Lower Your Taxes in Retirement: The Gap Years
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- Опубликовано: 30 июн 2024
- Is it possible to lower your taxes in retirement? Absolutely - with these two often-overlooked strategies for your gap years.
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Timestamps
0:00 - The gap years
1:14 - Strategy 1: Partial Roth conversions
2:55 - Strategy 2: 0% capital gains taxes
4:19 - Factor 1: Social Security timing
5:12 - Factor 2: Other income
6:06 - Factor 3: Charitable contributions
6:59 - Can you lower your taxes in retirement?
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Patrick King is a fee-only financial advisor in Atlanta and the Founder of Prana Wealth. Over his career, Patrick has helped CEOs, all-star athletes, Grammy-winning artists, and many others build their wealth, retire sooner, and create a legacy. Patrick enjoys yoga, mountain biking, golf, travel photography, and Clemson football.
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Great video and a lot of things to consider.
Glad it was helpful, @Andrew !
I'm getting close to where all these item will become an issue in my retirement. Thank you for bringing them up so we can look at them. I think this is the first time I've really understood the IRA -> ROTH IRA conversion. thank you again.
That's awesome, Rick! Remember -- at some point you have to do the math. 🤣 But knowing this stuff is available can at least give you the option if it makes sense.
The partial roth conversion is definitely part of our plans. I did not know about the pro rata rule and instead of rolling the 401k from an old employer to my new employer's plan, i rolled it over to a trad IRA. so i will have to deal with that at some point to reduce our RMDs. yesterday i did an analysis of my asset location and found that i'm 59% pre tax so if i don't get on top of it, uncle sam is going to wreck me in my golden years 😪
Ana -- having your retirement funds in tax-deferred accounts won't wreck you, but it sure would make things easier if you can start moving a little bit each year when it makes sense. Glad you're making plans!
While your advice on doing Roth conversions to minimize the effect of rmds is good, it's a very small percent of the population that will have this problem.
As many comments I hear about RMDs many of these people will have no problem with RMDs because of the size of the portfolio.
Well that would be impossible to do considering I'm in my late 50s and I'm more interested in investments that could set me up for retirement in my 60s, my goal is at least $2million.
It is possible to produce superior performance provided you do something different from the majority. However most of us tend to pay more
Interesting. I have a lump sum doing absolutely nothing at all in my bank account, I wanna get something started with it. You seem to be doing excellent for yourself, how do you achieve this?
@Dwayne Wright Hello Do you trade on your own?
@Dwayne Wright That's impressive. Are you giving her your money or the money stays in your trading account? What's really the idea behind copying trades.
@Dwayne Wright Is her service available outside of the US? As her broker is registered in the US.
I am retired already but not collecting SS yet. Can I do Roth Coversion even though I have never have a Roth account before?. TIA
Too many talk about RMD at 72? 60-65 u have HCA Subsidy issues if over 400% Pooverty level. 63-64 the MEDICARE 2 YR lookback can trigger Taxes and Medicare Premiums from IRMMA 65 and beyond so there is always Something being Triggered by Roth Conversions or 40IK DISTRIBUTIONS!
Great point, @Joseph J -- there's always a blend of needs. IRMAA means testing can drive up those Medicare premiums. If you can get away with the ACA subsidies, that's great, but there are always tradeoffs. Save money today (ACA subsidies) vs. save money tomorrow (Roth conversions).
see my comment above. roth conversions complete by 52 401k to brokerage 55-56 to live off of till 59.5. we live off roth accounts from 59.5 and military retirement until we take SS. we look poor on paper because only income is MR. we will be at the lowest premiums for Medicare. Got to have a good withdraw strategy :-)
finished a 7 yr roth ladder in 2021 getting money out of old 401k's and IRA's. Will retire in 2023 live off last 401k until its depleted and start SS. Very little if any taxes from 58 to 72 and best of all No RMD's :-P
Well done, @John B ! That's amazing!!! 🙌
Unless you have other income why would you want to deplete your traditional account.
My goal is to stretch out them years of standard deductions and lower tax brackets forever
@@johngill2853 yep retired military, so will have that pay and qualified dividends until we take SS and that alone will cover all our expenses.....until we have grand kids that is 😛
@@johnb1571 yes a pension changes the traditional vs Roth equation.
Those of us without other income like a pension can take advantage of decades hopefully of the standard deduction and lower tax brackets. Making a traditional account very appealing
@@johngill2853 so true, so for us retiring in 2023 gives us 23/24/25 to empty our 401k's out before the sunset of the Trumps tax cut expires. ~14 yrs or so of almost no taxes makes me happy 🙂
If we get SECURE 2.0 then the RMD will be 75.
@D Y -- I'm teeing up a video about SECURE 2.0 if it gets passed...
That is good for some people and bad for others.
If you do tax planning that can be a good thing but because of the new law you wait till 75 to start withdrawing money from your IRA that might cause you more of a tax headache. From my personal experience many people don't do tax planning or they wouldn't have a problem with rmds to begin with
I assume you can't make those QCDs to a DAF...
Great question, Joel! I don't believe you can make a QCD directly to a DAF, even though they are technically a 501(c)(3). You'd have to make the QCD distribution directly to the charity you want to support. Thanks for the comment!