Is there a fee for cashing out a matured annuity

I would do one conversion at age 62 then carefully determine when and how large a conversion you want to make to not cost you too much when you begin Medicare. Medicare uses your income amount two years before you begin to establish your Part B monthly bill. Pay attention to the various income limits for Medicare costs.

Great discussion, you hit all the high points. However, I'm not sure how much penetration you got into the general audience. Seems like it's a case of "preaching to the choir". Those who are familiar with the ins and outs of traditional IRAs, Roth IRAs, marginal tax brackets, Medicare and IRMAA will be the ones who benefit the most from your video - but their base knowledge was already pretty good. For those who are not familiar with these factors, your video may perk their interest - but won't actually add to their knowledge of the subject, because all of the financial connections are over their head. Biggest omission is a lesson on accounting: Roth growth post-tax vs. Traditional growth pre-tax. IMO, over half your audience (maybe 3/4 of your audience) doesn't understand the basic math behind their growth. A x B x C = A x C x B. Always. Every time. Substitute $Investment for A, Interest rate for B, and Tax factor for C and this models Traditional investment vs. Roth investment. A x B = ($Investment x Interest rate) = Your IRA fund total after investment time period, before taxes. A x B x C = ($Investment x Interest rate) x Tax factor = Your IRA fund total after investment time period, after taxes. A x C = ($Investment x Tax factor) = Your Roth fund starting value, after taxes. A x C x B = ($Investment x Tax factor) x Interest rate = Your Roth fund total after taxes, after investment time period. No matter how much you invest, no matter how much interest rates fluctuate and no matter how long a time period they are invested, the two funds will grow and end up being equal provided the same interest rates are applied to both accounts AND PROVIDED THE SAME TAX FACTOR is applied to both accounts. The tax factor is the one variable that is least likely to remain constant over the life of each investment account. Therein starts the discussion of tax brackets and the advantages/disadvantages of Traditional vs. Roth accounts. Such discussion starts AFTER understanding that basic financial mechanics are the same. If we didn't artificially introduce tax brackets and IRMAA limits, and if government didn't dictate RMDs for one type of account and not the other, then there wouldn't be a difference between the two types of accounts.

Thank you always for helpful podcast. Scott’s topic is always something I am wondering about. Thank you!!

The actuarial tables for a couple show increased risk of one spouse dying is very high and then the value of the Roth conversion is multiplied. The taxes on a single person with this size portfolio are very high.

Quesion: for employee 401k under distribution detail page, what does it Mean on Termination claim along the issue date, the gross amount, defaulted amount? Its transamerica. Does that mean they gave me the money? I have not got anything and my 401k is showing $0 balance. Idk whats happening.

Do roth conversions before you begin SS benefits. Use IRA funds to fund your retirement to postpone starting SS benefits and increase the benefit while lessening the balance in your deferred account.

I am 62 and have been retired for 6 years. I have a pension and I began to draw my Social Security and I inherited some money from my mom when she passed away so I don’t need to use my 401k to survive. It made 46% last year and 29% so far this year which seems crazy. It seems like a pyramid scheme sometimes so I get scared and take it out sometimes. I have 500,000 which can earn money quickly. I owe 79,000 on my house at 4%. I feel that I should continue to make money on the money I would use to pay it off. I don’t have consumer debt. No car payment. What should I do?

How would you know the future tax brackets?

Great advice, especially on the wheels of trust and power of attorney. Things of that nature because those are things that you do it when the kids are young but when you’re an empty nester, you need to update.

This is a great reminder of the importance of regularly reviewing and adjusting your retirement plan. It's crucial to stay adaptable.

This was a useful tutorial until the statement at 9:42 which is absolute BS. Feel free to reply below with details of a Roth conversion example where someone's medicare premiums could "go up by hundreds of thousands of dollars".

who can afford to put 30K away out of 100K

I think a lot of us focus on building our retirement fund, but tax planning can make a huge difference once you actually start drawing from it. I’ve heard of people who end up with way less than they expected just because they didn’t plan for taxes properly

IRA can double every 7.2 years at 10% return so $200,000 can become $800k in 20 years So it may make sense to start converting when your income is down or have business losses because u may end up paying. More

Thank you. It would help to see the graph in full.screen as one listens to your explanation of ot.

As with many videos on retirement, the "buy a new car" spike causes an unnecessary distraction. If you want a new car with cost C every X years, don't input C as an expense every X years (resulting in spikes), input annual cost of C / X, e.g. if you want a $42k car every 6 years, don't input $42k expense every 6 years, input an annual expense (i.e. expense accrual) of $42k / 6 = $7k expense annually; and Yes, this means pulling C / X out of your taxable account each year to smooth the tax accrual.

If i retire at 50 and start to do convert 401k to Roth. Will the 10% penalty apply? Is it considered early withdraw?

Wouldn't the best "timing" strategy be to do say 90% of your conversion at the beginning of the year, and then "true up" to a final amount near the end of the year? You can do as many Roth conversions during the year as you like, can't you? Converting later in the year isn't as good as doing it earlier (assuming your account is growing).

U cant use your money the way you want too, I end paying last year 7,0000...next year probably 50000 IRS. I USED IT AND STILL USING IT,, I WILL DIE ONE DAY. I TRAVEL NOW

I'm in the position of having a significant amount in traditional IRA'S. My only realistic option is to pay the taxes from the conversion, but how would I know if it's beneficial

Good morning, does your standard deduction reduce the amount of your Roth conversion? I have no income, so I’m wondering if I convert up to the standard deduction if that means I pay zero tax

Sir, your explanation is the cleanest, clearest, comprehensive,and most concise explanation I have experienced over viewing many videos from other financial experts on KZbin. Thank you! You are appreciated!

Great show. thanks

We are almost certain of a 22 percent cut in SS benefits in about 10 years when the SS Trust Fund runs out of money. This changes the break even age by a few years. Why is this not considered?

My employer automatically withdraws a percentage every paycheck, in order to reach the yearly limit ($23k 2023).. but I'd like to change that to add the $7.5k catch-up. How difficult is it to change.. or is it HR specific? But say you will turn 50 on December 31, 2023, then how/when should you add the extra catch up amount for 2023.. or do you have to be 50 for the full calendar year in order to be eligible (i.e. 2024)?

The title states "Retiring at 62" then your math at 18:00 talks about a bigger pull from savings if he claims Social Security at 62 vice waiting to claim. This appears to also assume he will continue working. If he in is not working, and does not claim Social Security, that will be the bigger draw on his savings. Of course continuing to work longer makes your money last longer. Am I missing something?

If you're subject to WEF, age 70 is the ONLY logical solution

the answer isn't "what gives the most money" the time value of money needs to be accounted for, in other words, money gained in ones 60s is likely much more valuable than money in their 80s. when you consider this, and the memories which can be made by having the money in the youth of your golden years it's clear that drawing early is more "valuable"

I'm claiming SS @ 62, I don't trust the gov to watch out money.

My income is ok but my spouse income is none for many years . Can she still claim for half of mine and I still get 100 percent

Social security?

Ten minutes of excellent points diluted to 30 minutes of vamping, filler feel good empty phrases, “let’s keep this simple..” delaying the topics. Too tedious to watch. Use the chapters feature to reduce the filler.

Question: I have huge gains above basis in my 401k. If I roll it to an IRA, I have to realize those gains, be out of the market while check is sent and then I’ll have to reinvest at a much higher basis in a limo sum. Is this a concern? Is there a way to avoid this like an-kind 401k to IRA rollover?

Get to the point dude.

Pay for Roth conversions with RMD

Solutions, please for this scenario

On the appeal for retirement you said they might adjust. Is it not automatic if you are below the limit due to retirement?

Good video. On item 4 if you just withdraw from your IRA to spend you get the same IRMAA benefit with or without conversion to Roth.

Very worthwhile watch. Your explanations are super clear. Appreciated!

Pretty sure when I’m 70, I’m not going to have a desire to do the things I want to do when I’m 60.

This was an excellent presentation. So on target these 2 scenarios. Thank you!

Congratulations!

Incredibly informative. I was particularly surprised to learn about the potential tax surprise that many people are unaware of. It's a great reminder of the importance of understanding the nuances of these retirement plans.

I have an annuity that structured the same as SS.. even though I’m still working at 62, I started taking it this year.. it pays me $3k per mth for life.. if I waited until 65, it would have paid me $3.4/mth.. but I wanted to start enjoying that extra money now, as I’m using it to get my house ready for retirement yrs… so u do t get hit with big home repairs once I retire, plus nice vacations

The government is desperate for you to delay SS and to keep paying in and work til the day you die. 63 for me.

Checking and savings have already been taxed. So I don’t understand why they are in a taxable bucket. They can be used without additional income tax. Taxable may generate tax by dividends or selling. Dividends and selling will be taxed a lot less than tax deferred. They would not be considered ordinary income so those taxes aren’t even measured on the same scale. Essentially, if you aren’t working, either draw from tax deferred or roll it over to a Roth up to your projected tax bracket… or to your future needs if you are pre59.5 and will need the money in 5 years. Also consider your tax bracket and aca subsidies for health insurance.

You used “Recognized gains” repeatedly. Did you mean “realized”?

It all depends to every person about their financial standing whether retiring @ 62 or 67. Always have something for rainy season.God bless

If taxes stay the same it doesn’t make sense to do a Roth conversion? It’s the growth of the money over time that gives most folks large tax bills not their contributions. 4 doubles = 35-40 years of growth…. 1. Double 200k you get 400k 2. Double 400k you get 800k 3. Double 800k you get 1.6m 4. Double 1.6m you get 3.2m I’d much rather convert 200k in Roth even if tax brackets decreased in the future rather than leave it in traditional. All that being said if I can afford to convert and pay the tax bill today. It’s almost always better to convert. I don’t understand how “experts” can’t understand the entire problem