I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totalling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2025
There are a lot of strategies to make tongue-wetting profit especially in this down market, but such sophisticated trades can only be carried out by proper market experts
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
I highly recommend 'Annette Christine Conte she’s a US SEC regulated Investment Adviser. she has been helping me with my portfolio for years. Feel free to look her up on the internet she’s renowned for her Services ..
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
SOPHIE LYNN CARRABUS is the licensed advisor I use and i'm just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
As an investment enthusiast, I often wonder how top-level investors are able to become millionaires through investing. I have a significant amount of capital to start with, but I'm unsure about the strategies and direction I should take to help me generate substantial profits like some people are this season.
The stock market is likely the best smart investment. However, if you are thinking of investing in the stock market and you are not well versed, its advisable to work with a financial advisor who is an expert to guide you through the process. this way you could make more profit with less risk
I agree. Based on my personal experience working with an investment advisor, I currently have $185k in a well-diversified portfolio that has seen exponential growth. It's not just about having money to invest in stocks; you also need to be knowledgeable, persistent, and have the strength to hold on during market fluctuations
Talking about a financial market specialist, do you consider anyone worthy of recommendations? I have some money to test the waters now that large cap stocks are at a discount... Thanks
My CFA, Amy Lea Kohlert a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
Thank you. Ok, here’s my comment / request - I’d like to see the effect of “filling up” (Roth conversions) the 22% tax bracket, ages 60-90, for your example. Would be nice to include a simple table, at the end, showing T401k balance, and taxes paid, for all years. Assume SS delayed, to age 70, please. My opinion: < 22% bracket just seems too low. Subscribed.
Great video. I was surprised you did not mention how the "convert all at once scenario" improves the tax situation for the survivor if one of them passes. It would essentially eliminate that risk. This was a significant factor in my decision to convert aggressively the first few years.
One item mentioned, but not shown in the calculations, is the healthcare cost difference. The 6k number shown, is less than half the real cost prior to age 65, if you have any type of issue at all that prevents you from buying a cheaper private policy. I'm buying my healthcare on the ACA marketplace right now and without a subsidy it is over 2k a month for my wife and I. If they are drawing all their income from a 401k, their monthly cost is going to be closer to 2k a month, than the 1k a month the plan was showing. If they convert all their money up front, that cost goes away and they are going to be saving around 2K per month on healthcare for those 5 years. And, the RMDs later on would almost certainly force them to have irmaa surcharges on their Medicare, which would also go away if they convert.
Not what I would do. Rather than convert 1.5 million to Roth. I’d live off that money between ages 60-70 at somewhere between a 5 to 10% withdrawal rate depending on what the market will bear for any given year. Take SS at 70 and still enter RMD with 1.5 million. That would give you a very manageable RMD of about 60 grand at 75 or 73 depending on when you were born. The larger withdrawals in your 60’s allows you to help your children sooner rather than later with things like college loans and down payments on a home. Rather than getting an inheritance when they’re in their 60’s and already financially established.
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $200k, but I'm not sure how to go.
Holding fixed-income assets in tax-deferred retirement funds as opposed to taxable accounts has additional advantages. If you don't know how to invest in the market, get some advice from a financial counselor.
Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly and I made over $400K within a short time
My consultant is Rebecca Lynne Buie. She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision. I basically follow her trade pattern and haven’t regretted doing so
My favorite response to the "Why 90?" Question: "According to current data, for a married couple in the USA, there is roughly a 50% chance that at least one spouse will live to age 90, with women generally having a higher probability than men of reaching that milestone."
It would be more interesting if you stayed under the 22%/24% tax bracket for each year as the max conversion, vs going into the 32, 35, and 37% bracket by converting all of it in one year. .
I enjoyed your video. I liked the extreme, regular, and don't do anything scenarios approach to video. It shows nicely a range of potential outcomes. Anyone that does planning knows there are many variables that you just can't predict so like really like the multiple outcomes way of showing things.
I'm so glad someone is sharing this. All the recent events make me want to re-distribute my portfolio. I currently have 80k in my portfolio. How can I consistently pick winning stocks?
I agree. I started trading stocks because I can work with an expert who has a good understanding of the marekt. This third quarter I've already made more than 150k in net profit.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Irene Powell ’’ for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!
I converted my entire 401 k pre tax all at once, it was worth $6 million dollars. I also have a inheriated Ira worth $700 k that I must deplete in 7 years. If I did it slowly through the years, I would always be in the high tax bracket. Now I have 3.5 million in Roth, no rmd and kids inheriate it tax free. I invested all in nvidia. Just retired and what a relief. 60 years old. Even the Charles Schwab Roth expert said he normally is more conservative in Roth conversions, but in my case he said I should do it. Especially I’m an aggressive investor. I have another 4.5 million in taxable stock account. My issue is not hitting estate taxes when I die. Started gifting and helping kids with home. Traveling, but it’s a small fraction of what I have. Net worth 11 million. Still living off my pension, I don’t need the extra dollars. Trying to spend my money, but it’s grown too much. Driving 34 yo car with 800 kids miles. Got one tesla, will get another to replace the junker.
Wouldn't you have been better off to pay the $2.5 million in taxes out of your taxable account, and end up with $6 million in your Roth (and reduce your future taxes on your taxable account balance of $2 million ($4.5 - $2.5 = $2))?
Kudos for addressing where the money to pay the taxes incurred by a rollover will come from. Most RUclips advisors assume it'll come from other after-tax savings. Given the savings rate today, this is unrealistic; however maybe not for the kind of people who work with financial planners and have $1.5M in an IRA. I suspect the DIY'ers here on RUclips with
The excess RMD drawdown saved by the Roth conversion is not entirely lost money because it can be converted to considerable extent to increased balance in taxable investment accounts .
@@klrmoto I think the direct answer is "No" . At least just looking at that year. My understanding: If you are subject to RMD you are supposed to calculate the amount of it according to "Fair Market Value" as of January 1 of the year,I think the custodian of your IRA (or custodians of IRAs if you have more than one are supposed to provide a statement of the "Fair Market Values"to you (might be IRS Form 5498) Also separate RMDs for your 401 or 457 accounts provided you make the RMDs for the sum of your IRAs (if not Roth) and for your 401 type "deferred compensation" accounts it is up to you if you want to do Roth conversions but doing those does not reduce the "FMV" that the year's RMDs are calculated on FMV = "Fair Market Value" some custodians will calculate the RMD amounts for you on such accounts that they hold on your behalf . The 401/457 accounts RMD need to be calculated and listed on the tax forms separately from those of the IRAs. It occurs to me that if you sell from within the IRA to come up with the money to pay the tax on the RMD you might have to pay additional income tax on the amount sold ! Having done the Roth conversion should help during the following and later tax years in that you would be reducing the "Fair Market Value" of the plain IRA applied to calculating future RMDs. Also if you have "basis" in your IRA (made some nondeductible contributions) you need to do Form 8606 and keep copies of it and older Form 8606 to keep track of and adjust your "basis" going forward so as to not have to pay tax on the "basis" being moved to Roth. May be a trap to watch out for if you are allowed to delay taking the first RMD into the second year so as to have to take 2 RMDs that year you might get bumped up even more into a higher tax bracket or have a higher one year "MAGI" pushing you further into IRMAA penalty territory ! So probably better to take the first one in the first year that you reach RMD age. Provided you take the RMD in the appropriate year you should be able to make Roth conversion with more of the money remaining in the IRA and/or with other money from common checking or savings to pay the taxes. I guess the video author will fact check this.
Most of my friends and I have experienced net worth growth over our retirements while spending at a “reasonable” level. I have run the numbers on Roth conversion in a lump versus gradually converting every year for the past ten years and it doesn’t work for me. I’ve recently made the decision to spend more and leave a smaller amount to beneficiary’s.
Regardless of the sensibility of a one year conversion, I would not do it simply because I will not want to write a $500,000 check to Uncle Sam, let alone the State of Calif.
Thanks Curtis. This is one of the most useful case studies I’ve seen. It would be great to see several “what if?” scenarios based on the multi-year conversion that you showed as the starting point. What if they delayed SS to 70? Would that allow even more conversions? How would that affect taxes and end of life savings? What if one spouse pre-deceases the other by 5 or 10 years - how would that affect taxes and end of life savings? I’d also love to see a case study based on retirement relocation from CA to AZ - what would be the tax planning considerations (eg taxes on primary home sale, property and income taxes etc) and how/when to think about Roth conversions and SS strategy. Many thanks.
Helpful examples. Yeah. Enjoyed watching. No heirs in my case, at least not so far. Wish I’d thought more about Roth conversion a few years ago. In my case I will probably end up granting most of my IRA monies to charity. So that’s a factor for sure in how much to convert.
Please review the five year rule for conversions, especially with chunking and it is so confusing because each five year rule has to be tracked, right? Then there are rules on order of withdrawals, right? I am intimidated by the complexities of trying to manage conversion withdrawals in my later years. I don't find it attractive to use cash I have now to pay taxes on a conversion for funds I cannot access for 5 years.But this video is great to get me moving. my inherited IRA is a headache.
Some notes on this - There are 2 five year rules. One applies to when you open your FIRST Roth IRA and the other applies to when you do a conversion. You have to have an account open for at least 5 years, before you can withdraw earnings tax free. The 5 years starts when you open your very first Roth, not necessarily the one you are withdrawing money from. There is no age limit, so if you start your very first Roth at 60, you can pull what you put in out, but you cannot withdraw earnings in that account till 65, if you don't want to pay taxes on them. The conversion 5 yr rule, only applies if you are under the age of 59 1/2 (fyi: If you convert to your VERY FIRST Roth IRA, the 5yr rule #1 applies) . So once you reach 59 1/2, you don't have to track anything, including ones you may have converted at ages 54 - 58. So, for example: if you convert at age 56, you just need to wait until age 59 1/2. If you start converting stuff earlier, in say your 40's, then you have to track 5 years from that conversion. And, if you convert multiple years in a row, then you'll have to track each one separately.
Interesting video. Would like to know what investment return rates were used and how the tax brackets were projected out (same percent but income tax went up x%? What is assumption of where they get to pay taxes.
Can you explain the effective tax rate vs marginal tax rate if one were converting up to the maximum 24% bracket, and for the example, presume taxable income were $100,000? How can you plan to maximize a conversion at this level? How much do you decrease your RMD and tax load at 75? (Presume current age of 60, for the example). Interesting topic. Thank you.
How does the IRMMA fit into all of this? I was slammed with a huge Medicare bill after a large house renovation withdrawal due to capital gain (taxable) income.
Converting entire pre-tax to after tax in one year should be viewed from perspective of year 2 under the sunk-cost fallacy, in year 2 your perspective is what exists in year 2: freedom from tax implications. The remaining years are approached very differently and more optimistically than continuing the tax-implication considerations for withdrawals.
I try to plan my withdrawals every year to come as close a I can to the IRMAA second level maximum (pay no more the 2.0 times my Medicare Parts B & D). My objective is to convert as much of my IRÁ into Roth as I can. It’s kinda complicated as you have to guess at the income limits for IRMAA because of the 2 year look ahead. I have considered the full conversion and rejected it as I feel I’d prefer to maximize the after tax amounts BOTH for me and my heirs. Ideally I’ll be able to convert that large majority of my IRA to Roth before I die. Do you have any software or consulting ability to assist me with this arduous task?
The thing that came to mind for me is health ins cost. Let's assume that this couple is going to use Cobra from previous employment for the first year (remember you can only use cobra up to 18 months) and then for the next 3 to 4 years they plan to use the ACA (Obamacare) until age 65 when they can go on medicare. Taking the tax hit all at once during the year that they are on cobra means that for the remainder years all they have to do is show some small amount of taxable income and their healthcare premiums though ACA will be completely subsidized. Further they will have the lowest cost for their medicare plans. Its just a thought and I have not run any numbers but this in itself makes the scenario much more attractive to me.
The proposed plan has one fundamental problem -- It pays big tax upfront and assume the balance can grow stably and nicely years after. If the investment return become smaller or very unstable or even losing money for many years to come then they lose big because they already paid out the tax they shouldn't need to pay. No conversion has the advantage that they pay more tax if the fund grow big and pay less if the return is not good or even negative.
I’m putting all my future contributions to Roth. I’m currently in the 24% bracket. My employer match still goes to traditional. Hopefully, taxes will go down some in the next 3 or 4 years to aid in some of these conversions.
Perhaps I missed something but it appeared to me that you compared the ending balance of the no Roth IRA scenario to the ending balance of 100% Roth or partial Roth conversions. One dollar remaining in the Roth accounts at death has more value than one dollar remaining in a IRA because of the tax that must be paid to spend the IRA money. Which scenario would have the highest after-tax value to the person inheriting the account?
Hi Chris, how do we do conversions and pay the tax each year from the funds in my TSP? I don’t have cash to pay taxes on the conversions, unless I sell the rental property. I have 8% cash in my TSP. Is that available to pay the taxes?
I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
I consistently recommend Rebecca Lynne Buie as my top choice. She is well-known for her expertise in financial markets and has an impressive track record. I highly endorse her services.
Thank you for sharing! I did a quick search for Rebecca Lynne Buie online, found her consulting page, and scheduled a call. She seems to have a high level of expertise.
Good analysis and I've been going through similar and ACA subsidies are a factor. For this year, instead of Roth conversions, I'm doing Capital Gain harvesting up the 0% max for CG in my brokerage account. Next year, we have to get an ACA policy for 6 months and so keeping income low, nets a $2100/mo subsidy. That is a significant savings over doing a Roth conversion next year and will pick up the Roth conversions again in 2026 based on what happens to tax law by then.
Sort of the same situation for myself. I did the opposite and converted a large amount this year, in order to get the ACA subsidies starting next year. I retired late last year at 55, turning 56 during the year. So I still have 9 years to go until age 65 and Medicare. I'm going to save over 2k a month on health care starting next year. Never thought I'd be converting such a large amount at one time, until my wife got sick and I started running through the numbers and the ACA cost. It doesn't take long to make up the tax cost of converting, when you add up the healthcare and tax savings.
@@markees557 Yes, the amount of what you pay on the ACA Market Place (Obamacare) for health insurance, is based on your income, per your tax return. Income from a Roth IRA is not taxable, so it does not count. My cost next year would have been about 2500 dollars/m, instead I'm going to be paying around 400. Some notes are: If you aren't retiring till 65, it doesn't matter, since you'll go straight to Medicare. If you are healthy, you can find a cheaper policy in the private network, my wife is not healthy, so we can't get private insurance at any cost. Every state is different, so you'd have to check and see what private policies cost in your state. FYI - You can also get cheaper policies on the ACA, but they have huge deductibles & max out of pocket numbers, if I did pick one of those I'd end up paying even more, because I'd definitely end up paying all of that max out of pocket. Healthy people can take a chance that they don't get hammered with that and pay the lower premiums if they want.
Hi Curtis… Single boomer here with 1 million in traditional IRA..1 million in brokerage account…no heirs..could you talk about opening a QCA to offset tax implications? Much appreciated😊
Same example couple but maybe look at a Roth conversion that goes up to the IRMAA limits each year instead of looking at tax bracket filling. This is what I am thinking of now, stay below the IRMAA limits (kind of like staying below the clouds flying VFR) Thank you very much for your video. (I think the IRMAA limits, $106,000 for 2025 are like filling the 22% tax bracket for 2025). Don't take SS until 70.
Don't convert beyond the $$ you have available in hand (that are not in a retirement savings vehicle). In reality, RMD rates are VERY low, under 4% at age 73. A main reason to convert is to keep from triggering means testing on medicare contributions and likely on social security too.
Two possible arguments, 1 for and 1 against the crazy-big conversion now? 1. Markets at all time high. So maybe a good time to essential take some gains, and pay the taxes with high-valued stocks in the 401k/IRA. 2. Probability of not living to 90, and bequeathing remainder of IRA to heirs with lower tax rates, or to charities with no tax obligations. But of course if you consider probability of shorter time horizon , it re-raises the question of what your planned consumption rate should be.
I see a lot of similar videos to this looking at not converting, converting all in one year, or converting it all over time. Few if any consider if it's even helpful to convert any at all or if you need to convert it all or if it's better to leave some of it unconverted. My guess is that for most people worried about having rmd's being too high later will benefit most by leaving some in traditional IRA's or 401(k)'s which still leaves a bit of wiggle room with social security and capital gains.
Would be nice to have your assumptions like at what tax rate are you estimating their taxes and at what percentage are you projecting their retirement balance? Maybe I missed it.
One thing tax people never talk about is the marginal tax rate of the people who will inherit your IRA money, in my case - my kids. If their marginal tax rate is lower than mine, a Roth conversion makes no sense. RMDs are not some boogeyman to be feared. Take the distribution, pay the tax and put any excess into a taxable account that will pass to heirs tax free. Simple.
I’m 50, at this point I need to plan for much longer life horizons than are traditionally considered. Life extension intently is already happening and on the verge of happening in a big way. Cancer cured, aging reversed, disease eliminated. I give myself decent odds of living for hundreds of years.
My 68yo husband is receiving a pension that covers our expenses, and has a part time job he likes that he has no plan to quit, even when SS starts at 70, and RMDs start at 73. We are in the 24% tax bracket. We are both converting trad to roth, but only 80% of the way up to the next IRMA cliff because we never know what his end of year bonus will be (potentially taking us over the IRMA cliff).. Should we just bust through the IRMA cliff and go all the way to the next tax bracket? Or beyond that?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family...
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks...
@@OnkelFrauenknecht Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY* ..
I'm also 60..maybe I'm missing something here (and I'm certainly no genius) but, since my RMD age has been recently pushed-out to 75..only about 10% of my entire portfolio is currently in Roth accounts..I have no "legacy" concerns..isn't there even LESS of a case than before, to through all the contortions of Roth-converting?
Whether to convert is very simple. Converting is advantageous if the tax rate you convert at is lower than the estimated tax rate you will have avoided on your future Roth withdrawals. Conversely, it is costly to convert at a tax rate that is higher than the estimated tax rate you will have avoided on your future Roth withdrawals. The complexity comes with all the math and estimates that are necessary, for making the decision.
Big Bad IRMAA (but only for one year?) forgot they are not old enough to be on Medicare so maybe the massive IRA to Roth conversion doesn't hurt as much ? But are they on an Obamacare subsidy and will the conversion mess that up ? better now than later (avoid issues with making Social Security income taxable and invoking the IRMAA monster) but still disadvantageous if one of them ends up in the nursing home early ? what if the future market returns are much less than anticipated ?
I believe the conversion may actually help them with Obamacare subsidies. They would have very small subsidies all 5 years, if all their income was coming from the 401K. If they convert it all in the first year, they'd have no subsidy that year, but they'd get the full subsidy the next 4 years (5 years if they do it before hand).
I’d like to see you highlight IRMAA and RMD brackets over time as well on the videos. Since there is a 2 year look back for IRMAA, the magic begins at 63 for Medicare surcharges that could potentially last for the rest of life. Most people in my life that just retired with all pre-tax say “who is IRMAA?” and “what’s an RMD?” They are angry once they figure it out since we were all led to believe we’d be in a lower tax bracket when we retire.
@@jillalexander6594 IRMAA does not last your whole life if your income drops. If you don't sign up to Medicare at the right time, I guess the penalty is for life.
@@jillalexander6594 Yeah, I got hit with two years (2020 & 2021) of IRMAA, as I didn't know who she was. And due to the two year look back (2018 & 2019), I was already on IRMAA's naughty list for two years. I hate her. My extra Medicare parts B & D premiums, for 2020 & 2021, totaled $3,000 ($1,500 per year). The good part, is I now have a plan in place to never be bothered with IRMAA again.
I (59M) have $750kin a 401k. I was just diagnosed with ALS. Probably two year mortality. My wife (36F) will inherit the 401k. Do we convert to Roth in one shot? Or should she convert after I pass?
The main advantage of just doing it all at once is much less hassle and paperwork to do for the rest of their lives which might be worth half their net worth. Not paying taxes for the rest of your life, priceless 😅
You are making a false comparison when you say that the total tax bill is lower by doing the up front Roth conversion, because you are comparing current dollars (Roth conversion) versus future dollars (no conversion). Having to pay $500k now is a lot more money than paying $1M over 30 years, due to compound interest. By reducing their principal now, they would not be earning interest on the money paid don’t the Roth conversion, which is why the ending balance is $1M less. If you are going to compare the taxes paid, then do it right. Either convert all tax payments to present value or future value. FV = PV * (1 + i) ^n
Listen again @5:00. He is saying 67 is the full retirement age for both, for social security benefits. I heard it the same way you did at first. But he means 67 years old, not $6700/month.
Aside: "It comes as no surprise that people don't enjoy paying taxes." Sure. Nor do they generally enjoy waiting their turn in line, yielding to strangers in traffic, getting drafted, or accepting an election outcome they didn't hope for. But these are some of the things that we do, the sacrifices we make, to serve and preserve our community and country. I'm willing to pay reasonable taxes, and to pay more than some other people who are less fortunate. Maybe we all, or some of us, can agree to start from that point. Having a big tax liability because of a large tax-deferred asset is a good problem.
I have 35% of my capital investments in an IRA, 25% in index funds, and the balance spread across other investment accts totalling over $250k. I took a big hit in Q2, 2023. Right now i am just looking for ways to recover in 2025
There are a lot of strategies to make tongue-wetting profit especially in this down market, but such sophisticated trades can only be carried out by proper market experts
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
Hmmm this is quite interesting, Please can you leave the info of your investment advisor here? I’m in dire need for one.
I highly recommend 'Annette Christine Conte she’s a US SEC regulated Investment Adviser. she has been helping me with my portfolio for years. Feel free to look her up on the internet she’s renowned for her Services ..
@@sabastinenoahWho was it you looked up there isn't even any name? This is a scammer thread I would never use anyone recommended here...
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
Your allocation looks solid. Consider dollar-cost averaging & dividend reinvestment. I suggest you consult with a financial advisor for guidance.
A lot of folks downplay the role of advlsors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850k.
@@PatrickLloyd- Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
SOPHIE LYNN CARRABUS is the licensed advisor I use and i'm just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
As an investment enthusiast, I often wonder how top-level investors are able to become millionaires through investing. I have a significant amount of capital to start with, but I'm unsure about the strategies and direction I should take to help me generate substantial profits like some people are this season.
The stock market is likely the best smart investment. However, if you are thinking of investing in the stock market and you are not well versed, its advisable to work with a financial advisor who is an expert to guide you through the process. this way you could make more profit with less risk
I agree. Based on my personal experience working with an investment advisor, I currently have $185k in a well-diversified portfolio that has seen exponential growth. It's not just about having money to invest in stocks; you also need to be knowledgeable, persistent, and have the strength to hold on during market fluctuations
Talking about a financial market specialist, do you consider anyone worthy of recommendations? I have some money to test the waters now that large cap stocks are at a discount... Thanks
My CFA, Amy Lea Kohlert a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
Thanks, i did a quick web search and i found Sharon, i hope she responds to my mail.
Thank you. Ok, here’s my comment / request - I’d like to see the effect of “filling up” (Roth conversions) the 22% tax bracket, ages 60-90, for your example. Would be nice to include a simple table, at the end, showing T401k balance, and taxes paid, for all years. Assume SS delayed, to age 70, please. My opinion: < 22% bracket just seems too low. Subscribed.
Why not take it to the IRMAA limits as a suggestion.
@ IRMAA costs seem insignificant, when thinking of filling 22% bracket. Maybe I’m missing something…
Great video. I was surprised you did not mention how the "convert all at once scenario" improves the tax situation for the survivor if one of them passes. It would essentially eliminate that risk. This was a significant factor in my decision to convert aggressively the first few years.
I’d rather hold the money than pay the taxes, understand that over 30 yrs I pay more taxes, but I may not make it to 94 and have no heirs
One item mentioned, but not shown in the calculations, is the healthcare cost difference. The 6k number shown, is less than half the real cost prior to age 65, if you have any type of issue at all that prevents you from buying a cheaper private policy. I'm buying my healthcare on the ACA marketplace right now and without a subsidy it is over 2k a month for my wife and I. If they are drawing all their income from a 401k, their monthly cost is going to be closer to 2k a month, than the 1k a month the plan was showing. If they convert all their money up front, that cost goes away and they are going to be saving around 2K per month on healthcare for those 5 years. And, the RMDs later on would almost certainly force them to have irmaa surcharges on their Medicare, which would also go away if they convert.
Not what I would do. Rather than convert 1.5 million to Roth. I’d live off that money between ages 60-70 at somewhere between a 5 to 10% withdrawal rate depending on what the market will bear for any given year. Take SS at 70 and still enter RMD with 1.5 million. That would give you a very manageable RMD of about 60 grand at 75 or 73 depending on when you were born. The larger withdrawals in your 60’s allows you to help your children sooner rather than later with things like college loans and down payments on a home. Rather than getting an inheritance when they’re in their 60’s and already financially established.
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $200k, but I'm not sure how to go.
Holding fixed-income assets in tax-deferred retirement funds as opposed to taxable accounts has additional advantages. If you don't know how to invest in the market, get some advice from a financial counselor.
Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly and I made over $400K within a short time
@@williamDonaldson432 How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
My consultant is Rebecca Lynne Buie. She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision. I basically follow her trade pattern and haven’t regretted doing so
My favorite response to the "Why 90?" Question:
"According to current data, for a married couple in the USA, there is roughly a 50% chance that at least one spouse will live to age 90, with women generally having a higher probability than men of reaching that milestone."
It would be more interesting if you stayed under the 22%/24% tax bracket for each year as the max conversion, vs going into the 32, 35, and 37% bracket by converting all of it in one year. .
Excellent question! I'd like to see this, too.
You are very good at doing these and I wish you would do them as many as weekly great job
I enjoyed your video. I liked the extreme, regular, and don't do anything scenarios approach to video. It shows nicely a range of potential outcomes. Anyone that does planning knows there are many variables that you just can't predict so like really like the multiple outcomes way of showing things.
I'm so glad someone is sharing this. All the recent events make me want to re-distribute my portfolio. I currently have 80k in my portfolio. How can I consistently pick winning stocks?
If you are not a professional, it's much easier you work with a professional who understands the ins and outs of the market.
I agree. I started trading stocks because I can work with an expert who has a good understanding of the marekt. This third quarter I've already made more than 150k in net profit.
This sounds like incredible profit. Could you recommend who you work with so I could check them out?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Irene Powell ’’ for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thank you so much for the suggestion! I really needed it. I looked her up on Google and explored her website; she has an impressive background in investments. I've sent her an email, and I hope to hear back from her soon!
I converted my entire 401 k pre tax all at once, it was worth $6 million dollars.
I also have a inheriated Ira worth $700 k that I must deplete in 7 years.
If I did it slowly through the years, I would always be in the high tax bracket. Now I have 3.5 million in Roth, no rmd and kids inheriate it tax free. I invested all in nvidia. Just retired and what a relief. 60 years old. Even the Charles Schwab Roth expert said he normally is more conservative in Roth conversions, but in my case he said I should do it. Especially I’m an aggressive investor.
I have another 4.5 million in taxable stock account. My issue is not hitting estate taxes when I die. Started gifting and helping kids with home. Traveling, but it’s a small fraction of what I have. Net worth 11 million. Still living off my pension, I don’t need the extra dollars. Trying to spend my money, but it’s grown too much. Driving 34 yo car with 800 kids miles. Got one tesla, will get another to replace the junker.
Wouldn't you have been better off to pay the $2.5 million in taxes out of your taxable account, and end up with $6 million in your Roth (and reduce your future taxes on your taxable account balance of $2 million ($4.5 - $2.5 = $2))?
Kudos for addressing where the money to pay the taxes incurred by a rollover will come from. Most RUclips advisors assume it'll come from other after-tax savings. Given the savings rate today, this is unrealistic; however maybe not for the kind of people who work with financial planners and have $1.5M in an IRA. I suspect the DIY'ers here on RUclips with
The excess RMD drawdown saved by the Roth conversion is not entirely lost money because it can be converted to considerable extent to increased balance in taxable investment accounts .
You never stop investing. My question can part of the RMD be turned into Roth savings?
@@klrmoto I think the direct answer is "No" . At least just looking at that year. My understanding: If you are subject to RMD you are supposed to calculate the amount of it according to "Fair Market Value" as of January 1 of the year,I think the custodian of your IRA (or custodians of IRAs if you have more than one are supposed to provide a statement of the "Fair Market Values"to you (might be IRS Form 5498) Also separate RMDs for your 401 or 457 accounts
provided you make the RMDs for the sum of your IRAs (if not Roth) and for your 401 type "deferred compensation" accounts it is up to you if you want to do Roth conversions but doing those does not reduce the "FMV" that the year's RMDs are calculated on FMV = "Fair Market Value"
some custodians will calculate the RMD amounts for you on such accounts that they hold on your behalf . The 401/457 accounts RMD need to be calculated and listed on the tax forms separately from those of the IRAs.
It occurs to me that if you sell from within the IRA to come up with the money to pay the tax on the RMD you might have to pay additional income tax on the amount sold !
Having done the Roth conversion should help during the following and later tax years in that you would be reducing the "Fair Market Value" of the plain IRA applied to calculating future RMDs.
Also if you have "basis" in your IRA (made some nondeductible contributions) you need to do Form 8606 and keep copies of it and older Form 8606 to keep track of and adjust your "basis" going forward so as to not have to pay tax on the "basis" being moved to Roth.
May be a trap to watch out for if you are allowed to delay taking the first RMD into the second year so as to have to take 2 RMDs that year you might get bumped up even more into a higher tax bracket or have a higher one year "MAGI" pushing you further into IRMAA penalty territory ! So probably better to take the first one in the first year that you reach RMD age.
Provided you take the RMD in the appropriate year you should be able to make Roth conversion with more of the money remaining in the IRA and/or with other money from common checking or savings to pay the taxes.
I guess the video author will fact check this.
Most of my friends and I have experienced net worth growth over our retirements while spending at a “reasonable” level. I have run the numbers on Roth conversion in a lump versus gradually converting every year for the past ten years and it doesn’t work for me. I’ve recently made the decision to spend more and leave a smaller amount to beneficiary’s.
Regardless of the sensibility of a one year conversion, I would not do it simply because I will not want to write a $500,000 check to Uncle Sam, let alone the State of Calif.
It should be based on numbers, not emotion, your kids will thank you😂
@2Greenlid Spoken like a true accountant.
Great video. Thank you for the detailed analysis. Would converting up to the 24% tax level be more optimal?
My thoughts exactly
super helpful. roth coversions are a headache when i don't know what my final AGI, MAGI will be.
Analysis is not complete without considering IRMA. Withdrawals from Roth are not included in IRMA basis.
Thanks Curtis. This is one of the most useful case studies I’ve seen. It would be great to see several “what if?” scenarios based on the multi-year conversion that you showed as the starting point. What if they delayed SS to 70? Would that allow even more conversions? How would that affect taxes and end of life savings? What if one spouse pre-deceases the other by 5 or 10 years - how would that affect taxes and end of life savings? I’d also love to see a case study based on retirement relocation from CA to AZ - what would be the tax planning considerations (eg taxes on primary home sale, property and income taxes etc) and how/when to think about Roth conversions and SS strategy. Many thanks.
Would like to see how to determine optimizing ACA credits versus Roth conversions.
Helpful examples. Yeah. Enjoyed watching. No heirs in my case, at least not so far. Wish I’d thought more about Roth conversion a few years ago. In my case I will probably end up granting most of my IRA monies to charity. So that’s a factor for sure in how much to convert.
Please review the five year rule for conversions, especially with chunking and it is so confusing because each five year rule has to be tracked, right? Then there are rules on order of withdrawals, right? I am intimidated by the complexities of trying to manage conversion withdrawals in my later years. I don't find it attractive to use cash I have now to pay taxes on a conversion for funds I cannot access for 5 years.But this video is great to get me moving. my inherited IRA is a headache.
Some notes on this - There are 2 five year rules. One applies to when you open your FIRST Roth IRA and the other applies to when you do a conversion.
You have to have an account open for at least 5 years, before you can withdraw earnings tax free. The 5 years starts when you open your very first Roth, not necessarily the one you are withdrawing money from. There is no age limit, so if you start your very first Roth at 60, you can pull what you put in out, but you cannot withdraw earnings in that account till 65, if you don't want to pay taxes on them.
The conversion 5 yr rule, only applies if you are under the age of 59 1/2 (fyi: If you convert to your VERY FIRST Roth IRA, the 5yr rule #1 applies) . So once you reach 59 1/2, you don't have to track anything, including ones you may have converted at ages 54 - 58. So, for example: if you convert at age 56, you just need to wait until age 59 1/2. If you start converting stuff earlier, in say your 40's, then you have to track 5 years from that conversion. And, if you convert multiple years in a row, then you'll have to track each one separately.
Interesting video. Would like to know what investment return rates were used and how the tax brackets were projected out (same percent but income tax went up x%? What is assumption of where they get to pay taxes.
Just found your channel and subscribed. Love your video! Lots of great information, thanks 🙏
Can you explain the effective tax rate vs marginal tax rate if one were converting up to the maximum 24% bracket, and for the example, presume taxable income were $100,000? How can you plan to maximize a conversion at this level? How much do you decrease your RMD and tax load at 75? (Presume current age of 60, for the example).
Interesting topic. Thank you.
How does the IRMMA fit into all of this? I was slammed with a huge Medicare bill after a large house renovation withdrawal due to capital gain (taxable) income.
Converting entire pre-tax to after tax in one year should be viewed from perspective of year 2 under the sunk-cost fallacy, in year 2 your perspective is what exists in year 2: freedom from tax implications. The remaining years are approached very differently and more optimistically than continuing the tax-implication considerations for withdrawals.
I try to plan my withdrawals every year to come as close a I can to the IRMAA second level maximum (pay no more the 2.0 times my Medicare Parts B & D). My objective is to convert as much of my IRÁ into Roth as I can. It’s kinda complicated as you have to guess at the income limits for IRMAA because of the 2 year look ahead. I have considered the full conversion and rejected it as I feel I’d prefer to maximize the after tax amounts BOTH for me and my heirs. Ideally I’ll be able to convert that large majority of my IRA to Roth before I die. Do you have any software or consulting ability to assist me with this arduous task?
The thing that came to mind for me is health ins cost. Let's assume that this couple is going to use Cobra from previous employment for the first year (remember you can only use cobra up to 18 months) and then for the next 3 to 4 years they plan to use the ACA (Obamacare) until age 65 when they can go on medicare. Taking the tax hit all at once during the year that they are on cobra means that for the remainder years all they have to do is show some small amount of taxable income and their healthcare premiums though ACA will be completely subsidized. Further they will have the lowest cost for their medicare plans. Its just a thought and I have not run any numbers but this in itself makes the scenario much more attractive to me.
What worries me is that I do not understand the health care impacts yet.
Quark in the background - got to subscribe.
The proposed plan has one fundamental problem -- It pays big tax upfront and assume the balance can grow stably and nicely years after. If the investment return become smaller or very unstable or even losing money for many years to come then they lose big because they already paid out the tax they shouldn't need to pay. No conversion has the advantage that they pay more tax if the fund grow big and pay less if the return is not good or even negative.
I’m putting all my future contributions to Roth. I’m currently in the 24% bracket. My employer match still goes to traditional. Hopefully, taxes will go down some in the next 3 or 4 years to aid in some of these conversions.
Monthly expenses are too low. Health insurance premiums would eat a bunch of that. 100% Monte Carlo is one flag showing.
I would love to see the permutation of filling up the 25% bracket
Perhaps I missed something but it appeared to me that you compared the ending balance of the no Roth IRA scenario to the ending balance of 100% Roth or partial Roth conversions. One dollar remaining in the Roth accounts at death has more value than one dollar remaining in a IRA because of the tax that must be paid to spend the IRA money. Which scenario would have the highest after-tax value to the person inheriting the account?
I didn't hear the impact of the initial 5 year limitation of Roth withdrawals. Especially since they were spending about $80k per year.
Is the life time total tax paid up to age 90 inflation rate adjusted? Tax paid out at 60 worth a lot more at age 90.
Hi Chris, how do we do conversions and pay the tax each year from the funds in my TSP? I don’t have cash to pay taxes on the conversions, unless I sell the rental property. I have 8% cash in my TSP. Is that available to pay the taxes?
Sorry about the name. I think the phone corrected my spelling and I didn’t notice it. Thanks Curtis.
I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
It might be worth considering a financial advisor to avoid constant adjustments. Your selections are strong, especially for a $350k portfolio.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
How can I find a trusted financial planner like yours?
I consistently recommend Rebecca Lynne Buie as my top choice. She is well-known for her expertise in financial markets and has an impressive track record. I highly endorse her services.
Thank you for sharing! I did a quick search for Rebecca Lynne Buie online, found her consulting page, and scheduled a call. She seems to have a high level of expertise.
Isn’t the estimate for annual health care costs a tad low?
Good analysis and I've been going through similar and ACA subsidies are a factor. For this year, instead of Roth conversions, I'm doing Capital Gain harvesting up the 0% max for CG in my brokerage account. Next year, we have to get an ACA policy for 6 months and so keeping income low, nets a $2100/mo subsidy. That is a significant savings over doing a Roth conversion next year and will pick up the Roth conversions again in 2026 based on what happens to tax law by then.
Sort of the same situation for myself. I did the opposite and converted a large amount this year, in order to get the ACA subsidies starting next year. I retired late last year at 55, turning 56 during the year. So I still have 9 years to go until age 65 and Medicare. I'm going to save over 2k a month on health care starting next year. Never thought I'd be converting such a large amount at one time, until my wife got sick and I started running through the numbers and the ACA cost. It doesn't take long to make up the tax cost of converting, when you add up the healthcare and tax savings.
I’m not very savvy on healthcare costs, just pay my premium. You’re going to save thousands per month?
@@markees557 Yes, the amount of what you pay on the ACA Market Place (Obamacare) for health insurance, is based on your income, per your tax return. Income from a Roth IRA is not taxable, so it does not count. My cost next year would have been about 2500 dollars/m, instead I'm going to be paying around 400. Some notes are: If you aren't retiring till 65, it doesn't matter, since you'll go straight to Medicare. If you are healthy, you can find a cheaper policy in the private network, my wife is not healthy, so we can't get private insurance at any cost. Every state is different, so you'd have to check and see what private policies cost in your state.
FYI - You can also get cheaper policies on the ACA, but they have huge deductibles & max out of pocket numbers, if I did pick one of those I'd end up paying even more, because I'd definitely end up paying all of that max out of pocket. Healthy people can take a chance that they don't get hammered with that and pay the lower premiums if they want.
@@markees557 Correct. If you can keep your MAGI (Modified Adjusted Gross Income) at or about $60k, ACA subsidies can be significant.
@@jamesleonard4713 At what average federal & state tax rate did you convert?
Hi Curtis… Single boomer here with 1 million in traditional IRA..1 million in brokerage account…no heirs..could you talk about opening a QCA to offset tax implications? Much appreciated😊
Same example couple but maybe look at a Roth conversion that goes up to the IRMAA limits each year instead of looking at tax bracket filling. This is what I am thinking of now, stay below the IRMAA limits (kind of like staying below the clouds flying VFR) Thank you very much for your video. (I think the IRMAA limits, $106,000 for 2025 are like filling the 22% tax bracket for 2025). Don't take SS until 70.
I would do a planned withdrawal from 401k and move that to both. Say 18% yearly.
Don't you have to not touch the funds for 5 years after a conversion?
A lot of this will depend on your projected “retirement income” and what tax bracket that puts you in.
Place your bets folks.
Just subscribed!
Don't convert beyond the $$ you have available in hand (that are not in a retirement savings vehicle). In reality, RMD rates are VERY low, under 4% at age 73. A main reason to convert is to keep from triggering means testing on medicare contributions and likely on social security too.
Is Quark your financial advisor? He seems to be watching over you.
Can the principal amount in a converted Roth IRA be withdrawn at anytime?
Two possible arguments, 1 for and 1 against the crazy-big conversion now? 1. Markets at all time high. So maybe a good time to essential take some gains, and pay the taxes with high-valued stocks in the 401k/IRA. 2. Probability of not living to 90, and bequeathing remainder of IRA to heirs with lower tax rates, or to charities with no tax obligations. But of course if you consider probability of shorter time horizon , it re-raises the question of what your planned consumption rate should be.
I see a lot of similar videos to this looking at not converting, converting all in one year, or converting it all over time. Few if any consider if it's even helpful to convert any at all or if you need to convert it all or if it's better to leave some of it unconverted. My guess is that for most people worried about having rmd's being too high later will benefit most by leaving some in traditional IRA's or 401(k)'s which still leaves a bit of wiggle room with social security and capital gains.
Would be nice to have your assumptions like at what tax rate are you estimating their taxes and at what percentage are you projecting their retirement balance? Maybe I missed it.
One thing tax people never talk about is the marginal tax rate of the people who will inherit your IRA money, in my case - my kids. If their marginal tax rate is lower than mine, a Roth conversion makes no sense. RMDs are not some boogeyman to be feared. Take the distribution, pay the tax and put any excess into a taxable account that will pass to heirs tax free. Simple.
If they sell their house I would definitely move to a no tax state for that year to save the $39,xxx state tax
I’m 50, at this point I need to plan for much longer life horizons than are traditionally considered.
Life extension intently is already happening and on the verge of happening in a big way. Cancer cured, aging reversed, disease eliminated. I give myself decent odds of living for hundreds of years.
Are you planning to work into your 200’s then?
@ no the plan is early retirement and the money lasts forever, because the growth outpaces the withdrawal.
My 68yo husband is receiving a pension that covers our expenses, and has a part time job he likes that he has no plan to quit, even when SS starts at 70, and RMDs start at 73. We are in the 24% tax bracket. We are both converting trad to roth, but only 80% of the way up to the next IRMA cliff because we never know what his end of year bonus will be (potentially taking us over the IRMA cliff).. Should we just bust through the IRMA cliff and go all the way to the next tax bracket? Or beyond that?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family...
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks...
@@OnkelFrauenknecht Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY* ..
@@BennettElizabth Oh please I’d love that. Thanks!
@@OnkelFrauenknecht *MARGARET MOLLI ALVEY*
Lookup with her name on the webpage.
I'm also 60..maybe I'm missing something here (and I'm certainly no genius) but, since my RMD age has been recently pushed-out to 75..only about 10% of my entire portfolio is currently in Roth accounts..I have no "legacy" concerns..isn't there even LESS of a case than before, to through all the contortions of Roth-converting?
Whether to convert is very simple. Converting is advantageous if the tax rate you convert at is lower than the estimated tax rate you will have avoided on your future Roth withdrawals. Conversely, it is costly to convert at a tax rate that is higher than the estimated tax rate you will have avoided on your future Roth withdrawals.
The complexity comes with all the math and estimates that are necessary, for making the decision.
Big Bad IRMAA (but only for one year?)
forgot they are not old enough to be on Medicare
so maybe the massive IRA to Roth conversion doesn't hurt as much ?
But are they on an Obamacare subsidy and will the conversion mess that up ?
better now than later (avoid issues with making Social Security income taxable and invoking the IRMAA monster)
but still disadvantageous if one of them ends up in the nursing home early ?
what if the future market returns are much less than anticipated ?
I believe the conversion may actually help them with Obamacare subsidies. They would have very small subsidies all 5 years, if all their income was coming from the 401K. If they convert it all in the first year, they'd have no subsidy that year, but they'd get the full subsidy the next 4 years (5 years if they do it before hand).
I’d like to see you highlight IRMAA and RMD brackets over time as well on the videos. Since there is a 2 year look back for IRMAA, the magic begins at 63 for Medicare surcharges that could potentially last for the rest of life.
Most people in my life that just retired with all pre-tax say “who is IRMAA?” and “what’s an RMD?” They are angry once they figure it out since we were all led to believe we’d be in a lower tax bracket when we retire.
@@jillalexander6594 IRMAA does not last your whole life if your income drops. If you don't sign up to Medicare at the right time, I guess the penalty is for life.
@@jillalexander6594 Yeah, I got hit with two years (2020 & 2021) of IRMAA, as I didn't know who she was. And due to the two year look back (2018 & 2019), I was already on IRMAA's naughty list for two years. I hate her. My extra Medicare parts B & D premiums, for 2020 & 2021, totaled $3,000 ($1,500 per year).
The good part, is I now have a plan in place to never be bothered with IRMAA again.
I (59M) have $750kin a 401k. I was just diagnosed with ALS. Probably two year mortality. My wife (36F) will inherit the 401k. Do we convert to Roth in one shot? Or should she convert after I pass?
The main advantage of just doing it all at once is much less hassle and paperwork to do for the rest of their lives which might be worth half their net worth. Not paying taxes for the rest of your life, priceless 😅
You are making a false comparison when you say that the total tax bill is lower by doing the up front Roth conversion, because you are comparing current dollars (Roth conversion) versus future dollars (no conversion). Having to pay $500k now is a lot more money than paying $1M over 30 years, due to compound interest. By reducing their principal now, they would not be earning interest on the money paid don’t the Roth conversion, which is why the ending balance is $1M less.
If you are going to compare the taxes paid, then do it right. Either convert all tax payments to present value or future value. FV = PV * (1 + i) ^n
Fantastic video, very clear explanation, I just subscribed.
I want to pay the least amount of taxes possible … period!
SS: $2800 + $1900 is…$6700? 😅
Listen again @5:00. He is saying 67 is the full retirement age for both, for social security benefits. I heard it the same way you did at first. But he means 67 years old, not $6700/month.
Maybe next time, don't put you mug on top of the data one might want to see on your slides.
Aside: "It comes as no surprise that people don't enjoy paying taxes." Sure. Nor do they generally enjoy waiting their turn in line, yielding to strangers in traffic, getting drafted, or accepting an election outcome they didn't hope for. But these are some of the things that we do, the sacrifices we make, to serve and preserve our community and country. I'm willing to pay reasonable taxes, and to pay more than some other people who are less fortunate. Maybe we all, or some of us, can agree to start from that point. Having a big tax liability because of a large tax-deferred asset is a good problem.