qualify charitable distributions where they have to take out a certain amount. In this case, we’re going to talk about this couple that have to they have to take 5,000 out uh for their required distribution or they have to take out uh they want to give this to the charity. So, let’s look at this example. So, the charity is going to get 5,000. So, this is if they just do a withdrawal of their required distribution. Let’s say the 5,000 say so they take 5,000 out. They have to pay taxes on that. So in this on the far right where you can see it’s goes from the IRA into their check-in account in this example where it’s basically a distribution a taxable distribution. So the 5,000 satisfies their required distribution. They had to take it so they took it. Uh and so the 5,000 is reported as taxable income. And let this is assuming they’re this couple is in the 24% bracket. They have to pay $720 in taxes. So, the charitable uh contribution uh cost them 5,720. So, they want to give the 5,000, but they had to pick it up and pay taxes. And so, that cost them $720 more by doing that. So, this is the recommended way to do that. If you’re going to be giving to charity and you’re taking out required minimum distributions, do a QCD, qualified charitable distribution. the charity gets the 5,000. The 5,000 satisfies what you had to take out and you don’t have to pay taxes on it. Uh so zero taxes on that uh distribution and the total cost instead of so you didn’t have to pay $720 in taxes to give to the charity. You are able to do that directly from your IRA. And again, I do this with people every year. I hope to have assets to pass on to my family. So, how does retirement uh tax planning figure in? Organize your assets for your uh family’s benefit. Estate planning still matters. I do other estate planning where we talk about these types of things. Um the estate planning webinar that I do uh certainly digs into this more. So, if you do want to hopefully look out for that presentation and uh talking about tax planning on uh estates. So, in this case, we’re going to look at Phil and Mary. So this is an interesting uh uh scenario here. So they have a joint account. So they have a taxable investment. So they just have a brokerage account in this case. And it’s a joint tenant with rights of survivorship. And this most joint accounts are held that way typically. Uh there are some other ways, but this is typically what I do see. And they have 120,000 investments have a long-term capital gain. So there’s gains within this account. So Phil is diagnosed with a terminal illness and he has 18 months to live. So there’s two scenarios that we’re going to look at. This is kind of a drastic uh example here, but it’s certainly a realistic uh example. So first of all, do nothing after the diagnosis. So Phil dies and Mary inherits Phil’s half of the joint account. So, how this works tax-wise, technically Mary owns 60,000 and Phil owns 60,000. It’s not they jointly own 120. Legally, she owns 60 60,000. He owns 60,000. So they have what is called a stepped up basis which means when Phil in this case passes away. She does not have to pay taxes on the portion that on any gains of the portion that she inherits from Phil. She does have to pay taxes on her own portion though. So if she sold all the investments, she would only owe income tax on her gains, not his. It’s called a stepped up cost basis. And if you do want to dig into that, if you do happen to have investments or you think you’re a beneficiary on an account of this type of an investment, I would love to have a conversation with you on how this may affect you or not affect you. Um, so her gains, long-term uh gains on her 60,000 plus any gains of the remainder of after Phil’s death. So if Phil passed away and then there was gains after that, she would have to pay tax on those. But anything from the original cost of investments up to the date of death, all those that taxable gain is wiped away on his half. So the bottom line on this is that Mary owes tax on her 60,000 and potentially more of Philills if it grew after death. So here’s what an example could look like. If after diagnosis, you move all of the investments into Phil’s name, 100% of the account, you’re able to do this as a married filing joint couple, she can gift it all to him. And when he passes away, 18 months later, uh, Phil dies, and she inherits now all of Phil’s account. All 120,000 is tax-free. So, she does not have to pay because everything steps up on there. She doesn’t own it. So, it’s not split 60 and 60 anymore. 100% of it, 120,000 moves to Phil’s name. If he passes away, 100% of that goes to her and she does not have to pay any capital gains on that. So, there’s a little kind of tricks to the trade. It’s again, it’s a sad example to have to share, but it’s certainly a realistic thing that could happen. Uh, when you go to sell your investments, would you rather owe tax on 60,000 or no tax? inheriting IAS. And here’s an example of inheriting an IRA. And uh this is the son. So Kyle is 40 years old. Pamela leaves 100% of her IRA to Kyle and there’s a balance of 400,000. So an average 6% average rate of return. So now we’re talking about some inheritance rules. So just I’m going to share very quickly that if a husband and wife spousal married filing joint and if you again in that situation married filing joint legally. So if husband passes away and the wife is the beneficiary all of that money just goes to the wife as if it was always the wife’s. That’s how spousal benefits go for IAS. If it’s other than a spouse, in this case a child that it goes to, he Kyle has some rules that he has to follow on this 400,000 that he would inherit. So on an average of 6% rate of return, he has 10 years to liquidate this account to zero balance that IRA. Doesn’t mean he has to spend it. He just has to pay take it out and pay the taxes on the IRA distributions. So he has to do it uh over 10 years. If it was 400,000 and there was gains over time over that 10-year period, we’re talking an annual distribution of a little over 54,000 that Kyle would have to take in on Kyle’s tax bracket. So, is Kyle in a higher bracket or a lower bracket? Uh, so, but just know on an average of 54,000, he would be paying taxes on those distributions. Now, you don’t have to take it all uh exactly the same amount each year as long as it’s a zero balance by the end of 10 years. In this example that we have that Kyle is the beneficiary, and he decides to not take anything out years 1 through nine, he doesn’t touch it. It’s growing 6% average rate of return every year, 400,000 to start, and it’s just growing, growing, growing. He does nothing for the first nine years and then he year 10 he’s got to liquidate. He’s got to take it all out. It’s got to be a zero balance by December 31st, the 10th year. And that would be 716,000. That would throw Kyle into the 37% the highest tax bracket. So is that the best thing for Kyle to do? Probably not. He should have taken stuff out. He can if he wants to. Uh but it’s certainly something you do want to be uh um have some caution on of uh when you take out of IRA distri you know inherited IRA distributions. And I have several people that I work with that have beneficiary or inherited IAS that they are doing distributions throughout their uh their 10-year period that they have to own this. So again, that’s a big tax bracket that Kyle would be in. Taxes and long-term care premiums may be taxdeductible. Uh payments uh from policies for reimbursement are tax-free. So if you are have a long-term care policy and you aren’t in a claim, meaning you can’t do two of the six daily activities of living uh and you’re starting to get a payment from your long-term care policy, those are tax-free. So, uh, that’s certainly something that you could have some benefits on a long-term care policy. It’s an important thing that I do. Talking about long-term care, uh, and, uh, one of the costs if you do not have long-term care coverage, it could be catastrophic. Um, so there could be family members that could help. Can you count on family or friends to help and uh not have these big costs? But sometimes we can’t avoid these extreme costs that long-term care has and maybe be prepared for that. I’d be happy to dig into long-term care. If you do say yes on that uh qu survey question and uh I would be happy to do some future planning on that as well. How in the world can we manage this? So taxes and retirement highlights your pre-retirement, your early retirement, your middle retirement, your late retirement. If you’re starting putting money into retirement accounts, if you’re taking money out of retirement accounts at these various stages, how does this all affect your overall plan? Please say yes at the end of the presentation and I will put uh uh together a plan specifically for you. Typically what that is, it’s a couple of appointment meeting process where the first one is we have that first discussion. What are you trying to accomplish and the second one is is maybe usually going over the plan of uh if we’re together if you’re local here in the Chicago area. Um my office is still on the over by O’Hare airport. If you’re not, I do many of these Zoom. I share my screen just like I’m doing on this presentation and we can dig into your future plan. Uh because your tax exposure may change throughout retirement, you need a tax strategy that anticipates how and when you tap your assets, understands the range of taxes you will face, and manages your actions so you pay the lowest tax rate possible. Preparing for retirement and taxes, the distribution phase, managing tax happens through retirement. uh throughout retirement, mistakes can be costly. Again, remember that Medicare, not signing up for Medicare on time could be very costly. Education planning and advice are needed. So, we’re going to hopefully you and I will have a one-on-one conversation about taxes and retirement planning uh review meeting, and I would be happy to dig into your future at a complimentary, no cost, uh no obligation plan. I would certainly share here’s what I do for people. Uh as I go through uh the questions now uh so you see on the screen my contact information. If you do want to schedule a time to meet you can actually if you have your phone handy uh put it up to the QR code on your for your camera. Put it up on there and you’ll get access to my calendar. If you want to do that right this second you’re able to. Um as I I’m going to launch the survey here in just a second as I go through some questions. So, um, you know, so again, if you do want to have that meeting, you can actually schedule this on your own, uh, and see, you’ll have access to my calendar to schedule either a 30 minute or 60 minute. Just so you know, I always count on 60 minutes. If you think you only have 30 minutes, we can we’ll we’ll certainly uh go by your schedule, but I usually typically block off an hour for all of those meetings. So, I’m I’m going to put up the survey right now. So, hopefully you see that up on your screen. So please uh uh respond to that if you would like to have a time and I will go through all the questions. Now uh let’s see does it include spouse’s income. Is spouse’s income included to determine social security reduction for income? No, that is your own income. It’s not household income. It’s if Joe is getting social security income and I took it early, what is Joe’s um you know uh total income if my social security will be affected uh by that $1 of every two being withheld? So, uh no, it it’s not spousal income. It’s only my in that example um my income that would affect. So, it’s not the spouse’s income. Can uh you split the QCD between charities to total the RMD or does it have to be lump sum? You can have I’ve done one client that I have had six charities actually. Uh let’s say if it was a 10,000 distribution, you know, one was 1,500, one was 2500, one was 500, one was 2,000. Uh you know, so varying amounts. Uh and yes, you can have multiple charities get it. Um and uh but yeah, absolutely. Uh you can do whatever you would like to do on that, however many charities you would like and to satisfy the full required distribution. Uh are there different rules for inheriting a Roth? Inheriting a Wroth, it’s all tax-free. So there’s no 10-year distribution. Uh so it’s all taxree. So there’s limited, you know, so it’s not the same rules on a Roth as it is for a traditional. Basically, a traditional is going to be all taxable coming out. Uncle Sam says, “We want some tax money. Start taking those distributions and close this sucker out within 10 years.” Uh, so very different for a Roth because it’s all taxree. The government’s not getting any. Whether it’s the owner’s Roth or an inherited Roth, it’s all tax-free. Are long-term care premiums only deductible if you itemize? Yes. Uh, very good question on that. Um, so if you’re getting the standard deduction, uh, in fact, I just read this recently as I was checking something for someone else on deductible, uh, long-term care premiums and you do have to itemize to get the that deduction. So, yes, uh, what happens if spouse dies and you file married filing separately? What happens to asset? Um married filing separately could be different especially well if you’re if well if you are is still even filing separately it’s all based on your own tax bracket then not a married filing joint tax bracket so if you’re married filing separately if you’re referring to the taxable gains on investment accounts um I have your information I could certainly dig into to see I might have a few more questions on that. Uh, but I have your information. I’m going to follow up with you on on that specific question just to see exactly uh which uh slide you were referring to and uh but I will certainly dig into that for you. Um I just have a few more questions on that. Let’s see if there anything else came in on here. I think we are right at 258 here. Um so actually one more. How do I know if I should be contributing to a Roth or traditional IRA? Um, do all uh do all 401ks have Roth options? So, how you so based on your tax bracket, what are you trying to accomplish? So, people want the tax advantage now by putting into a retirement account. That means that you’re going to um do a if you want the tax advantage now, you have to put it into the regular 401k. If you want the tax advant advantage later, you’re not worried about your tax bracket now. You’re going to do a Roth. Some people say, “Well, I kind of want both. Maybe split the uh the contribution to traditional and Roth and uh split it that way.” So, you’re able to do that. Uh but uh so to be contributing to, that’s the question that I have back to people when they say, “Should I contribute to a Roth or a traditional?” What do you want to accomplish? Do you want the tax benefit? Now, put it in the traditional. If you want the tax benefit later, you could put it into a Roth or split it between the two and get some tax advantage now and some tax advantage later. Uh, and the retirement plan helps us figure that out, too. Looking at your current brackets and looking at your future brackets. Um, so we can certainly dig into uh let me see if anything else just came in. I think that is all of our questions. We’re right at 3:00. Thank you all so much for your time and attention this afternoon. I look forward to speaking with some of you and very soon about your specific plan. Thank you. Have a great rest of the day.

  • 06/02/2026 – Alliant Webinar – Social Security – The choice of a lifetime

    Evening everyone. Uh looks like we still have a couple of minutes and we’re having folks still log on. So we’ll give it a couple of minutes and then we will start pretty close to 6:00. Maybe maybe to give it a minute or so after that. I am not sure what part of the country you are joining us from. It was a uh we had quite the storm event. I was worried there. It knocked out the power and internet to our building here. So, I was worried that it might might have impacted this webinar, but fortunately, we have power and everything’s back on and I just heard back from the boss and everything is good at home. We were out for a couple of hours there. Ah, Florida. I heard Florida got hit right now. I was talking to uh one of our clients out there and they said that it I mean Florida is a big state so I guess it depends where you’re at.

    North Carolina. Nice. Miami. Uh she was not in Miami. So

    hopefully the weather is nice there. It is it is stormy here and it is warm and it is about 10,000% humidity right now. I think the only ones that are happy are the mosquitoes and maybe the alligators out here. So,

    but I can tell you for a fact my dog is certainly not too happy about this. All right, what time do we have? So, I have six o’clock straight up. It looks like maybe we’ll give it one more minute as people are still logging on here.

    We’ll still have some time for Q&A at the end.

    Okay, I think in the interest of time, we are going to go ahead and start. Hopefully everyone can see the screen with my smiling face on there for the slide. Uh, thanks a lot for joining me for tonight’s webinar, Social Security, Choice of a Lifetime. Uh, if you’re joining for the first time, a special welcome. I’m Michael Marx, certified financial planner and a financial consultant with Alliant Retirement and Investment Services, or AIS for short. I live here in Houston, Texas, and I’ve been doing this for over 30 years now. Um, most of my family has worked I’ve told the story before, but for those of you who have not heard it, most of my family has worked for either United Airlines or Continental since the 1960s. So, I’ve been tied to Alliant longer than I’ve been alive. And for any of those who may not know, uh, Alliant was the original credit union for United Airlines. And, uh, last year they celebrated their 90th anniversary. So, I know some of you may have come through different channels. So whether it’s United or Continental or Google or Tesla or CVS or Susie Orman or many any of the other many segs that we have happy you’re here. So just a quick just before we dive in just a quick housekeeping item. So this evening session and all of our sessions are for educational purposes and includes proprietary material. So to protect both the content and everyone’s privacy that we ask attendees please not record or capture the presentation whether it’s by video, audio, screenshots or AI tools without prior consent. That’s from our lawyers so I’m reading that. Uh we appreciate your understanding and we are glad you’re here. So uh and I am not sure what path brought you to our webinar this evening. Uh so if you join this webinar via an email that you received directly from us um or the marketing department or signed up right on the credit union’s website, I’d like to just take a couple of minutes and talk about AIS. Uh in addition to the weekly webinars that we host, we offer uh full service wealth management and investment planning. Uh we’re fiduciaries. I’m a CFP. Uh we offer a broad variety of investment options ranging from fixed rate guaranteed to as aggressive as you want to be in the market and everywhere in between and maybe even a little bit of life coaching when it comes to your retirement years. Uh we’re actually a very good resource to utilize. Um as I said we offer multiple webinars throughout the week with different presenters. Each of us usually hosts twice a month. Um I’ll do one in the evening and one in the afternoon. So, our goal is really focusing on helping you understand the ins and outs of investing and saving for retirement, becoming much more informed and making more informed decisions. So, I encourage you to take a look at the resources available to you uh at our website. Uh that’s eris.alliancreditun.com.

    Um or you can just uh find us right on the upper right hand tab under the investments tab right on the credit union website. So we have our weekly webinars that list there um our podcast invests savvy uh our blog and some other financial resources. So speaking of webinars my next webinar will be called anatomy of a recession. I’ve done these in the past. So, we’ll talk about recessions from a historical perspective and how they might apply to our current situation. Um, and I’ll sprinkle in some of the current events such as like Fed rate cuts or potential hikes. Uh, some tariff impact on some of the shutdowns, maybe some of the government decisions going on out there, the war, etc. that will be in the afternoon um on Wednesday, June 17th, 2:00 p.m. Central and 3:00 Eastern time. I think this is especially relevant and kind of an ongoing topic, right? Because things seem to be changing every day for us here. Uh I usually try to do these a few times a year past just to kind of catch everybody up on what’s kind of going on out there and the pulse. Uh so and then I’m back in the evening talking about Roth conversions. And that’ll be Tuesday, June 30th, uh 6:00 Central, 7:00 Eastern. Um we’ll be talking about Roth conversions and how they might be a part of your long-term retirement tax strategy for your withdrawals. All right. So today’s presentation, it’s focused on how to maximize uh what is for many the single most important monthly paycheck they’ll receive in retirement, their social security benefits, right? Um so there there’s a lot to it. So I want you to come away knowing that social security benefits provide a protected level of income um and they can’t be outlived, right? So a basic understanding of how that works. Um, so before we get into some of the details, uh, it can be complicated as far as social security goes. So you’re not alone if you feel that way. This is a great opportunity to work with your adviser or retirement specialist or someone at Aerys. They can really help you lay out a solid foundation for a solution that works for you under your personal situation. So again, material is it’s not a recommendation to buy or sell any financial product or adopt a particular investment strategy. Uh I would always say that everybody’s situation is unique. So you really want to discuss your specific situation with with your adviser or trusted professional. Um now kind of generally speaking right when you claim it can make a huge difference. So the assumption here is that this person is making about 54,000 a year and their full retirement age is 67. Uh and which most of you who are on this call are probably full retirement age of 67, but we’ll we’ll show you a chart where where yours would be if you are born earlier than 1960. and not already retired. U but as you can see that difference between the earliest you can take social security and the latest you could take it is a 77% difference. Um so obviously maximizing is really hey maybe I should just wait until longer but there’s really a lot of moving parts and things you should consider but that is really kind of the basis of our of our webinar tonight. So, social security our agenda is choice of a lifetime some of the social security basics and guidance built for you. So the uh first one we’ll talk a little bit about. So most people, not most, that’s not true. Many people file at the earliest possible time, right? So these are like these are the percentage of new social security claimants in a calendar year. So as you can see, if full retirement age is sometimes 66 or 67, almost half of claimants file early. Now, that’s kind of significant um because they’ve done studies on this and they found especially in that 63 to 65 category, that second that second bar, a lot of those people didn’t plan on retiring that early, but they were forced out. So, it was either due to health reasons, either their own or having to care for a loved one or something happened with their job where it was eliminated and they were laid off. Um, but they originally wanted to wait until their full retirement age. So, this is really more of kind of a cautionary tale when it comes to retirement planning as part of your whatif scenario. That’s one of the things that we run, right? What happens if you’re forced to retire early versus your goal? um are we still okay to have that little bit of peace in mind? So, so with that, just be mindful of that. If you haven’t built that in your planning, we could certainly help you with that. Uh if you have, you’re ahead of the curve. So, let’s take a look at an example. So, the benefit at So, the benefit at FRA, which is full retirement age,

    So the scenario here is the age where Pat and Kelly, right? Pat’s 66 um and Kelly 61 and those are their social security benefits at full retirement age. So when they’re looking at their cumulative benefit, right, and the and the assumption is so so this is always the assumption, right? If you know one of the f one of the biggest factors is knowing when you’re going to die, which clearly no one knows. So they use averages. So for men in this scenario they used 85 for men 88 for women and a cost of living uh adjustment or cola from social security at 2.4%. So what they said is they said, “Hey, look, if we if we file as soon as possible, our total lifetimes, we’ve taken in just over 1.1 1.5 million in social security benefits. Where if they tried to optimize these benefits, it would be closer to 1.8. So over $200,000 more in in total benefit from Social Security.” Now I will tell you and I’ve talked to many people about this who have done these things are trying to find the perfect timing on when this is done. So we use software and we say hey this is when we think if you’re kind of optimizing when this should be and you estimate when you’re going to when you’re going to pass away what your benefit will be when you’re planning on taking it and then we kind of make some assumptions some assumptions there. Now there are different calculators out there that might give you a different target. though it’s based on some of the assumptions that are built in. But I would say this and and I would say that this is really really important um that since we don’t know when we’re going to die, I I’ve seen people really struggle with trying to find the exact answer on when’s the best time to take social security. And it’s really not just about the age to maximize. And we’ll talk a little bit about that because the computation of retirement based on survivor benefit is really complicated. So I actually want to read you a quote from directly from the social security website. It’ll take about a minute or so and basically it describes on describes how they calculate it. So this is what it says. I should have made a slide on this, but what it says is the formula used to com compute the family maximum is similar to that used to compute the primary insurance amount. The formula sums four separate percentages of portions of the worker’s PIA, which is your primary insurance amount for 2026. These portions are the first 1,643 between 100 1,643 to 2371 and then the next one is 2371 to 3093 and then the amount over 3093. And what they’re going to do is they have bend points. And this goes on to say, hey, you get 150% of the first bend point, 272 of the second, plus 134 of the next and 175 of the next. and then it’s rounded to the lower 10 cents. So really there’s no way to actually fully estimate it, right? You just have to say, “Hey, look, roughly we’re going to go at this age.” But but that’s why, you know, god forbid when someone’s spouse does pass away. The best exact dollar amount is really cuz you have the date of death, you knew when it was drawn is to actually run it directly through uh social security. But with that said, not to steal our thunder, we can at least help you give you an idea on that. So,

    while this is important, nobody really knows exactly when they’re going to die. So, again, while important, I think there are other factors you’ll want to consider when looking at the timing of your social security. Well, we can give you some ideas on the age when you maximize it, right? based on when you think you might pass away or average mortality, but frankly things like your retirement plan as a whole, right? What does that look like? What do you want to do? What are those goals? Your cash flow, your assets, and how your assets are allocated, your health, health of the spouse, your age when you’re looking to take this, and what your taxation, you know, a few others. So, but that’s one of the many benefits of working with an adviser. So we’ll look at a little different scenario, right? So someone who’s not married. So and this is just an example of the range of the total benefit that received from social security based on when you take this. So Mary is age 60 and her full retirement age is 67. As you can see, her social security benefit would be $1,236.

    So, if she files as early as she can, her cumulative benefit would be just over $350,000. Now, if she waits until full retirement age, it’s $432,000. And if she waits until the maximum, it’s $478,000. Um and again life expectancy for women since it’s Mary uh it would be 88 years old. Now I can tell you kind of as a general general general general rule if you expect to live past 81 or 82 for total dollars from social security you would be better served waiting until age 70 which is your maximum social security benefit. do not wait a day longer because there is no advantage to that benefit. Now, I will say both these slides use the word lost, right? Cumulative benefit loss by filing early, but and that’s just regarding your total dollars received, right? But what you do gain is the use of those dollars earlier, right? So that gives you the option to either reinvest it in something potentially more lucrative or you can spend it making retirement memories with your loved ones, you know, while your health permits. So everybody is different. This is a very much individual thing. Uh and that’s one of the things that we talk about when we’re doing planning for the members here as far as hey, what does that retirement look like? What does your cash flow look like? Do we need this earlier? Do you have the life expectancy for that? Because is there an age difference, right? Because it also matters on the death benefit side. So, and I don’t want to minimize the importance of having a social security withdrawal plan. You know, as you can see, for most people, social security makes up the lion share of their retirement income. So, that’s why it’s important to have a withdrawal plan before you retire. Uh actually, it’s probably a good idea to have a withdrawal plan a few years before you actually retire.

    So the basics. So let’s talk about some of the basics with a little history lesson on there. So what does social security offer? Right? It offers a lifetime income, right? So it’s a lifetime based income. So you won’t run out of income. It is indexed for inflation. You’ll see it called COLA when they talk about it on the news, which is a cost of living adjustment. Now, just know historically it doesn’t quite keep up with inflation over time. So, that’s why you usually have a retirement plan with multiple income sources. It provides some survivor benefits for those who are married or even if you’re divorced, but you were married for more than 10 years. uh you know so if your spouse passes away uh and there’s some pref preferential tax treatment so some or none of your social security could be taxed depending on your total income I can tell you as a general rule most everybody on this call some of it or up to 85% of it will be taxed because you have to have $25,000 or less in income for it to be not non taxed taxable. Um, and for married couples, it’s 32,000. Oh, but social security wasn’t always around. So, it’s actually less than 100 years old. If you remember learning about the crash of 29 and the Great Depression that followed, right? That event created the law that created social security. Now, it created 11 years later, January 31st, 1940 to be exact. um and Ida Fuller was the first recipient um to receive a check for social security. Now, you can’t see that check amount, but um if we were actually in person, I would have some people guess, but so that check amount. So, you can go ahead and guess in your head that check amount was $22.54. So, I don’t know how close you were on your guess, but I’m not sure $22 was still a big amount even in 1940. So, um, what determines someone’s primary insurance amount, which is PIA, right? So, you’ll hear that. And basically what it is is it is your highest 35 years of wages up to the maximum each year. And if you look at your payub, right, not that we really get past payubs anymore right now that everything is electronic, but you’ll notice something called FICA as one of the line items as far as your tax, your taxes on there. Um, and what that is is that is a tax that includes social security as well as your Medicare. So that total amount is 15.3%. You pay 7.65, your employer pays 7.65. And of that 7.65, 6.2% goes to social security up to the maximum. So the maximum income this year is 184,500. So if you make more than that, you are only paying that 6.2% up to that max. And it changes every year. It increases every year. So they’ll look at your last 35 years and that is what qualifies you for how much of your benefit. You do not have to work 35 years. You only have to work 10 years to be eligible for it. But they will take the last 35 years. Many of us work for much longer than 35 years.

    If you haven’t, I encourage you to sign up with Social Security so you can see your specific benefits as reported on your income over your working life. It’s secure. It’s free to do and it’s really easy. So, you’ll want to go to the Social Security website, create that account, and what you can do is you can also see and make sure that the that two things, no one’s making claims on yours, and also uh they’re reporting the right income.

    So, your social security statement. So, they used to send these out at regular intervals, but in the world of saving money and in the electronic world, you’ll have to look online now if you are 60 or under. Um, for those of you over 60, you receive them annually around your birthday. And what that does, uh, it’ll tell you, hey, what your estimated benefits are. So, the assumption is, by the way, on this is that you will continue working up until retirement. So, if you do retire early, uh it might adjust that a little bit. So, we’ll talk um here is that chart that I had talked about as far as when you’re eligible for full retirement. And this is the amount that you receive without a penalty or a bonus, right? So, if you wait until later after your full retirement, you’ll get 8% more per year. Uh and that what that allows you to do is allows you to work without any reductions in your benefit. So, like I said, most of you on this call, your full retirement age is probably 67.

    So, here is a great example of taking social security early versus waiting until you’re older, right? So, the full retirement in this scenario is 67. And as I said, for every year you wait, you’ll get an 8% increase on that benefit, including the COLA, too. So that is something to consider when you are when on the timing as far as your social security goes. Now if you take it early there’s a couple of things right as you can see there’s some deductions on that you’ll get 93 or 86 or 80 but also you have an earnings limit too. So if you earn over a certain amount those benefits will be reduced even further but it’s not a total loss. when you hit full retirement age, they will recalculate it. So, so filing rules are different for situations. Uh, so some of the surviving spouses, spouses, divorces, dependent children, government employees, etc. So, let’s take a look. So, spousal filing rules, these are pretty straightforward, right? As I said, you are eligible at 62. uh you have to be married at least one year. Uh and one spouse can file for the other to claim their benefits, right? So you can claim your spouse’s benefits or your spouse can claim yours. You’ll get the higher of those two. This includes samesex couples. They changed that law a while back. Now, your benefit, if you’re trying to claim your spouses, your benefit is 50% of that. So, for example, if my social security were 4,000 a month, my spouse would be eligible for the higher of hers or 50% of mine. So, that would be $2,000.

    Now, surviving spouses, right? So, you have to be married for at least 9 months. Now, it says at least for 9 months, unless the death was an accident, and you can take your benefits as early as age 60 on this. So now there are some things where it says currently widowed. Uh now if you remarry you are not eligible for that social security unless your spouse’s social security unless you marry after age 60 then you are still eligible for your former spouse’s uh social security. Now some of the benefits right you’re it’s up to that PIA which is that primary insurance including the delayed retirement credits that they earned right so if they delayed that um and survivor benefits they can they could be received independently of the individual benefits. So this kind of matters, right? So one of the things that we look at is that if you’re trying to delay and and there might be a a life expectancy issue, right? Sometimes delaying for the higher earner, it’ll be helpful to the surviving spouse later on because you’ll actually get that delayed credit. So divorce spouses, these are always fun. So

    um you had to be married at least 10 years and you cannot have remarried. So now the expouse doesn’t have to file beyond those two years after the divorce, right? So, um, you know, so in theory, if I were married at 20 to the love of my life, and then I’m divorced at 30 and I’m married to the new love of my life, and then I’m divorced at 40, and I marry the new love of my life, and so on at 50, and so on at 60, uh, and so on at 70, and then I’m my new love of my life. So, all five, 20, 30, 40, 50, 60, 70. So all six of those spouses are actually eligible as long as they didn’t remarry, right? Or wait until they are after 60. They are all eligible to claim my social security or at least part of my social security. And and they’re all independent, right? So it won’t impact my benefits and it wouldn’t impact any of my ex’s benefits.

    So that was a big one for Johnny Carson or Elizabeth Taylor if anyone are old enough since I don’t know how old people are on this thing or if I just completely dated myself there. Um so how working impact your social security right so this so this matters right so I talked about if you retire early one of the things is that there’s a reduction in that benefit so if you’re under your full retirement age so for most let’s say it’s 67 you’re like you know what I am done I’m going to retire at 65 well you can only earn as you can see $24,48 80 for the year. Now, for every every dollar you go over that, right, you get $1 withheld. Now, now it says on that annual limit. So, for the year of your full retirement age, so like my birthday’s in November, so from January till November, even if I’m early, then every $2 it’ll be reduced by a dollar. So, um I’m sorry, it’s reduced for every $2 over it’s reduced by a dollar. Once I hit the year of my full retirement age, then for every $3 over um and then that limit is higher. So once you hit full retirement age, you can earn as much as you want. And yes, Johnny and Liz, bravo. Thank you for at least acknowledging that one. Um at full retirement age and beyond, you can earn as much. There’s no earnings limit. So, frankly, what we tell folks, hey, look, if you still have that life expectancy, you know, um it’s probably not a bad idea to wait until full retirement age, assuming you don’t need it. Like I said, every person’s situation is very unique. So, that’s why we work with that and we talk about potential situations and scenarios that you would look at. So, let’s talk a little bit about some guidance built for you. We’re doing fine on time here. So, let’s just look at some of the filing strategies, right? So, what this does, we’re going to show you a couple scenarios where it just says, hey, you know, these cumulative benefits that are optimized strategy versus filing early and some alternative filing strategies. So, you can compare those and how to maximize your social security. So, what you’re basically looking for is your break even, right? And Social Security used to do this on your on on the statements that they sent it out. And I don’t even think they do this on the website anymore. It’s it’s been a few weeks since I looked at mine. Um, but what they used to say is they said, “Well, if you’re expected to live beyond this age, you will get more. If you think you’re going to die before that age, then it’s probably better that you take it earlier.” Um, so what this chart shows is the earliest and suggested and right where those lines meet down at the very bottom there. Um, Pat and Kelly’s on the vertical and that horizontal is right where that break even. So that’s somewhere for Pat on the bottom part somewhere around 87. And for Kelly, it’s probably looks like around 86. It’s not an exact right there, but um but basically for Pat, if he expects to live to 90, you would delay. If he’s like, “Look, I don’t I don’t really have that life expectancy in my family,” then you would probably take that maybe sooner.

    So, optimal strategies and I always, and again, this is just for total for total dollars received from social security. So in this scenario, right, the expected lifetime family, we’re going to go back to Pat and Kelly for that entire strategy is a little over a million dollars, right? So in this scenario, they would say, well, Pat should wait until 70 and that way his benefit would be about 36.96 where Kelly, she should file it around 66 and her benefit would be 1744. And basically what that looks like is she would get hers early, right? And then they would get theirs and then he would pass away and then she would get the death benefit. So that’s essentially what that chart looks like for you. But that’s kind of what this looks like. This is a little better idea of looking at it than the chart, but you know, you’re looking at an income gap, right? When a spouse passes away. So, I mean, obviously, we don’t know when we’re going to die, but you can use your own health or your life expectancy of your family to kind of create just a general strategy on that

    and we’ll give you some ideas based on that, right? We have software that’ll say, hey, you know, roughly this is when you should take this. This is, you know, just based on those numbers and this is when your spouse should take that. So, um, look, when and how you do this is really an important decision, but I would probably argue that it’s not the most important decision, or at least it’s maybe a 1 A, 1 B, 1 C, because there’s a lot of other things that you should factor in, right, as far as how how much you need the money and what your retirement looks like, right? Um, we’ve talked to people um where they did delay, you know, we talked to members of all ages here where they said, you know, I mean, yes, I got more money now and that’s really good, but frankly, in hindsight, would I have liked that extra money a little earlier even though it was less because we might have been able to do some of those things that we wanted to do, right? travel at 70 may not be as easy as travel at 65 or 66 or something um or 67. So, it really is an individual thing, right? So, learning how claiming those benefits impacts not only you but as well as your family members, right? Your spouse um and how we can put those filing rules to work to maximize what works for you. And maximizing, frankly, might not be the biggest dollar amount, right? There’s there’s a lot of moving parts to retirement planning. So consider your filing decision within the big picture of your overall plan and we can certainly help you with that. So um with that how we can help. We’re coming to the end here. U there’s a lot of things that we can do and it takes all hands right both yours trusted advisor and maybe any other family members that are involved. So we covered a lot today. So what I would tell you is how we can help as far as life planning. Um, and it’s basically questions to help you imagine your retirement, right? So, even if you haven’t given it much thought or you have and you’re kind of stuck, we have the benefit of talking to hundreds if not thousands of members over the course of my career. So, it’s much easier to say, hey, you know, this is kind of how a lot of others have done that. And I don’t know if that applies to you, um, but at least we’ll give you a good baseline. The other thing we can do is budgeting, right? And that is one of the things that we do here. We usually work with folks and say, “Hey, you know, this just get an understanding of your cash flow now and how you think that’ll look different in retirement.” And we’ll talk a little bit about what normally happens uh in retirement for like spending habits because it does not always go up. It usually goes up and then it comes down and then it goes back up again. We can help you with the account management, your asset allocation. We have access to investments here that you probably do not have access to out there in the regular retail world whether that is through you know like the Fidelities or the Vanguards etc or even the JP Morgan Chasees etc. So I think you’d be remiss to not look at what we can do here and obviously our portfolio management it’s really the broad range and we are cognizant of tax considerations when we’re helping you make those decisions. So I want to thank everybody for attending. Um we have some time for questions. If you have any questions go ahead and type those in the webinar chat or the Q&A box. Uh what I will do is I’ll put up a quick one question survey. If you would like us to give you a call and schedule some time for us to look at your particular situation, let me know. Or you can just take a picture of that QR code on the screen and that will give you a um it’ll give you access to my calendar. And oh, if you’re doing that electronically, by the way, it only lets you do that during regular business hours. So, if you do need to talk to me outside of business hours, just shoot me an email or something and um or give me a call or just put yes in there and I can give you a call and I’ll be happy to accommodate you as I can. It looks like we have one raised hand out there. So, we actually don’t do the audio on this. Forgive me on that. So, if you would mind just uh going ahead and typing that question in, I’ll be happy to answer that. So social security. So the question first question is we have a few them out there. Social security is taxed at 10% up to a certain amount. So what social security is social security is part of your regular income. So if you have other sources like retirement like IRA um or part-time work or pulling money from your 401k that goes to it. So it starts at 10%. And then it can go up to there. But in theory, if you make enough money, you could be taxed at the highest tax bracket of 37%. Plus the 3 uh what is that excess tax? 3.8%. So I mean, you could pay up to 40 almost 41% on that. Um, next question. Any suggestions on saving tax if you cash in a whole life policy early, not annuities, please? Okay. Um, so generally speaking, if you cash that in, right, your cash value, depending on how long you’ve had it, and I can take a look at that if you just say, “Go ahead and give you a call. We’ll take a look at it.” But generally speaking, oh, hang on. Let me give you let me give you a a disclaimer. Please consult your CPA or or tax attorney or other tax professional since we just give general advice. But generally speaking, when you’re looking at that, um, it’s over your cost basis. So, for example, if you have $50,000 in there, but you have paid $40,000 in premiums over the course of your life, you actually don’t owe the tax on the 50,000. You only owe the amount over your cost basis. Uh so, let’s see on that. Hopefully, that answered the question. For the first year of retirement, how are you taxed when there’s part of the year working income and part of the year social security? Say half and half. So, still it’s cumulative income, right? So, easy math. You make $100,000 a year and you work half the year, you’re going to get you’re going to have to show taxable income of 50,000. And if you draw on social security for half of the year, you’ll get that for half of the year. Uh, if I keep my adjusted gross income at 25,000 or less, I won’t have to pay taxes then. Uh, well, yeah. So, so as far as social security, it’ll be it’ll be zero at that at that point. But again, without looking at anything else. Yes. Uh, all right. Let’s we have a few more. Bear with me for a moment. So, 65, was married for 20 years. Your ex-husband was 5 years older than you are. Can you start taking a social security and then at 67 start taking mine? You are

    20 years. Your ex-husband for 20 years. my ex-husband was 5 years older than me. You should be able to apply for his because you were married for for that, but it depends. You’re still supposed to be full retirement age on that, but you are eligible 65, but I can double check. Um, Lisa, if you want to just go ahead and change that to yes, I’ll do the research on that and double check for you there. Um,

    yes. Yes. So your social security it’s actually half of your social security uh is part of your income for that part B on that question. Any comments on social security solveny? Yes. It is supposed to run dry uh in 20 not 2024. It’s actually late. Oh yeah 34. Yes. I was like no it’s later than that. Um so a couple things on this. Yes. I have a lot of comments on that. So but I’ll I’ll be brief in the interest of time. So I do not I am not worried about the solveny of social security at this point. And for the simple reason is that the assumption is if absolutely is nothing is done. Um and there are many things now it is great great they’re great talking point for ringing up your base if you are a politician. However, this is what I would say cuz I’m a big fan of behavioral economics, right? And I’m going to jokingly say this. So, if anybody’s a politician here, my apologies or has a family member, but what is the first job of an elected politician? To make sure you get to make sure you get reelected, right? Um, and make sure your party stays in power. So, nobody nobody wants to be the one responsible for social security failing. Now, with that said, there’s some very very very easy changes that can be made because I know one of the things are floating, right, is a 25% cut um in benefit. And that’s that’s really unlikely, right? That would be a really huge strain on a lot of retirees. So, what they most likely will do is they will simply start bumping that age up, right? So right now it’s full retirement age is at 67 but there’s nothing that could be said at a certain age or certain generation to say hey it’s going to be 67 12 or 68 or the other thing they can do two things that would make a huge difference and shore up a lot of this is increase the social security tax right you remember that 6.2 even if they went to 6.25% to five% collectively in a country, it would make a huge difference. And since it’s pre-tax, most people, not all, but most people wouldn’t notice a significant decrease in your actual take-home pay. Um, the other thing that they could do is simply not cap it, right? If you make a million dollars a year, you’re still going to pay that 6.2 all the way up. So, they can raise the caps. and raising the caps would probably be the most would be the most uh logical one at that point, right? If they raise the cap because even if they go because then then some of the lower income wouldn’t be impacted by that because the way social security works is the lower your income, the larger percentage of the benefit which is who they’re really trying to shore up, right? Because the assumption is those folks who are more fluent. I’m not saying you’re rich and the millionaires and the billionaires etc etc but this is really just kind of where social security as far as in the spirit of where it came about is they were really trying to make sure that people weren’t in poverty. Uh and it’s just really a part of your social retirement picture. Hopefully that I know that was a very long-winded answer and my apologies for that. Um are they raising the cap every year? Yes, they do raise the cap every year. Uh, I’m retired, have Roths and pension will be 79. It’s important to continue to save for in retirement accounts. Well, I have to start making deductions at 70 making distributions. I assume you mean at 73, you probably if you don’t have any regular IAS, you wouldn’t be forced if you only have Roths, you’re not forced to take distributions out because that’ll just go to your beneficiaries. Um, if I missed that or if it was something more specific on that, just go ahead and I can give you a call. For the courses offered earlier during the day, am I currently working? Are they recorded? Oh, I am so sorry. They are not. These are live. Um, it’s a compliance issue. We had asked about actually just posting these out there. But I would say this, um, what we can do is if you’d like, just go ahead, if you’re not one of the yeses on there, go ahead and change that to yes, and we’ll actually look at your situation. We can do something after hours. No problem. I understand life gets in the way, so I will do my best to accommodate. Um, someone just said yes and someone said I will be 69. So, oh, 79 versus 69. So, yes. So, you’re talking about your RMD. The rocks do not have an RMD. It’s only IRA and 401ks, assuming you’re not working anymore. If you’re still working, then then you don’t have an RMD on your 401k. So, let’s see. What am I missing? Make sure I did not miss any. Those were great questions, by the way, everyone. Thank you so much. It makes this much, much better when it’s interactive. Frankly, I love the inerson stuff, but it is the digital world that we live in now. Um, so with that said, it looks like all the questions are answered. I will hang around on here for a little bit if there’s any Oops, hang on. Party can suspend their social script and take their spouse and apply for them later. Uh, to a degree, you can do a suspend, but they actually did a change on that. So, they just changed that law a couple years ago where u if you do take it, it still counts toward when when it was taken. So, it’s not it’s not as robust and advantageous as it used to be. Um, all right. I think that is everything. Thank you so much for attending. Um, if you have any questions, feel free to give me a call or shoot me an email. I will be happy to help you in any way we can. I hope to see everyone on future webinars. Thank you so much. Be safe and enjoy the evening. Take care. Bye now.

  • 05/26/2026 – Alliant Webinar – Savvy Tax Planning – How Tax Planning Changes Through Four Stages of Retirement

    Good evening everyone. Thanks for joining. Uh gonna get started about one minute after the hour. Today’s uh a little bit longer of a presentation, so not as much leeway can be given today. Uh if somebody does not mind hopping in the chat or the Q&A section, just let me know that you can hear me. We got a quick mic check. I’d really appreciate that. Perfect. Thank you very much to everyone. Thank you. Thank you. All right. Great. Like I said, we’ll get started here in about three and a half, four minutes. That way can get through it. But today’s webinar is great. It’s one of my top two, three favorite ones to present. A lot of information. Um wouldn’t say that there’s really any downtime in it either. A lot of great scenarios to go through, a lot of information to be learned. Um we’ll get into it. Might even want to grab a pen and paper for this one. But of course, you know, you can always schedule a meeting with me after to review the information. We’ll get started here in about three minutes. Right folks, we’re going to get started in about 30 seconds or so. Anybody who’s running late, experiencing technical difficulties, give them an extra second to join in early on. Again, if you didn’t hear my spiel about 3 minutes ago, today is a great webinar to show up for. Uh top two or three favorite one of mine to present. A lot to be learned. Um you know, a lot of folks join these webinars. They want to know if they can retire on time, how much they need to save, etc., etc. And that’s simple to show with financial planning. Um, this gets into a lot more than that. Gets into the taxes and the weeds of things. So, just be prepared for a great webinar today. It is longer. So, we’ll be getting started here in just a second. But again, thank you all for joining. Hope you learned something. I’m sure you will. All right. With that, let’s begin. So, good evening everyone. My name is Beep T Sprreer. I’m one of the financial consultants with Alliant and I’m part of the team of financial professionals through the credit union that just offer webinars and educational seminars on a regular basis to educate our members. You guys are our boss. This is why credit unions are better than banks. Not owned by shareholders, owned by you, the members. Of course, all the other perks that come to with a credit union, too, but we’re here to just assist our members and give you the best experience possible. And again, like to just start thanking all of you for taking the time to learn about taxes in retirement, ways to save money, how to avoid some very costly mistakes, and of course, as always, I will reserve time at the end to answer any questions you may have. If you answer ask any during the uh webinar, I can’t get to them just yet cuz I will be on a roll. But feel free to pop any questions you have in the chat or the Q&A section. Two different areas you can ask questions. Go ahead and identify both. But when that time comes at the end, ask your questions in those sections. I will be sure to get to them. New disclosure that we have here. Uh some people have been putting their AI notetaker in the meetings. Sorry, this is proprietary information. We can’t allow people to do that. I don’t think I see any in here right now. So, please don’t put your AI noteaker in here. If you want to take photos with your camera, I can’t stop you from doing that. But feel free to ask any questions, take photos. Again, can’t stop you from doing that, but no notetakers.

    All right, upcoming webinars, state matters, state planning. This one ties into today’s, too. So, we’re going to cover a little bit about estate planning. Want to really get into the weed up weeds of it? There it is. Thursday, June 11th, 2:00 Central, 3:00 for you Flidians and my East Coast folks out that way. And then another thing we’re going to be touching on today too because it does assist you with tax preparations, saving money in taxes, Roth IRA conversions. This is another one of my top two top three favorite webinars. And that will also be at evening webinar Tuesday, June 23rd. Please join us for that one. And of course, our team at Alliant Retirement Investment Services. We are focused on helping you, our members, understand the ins and outs of investing, retirement, being savvy with your finances, of course, much more. Take a photo of this slide. Oh, boom. Sorry about that. Please go ahead and take a photo of this slide. Check out our webinar schedule, aerosis.allantcreditun.com/event.

    Then we have our podcast. We also have a plethora of other resources that you can check out as well on there in our resource center. All right. So, before we dive into our presentation, we’re just going to warm up with a little bit of a tax brain teaser about Bill here. Sounds like fun. And so, after working hard for his whole adult life, Bill, he’s 63 now. He’s finally retired and he’s going to go to a lot more concerts now more than ever before. That’s how he wants to sell uh celebrate his retirement, enjoy himself. So, Bill has $58,688 in taxable income, which includes 375 of Social Security benefits this year. As you can see, Bill’s $58,688 of taxable income puts him squarely in that 22% tax bracket. Because it’s more than 50, 401, but less than 1057. Now, towards the end of the year, Bill decides to take an extra,000 out of his IRA for a trip to see Willie Nelson, old Willie, playing in Austin. And how much is he taxing that extra thousand dollar? Well, I mean, the the logical answer is that for every dollar of IRA money he pulls out, he’ll pay 22 cents in federal income taxes, right? You know, 22% bracket. And therefore, if he took out $1,000, he should only owe $220 in federal income tax. That 22% tax bracket. I mean, simple enough, right? Well, you’re wrong. He owes $47 in taxes, a 40.7% federal tax rate on that income. That’s thanks to the madness that is our tax code and the unique formula that determines how your social security benefits are taxed. And the real answer is that billow is $47 and that extra income. We’ll get into that a lot more soon, but everyone’s tax situation is different and you should always consult a qualified professional tax advisor to discuss your specific tax situation, especially about these topics. You traditional IAS are tax deferred, must pay taxes on the distributions or the conversions at ordinary, federal, and state rates down the road. Your Roth IRA, that’s your money that grows taxfree. You already paid taxes on it, taken care of. Then there’s state taxes, too. But this presentation references federal taxes. So if you’re in the state of Florida or Texas, obviously it doesn’t matter. Um you may still face state taxes depending on where you are. Check with your tax pro. We can go over that too should you decide to meet with me afterwards. But I am a financial consultant folks. I do not prepare taxes or provide tax advice. What I do though is tax planning and I help people understand how that tax code and other rules could impact their financial planning and investments. And then we develop a plan to take into account many of the odd things people encounter, especially around taxes in retirement.

    But 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. So, chances are you’ve been in the accumulation phase for most of your life, for several decades. You’ve been working hard and just trying to save money, and hopefully your accounts have grown. But now, as you may be entering or preparing for retirement, you’re in an extremely entirely different place, the distribution phase. And the distribution phase has new strange rules that can catch people off guard. And along with those new rules, there are often many changes in your own personal life that can have a big impact on your taxes, too.

    So, that brings us to a simple statement about the problem we’re here to discuss. Simply put, people often pay more in taxes in retirement than expected because a confusing system treats various income types differently and contains hidden taxes and penalties. So in the accumulation phase, people build their assets in several different forms, stocks, bonds, etc. 401ks. In the distribution phase, your regular wages stop coming in and you have to take the money you’ve saved and use it to fund your retirement, which can go on for decades, hopefully. So hope everyone here lives to be 120 plus but with just good health in your side. 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. So in retirement your tax rate can vary dramatically based on decisions you make such as the timing and order which you use different sources of money to pay for your expenses. And those poor choices through misunderstanding or ignorance of the rules can result in people paying way more money in taxes than it’s necessary. And as a result, they may see their savings drop faster. That can mean less to leave to your kids, grandkids. You know, of course, we don’t want that to be you. And the fact that you are here means to me that you’re willing to work towards a solution, which is of course the most important first step. But because your tax exposure will change throughout four stages of retirement, you’ll need a strategy that anticipates both traditional taxes and possible taxes. You know, possible search charges, penalties related to social security, Medicare, and other income sources. But that means you’ll need an informed and proactive plan that addresses how you create your income in retirement. But my goal here for you today is to introduce you to the major aspects of such a strategy, show you the challenges we all face, and then explain what makes up a workable solution to our retirement tax problem. But the first step is to develop an understanding of the types of taxes you may face. And what I mean by taxes, I’m talking about all the costs that can increase as your income does, including some that aren’t actually called a tax. You know, to me, if your cost goes up as your income rises, it it’s a tax in my book. So, 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 tap 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. Hopefully, you save a fortune in taxes. You’ve paid enough already, more than likely. But before we go on, here are four stages of retirement that we’ll discuss. These are rough ranges and descriptions. You your experience may differ. This is just a framework for discussing our topic. First, there’s pre-retirement, the final home stretch, the work and save years of 50 to 60. Next, the early years of retirement, 60 to 70, those go-go years. People often have grand plans for this time, like you’re traveling, volunteering, starting some new hobbies, etc. Then you reach those middle years of retirement, 70 to 80, the go slow years, which brings more financial decisions such as how to deal with RMDs if you had we’ll get into RMDs, required minimum distributions from your IAS and other retirement accounts. 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 estate. You know, the no-go years starting around age 80. Hey, for some of you that’s not until 90, 95, 100 probably. Um, but as you’ll see, there’s just a wide range of issues that have to be planned for in each phase. And this can be a lot harder than it seems because retirement is just full of surprises. And even the best planning will divert from reality at some point. One future unknown is inflation. People tend to view their future costs in current dollars, and they don’t always anticipate how those costs grow with inflation. Think back 30 years ago to the cost of a gallon of milk or a gallon of gas or a Coke at the vending machine. Used to be a nickel when I or a quarter when I was a kid. Now it’s a buck buck 50 or a visit to the emergency room. We know how much how expensive medical uh costs have gone up. Now think about those costs today and imagine 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, which is great, but that requires more money at a time when it’s difficult to work. So, how long do you think you might live? And many people also understate how much money they need to maintain a pre-retirement standard of living. And who wants to see their standard of living drop? These are the go-go years. You want to have a lot of fun now. And then there are health care costs. That’s that 10,000lb gorilla in the room. That includes your out-ofpocket payments for services and drugs plus Medicare and insurance costs which just keep rising. They’re about double what standard inflation or it doubles. They grow by more than double standard inflation too. For many retirees though, taxes could be their largest expense in retirement. But it is not often discussed or addressed with a thoughtful plan. Now, at this point, you may be thinking, okay, so what’s the first thing I need to understand about retirement and taxes? Here it is. It’s our first key. You have to know what your after tax retirement savings picture looks like before you actually retire

    because a $500,000 401k or IRA balance isn’t really worth $500,000 if it’s pre-taxed. That’s what we mean. If it’s a pre-tax 401k or IRA, the government still has a claim on part of that money because the taxes were deferred. They’ll get their share when you’re forced to start your required minimum distributions at 73 or 75. The Secure Act 2.0’s push back RMDs to 73 if you were born between 51 and 59. If you were born after that in 1960 or later, you won’t have to start taking them until 75. Obviously, the higher your tax rate in retirement, the less your account is actually worth, though. So, here’s an example of that. This chart shows you the cumulative after tax value of a half a million dollar IRA. That’s just earning a modest 6% per year at different tax rates. And as you can see, the lower your tax rate, the more you get to keep. Simple in theory, very difficult in practice, though. 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.

    Now, 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 that 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. So let’s get into social security and taxes now. Let’s go back to Bill from our tax brain teaser at the beginning. And we want to understand why he paid such a high tax rate on that extra amount of money that he took. It was just $1,000, but he took his extra $1,000 from his IRA to go on a concert road trip to go see Willie. You know, remember he has $45,000 of IRA income. Part of his adjusted gross income is $65,538. He has $37,500 of social security benefits. So that puts him squarely in that 22% bracket. And he takes the standard deduction. Yet, when he took the extra$1,000 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 takes an additional $1,000 from an IRA. You see that in that after concert trip column, he has for $46,000 in IRA income. So we see here that by adding that additional $1,000 of actual income, it increased both his AGI and his taxable income by $1850. And that means for every dollar of income he actually received, he’s being taxed on a dollar on a $185. Huh? How? Why? Well, 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 can possibly be income taxfree 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. When Bill finds himself in the later scenario 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 of taxable social security benefits.

    And if you add that up, that’s a $1.85 85 taxable at his 22% rate for every $1 of additional IRA income that he actually receives. And if you do the math on that, it comes out to 40.7% real tax rate on that additional $1,000 income. And that’s the so-called social security tax torpedo. It can impact single filers. It can impact married couples with even fairly modest income during any stage of retirement. And it’s just one reason planning for taxes and retirement is so important. Let’s look at another aspect of social security and taxation and how people approach retirement. Pardon me, somebody’s driving by with a motorcycle. Now, during the go-go year stage, some people retire altogether, but other people enter into a sort of a semi-retirement. And sometimes it’s a continuation of a previous job just with fewer hours. Others use it to explore an interest in a new field. Still others use semi-retirement to pursue non-paid rewarding volunteer work. So working retirement can impact your planning and taxes in just a number of ways. And some good, some bad, and some can just be downright ugly.

    So let’s look at how working during these years can be a good thing. Chances are you’ve researched what your social security benefits might be at various ages, but you may not know that your social security benefit is calculated using your highest 35 years of inflation adjusted earnings. Well, what if you started working late in life? Or what if you left work to raise children? You may not even have 35 years of earnings history. You suppose you have only 28. The remaining seven years just count as big old fat zeros when they calculate your benefits. And if anybody’s ever missed a quiz or a test or remembers their school days, a zero really can pull your grade down way worse than, you know, just a regular old F between getting a 40 or 60. That zero really drags you down. But there’s good news. 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 my earnings can positively impact your benefits down the road.

    Now, let’s look at how working during your go-go years can be somewhat bad, though, if you’re already collecting benefits and unaware of the Social Security earnings limit that applies prior to reaching your full retirement age. Here’s how the rule works. If you start social security, be it your own retirement benefit or spousal benefits, prior to the year you reach your full retirement age, probably 67 for most of you, every $2 above a certain amount that you earn, which $24,480 in 2026. So for $2 that you earn above that, Social Security will be withhold the dollar in benefits. So, just keep in mind that we’re talking about earnings here, like a W2 salary or self-employment income, not talking about pensions, interest, dividends, capital gains. They don’t count and won’t reduce early social security benefits. For instance, let’s say you earn $25,400 in 2026. That’s 200 two $2,000 over the limit. Therefore, under the one one for two withholding, Social Security would withhold $1,000 of your 2026 benefits. But these benefits aren’t truly lost, though. When you do turn your full retirement age, your benefit will just be adjusted upward to make it as if you’d applied at full retirement age with respect to those withheld benefits. 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, now we talked about the good and the bad. So, now we got to get to the ugly. And we’re here today to talk about taxes 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 in addition to income tax. The self-employed pay twice that amount, 15.3% to cover their employer’s contribution. 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’s 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. So, keep that in mind. Next, let’s get into Medicare and taxes.

    Let’s just take a look at how Medicare and something it calls IRA can impact some couples in the go-go years and beyond. IRMA basically is what you’re going to be paying towards social security or towards Medicare while you’re under uh while you’re in Medicare. Think of it as your premium. First, what is it? It stands for the income related monthly adjustment amount. And the emphasis is on income because it is a monthly tiered search charge. Again, it’s a kind of a tax and it’s tacked on to people’s Medicare Part B and D premiums, but it only happens if you have income over 109,000 for single filers and 218,000 for married couples filing a joint return. So, let’s take a look at what this means in action. Let’s meet George and Martha here. They are a high earning married couple and both are Medicare Part B and D participants. And ears charges affect income from 2 years prior. And this couple is on track for $342,000 in modified adjusted gross income uh in 2024. So it’s 2026 now. So they’re going to be judged in 2026. Their taxation or their IMA charges are going to be p um based off of what they made in 2024. But on December 1st, 2024, George decided to sell a stock that he bought for $10,000 on July 1st, 2007. He sold the stock for 11,000 resulting in $1,000 of gain. Was taxed at 15% long-term capital gains rate, which is standard for most, plus an additional 3.8% of net investment income sir tax for a total federal tax bill of 18.8%. And that 3.8% net investment income sir tax is another tax that does come into play when your modified adjusted gross income exceeds 200,000 for singles and 250,000 for married couples. So George and Martha owe $188 of tax and the gain from the sale of their stock, right? 18.8 of a,000. Or do they? Remember, my definition of a tax is any cost that increases as your income increases. So then George and Martha will owe more than $188 because the gain from the sale of the stock pushed them off the Medicare IMA cliff into paying higher Medicare premiums. Let’s take a look at those. So look at this part B here in my chart. That extra thousand gain pushed their AGI into the next premium tier that starts with $342,01. So now instead of paying $405 each for their monthly Medicare Part B premiums, George and Martha are now going to owe 527.50 each per month. So that’s an extra $121.70 bucks.70 per month. Multiply it by two, it’s $243 $244 more a month for an annual total in additional income related monthly adjusted Medicare Part B premiums of $2,920 just for selling the stock. He threw himself into another bracket. And we do this kind of planning, too. So we’ll keep an eye out for that. But we can help you with this. But it’s not over though because now Medicare Part D, we just we were just looking at Part B. Now Medicare Part D is going to also be impacted. And George and Martha will now pay each another 22 $23 per month for their drug plan, which is an extra $550 for the couple over the course of a year. So we’re talking about a $3,600 a year swing just from the sale of the stock.

    Again, just adding all those search charges together. George and Martha will each owe an extra $145 a month, more than $3,400 a year of combined additional charges for the year.

    Now, combine that amount with the $188 of actual federal tax income income tax they would have owed on the sale of that stock and the total tax owed on $1,000 of gains. That comes to 3658.40 40 cents and that’s tax rate of 337%. Let me repeat that. That’s a tax rate of 30 365%. So, let’s just do a quick review. They sold stock for $1,000 income gain. The stock sale tax was $188, $15 for long-term capital gains plus the net investment income tax, 3.8%. The extra income from the stock sale triggers new IRA tiers, new Medicare costs. And the total IRMA charges amounts for the year to it increases it to $3470. So the $1,000 extra income triggered taxes of $3,658.

    Again, $365% real tax rate. You see, being pushed into a higher Medicare Part B and D premium range is worse than being pushed into a higher tax bracket for most. That’s because if you go over a regular tax bracket by even a single dollar, only those last dollars are taxed at that higher rate. But if you go over the Medicare Part B and D income levels by even a single dollar, you then move into the next premium tier. It doesn’t matter if you exceed the limit by a dollar or $10,000. That’s what they call the earma cliff. Just keep in mind your IMA payments are not determined, again, let me just repeat this. Your IMA payments aren’t determined by how much money you made the previous year, but rather your modified adjusted gross income from two years ago. And it’s another tax thing that catches people by surprise and it needs planning.

    And 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. So to help you understand that Jim and Anne here, both 68. Jim retired at 65. Anne retired at 66. Prior to her retirement, the couple had health insurance through Ann’s employer, and they continued that after Ann retired because her employer offers her their own health benefits. Unfortunately though, they didn’t know they had to enroll in Medicare Part B as soon as an retired. And even though Anne’s employer offered you 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 too late. And thanks to the way Medicare enrollment periods work, they weren’t able to begin coverage until the next year. And in a worst case scenario, this might have resulted in a gap in coverage for Jim and Anne. They had a major medical need. But even in a best case scenario, because Jim and Annne missed their deadline to sign up for Medicare Part B, they will each owe 10% Medicare Part B base premium penalty for life. Again, for life, they penalize you perpetually for this. And you can see how much that translates to in real dollars. They owe $487 in extra in 2026. And historically, we can estimate that the premiums will be higher. So that 10% penalty would just grow and grow and grow over the course of a lifetime. That could translate into a $10,000 mistake for the couple. But just for simplicity sake, we’re assuming that Ann’s retiree 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, though.

    We’ve seen how Social Security and Medicare have their own tax traps 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 can face in retirement?” Well, the rest of what we’ll cover isn’t like what we’ve seen with the Social Security tax torpedo or the Medicare earmar isn’t aware of those tax squeezes. What we’re going to see now is how the tax code in 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. You can’t be halfhazard about tapping into your tax deferred savings. Timing is everything. And if you don’t plan carefully through all stages of retirement, you will encounter unintended tax consequences. Let’s take a look by first addressing a question I hear often when doing retirement planning. Which accounts to spend first? And here’s a common example. I told you guys earlier, this one’s nothing but examples, but hopefully they they’re able to make the point across. Talking about Sam and Mary here. They’ve been great savers, as you can see, and are looking forward to spending their retirement years traveling and seeing their grandchildren. In addition to social security benefits, though, they also have uh $450,000 each in an IRA, $60,000 each in a Roth IRA, and 300K in a joint bank account. They want to spend about $8,500 a month or just over 100k a year. You where would you take the money from first? Most people think first take the after tax money in the bank, then take the tax deferred IRA money, then take the tax-free or Roth IRA money. And this is conventional wisdom. It has been promoted by many big investment firms for some time. And it’s not a bad plan, but we know conventional wisdom isn’t always the best approach for that matter. 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 banks, bank accounts, tax deferred accounts like IAS and pensions, tax exempt Roth accounts as well. And you can see some study titles there. The research has shown that the conventional wisdom approach probably isn’t ideal. I mean, again, everybody’s we might have a bunch of cookie cutter homes here in Texas, but shouldn’t be subject to cookie cutter ways and just conventional wisdom, especially in retirement. But 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 lowinccome years, then putting that money into Roth accounts. And this is the fill in your tax bracket approach, which we’ll discuss here in a second. And this alternative approach gives you more flexibility to use that tax-free Roth money strategically in future years. Does it make a big difference? I mean, I think so. And in the academic studies, this approach has been shown to increase portfolio longevity, and that is how long your portfolio assets will last without requiring you to take on additional risk. The big takeaway here, 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, see your tax pro and financial consultant for tax advice and tax planning. One way to help manage your income both before and during retirement is to utilize Roth IRA conversions. And a Roth IRA conversion is just a simple process that allows you to move money from a traditional IRA or the 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 rate. So, for example, if Jill from earlier converts $100,000 from her IRA to a Roth IRA, she’ll have to add $100,000 to her income and the conversion income will be taxed at Jill’s rate for that year. For that reason, it’s recommended that prior to making any conversion, again, t consult with the professional. But it doesn’t always have to be all or nothing. In fact, rarely do should you ever do a conversion all in one year. Break it up. And one helpful conversion approaches using something called filling up the tax bracket. You know, often you may find yourself in the middle of one of the tax brackets with a lot of room to add more income without pushing yourself into a higher bracket from there. So, for example, in 2026, 22% tax bracket for married couples filing a joint return goes from about 50,000 to about 105 106,000. If you file a joint return, your taxable income is 110,000. That means that you could add another $100,000 of income without going into that next tax bracket. Making a Roth IRA conversion like that could make sense to some. Maybe you do a little bit less. There are ways of finding out the best strategy for you. 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 conversion num um conversions over a number of years, filling up tax brackets or just doing a smaller fixed amount. And this can really help the average tax rate that you’ll pay on your converted money and spreads out that tax bill over a very long period of time. And generally speaking, sometimes that happens between when you retire and whenever you hit your RMD age, when you are in a much lower tax bracket, more than likely. But conversions can be especially powerful in years when your taxable income is low, such as having a high non-recurring medical expense deduction, low sales years, maybe you’re retired and you’re just living off of cash reserves and social security. It’s also common for people who retire early, like I mentioned, just not receiving social security benefits, their pensions yet. They just may have a very low tax bracket, making it a good time to complete, you know, filling up those brackets throughout the years.

    So, this is a good time to spell out the crux of things. You know, 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 tactic some tactics you could use in managing income around tax brackets might include withdrawing taxfree money from life insurance policies to keep that income low. Selling highly appreciate stocks for low or no capital gains. Taking distributions from IRA or 401ks take advantage of a lower tax rate. And as we’ve seen, you can also consider a partial Roth conversion to fill up those lower brackets.

    There are also 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, and this would only apply to people who are covered by those high deductible uh HDHP health plans. And the second has to do with small business owners, those who want to be extra tax savvy and saving for retirement. Yeah, you can fund a company pension plan which for certain high earning business owners can increase their ability to claim that qualified business income deduction. Uh both of these features of the tax code could be used to manage you know your tax exposure and provide significant tax favor benefits throughout retirement. If either or both of these apply to you, just go ahead and note that now in the questions area of your value um you can note that now and just make a mention of it later.

    All right. So, we’ve seen throughout the presentation the critical importance of managing our tax deferred accounts because at some point you’ll be forced to take out RMDs required minimum distributions and that can be troublesome for your tax bill. Many people make charitable donations too supporting their favorite nonprofit with annual gifts. So, let’s look at how your RMDs and charitable giving may work for you with some planning. Now, we have Albert and Shirley. Thank you for joining us, Albert and Shirley, who are in the 24% tax bracket. Now, the standard deduction for a married couple filing a joint return this year is $32,200. Albert and Shirley are over 65, though. So, they each get an additional standard deduction, bringing their total standard deduction for 2026 to roughly 322 for the purpose of the scenario because they’re in that 24% bracket, meaning their taxable income is 27,000 plus. We assume they do not qualify for that enhanced senior deduction of $6,000 per person because they that starts phasing out at 150 grand. That’s the new one that came in with the one big beautiful bill passed last year. However, if they take the standard deduction, they qualify for the maximum $2,000 for married filing jointly. Additional charitable deductions available in 2026 as well. We’re not going to get too far into this, but if Albert Shirley had $15,000 of existing itemized deductions, say from state and local taxes, deductible medical expenses, mortgage interest, if they’re still paying their mortgage, what happens tax-wise if they donate $5,000 to charity, they get no federal income tax benefit from making that charitable contribution because it doesn’t exceed that 32,200 standard deduction. Now, that’s not to say they shouldn’t do it, but they should understand it’s not going to help them in saving their taxes.

    Now, if you’re over 70 and a half, though, you have an IRA or inherited IRA, there’s another way to give to charity than simply just writing a check. It’s called a QCD, qualified charitable distribution. Let me explain how it works real quick so you can see how they can be powerful in tax planning. First, some rules. If you’re over 70 and a half or older, you can make a QCD of up to $111,000 a year. At least for this year, it’s going to be adjusted with inflation from your IRA. You can do this. If you’re married and both of you are over 70 and a half, then both of you have an IRA and both of you have an IRA, then you can each make that $111,000 QCD maxed out. Second, any qualified charitable distributions you make count towards satisfying your RMD distribution for the year. So, if you didn’t need that extra money that Uncle Sam’s forcing you to take out, you can apply that towards QCD and lower your taxes. But whenever you make the distribution from your IRA, it must go directly from your IRA to a qualified charity. Has to be a direct rollover, direct transfer. You can receive a check from your IRA custodian, just make it payable to the charity. Third, this is the odd part. Even though you gave to charity, you get no income tax deduction. So why would I suggest a strategy where you get no deduction for giving it to charity? Because when you make a QCD, the distribution from the IRA is never counted towards your income when then you compute when you compute your taxes later. So let’s see how that can actually help out Albert and Shirley. So we’re we’re under the assumption that um let’s just suppose that Albert Shirley do what many retirees 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 R&D for the year. Now, being the charitable people that they are, they donate 5,000 to charity. And the end result is that that 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 charitable contribution will cost them a total of $5,720. Why? Well, because the $5,000 RMD that went into Albert’s checking account at the beginning of the year still has a tax cost. Remember, the couples, they’re in the 24% bracket, 24% of 5,720. So, there’s 720 additional taxes that Albert and Shirley must pay when they file their taxes. Means the total cost of their charitable gift is 5,000 plus 720 or 5,720. So, remember, the gift didn’t impact their standard deduction. RMD behind the gift just added to their income. Big ouch. But let’s see what happens if instead of just writing a check from the bank account to them, if you made it in the form of a QCD, which is what they’re doing here, they give a $5,000 QCD and instead of requesting a $5,000 distribution from his IRA to go into his bank account, Albert’s simply just having the IRA custodian make the check directly out to the charity of his choice. It satisfies Albert’s uh RMD because he’s over 73 at this point. And now the charity is in the same position as before. They receive a $5,000 donation. Good day for them. Albert and Shirley, however, are also in a better position because they still give $5,000 to charity even though they receive no deduction from making contribution, but their IRA distribution is excluded from their tax return. Therefore, they owe no income tax in that $5,000 distribution. and their total cost to give the $5,000 to charity is $5,000. So that’s a savings of $720 of our previous example. So again, simply by knowing how to use these tax rules to their your advantage can work out if if giving you a charity is important to you and they did it all without ever even getting a deduction.

    Have one person here saying they lost sound. Did anybody else lose sound or you can still hear me? Can everybody still hear me?

    Okay, great.

    And I didn’t even click through these. I’m sorry, folks. All right. Well, we all know charity starts at home. Got it. Sorry. Thank you. We all know charity starts at home. So, it’s a natural question to ask, how does retirement tax planning factor 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 does really matter. Which leads us up to our final key number four. Organize your assets for your family’s benefit. Estate planning still matters here. Estate planning is always a relevant topic, even though people don’t like to discuss death, but we’re not going to discuss it in the traditional way. That’s because the new tax law excludes estated values at up to $13.99 million from the federal estate tax, meaning only the tiniest fraction of people need to worry about estate taxes. Now, again, you might still face them at a state level. something that we can talk about though still very important 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, 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 the death paid for initially. said it stepped up to its price in the date of death. And this can make a big tax difference as we’ll see. Another example, if you bought stock in GE 50 years ago, $10,000 worth of stock in GE 50 years ago, and it’s worth $200,000 today. So, it’s $190,000 of capital gains for you. You pass away, you give it to your children, your children receive it at a new cost basis of $200,000. Should they continue to let that stock grow, now they have capital gains, but it’s not from 10,000 to two, it’s 2 to2, whatever new gains have from there. It’s likely that most assets you own though, other than your retirement accounts and annuities, they will be eligible for a step up in basis.

    All right, let’s see how this works with two scenarios. In the first, Phil and Mary make no planning changes to their assets. And when Phil passes, Mary will receive a step up in basis on Phil’s half of the joint account, which is $60,000. So, 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 gain. Now, suppose that upon Phil’s diagnosis, Mary and Phil move all the investments into one account in Phil’s name. And 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.

    And when you sell your investments, would you rather owe tax on $60,000 a gain or none at all? Let me say planning around death is hard. A lot of city buses out there that could just come out of nowhere, but this is where a professional can help because they are emotionally removed from the situation. They can assist you to make good decisions that may seem hard at the time. Now, maybe you’re someone who’s managed to save up quite a bit in your IRA or your 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. And in the past, we we have recommended that because with the right structure, your heir could withdraw the money throughout its lifetime, possibly over decades. That changed recently though in December of 2019 with the Secure Act 2.0. And now beneficiaries of inherited accounts, with some exceptions, they have to withdraw all the money within 10 years of the owner’s passing and pay taxes on that money. That is for those pre-tax accounts, of course. Now, the restriction what was called stretch IAS shines a light on how important tax planning is and laws can change at any time. So, you need to have a plan and revisit that plan regularly. 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 the course of their lifetime. The first scenario we have involves Pamela and her son Kyle. Pamela unfortunately passed away at 70, leaving the full IRA to her son Kyle. He is an only child. He’s healthy and the sole beneficiary of that IRA. Now, we know that Kyle has a maximum of 10 years to withdraw the IRA monies to meet those required minimum distribution rules. And Kyle likes regular distributions. So, he chooses to take equal distributions of the funds over 10 years. And that IRA earns an average 6% rate of return annually. This payment will 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. Second scenario for Kyle looks a little different though. Kyle lost just lost track of time. He’s already reached year 10, the required minimum distribution window. And since it’s year 10, he must now take out the full distribution in one year. And assuming that same rate of return earned um same rate of return earned annually on the $400,000 IRA, we can calculate the IRA balance has now grown to $716,000 and change. Now Kyle has to take out $716,000 all in one year and pay income tax on that amount from the top tier bracket. So now he’s going to be spending about 37 he’s going to be paying 37% in taxes on that full amount. But enough about death. Let’s talk about long-term care. It’s not a long-term care presentation. It’s about retirement and taxes. Just believe it or not,

    there are a number of tax breaks that are associated with long-term care insurance. It can be beneficial. If you want to learn more about it, give me a holler. Be happy to help you understand more about long-term care. I just don’t want to get into it too much today. Um, but it can lower your taxes. A lot of these costs can be deductible. You can pay it out over a couple years. You can pay it all up for it upfront. There are different ways to get benefits from it. So, we’re going to skip through that one.

    All right. So, again, we’re towards the end, probably thinking, goodness, how in the word world will we ever manage this? And it’s a good question. So, let’s just bring it all together here. We started with a clear statement about the problem. Retirees just often pay way more in taxes than expected because a confusing system treats various income types differently and contains hidden taxes and penalties. Yay, you’ve finally retired and now here’s all these taxes and penalties. Well, let’s just do a quick review on what we’ve learned in the context of the four stages of retirement. So, under the pre-retirement heading, we saw the importance of understanding the after tax value of your retirement savings before you retire. And 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 through your early retirement years in low tax years. We also looked at social security and taxes plus the importance of couples ha um plus the importance of couples having benefit strategies that consider surviving spouse and we saw Medicare has its own tax-like structure that can push you off the earlift. And we saw the importance of signing up for Medicare on time right in the middle of those early go-go years. That’s because starting in your middle retirement years, you’ll be confronted with RMDs. 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 that you can preserve the most for your heirs and leave them with the most tax flexibility. All those items together lead us to the obvious solution to our original problem because your tax exposure will change throughout retirement. And you need a strategy for that. You need a strategy that anticipates how and when your t you tap assets, which assets to cover your personal expenses. Understand the range of taxes you’ll face at various stages and manage your actions so that you pay the lowest tax rate possible.

    So again, so by attending today, I hope that means that you’re preparing to leave the accumulation phase. I hope that you’re finally seeing the light at the end of your career and being able to go retire and moving towards that distribution phase when you get to start spending all this money now. And we’ve seen that the distribution phase is more complicated than working and collecting a paycheck. You know, managing your tax rate throughout those four stages of retirement is part of the challenge of retirement planning. And we’ve seen the cost of mistakes. And naturally, we want to be efficient with our savings. And there are strategies to reduce your tax burden. But as with many things in life, this takes education and planning and advice and 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 look, you’re all members of the credit union. This is part of a service that we offer and I’d like to help you get started with creating a retirement tax planning strategy. So in a minute, I’m going to go ahead and put up a poll. Click yes, no, not at this time. It doesn’t hurt my feelings if you say no, but we’re here to offer this service to you. It’s at no cost. There’s no obligation. Let’s just help you make sure that you don’t hit any of these tax pitfalls. We’re here to help. So during that meeting, we’ll identify where you and your family stand in regard to preparing for retirement, review your timeline, and identify key retirement planning and tax issues you need to anticipate. And then coming out of that, we can act as your resource and help you find, you know, if you need help with the finding a CPA. We have a referral network of CPAs to work with as well that we work together with. So again, let me go ahead and set up the poll. If you don’t mind answering it, we’re here to help. If you do answer yes, it is almost 8:00 for some of you and 7:00 for the rest. And you know, if you’re one of the folks from California that’s on here, I know it’s earlier, but I’ll be reaching out to you tomorrow um via email or phone. But please, if everybody would answer the poll, at least I get to have a good attentive score here. Um, I I brag about this a lot and forgive me, but uh I do have the best attention and um best answered number of polls, folks answering polls. I I wear that badge with uh with pride. So, please, if everybody could answer the poll, would really appreciate it. Show my boss that I kept everybody’s attention for all 53 minutes of today. Um and with that, let’s get into some questions here. Be happy to answer everyone’s question, but please everybody answer the poll.

    Okay. Uh, I do apologize to the person who wanted me to send a link to the presentation. We can’t offer that. I am pushing it on my boss to let me record these and put them on YouTube. Then I can push every I can direct everybody to see them. There’s just a lot of compliance in this business. We deal with people’s money. It’s a lot of uh SEC and Federal rules out there. Uh, it’s like pulling teeth in order to have anything posted. So, we’ll look into it.

    Okay. Uh, like more info on the small business tax strategy, go ahead and either send me an email or click yes to an appointment. We can go ahead and discuss that one.

    When you discuss converting IAS to Roths and low tax years, are you also talking about converting 401ks? You can you can convert 401ks too. It just depends because IAS and 401ks have their own benefits. 401ks, you get to contribute more, but whatever 2025 investment options your HR department pick, that’s all you have. With an IRA, you have basically you’re fully independent with it. It’s an individual plan. So, you can sometimes take some funds out of your 401k and move it to a Roth IRA. Sometimes you might just want to move over a larger chunk so you don’t have to make that phone call every year. It depends on the person. It depends on your plan. I’d be happy to look over that with you and see what’s offered to you.

    This presentation is for married people. How can I use this for single unmarried people? Now, it applies to everyone. We’re just using married people here, but really the thresholds are just cut in half. So, if we’re looking at $218,000 means we’re crossing into the next bracket. It’s 109,000 for the f for the lower bracket in that case. But again, click yes, scan the QR code on the screen, send me an email, whichever one works for you. We can go over it and see how it affects you personally. Again, we do a lot of financial planning here. I can make a financial plan for anybody on here today and show you exactly what you need to do, what might be the best route, and show you some options.

    You also put link for appointment to schedule. Uh that would be the QR code here or just go ahead and select the poll.

    Is there a positive reason for moving my 401k into an IRA at age 70 or before RMDs? Yes, I find it to be I mean if you if you haven’t retired yet, it doesn’t matter. But I like to IAS more than 401ks simply for the fact of having more options, more control over your account, and most importantly, more investment options. Depending on who you’re using as your custodian, you could have endless investment options available to you, different products, whether it be structured notes, different ETFs, different mutual funds, etc., etc., but for the sake of doing a conversion too. And again, everybody’s different. There’s no cookie cutter portfolio approach here. Go ahead and select a meeting with me. I’d be happy to go over that with you and show you how it might be bene more more beneficial. Might not be, but we could solve that together.

    I I hate seeing this one now. Didn’t see the poll. Poll said it failed. My response is yes. Let me go ahead and make a note of that one there, Suzanne. And I’ll reach out to you via email.

    Sounds great. Looking forward to scheduling to seeing you in a meeting.

    Okay, great question here. I’m over 65 and have a good health insurance plan. I’m still working full-time. Do I have to take Medicare to avoid the penalty? You don’t have to take Medicare yet. You don’t have to start paying into Irma. You can keep your plan. You still need to sign up, though. There’s a way of doing that online. It m they make it easy. They have a fairly good phone call system, too. Um or you could go into the office for that one. But you have to sign up or you could hit that penalty. So, just make sure that you sign up. That’s the most important thing.

    Wow. Well, look, we got a lot of responses today. I have a lot of people to make a phone call to. Again, to those who said yes, um I will call you tomorrow or send you an email this evening and you get to go into that email. Click in the calendar link, schedule a meeting with me at a time that works best for you. If you cannot meet during normal working hours and my calendar link doesn’t let you pick select outside of 5:00 my time, send me an email saying that and I will make we can work to do something outside of normal business hours. It’s not a problem. Um, but again, there’s about eight more people to us to to click on the poll. If you don’t mind, please do so. I’d appreciate it. If if it failed, it’s okay. I’ll just report that you said yes or or that you clicked on it. That way, I’ll keep my numbers up. Looking good. Look, folks, today was a great webinar. I hope you learned a lot. Um, I’m not seeing any new questions in here yet, but I I really do hope that you all learned something. I don’t think I’m allowed to let you talk to the person who just raised their hand. Just go ahead and ask me the question in here. I’d be happy to right there or send me an email. Yeah, I’d be happy to uh do a phone call or something there. But look, this is a great presentation. It really does open up Pok’s eyes and to some serious pitfalls you might come across in retirement. And it just it I I hope it doesn’t make it seem like, Lord, when does it all end? I mean, I’ve been working my whole life being taxed by the tax man. Now I’m getting ready to retire to only have to worry about more taxes. There’s a solution to this. It’s not the hardest thing ever. Sometimes it’s just having a financial consultant and a CPA working together. Sometimes it’s just one or the other. But have a plan done. Make sure you don’t hit any of those pitfalls because you’ve already been paying taxes for 30, 40, 50 years right now. No need for you to keep paying an insane amount much more if there’s ways around it. How can I say yes? Uh, go ahead and just do me a favor. If you can scan that QR code, Alana, go ahead and scan that QR code and you can go ahead and schedule a meeting with me directly. If not, just take a photo of that email address and send me one. Be happy to help you with that, too.

    All right, folks. Well, look, I hope everybody here learned something today. Um, looks like we’re out of questions. I’ll stay on for another minute or so in case other questions come through. If anybody else needs any questions, anything that we didn’t cover today that you were hoping to have covered or other financial pitfall questions, retirement planning questions, that’s what we’re here for. That that is what my job exists for. There’s my information. There’s the QR code. Schedule a meeting with me. Please, we’re here to help any way possible. And that’s again why credit unions are better than banks. So, thank you very much, folks. You all have a wonderful day. And like I said, I’ll stick Oh, yes. I am a fiduciary. Sorry, somebody just asked that. Uh, I am a fiduciary. So, here to help folks. Let me know. Oh, wait. We did have more questions come in. What kind of info do I need to prepare for appointment? Thanks. Have a good understanding of your current financial situation. What you spend, what you make, what you have. Have those ready. If you have statements ready with you, I’d like to know what those balances are. Um, that’s step one. But also, here’s the fun part. Understand your retirement. What are your goals? What do you want to do in retirement? That’s the fun part that we’ve all been saving up for. Have an understanding of what that might cost.

    Well, I’m glad to hear that. Congratulations on being retired for 5 years.

    It is very important. Absolutely. If you ever want to look over them together, that’s what we’re here for, sir.

    No, I do not act as a tax advisor and a financial planner. So tax advisors are tax preparers, the guys that take the numbers, crunch them together, tell you what you owe in taxes. You know what we can do though is we can help you with tax planning. A lot of that might be Roth conversions in some cases. A lot of it’s going to be working on your, you know, hey, you want to spend X amount of dollars towards X goal. you might hit these issues here, but I’m not crunching your numbers for you. Unfortunately, I’m not certified for that. But I am a fiduciary here to assist in that. A lot of times though, I will work with my client CPAs. That’s a fun part, too, cuz then somebody else can crunch the numbers for me and I get to get to do the investment side of things, which is a lot more fun. So, that’s what we’re here to help out with. But, I do love working with my client CPAs because that way we can come up with a good if like somebody’s doing a Roth conversion. Okay. Can we do 30 or $50,000 this year? You know, the CPA will be able to tell us how much we can convert and what that tax bill will look like and help us make sure that we’re not going to cross into the social security tax torpedo or any of those pitfalls. So, we can work together on that one.

    Dynasty Trust. Uh, I can help you figure out maybe what a tr what trust might be best for you. And depending on where you are, I can help find you an attorney to put that together. A lot of people ask me about trust and if it’s necessary. For most people, it’s not. It’s more of a hassle to have a trust, but depends on what’s most important to you at the end of the day. Um, I think trusts are great. I think wills are great. Trust can be a fantastic um fantastic legacy planning vehicle. It just matters on who you are and what you’re trying to do. And then really you can come down to seeing if you if you want the burden of that extra tax return because a trust is another entity. So that is another thing you have to file for your taxes and keep up with. But that they find their place from a lot of people and if you need help with finding an attorney to set that up, we can help you with that, too.

    trying to understand this question.

    Uh we have a meeting coming up too, so we’ll talk about that. I cannot update a will for you. I’m not an attorney. My my mother who was an attorney told me not to be an attorney. So, I just do I just deal with money instead. Um, but I can I have another attorney who I have here in Texas, I have a couple of attorneys that deal with just trust and I have a couple of attorneys that deal with just wills. If you’re okay with working with somebody in Houston, I know you’re in Dallas area. Um, I can find one up there for you if you’d like to.

    How is a charitable donation from an IRA treated normally? You see, Gary, that’s a good question. So, how is the charitable donation from an IRA treated if you normally can deduct exceeded standard deductions? It might make sense in some cases to add it on. It’s just a matter of are you going to surpass that ch that uh the deduction amount. So, it can make sense and again that’s something that we can review. That’s a good CPA question though.

    All right. Well, again, I think there’s two more people who didn’t answer. We had about 200 people on today. So, good presentation. I do appreciate everybody joining. But again, I’ll wait for another 60 seconds on here. Everybody else can start signing off. But if you had any other questions, I’ll be on here for another 60 seconds. Thank you everyone. Have a wonderful evening and please join me for the next one on estate planning since we just had a bunch of estate planning questions. But Roth IRA conversion one that along with this webinar top two three favorite ones to do best amount of information there. Have a good evening.

    I’m glad you enjoyed. Thank you. I’m over here shaking whenever I give these presentations. So, it means the world to me for you to say that. Thank you very much.

    All right, folks.

    I’m going to sign off now. Have a wonderful evening everybody. Thank you very much for your time today. See you at the next one.