Check with your employer if they have the 55 option. Mine didn’t.

Great video as always. Very informative on leaving money to a trust in case your kids get divorced and pointing out the ten year rule makes it less beneficial. An inherited Roth has the same 10 year rule so no difference if leaving it to a trust.

Between Depreciation and 1031’s Real Estate Returns are much higher than what is stated!

My bank convinced me to buy an after tax, Jackson JNL , Perspective ll ,annuity 15 or so years ago. An IRA roth annuity. I haven't contributed any for 12 years. It has doubled in value, principle safe (45k) but it's very expensive. I pay 1k in fees every year with a present value of 89k.

I'm confused on the annuity comment. Being a fed employee, my pension will be a lump sum or an annuity, which rises with COLA. I thought the annuity would be the best way

Been waiting 2 hours for today's episode. Stinking East coast time

Oh no! Someone on the Internet disagrees with me!

For the record, if you reread my comment I did not say to compare effective rate to marginal rate. To clarify what I was pointing out, if you are in the 24% marginal tax bracket today before conversion, you pay 24% on the entire conversion. Many advisors (perhaps not you but definitely Ed) talk about paying less tax dollars as keys to Roth conversions. You can pay more tax dollars and be in a higher bracket and still come out ahead by deferring. The reason you may pay more tax dollars is you have a higher balance when deferring. The real comparison needs to be tax % paid not dollars. The point I was making is when RMDs start, even if the RMD causes you to enter the 28% bracket, you don’t pay 28% on the whole amount, thus my reference to an effective rate of 20% was showing the “average” rate you pay on the RMD over multiple brackets (depending on your other income at that time of course). Since 20% is less than 24% the conversion in that example may not be beneficial. Are there other reasons to convert? Absolutely, the biggest one being the widow trap when your rates double. Tax rates could go higher by legislation so you overshoot your projection. Maybe you just feel better knowing your account balance is all your money or want your heirs to get it tax free.

I love watching the guys reactions! C'mon Keith. Keep the videos coming.

Too funny, I guess Keith is only looking at one scenario as opposed to many scenarios. If some people didn’t do Roth conversions every year between now and when they reach RMD age they would be paying a lot more in taxes when they get there.

Love your show, love your content and your jokes. You have helped me immensely over the years. However, listening to ed slott invokes the same feelings from me as the letter writer here. He was great once, but now is just using fear to sell not very good books.

I've been all Roth since I started my Roth IRA in 2003 and my Roth 401k in 2008. These days my retirement account assets are 86% Roth and I plan to Roth convert all of my traditional dollars between the ages of 60 (when I plan to retire) and 70 before I take SS at 70. The goal isn't to maximize how much money I have, I have plenty. The goal is to remove complications and such from the later years of my life. The income from my brokerage account will always fill up the standard deduction and the first couple of tax brackets so its not like I have any tax optimization reason to keep my traditional dollars traditional anyway. I am looking forward to one day living off of only long term capital gains, qualified dividends, and Roth withdrawals.

43:10 Joe, I was the one that posted that on LinkedIn. Hawk tua. In no way was I calling you guys out. Love your podcast! Just trying to illustrate with a play on words with that video post. It was pretty creative though😅

Al is left handed just like myself. Skills learned later (computer mouse, calculator, sending morse code) are all done right handed. )

Love the YMYW show. Joe and Al are so funny. I hope I receive a copy of Ed Slott’s new book. Keep up the great show because it makes my day!

I think Ed Slott makes some good points but he comes across as a carnival barker. He’s not nearly as entertaining as Joe and Al!

Ed Slott is terrible! He gives blanket advice as if it’s applicable to everyone.

@keithmachado-pp6fv , please email your mailing address to podcasts [at] purefinancial [dot] com and we'll put Ed Slott’s new book, The Retirement Savings Time Bomb Ticks Louder, in the mail to you! We still have a few copies of the book available for other viewers and listeners. Schedule a free financial assessment with Pure Financial Advisors and we'll send you a copy as well: purefinancial.com/lp/free-assessment/?.com&YMYW-489KM

Good video. One complication at the top of the 12% bracket is converting to Roth will be taxed at 22% and now your qualified dividends and long term cap gains will be taxed at 15% instead of zero. It still can make sense if you will be in the 28% or higher bracket later in retirement but it does change the math and make conversion less attractive

Good video. I appreciate the example was to make the math easy and make a point but if your account is growing by 10X, at an average of 7% per year it will take over 33 years to get that result which would put you at 42 years old if your first RMD is at age 75. That is such a long time so their could be law changes, you could become single via divorce or death, your other income could be significantly different, you may have received an inheritance and other factors could impact the decision. With that said, if you are 43 you are likely working and have a base level of income that will make a Roth conversion be in higher tax brackets. If you ignore all the above and assume you are at a reasonable tax bracket now, will still be married at 75 and tax rates are the same, one issue that benefits deferring is that the standard deduction and tax brackets increase annually for inflation. If you can manage your other income so at RMD time your only income is SS and RMDs, your year 1 RMD on $1m of $40k will be totally absorbed by the standard deduction. Add in half your SS and you will be in the zero or 10% bracket.

You are correct on losses in retirement accounts. When Roth first came out and the max to contribute was $2k I put it all in 1 stock that went to zero.

FYI the SS boost from 67 to 70 is actually higher than 8% since you also get the COLA on the higher payment. If the COLA is 3% the increase for deferring one year after full retirement age is 8.24%.

Good video. I have both dividend and growth stocks in my portfolio. I view them as playing different roles. My dividend stocks have much less volatility and I look at them as a bond alternative not a comparison to a more risky growth stock. I also am retired in the 12% bracket and don’t pay tax on the dividends although I will pay 15% later in retirement.

Good video. I like the 7 reasons. One point on your comment of stock growing tax free in Roth, it’s only taxable in a brokerage account when you sell and recognize the cap gain. As a bonus you can sell losers and get a tax deduction which you can’t do in a Roth. I have had a brokerage account for 40 years and never paid $1 of cap gains but I take my $3k cap loss against ordinary income every year. My heirs will get it all tax free with a step up in basis.

Your example of $2500 vs $25000 is incorrect. The actual math is $10k Roth grows to $100k tax free as you indicated (10x would take over 30 years at 7% per year). If deferred and not paying the $2500 tax your $12500 grows to $125k. If you pay $25k tax you end up with the same $100k after tax. In addition you don’t pay the entire $25k at once but slowly over many years via RMDs, potentially taking advantage of the standard deduction and low tax brackets that have been adjusted for 30+ years of inflation.

Good video. Refreshing to hear you analyze the facts. Roth conversions are the flavor of the day. Some folks pitching them for all without specific facts are providing bad advice.

I'm 59 1/2 in a week. I opened my first Roth IRA in 2021 with a 5 years rule in Jan. 2026. But my question is , that I also contributed for the 2020 year in 2021 since the limit for 2020 is extended to April 15 of 2021. So that will make the 5 year rule reduced to Jan. 2025 instead of Jan. 2026 correct? (I only found that info. in one article, nothing else when searching the internet.)

Love it

I paid it every year until the 2018 tax change that limited the SALT deduction. I had been paying $40k of State income and property tax. Since 2018 I take the standard deduction and no alt min

Can I just pay my Roth conversion taxes from my monthly pension withholding? I can easily increase or decrease withholding as needed

No disrespect but converting in that scenario is Such bad advice. RMDs are not going to cause IRMAA problems. If you are 60 today your first RMD is 15 years away. The year 1 RMD on $2m is $80k. After 15 years of inflation adjustments to the standard deduction, tax brackets and IRMAA surcharge limits you would be in a very low bracket. IRMAA limits will be over $300k. The argument of converting when the market is down is not valid. First it assumes you know when we are at the bottom. If the market drops 15% no one knows whether the next 15% will be up or down. Secondly, a main reason to convert is to reduce future RMDs. When the account balance drops, there is less reason to convert as your RMDs are already less than they were.

What is the objective of having the Roth. Will they ever need to tap it? Is it for their heirs? Alternatively they could just withdraw from IRA before RMDs and spend it so all their other assets can continue to grow. That would reduce RMDs

I find it hard to believe anyone would benefit from converting in the 32% or higher bracket. You can have over $1m and have an effective tax rate under 30%. The year one RMD on $5m is $200k. You would need a whole lot of other income to make converting beneficial.

You guys are great thanks for the vlogs

...or, if your situation allows, and it works best for you, withhold the tax at time of conversion. Perhaps not the best option in the end, but still an option.

Your example in the 25% tax bracket converting $100k will not be a good decision if they deferred and pay less than 25%, even if they pay more tax dollars they can still come out with a better after tax net worth. Your math was perfect in the example. Where you went off track is assuming you will pay more than 25% later. If you properly plan your other income to minimize income except SS and RMDs, you can take advantage of the inflation adjustments. If you are 60 today The year 1 RMD is 15 years away. The RMD on $2m is only $80k which added to SS will be well under the 25% bracket at that time (subject to any other law changes, which are unknown).

In the example at the top of the 12% bracket, an important missing fact is the type of income. One issue when converting from the 12% bracket into the 22% is that your qualified dividends and cap gains that were at zero tax will now be taxed at 15%. If you converted $100k and had $40k of cap gains, that would add $6k tax to the $22k tax or 28% total. If you convert more than $100k you will trigger IRMAA surcharges if 63 or older and if you go over $250k you trigger the 3.8% investment income surtax.

Good video. I don’t think there is a such thing as a break even on a Roth Conversion since there are so many variables and it’s conceivable the deferred option won’t be fully depleted until 10 years after your death, so you can compare the after tax net worth. Of course there are some no brainer situations such as when your income is very low and you can convert some to Roth using up the standard deduction for zero tax (this would provide an immediate break even). Otherwise you need to do the math taking into consideration your current marginal rate and projected future rates, which will vary depending on the annual inflation adjustments to the standard deduction, tax brackets and IRMAA surcharge limits, as well as your heirs tax brackets (unless you know exactly when you will die so you can time out withdrawals). Don’t forget when you convert you pay all the tax up front in today’s dollars at your highest marginal tax rate vs deferring and paying RMDs slowly over many years with some income potentially taxed at lower rates. For example if you convert in the 22% bracket you pay 22% on the entire amount. If you defer are are in the 28% bracket later, your effective (average) tax rate can be less than 20%.

Good video. I found it amusing the gentleman let us know his seasonal beverage choices but not the balance of the IRA, other income including SS, annuities, or pensions. Retirement at 60 means you have 15 years before RMDs kick in. The standard deduction, tax brackets, and IRMAA surcharge limits all increase annually for inflation so the important question is how much you have in the IRAs. If $500k and it doubles to $1m the year one RMD is only $40k which added to SS, unless you have other income you will pay zero or very low income. Higher balances change the math some but you still need to do the math. You did not say what your tax bracket is now in order to compare to a projected future rate. Interesting you want to spend down the municipal bonds. I am doing the opposite and moving some assets from income tax generating to tax free municipal bonds paying between 4% and 4.5% tax free. They are very long term (some mature way after I will be dead) and trade close to par and are callable between 7 and 10 years from now. This allows me to withdraw from my tax deferred account to live on now and let everything else grow. I can convert at 22% now but if I continue to defer, even in the most optimistic view of growth, I may bump into the bottom of the 28% bracket during RMDs but have an effective tax rate below 20%. Each person needs to do the math on their own situation and clearly more information needed in your example.

that is a useless phone in question without the important info. that being said , they are 57 planning on retiring at 60 and living on muni bond interest, rental income and qualified dividends and doing 300K in conversions per year till RMDs kick in at 75 MEANS they have a boatload of money and have no need of their tax deferred reitrement accounts for their living expenses. high yield Muni funds will give 4% for who knows how long so their rental income is the likely source of most of their living expenses plus the qualified dividends. how solid is their rental income? what is their vacancy rate? are the rental properties all paid for? they don't mention what the goal of the conversion is( how much do they want their tax deferred acounts whittled to before rmds). the balance in the 3 buckets of tax freee, tax deferred and taxable would have been useful. if the tax cuts expire, they are converting into the 28% brackets. the 100K carry over tax loss they have will not last more than 2 yrs in liquidating from the brokerage to pay roth conversion taxes (unless their cost basis is high so most of the liquidation is principal which i doubt to be the case). after the carry over losses are used up, they will be paying 18.8% likely a significant chunk into 23.8% in capital gains. do they have legacy plans, plans for qualified charitable deductions(in which case don't convert what you plan to donate)... these would be pertinent. don't let the IRMAA tail wag the dog. if they are trying to stay under the IRMAA bracket of 193K vs ,let us say, 386-750K, the difference is only about $250/ month in todays numbers' WHO CARES? it is a paltry sum considering their assets. also by 63 y/o they are already subject to the IRMAA look back.they are converting up to 300K plus their rental income plus their interest and qualified dividends. at what age are they thinking they will get a break on their medicare premiums? just pay the higher premiums and count yourself lucky to have a high income. i think they are just bragging that they have enough in those assets to maintain their lifestyle for 15 yrs at least. i don't even get what the relevance of their cars is to the call and their choice of beverage.

Bring back the “Big Al Clopine” intro music from 2018! BIG AL TO BREAK IT DOWN!!!!

Spend the money now quit working and go

I also help educate coworkers. Specifically many don’t know about our 401k’s mega backdoor Roth option. If someone mentions maxing out their 401k, I probe a little deeper and have yet to find one who was actually maxing out the mega option. I don’t tell them to do it, but I give them a rough description of what it is and encourage them to check it out and see if it would fit their needs or not.

Love the show!

True enlightenment may be difficult because the tax code keeps changing. Similar to reincarnation, once you achieve one level, you have to keep moving up.😆

Here to answer your question, "Can I retire?". Simple Answer: No, everytime I try to build up to anything either something breaks and needs to be repaired/replaced or the governmant thinks its funny to do stupid shit which either has them dipping their hands into my bank account via IRS or them making the inflation worse which makes it harder to do the former statement as well as basic stuff like food and rent. This is also before we take into account that sometimes you gotta help ppl out which alrdy eats away at an alrdy small pie, or my person favorate SCHOOL DEBT, the kind you cant declare bankruptcy on and everyone gets sold it as a false bill of goods and a " right of passage". Wages arent keeping up either. You wanna know what a 6 figure salary in New York and Cali is called? Poor, which is fucked.

Control from grave and higher trust tax rate, thumbs up!

retire with ZERO expenses, oddly my wife and I will make more in retirement than when we worked small pension with S.S. is double what we have outgoing

Longevity hedge is a good way to put it. I described it as a "soft landing" if the retirement investments were to completely run dry.

Joe and Al walk into a trendy high-end lounge. Joe buys drinks for 4 beautiful women next to him after sitting down at the bar. The women then get up and sit at the table with the ''Big Man'' Al Clopine.