Cost of living adjustment strong? Really?? Doesn't Medicare increases eat away any COLA?

Very great info. Gotta find the FRA and maximize!

Man I love this Matt guy. Crazy smart about all these little loopholes.

Taxation is theft. We threw tea in the harbor for a 2% tax!!!

There are a host of factors to consider when doing a Roth conversion. You should independently consider all of these factors when making your decision. 1.Tax Brackets The biggest issue is whether pulling your money out from your IRA today (by doing a Roth conversion) will save you taxes versus regular withdrawal from your IRA later. What is the tax bracket today vs. what will your tax bracket be in the future. The basic issue can often be boiled down to comparing today’s tax rates (artificially lowered under the 2017 TCJA) against the pre-2017 tax rates. If you believe that Congress will re-authorize the TCJA before it expires in 2025, then maybe you’ll sit back and refrain from any Roth conversions. OTOH, if you think Congress will let the act expire in order to raise tax revenues, then now might be a good time to maximize your Roth conversions. 2.Required Minimum Distributions (RMDs) Feds mandate minimum withdrawal amounts at a certain age, whether you need them or not. This can wreak havoc in tax planning. You will need to manually adjust your RMD conversion ladder to satisfy whatever your choice of a manageable RMD level may be. 3.Double-Taxation Related to item no. 2, if you don’t spend your IRA withdrawals, you may be face the issue of cascading taxes (a.k.a. "tax drag"). Funds that you withdraw from your traditional IRA account THAT ARE NOT SPENT AND PUT BACK INTO ANOTHER ACCOUNT have their earnings taxed again. It is a second taxation, this time on the earnings of your withdrawn funds. And the unspent earnings earn further dividends/interest which, in turn, are taxed again. Year after year. Meanwhile your RMDs get bigger and bigger, compounding the problem. 4.Unanticipated (Emergency) Withdrawals Unexpected large emergency expenditures can have terrible tax consequences if you need to withdraw the funds from your traditional IRA account. OTOH, the tax consequences of withdrawing from a Roth account is zero since you've already paid the taxes on those funds. (I had to take a $250K emergency withdrawal a couple of years ago. It cost me $3K more in taxes and $5K in IRMAA penalties, compared to a properly constructed Roth conversion ladder.) 5.Widow (Widower) Impacts In comparing relative tax impacts of Roth conversions, most people fail to consider the impacts should one of the spouses expire. All the brackets change (income tax, IRMAA, SS exemption, Premium Tax Credit, etc.). 6.Income Related Impacts If you’re subject to programs or benefits that use income as part of their criteria for eligibility, then you should consider their related impacts when doing a Roth conversion. In particular, you would want to avoid any spikes in your income due to unanticipated or emergency withdrawals. Items affected: a) SS benefits, taxable portion dependent on AGI b) IRMAA brackets, Medicare penalties (See Note 1.) c) Long Term Capital Gains d) Retirement Savings Contribution Tax Credit (Saver's Credit) e) American Opportunity Tax Credit f) Earned Income Tax Credit (EITC) g) Dependent tax credits: Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), Credit for Other Dependents (ODC) h) Education tax credits: American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) i) Premium Tax Credit (PTC), subsidized under the Affordable Care Act j) Student Loan Interest deduction k) Net Investment Income Tax (NIIT) l) Alternative Minimum Tax. m) Anything where qualification depends on income such as food stamps, housing, credit applications, financial assistance, health insurance, education programs, etc. 7.Stock Market Considerations “Whether” you make a Roth conversion shouldn’t hinge on market conditions. However, market conditions may affect “when” you execute a Roth conversion. Ideally, to maximize the efficiency of your Roth conversion, the best time to do that would be in a down market. 8.Volatility Well, not “volatility” per se, but I don’t know what else to call it. Dealing with the known has value. I can’t quantify it, but I believe there is value in controlling variables. IMO, controlling what you can control is better than leaving things to the gods (or governments) to decide. I sleep easier having done a Roth conversion, fixing the specific tax rate. Also, it simplifies my financial decisions in retirement, no longer guessing at tax rates upon withdrawal. Note: This is not an endorsement for blindly doing Roth conversions. This is merely the feather that tips the balance of the scales weighing upon the decision. 9.Legacy Your heirs will appreciate that they don’t have to trouble themselves with figuring out their tax burden, especially if you have multiple IRA and 401k accounts. I can’t opine for others, but having gone through the death of my mother this year and having to sort through her financial affairs, I can tell you that the LAST thing on my mind would be second guess her decision not to convert her IRA to Roth. I’m grateful for all the things that she did as a mother for me. Everything that has happened since ... funeral, inheritances, reconciling financial accounts ... are just issues that need attending to. They have nothing to do with my memories of my mother. However, having gone through this process, I would save my son the trouble of filing taxes on my retirement account. It is a trifling detail, but one that I’d like to take care of. 10. Opportunity Costs There’s time and resources needed to implement any plan (including the effort needed to create and manage the plan). Is it worth doing? Would you be better off putting the time and resources elsewhere. E.g., at this stage in your life, would you be better off buying a new car or taking a fancy vacation than trying to save a few thousand dollars in taxes. 11.Early Planning The key is to start doing the conversions early enough, when you have the flexibility (tax bracket overhead) to do so. Preferably, you'll do your option planning well before RMD age. Some calculators can build a Roth conversion ladder, spanning a number of years. However, no one can decide what timing works best for you (not without you specifying the limiting criteria, anyway). Only you can decide how you want to phase conversions.

4:20 time mark: Example where person's $40K Roth conversion costs $10K in additional taxes for an effective marginal tax rate of 25%. I suggest that your blanket recommendation advising people against doing this SOLELY because of the 25% marginal tax rate is disingenuous. When the TCJA expires in 2025, the 24% tax bracket will increase to 28%. So, the decision to do the conversion now or not do the conversion is not as clear cut as you intimate. And, of course, the decision to convert is not one based solely on tax ramifications. (I'll go into details on a separate post.)

3:05 time mark: "Next Medicare Premium Break Point: $115,500." I don't understand where your $115.5K figure comes from. Granted, the 2026 IRMAA brackets haven't officially been published yet, but there are any number of financial blogs and forums where you can find reasonable guesstimates of these brackets. The one I use shows 2026 IRMAA penalty brackets starting at $216K for married couples filing joint returns. This bracket assumes a 0% inflation rate from now until the IRMAA brackets are published in late 2025. Given that assumed 2026 IRMAA bracket, the couple in your example would have an income headway of about $155K (over and above their current projected income of $60,863) before crossing the IRMAA threshold, which is substantially more than you show in your example. So, my question to you is this: What is your software using for the 2026 IRMAA bracket? Note to viewers: If you are confused about why we're talking about 2026 IRMAA brackets, that's because of the unique way in which Medicare premiums are calculated. Your Medicare premiums are not based on this year's income, they are based on your income from two years ago. The reason is that at the time Medicare publishes the IRMAA brackets (which is a couple of months before the affected year), the only information officially recorded for your income is from the last reported tax year. So, for 2026 IRMAA brackets (published in November 2025), the latest information that they will have is your 2024 income tax filing. Hence, Medicare operates on a 2-year lookback time period. Phrased a bit differently, this year's income will affect Medicare premiums two years from now. 😱

Why does everyone just shrug their shoulders on capital gains? These aren’t gains at all unless they exceed the rate of inflation. Everyone should be infuriated by the immorality of politicians that are ok with these taxes. They deficit spend on things that benefit their donors. This creates inflation. Then they have the nerve to tax you on the phony “gain” that they created. Wouldn’t these tax experts that don’t even comment on the immorality of all of this be more helpful to society if the washed windows or cars instead of tax advise?

But you lose out on all that money from flipping your stocks. Buy Low Selling High. Some stocks you want to hold forever. Some you just want to ride up before it crashes.

How about state tax? This is mainly for Federal tax, so it's never 0%

The $3,000/year deductions on capital losses when selling stocks should be removed or at least raised. There is no cap on us having to pay taxes on capital gains, why should losses be capped at a mere $3,000? Contact your congressperson, let's get this changed.

What about bdc’s

Again you are misleading people that don’t understand the details. Long term gains and qualified dividends are included in gross income.. Gross income minus your deductions then give you taxable income. There are people on your page that believe you can “make” 94k in married income and have say 1 million dollars in long term gains or qualified dividends and that $1 million is tax free. Go look at the comments in your last video and please put a stop to these clueless keyboard tax experts. The only amount that is tax free is the amount included in that 94k of TAXABLE INCOME. Thank you.

You don't have to repurchase something similar because the wash sale rule does not apply to gains - it only applies to losses. You could repurchase exactly what you sold.

My man just went aiming this for the married joint accounts and no mention on the less than amount single tax-bracket filers .. smh

Is this an old video? The brackets you are showing are 2023, not 2024. Also, you can purchase the same stock back if tax gain harvesting, there is no wash sale rule for gains.

Don't forget about the 3.8% Net Investment Income Tax

You failed to mention those numbers are cut in half for a single person.

All great advice that is well presented, as usual! Think twice before taking Social Security while working full time, even past your FRA. As stated in the video, there is no benefit reduction once you reach your full retirement age (FRA), but there is the possibility of substantial taxation of your benefits. Up to 85% of SS benefits are subject to federal taxes, as determined by your provisional income. Thus, the more one earns while collecting SS, the greater the potential tax liability on the SS benefits. Well done Seaside!

Can qualified dividends push other ordinary income into higher tax brackets?

With all due respect….Either you, or especially some reply’s I got are not understanding what I am saying or are getting and giving bad information. There is earned income, gross income and taxable income. Qualified dividends are INCLUDED in gross income. In my example, after our deductions our taxable income is $94k. Now let’s say I forgot I have an additional 1 million in qualified dividends. Those additional dividends ARE NOT tax free as you imply or in the case of my one commenter are in fact tax free. The only qualified dividends that are tax free are those that are included in the 94k TAXABLE income. So now I have $1009400 in TAXABLE income. All of this income is TAXABLE. As someone who is blessed with a 26.5 million dollar portfolio and doesn’t work I can assure you my 3.5 million last year of QUALIFIED DIVIDENDS and LONG TERM CAPITAL GAINS is not all tax free. In our case only 94k would be, but in reality that didn’t even happen because we had $1 million in short term gains which put us past the $94k. in reality there is only a handful of people that enjoy very little tax free qualified dividends This is why I tell people to never listen to KZbinrs and especially the keyboard commenters. Anyway, you do as you wish and have a Merry Xmas.

Very nice year-end review of how capital gains are taxed or not taxed, depending on one's ordinary income tax bracket. I am doing some tax loss harvesting to offset my capital gains and dividend income for the year. I think this belongs on the 25 things to consider for 2025 list. Thank you Seaside!

Great video!

This was very helpful thank you!

This is misleading. The part about being married and your income is less than $94k …..for you to pay 0% taxes on your dividends they have to be included in that $94k. It’s not like you can have income of $94k and then have an additional million in dividends tax free 🙄

Ok. I might be missing something. I’ve never seen conversation of the impact of someone’s living budget when discussing the conversions. I would think that for someone in retirement, their lifestyle’s budget drives how much money they need, whether from SS, investments, pensions, etc. My assumption is that many people have a budget and do not take more than they need on an annual basis. So the comments about delaying social security to reduce income just means more distributions to cover living expenses. So if SS, investments, and pensions are all considered income for federal tax purposes, I don’t understand the comments like “delaying” SS. I’d think folks only delay to maximize their benefit. Also, it doesn’t take much for a married couple to consume all adjusted gross income in the 10%-12% brackets, which doesn’t leave much room for Roth conversions. I’ve been speaking to an advisor that suggests converting our whole portfolio over the next 10 years, putting us consistently in the 24% brackets. Your video is confirming what I’ve been feeling. I haven’t seen enough to make it worthwhile.

awesome explanation

Merry Christmas Mr matt!!!!

1100 a month thanks . Starving here

Thank you! Good explanation.

Real Estate!!! You better have deep pockets and be ready to dish out cash fast and furious! AC Systems/ Taxes/Insurance/plumbing/ roofs/ electrical Tenants it's actually a terrible investment there's a ton of hidden cost ever time you have to buy stuff for the house call technician or someone to do repairs if you're out of town! I keep all my money in SCHD/VGT!! $3 million and not a single call for repairs or replacement of anything! Set it and forget it!

Liked and Subscribed (ALL)

You should clarify that this is for a brokerage accounts. Dividends from a 401k, 403b, 457b and IRA are taxed at regular income tax rates.

SCHD!!! Very tax efficient!

Some hidden gems in this video, worth watching. Thank you.

Two cheers for the Seaside Santas! All great advice and the Scrooge analogy is very season-appropriate. It's never too late to change! Here's wishing the Seaside Family a very Merry Christmas and a healthy, happy, and prosperous New Year! This viewer appreciates you and thanks you for all you do!

good stuff tks

Hey thanks for the tips.Great stuff.

Asset location matters just as much if not more than asset allocation! How does one determine whether dividends paid by a mutual fund, ETF, or individual stock or bond are ordinary vs. qualified? Is this information typically found in a prospectus? Well done Seaside!

If you are watching this expecting some in-depth analysis of investment returns of real estate vs. S&P500, the discussion in this video barely scratches the surface. Except for maybe... the psychological aspect. The biggest problem with this discussion is that it completely omits the effects of the rental cashflow from a rental property (or the money saved on rent in case of a personal residence). If the property was purchased with a GRM (gross rent multiplier) or 15 (which is about average), over 15 years it has a potential to add another 100% of the initial property value to your overall return (minus the expenses obviously). You cannot just ignore something this big, especially since the long-term data on housing price appreciation excluding rental value is not very impressive barely beating the inflation of the last 100 years or so. After all, if you take out the effect of dividends from the S&P500, the returns on that will decrease by 2-3% as well. Also, the rent received (or saved) is what covers property taxes and various maintenance expenses, so they should not be deducted from the appreciation as the video suggests. There is no discussion of the effect of leverage. the 11% annual return on the full cash value of a property becomes 55% annual cash-on-cash return if you only put a down payment of 20% and your rents cover mortgage interest, insurance and property taxes. In case of an investment property, the down payment may need to be higher, but it is the same effect. You cannot do that with stocks (margin loans are not really a viable equivalent to mortgages). Then, there is no clarity whether this discussion involves investment properties or a personal residence. Each comes with its own set of specifics. The video seems to mix everything together without any sort of logic or pattern to it. For example, various limits on deductions of property taxes and mortgage interest do not apply to rental properties. 121 exclusion applies only to primary residence. 1031 exchange only applies to rental properties and comes with a lot of complexities/restrictions making it a lot less useful than it seems. There are some aspects to tax treatment of stocks too, with some potential tax efficiencies there as well since this topic is introduced. Putting aside the very incomplete and likely very inaccurate estimates of the rates of return on real estate, the advice to include physical real estate into an investment portfolio for the sole purpose of diversification is fraught with problems to say mildly. First, rental real estate is not a purely passive investment. In terms of responsibilities, skillset, potential liabilities and time commitment it is much closer to running a business than to a completely passive activity like owning S&P500 shares. This is not for everyone or faint hearted (as a long-time landlord, I can attest to that). Second, on the same note, if diversification is the goal here, you could look into REITs or syndications as an alternative. This would give you what you want (diversification) without all the work and the risk (at the cost of somewhat tempered returns vs S&P500). You also must know that physical real estate is not cheap. Unless you are diversifying a billon dollar portfolio, purchasing any single property will immediately take a huge chunk out of it. This would be the opposite of diversification as a huge percentage of your total investment would be tied up in a single property. Lastly, real estate and its returns are highly local. If you look at the data carefully, in most cases, there are pockets of real estate with very high returns surrounded by huge areas with rather modest appreciation rates. Depending on where your listeners live, the outcome of house vs S&P500 can be wildly different.

Sounds as though Medicare does not consider ears, eyes, and teeth to be vital parts of the human body. My guess is that those who can afford it choose to supplement Medicare with private insurance coverage. Oh well, we get what we get and we don't get upset, because the latter would undermine our health and make us seek more coverage. Thanks for helping your viewers to decipher this wonderful (sarcasm) healthcare program!

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There has to be a better answer to health insurance. Medical is screwed, dental is bottlenecking. It's all gonna fail at some point and the government is messing it all up. Appreciate the great video Mr. Matt! Love the information, I'm a ways off of Medicare but always Important to remember what's to come

in the example from 500k to 1.5 million, initial investment can be as low as 100k, the 20% and leverage the rest, the mortagge interest will hurt some returns but the leverage gave a lot more benefit.

Mr matt always coming at us with the facts! Always appreciate the information . S and P seems like long term strategy and real estate FEELS better because it's more instantaneous gratification with something tangible. So I thinks it's more feelings than logic. But diversify that portfolio! Taxation is theft

Not well explained

Both are good investment instruments, both can fluctuate in price, but only one offers a shelter from a winter storm, and one is a lot more liquid than the other. This is why smart investors never put all their eggs in one basket or under one roof. 🙂 Very well done Seaside!

Long term capital gains definitely count toward provisional income. $50k plus half of SS will put your SS into taxable status.

If you find yourself obligatorily in the 24% bracket for the rest of your life, it might make sense to just pay your taxes up to the very top of that bracket with IRA or other pretax retirement account withdrawals. You would then want to use the unnecessary money from those withdrawals to pay off your mortgage, put into tax free municipal bonds or do a ROTH conversion (hopefully in gap years, before getting SS). I suppose just spending it isn’t even a bad idea if you don’t ever see yourself falling into a lower bracket in the future. If you are concerned about a tax bomb from RMDs as you get older, it is probably better to get your money out now, while you are in the 24% bracket, rather than later in a higher bracket. It is honestly a great problem to have. Most people aren’t that blessed.