Відео

Texas effective property tax is about 50% higher than you reported, even at the figure you used.

I'm not taking a permanent 30% pay cut by filing earlier, you'll never convince me that it's smart to collect earlier

I like the 5 bucket myself...

DON'T If you take it at 62 without 200k+ invested you will be pushing the car stock cart at WMRT at age 74 after your COLA increases do not keep up with inflation. I have already seen 3 such people in the past 6 months.

10:22 Does the "multiple beneficiaries" caveat mean what I think it does? If I have a sister 10 years younger than me and we were named 50%/50% as the beneficiaries of the IRA at the financial institution, she needs to use my age in doing her calculation? That seems strange and unfair. Would the IRS really know about and be able to audit this?

Your final point, is the most salient, to me; especially since I live in COMMIEfornia. I'm already in the 22% bracket, Federal, and 9.3% State..as a RETIREE, and I haven't even begun to to take 401K distributions, yet! The overwhelming majority of my retirement assets, are in traditional 401K, roughly 90%. It would be JUST MY LUCK..that I would spend a zillion dollars on roth-conversions..and then 1929 would happen, ALL OVER; AGAIN!

Good details on IRA rollover

The elephant in the room that NO one ever talks about is: if you take SSA at 62, you can work if you choose to. Only, at your speed, your leisure, your say-so.

Impeach CONGRESS

Some of this makes sense. One important consideration is that the main advantage of the Roth accounts is that the gains are not taxed. That means that even if you would pay taxes at the same rate later, the growth in your account is tax free.

If I am the client shown, I will opt to fill the 24% bracket in 2024-2025. Annual reassessment might convince me to only fill the 15% bracket in 2026-2028 if TCJA sunsets. Since investment returns will inevitably fluctuate, one needs to consider taking advantage of a down market if we see a repeat of some short term correction/crash that occurred in say 2008-2009, early 2020, or even 2022.

Great video! Your last chart brings up the most important point for those already retired. Over converting causes you to lose money! Under converting cause you to pay more tax. What many forget, is that with average portfolios, relying on an high annual ROR to come out ahead increases the risk of a conversion, which of course is done early. That causes your portfolio value to drop, in a poor return environment that would mean less gains over the subsequent years. The person that didn’t convert as much will have more gains that maythen be taxed at a lower rate than if they had been aggressive with the conversion. For large portfolios with excess funds, this risk is not as consequential. On the flip side if I have a just large enough portfolio, that ends up with a very good ROR, then yes I pay more in taxes, but I also have more money to pay them, so it won’t impact my cash flow. Cash flow always needs to be the first consideration, ultimate total taxes paid should be the second consideration.

Do they have enough money in taxable accounts ($150k) to pay taxes for the large roth conversions (ie $250k per year) in the first 3 years? Seems like its very close...

I have over $6 million in IRA Plus social security for my wife and I. Of $90k per year and a pension of $60k And an annuity of $50k In order to make any sizable Roth conversion I can’t avoid 20% cap gain Or NIT taxation Or even Irma thresholds So I’m considering making a very large Roth concersion and just bite the bullet until the tcja sunsets This will help reduce my rmd’s and reduce my marginal tax And my Medicare Irma And even get me below the 20% cap gain threshold after 2 years of pain What are your thoughts?

What if each spouse is 62 years old. One spouse has no work credits and can only claim spousal benefits if the other spouse claims. The spouse with credits gets a reduced amount for claiming at 62 and the spousal benefit at 62 is another 1/3 of a share of the full retirement benefit of the other spouse. Together the total claim of both spouses at 62 is elevated and can then accumulate and reduce the amount drawn from investments for the five years between age 62 and 67. When this total amount is allowed to grow it can easily push out the crossover point and be a better choice than waiting until 67. In addition the early claim reduces the sequence of return risk by allowing more time for unused investment growth beyond age 62. Please share your comments on this special case.

Great analysis and discussion.

Hooo! You look like you got some sun. Hot over there in Wisconsin?!?

historical returns are hindsight. human mind cant handle too much market movement so they end up being way below market return. on top, will US continue to be the only power house in the future?

I am taking death beneficiary RMD's and doing Roth conversions. Do I still have to take all the years RMD before completing any Roth Conversions. Is it different because I am still in my 60's and it's a death beneficiary RMD and not due to my age. I have looked for an answer for this but cannot seem to find this specific information. Thanks for any info and thanks so much for your videos. I watch almost all you produce!!

How should a person account for state income tax? Does the 22% federal tax bracket still make make sense or should that be lowered by the amount of state tax?

It fascinates me that you fixate on filling tax brackets. Since tax rates are progressive you should fixate on effective tax rate, so in your example where you declared 3 of the return rates should fill the 22% bracket you would have seen significant tax savings by optimizing to a flat effective tax rate over their lifetime (I.E. one of them might have optimized to 14%, another 17%, and another to 20%). None of these optimizations would have exactly filled a tax bracket.

I am currently in my advantageous Roth IRA conversion years, so my baseline planning is to convert up to the initial IRMAA income threshold since I will be claiming Medicare next year.

All this gets extra interesting if you plan to exit the w2 at or around 40. Converting enough early to keep your deferred accounts from growing over 35 years to be hit with RMDs is a big consideration IMO, but also, you can be very selective in choosing how much and when to convert. Pairing tax loss harvesting and conversions in the same year as a big draw down creates benefits on benefits later on. If nothing else you get to exclude $3000 more in income every year on top of standard deductions which should hopefully keep you out of super hot water long term.

Great work Eric. Your clearly passionate about this topic and with that brings so much clarity to the table; it’s complex for sure.

What is the tax impact for paying back Social Security for overpayment? Do you need to file an addendum on last year’s taxes or dues this impact this year’s taxes?

Great video once again! Full explanation of the obstacles we will be facing. Fortunately, we have a modest Traditional IRA, good size Taxable account and small Roth. Gives us options to pay minimal taxes. Love your videos

i am 58 MFJ and will soon have my 3rd yr retirement anniversary. 1st yr without w2, i converted only up to 12%. 2nd yr near top of 22% but living on my taxable brokerage and paying taxes out of the same brokerage, this pushed my MAGI above 250k so some of my capital gains were pushed into NIIT. my 3rd yr, i am going to try fully maxing 22% post deductions and this will subject quite a bit of my capital gains to the additional 3.8% NIIT. If i went into mid 24% bracket, all my capital gains will be taxed at 18.8%. at this time i think i will still shoot for converting in 2024 and 2025 only up to the 22% bracket. with my conversions since retirement my roth assets are now 58.4% vs 41.6% tax deferred of my retirement assets ( i had backdoor roths for me and my wife for 10 yrs and had a roth 401k for last 10 yrs of work). i may cut back on conversions as i start pulling from tax deferred at 63 y/o as i fill up the lower 2 tax brackets from tax deferred. i still regret not going up to the top of the 22% my first yr without the w2.

In 2024 the ordinary income cap for the 22% bracket is $201,050 and for the 24% bracket is $383,900. Those advocating going into the next tax bracket when doing Roth conversions should keep in mind that once your adjusted gross income hits 250K you become subject to the Net Investment Income Tax (NIIT) which is another 3.8% of the portion of your income over the 250K or on long term capital gains, whichever is smaller. So it is not just going from 22% to 24% but could be from 22% to 27.8%, which is not insignificant. Not enough folk bring this up in videos ( a pet peeve) and so this is just a friendly reminder. Overall, it was great to see that our strategy meshes well with Safeguard's. Nice video! Thank you!

Another great discussion on this important topic Eric. Thank you for this excellent video. Larry, Central Valley, Ca.

Excellent video - Thank you!

First let me start by saying Roth conversions early in retirement while living off taxable accounts and before collecting social security is an absolute priority. As for the remaining IRA or rollover 401k accounts, they are going to be taxed no matter what, the only question is when. Whether an RMD or a voluntary Roth conversion, the taxes are the same. I do not consider RMDs to be a tax problem if you consider the tax liability holistically. If your retirement accounts are generating RMDs in excess of your living need then you should be thinking about estate planning rather than just retirement income. The taxes you pay today at your retiree rate are likely to be less than the rate your heirs are going to pay when they have to distribute the inherited IRA during what is likely are their highest employment income years. BTW, if you have the “problem” that your RMD requires you to recognize income you don’t need for daily living, you can always fund your grandkid’s 529 accounts and avoid taxes on the account growth and even have the opportunity to convert the unused portion of their 529 for their starter Roth account.

You are the GOAT!!!! Another great one!

One fact that never gets discussed is the step up value of stocks in the brokerage account for beneficiaries. So reinvesting those RMD's help the beneficiaries in the end, if you cannot convert those funds to a ROTH, all is not lost.

Fine if you don't have kids. If you do it's your chance to create generational wealth for your family.

Unfortunately everyone skips the reality that lower tax bracket ppl can increase tax credits like EITC, Day Care, and Saver's Credit by contributing to Trad 401k/IRA.

I love your videos and called to see about becoming a client. My comment is why do you often/always show examples of people with less than $2M in assets when you wouldn't take on a client with less than $2M?

Roth 401K vs Roth IRA vs Roth 403b. Do Roth 401k and Roth 403b have RMD's. It is my understanding that Roth IRA's do not require RMD but not sure about the others.

I have never had penalties on a 100k conversion done in say april but paid evenly in quarterly estimates.

I don’t mean to be obdurate, but at these income levels, the extra expense from IRMAA doesn’t seem worth getting too excited over. Sure, I don’t like paying an extra $2k/year if I’m spending over $111k/year, but it’s also doesn’t seem like anything to jump through a lot of hoops about. It’s kind of “meh” to me?

Timing really does make a difference when it comes to Roth conversions. If you're looking for another way to diversify your retirement portfolio, check out My Digital Money. They let you invest in crypto inside a tax-advantaged IRA, or even rollover your existing Roth IRA without penalty. Just a thought!

It's too bad that not everyone is eligible to have an HSA.

The fact I get an IRR based on inflated dollars is why SS is going bankrupt. SS doesn’t invest my money, but needs to give me inflation adjusted funds with an IRR of 6 percent? That is destined to crash. If I give the same money to an annuity, they have to invest it in order to get me anything back or they would go out of business.

When you are near retirement lets see what strategy you decide to use. Nothing beats passive monthly income when you need to pay bills. BTW, the stock approach requires knowing when to buy and sell...good luck with that approach.

For a Roth conversion, a withdrawal strategy would not matter if selling stock ABC from one account and buying the same stock ABC in the Roth account within the same day or two.

Im 53 today thinking about retiring now. Problem is 95% of my money is in pre tax account. So i can pull out and pay penalties till 59.5 and incone tax (CA). Or wait till 55 and seperate from company and use rule of 55 to avoid penalties but still pay income tax. The main issue is having 50+ hours a week of free time. Still have family and can go adventurung while wife is working. I could retire to be a house wife :C

Must I not have quarterly dividends reinvested automatically because the small dividend re-purchase disqualifies my loss? Does a $100 dividend reinvested disqualify the entire loss sale or just disqualify $100 of the loss? What about ETFs? ETFs have dividends coming within the fund itself, so do these dividends within a fund disqualify a loss? Like QQQ has Apple within the fund and Apple has a small dividend. Can that small dividend disqualify a loss when selling QQQ, if you are re-investing the QQQ dividends? What if you don't re-invest QQQ, but just let dividends go to cash. I have searched high and low for answers to these dividend questions and how dividends trigger wash sales.

Great video I been saying that for years. Once you figure all the tax burden macros it’s very clear California is the winner plus the weather

If you have adult children 18-26 on your healthcare that are not tax dependants, they can also contribute the family max to their own HSA. Thus $8300 you and $8300 for each adult child!

Being broke and old is horrible. Retire when you have enough money

We only spend 40,000 a year and live very well. Own everything. The questain is to ask yourself what you need out of life