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Excellent points and presentation! I seem to have done everything that you have suggested. Currently I am taking RMDs.
My "good" problem is that I have a significant portion of my IRA in Tesla stocks which could go up 10X (if you believe the "experts") in the next 5 yeras. If this happens then my RMDs will skyrocket putting me in the top tax bracket and also raise our SS Part B premiums in the highest bracket. Is there anything that can be done to mitigate this issue? Should I sell Tesla stocks and buy a lower growth stock/bond fund?
Taxes are unavoidable for the most part. Pay now (convert to ROTH) or pay later, your choice. Now if you want to donate all of your assets you can live in poverty and pay zero.
ОтветитьDoes anyone know what the cost base is for NUA for 401K inheritance before 2019? Some say it’s the fair market value of the day the person died; some say it the purchasing price…
ОтветитьThe 10-year rule is in effect for those passed away after December 21, 2019! Not mentioning the nuance sent to to a search storm …
ОтветитьCharitable Trust. If your goal is to maximize the lifetime net proceeds from your IRA to your heirs, I suspect the charitable trust is not the way to do it. I suspect your heirs would get more proceeds during their lifetime by paying the taxes during the 10-year distribution phase. The charitable trust would make sense if you want to leave money to a charity and also leave some money to your heirs.
ОтветитьWhat about Qualified Life Insurance Contracts?
ОтветитьWhy is that a strategy to give your money away? What's the purpose of even saving it?
ОтветитьThis is great info for those who are under 75. Can this benefit those over 78?
ОтветитьGreat stuff thank you. One question- I know there is a way to convert a 401k so that it can be used to start a business- do you still have to take the RMDs if you have done this? For example- I use money in my 401k to build/buy some apartments. When I turn 73 would I be forced to sell/convert those apartments in part to do a RMD?
ОтветитьI am going to take a chance on running out of my money...instead of dying and leaving it all to vultures.
I know many people who never collected a single SS payment or took a single RMD withdrawal.
Tomorrow is not guaranteed to anyone. Live for today...
“You were PLANNING to take $20,000 from your IRA, but your RMD is $200,000”? Say what? There is literally no one who has ever been in this situation. Well, maybe a modern-day Rip Van Winkle. There are more sensible examples.
ОтветитьIf you don’t need your minimum distribution can you take it into your Roth account?
ОтветитьRetire early and start taking distributions….This will lower your total amount in your account at age 73 to 75 when you have to take RMD’s plus you will get more healthy years to enjoy it. That’s a win win….
ОтветитьI don't buy that putting money into your Roth has much to do with whether you're paying RMD's or not. You have to pay taxes on the money before it goes to the Roth in any case. Once you're doing your RMD's, you have to withdraw the money and you have to pay taxes on it. Once that's done why not put it into your Roth there is zero cost to do so at that point.
it is true that you should try to shift money to your Roth in years when your income is less so that the money you're putting into the Roth is after tax money in years where you pay less taxes.
Take out enough to keep your taxes below 12%.
ОтветитьOne of the important factors is determining how many years you are likely to face RMDs. For me, they don't start until I reach 75. Given that neither of my parents reached the age of 60, for how many years, if any, am I likely to need to worry about RMDs?
It's a lot like the discussion of when to take Social Security, 62, 67 or 70? It really all depends on what assumptions you make. You won't know if you were right until after it's too late.
There are a couple of other methods to help reduce RMD’s, especially from a 401K plan that contains company stock. The retiree can execute an NUA on some or all of the company stock, paying taxes on the cost basis and taking the stock in-kind which would be subject to lower capital gains taxes. The entire 401K would have to be rolled-over during the same year. The cost basis can also count towards the RMD if the NUA is timed when the owner must take the first RMD. Reducing the value of the roll-over through an NUA can significantly reduce RMD’s as RMD’s do not apply to the stock taken in-kind, but beneficiaries of in-kind will not enjoy a step-up.
ОтветитьBased on your advice, I promptly notified my wife that it would be more beneficial to have a spouse 10 years younger. It did not go as planned. However it has indeed reduced my RMDs since the divorce awarded half of my IRA to her. Mission accomplished!??? 🤔 On a serious note, great content as always.
ОтветитьI’m required to start my RMD this year. Would a Roth conversion be beneficial to me now?
ОтветитьAt 78 year's old is a Roth a Advantage if you are worth millilns?
ОтветитьDumb. Don't forget you have to pay taxes on Roth conversions and you have wait 5 years before you can withdraw any gains on the Roth conversion. Best way to save money is to avoid using any financial planners. They have no skin in the game and play with YOUR money.
ОтветитьIf I get a second wife who is much younger, can I then use the joint table? 😂
ОтветитьI don’t see how the QCD helps. If you use the QCD in your example, you save $3,750 on taxes. However, you now lose the $15,000 charitable contribution deduction, right? And at the 25% tax rate, that would also be $3,750 so it seems to me that the net result is the same. You either save the $3,750 on the RMD withdrawal or you save it later as an itemized deduction.
ОтветитьJust to confirm what others have said. When my RMD is what I can live on , life is good. When the returns on my account exceeds the RMD and the account grows, life is good. Remember, my children now only have TEN YEARS to take and pay taxes on what is left.
ОтветитьEvery time I see any podcasts it just shows how screwed up the IRS is. Flat tax of say 15% and all this nonsense goes away.
ОтветитьExcellent video with very detailed easy to understand presentation.... Great job James... Just became a sub.... Be well...
ОтветитьANYWAY [ NOT;ANYWAYS]!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
ОтветитьWhat about a Qualified Longevity Annuity Contract (QLAC) to reduce RMDs?
ОтветитьWell done! Great food for thought
ОтветитьI advised my husband to take 401K Roth because he was at a lower tax bracket. I’m glad he listened to me as now we have a combined 500K in Roth. But he still has a lot of conversions to do before RMD hits in 10 years.
ОтветитьLove the content! Considering RMDs through the lens of deciding between Roth and traditional 401(k) contributions, what would you recommend in a scenario where your RMDs alone would put you in a similar or higher tax bracket as when you are making contributions? I would think this would favor going with the Roth 401(k). Of course this would require a large enough retirement account balance. Additionally, the amount you would need to convert in order to lower your account balance enough by RMD age would put you in as high or higher of a tax bracket because it’s recognized as income. Not to mention that in this scenario your account would likely be growing by more than the amount you are converting. Again, assuming you plan to have a very large retirement account balance
ОтветитьVery good video. Thanks for making it.
ОтветитьWhat qualities you as a financial advisor?
ОтветитьI’ve spend the last few days watching retirement strategy videos and everyone speaks way too fast and doesn’t take the time to slow down and use illustration to help explain what they are teaching. You do an amazing job communicating and slowing it down for easy note taking and understanding. Thank you!!
ОтветитьThank you, James. I have never thought about your points 6 & 7 and this changes my planning.
ОтветитьStating the IRS will “force” you to take an RMD is like saying the police “force” me stop at red lights. Congress makes the laws. The IRS is the enforcement agency of congress.
ОтветитьHi James, I have option to put into 401k Pre-Tax or 401k Roth, do you think I should put all into 401k Roth and pay more tax today. In exchange, I won't pay any tax for the growth on the roth account?
ОтветитьBy far the best and most comprehensive explanation of RMDs available out there. Very easy to understand and very well laid out. Great job James!
ОтветитьMethod 8) Reduce the balance of your IRA at age 73 by spending more of it in your early go-go years.
ОтветитьIs it smarter to do a Roth conversion than to withdraw the same amount as the standard deduction from your IRA/401K in retirement years before RMDs kick in?
ОтветитьThe charity idea works only on IRAs but not on 401k's
ОтветитьJust remember: if you are complaining about having to take RMDs, you are in a great situation.
ОтветитьI thought there was no inheritance tax unless the estate was over a certain amount. What is the tax that you were speaking of regarding leaving the estate to the heirs? I know some states do tax the estate but if you live in a state that doesn’t, what does this mean?
ОтветитьAll of this is way over my head😅
ОтветитьGreat advice but too late for me. Stuck with RMDs and higher tax bracket. Should have converted to Roth before age 70 😟
ОтветитьCan you take your 401K RMDs and put them towards a Roth IRA? Not talking about a rollover, but just part of your RMD that you'd be taxed for. I know that a 401K distribution is taxable and considered income, but it's it "earned income"?
ОтветитьAs per the usual, another excellent video James! But I'm curious... Why did you choose not to mention QLACs?
ОтветитьI love that you lead with living a quality of life in retirement and money is to have a fulfilling life. I only want to not outlive my money, have great experiences, and leave a little to my one child. My projections look very good, and I appreciate the giving to charity with RMD’s. That would be a blessing all around. As always, thank you for some more ideas and strategies.
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