How To Pay No Taxes In Early Retirement

[@kkorn7]

One note. If you are at the point that you are pulling money from your after tax brokerage account in early retirement, pull out the entire 0% amount even if you do not need it. Reinvest what you do not need so that you move up the cost basis.

[@Rachel-zc8ur]

I didn't think of that. Thank you

[@MoneywithKatie]

This is brilliant. Thank you, Kevin!

[@kellyconrad4688]

What do you mean by move up the cost basis?

[@kkorn7]

@@kellyconrad4688 you can sell some stocks that you have held long term, more than a year, and then re-buy them at the current higher market cost. You will have capital gains due on the earnings but it will be 0% if you meet income limits. I usually sell enough to hit $65k per year and this keeps me at 0% taxes. When I eventually sell to keep the money, the capital gains will be less because gains are based on the selling vs purchase price and by moving up the purchase price when you can, you will have less gains later. I hope that makes sense. The cost basis is the average purchase cost.

[@francisYT24]

@@kellyconrad4688 Ex. You have one share of stock that you purchased at $100 and then sold it at $150, you would have a $50 capital gain because the cost basis was $100. A few months later you reinvested what you didn't need at $175 a share, the cost basis would be at that $175 mark which would result in less capital gains tax if you sold at, for example, $200. ($200-$100 cost basis) vs ($200-$175). Hope that makes sense.

[@jinsight3944]

I think a blog article would be much easier to follow than the video, at least in terms of referencing all the steps you mentioned without then having to dig through the video

[@MoneywithKatie]

Thanks so much for the feedback! I'll keep this in mind. :)

[@ethanolivertroy]

I think this is one of the best explanations I’ve listened to about this. Thank you!

[@MoneywithKatie]

That is so nice of you; thank you so much!

[@brucebanksshow]

I miss Whiteboard Katie. Because this was difficult to focus throughout but I commend you for figuring this out and giving out this content.

[@missouri6014]

Your youth really stands out. Throwing a bunch of numbers up there without a visual that we can see for more than two seconds doesn’t work very well for most people. I do wish you the best.

[@kickballjamie]

Very helpful info and useful example/illustration. You don't mention Section 72(t) where one can use their retirement account early without penalty if no longer earning other income and if one draws a consistent amount over a period of 5+ years or until 59-1/2. Can be useful for those who did all their savings in pre-tax accounts and/or to bridge to social security. Might also be useful in your example scenario depending on the numbers.

[@Rachel-zc8ur]

This was really useful. I'm not 100% sure I would choose to live at 40k/year as a single person those first 5 years but if I can keep my total taxable income under 80k that could be doable. The biggest takeaway for me is I need to be more aggressive on that bridge account. Thanks!

[@MoneywithKatie]

I love that takeaway! Yes, I hear you-I think $40,000 for one person is really different than $80,000 for two, since there are usually efficiencies to be gained with larger costs (like a mortgage, etc.).

[@keithmachado-pp6fv]

Great advice especially for anyone able to eliminate all their other income at retirement. Pensions, an annuity or other forced income would be a barrier to getting to zero but you could still convert at 10% bracket and pull out some LTCGs tax free.

[@richcomeau7230]

You seem to conflate long term capital gains with ordinary income when determining the income thresholds that are used to determine the long capital gains tax rate. For example, "pulling money from your after tax brokerage account" has no tax implications. Pulling money from a before tax account is a distribution as income. That income, which shouldnt be conflated to be capital gains, contributes to the income thresholds for determining the long term capital gains tax rate. Short term capital gains are taxed as income. You weren't clear about how the long term capital gains rates are determined.

[@reachtylerthomas]

Agreed. She makes it seem as if the long term capital gains threshold applies only to those gains. In reality the thresholds are a combination of all income that year. I found this when using some long term capital gains calculators.

[@jamesminor4141]

First time listener, 60yr, MFJ + retired a few yrs (after hitting the $1M in 401k, $500k Roth, USG pension, & $1M in spouse trad IRA (converting $100k/yr)). This show was a good review & overview of this strategy, which I am partially already following (& basically succeeded at- mult avenues of saving over 30 yrs to FIRE early). I'd like to share w/my two 20+ daughters, but much was over their heads, as they're not into Fin Plan (or FIRE) like me... that said, I have them both in Roths a few yrs now fully funded, & work 401ks. Any earlier shows you have which focus on time value of investing, or basic investing that i can share w/them? TIA, and I'll figure out how to sign up for future shows! Great example for girls doing a financial advice show!

[@keithmachado-pp6fv]

Good video. Although my pension and an inherited IRA mean I will never pay zero tax and my SS will be taxed in the future, I do plan on reallocating my other taxable investments to cash value life insurance, Municipal bonds, and MLPs to minimize other taxable income.

[@imazingg]

Thank you! I've been wondering specifically about this topic lately. I found out what my FIRE number/s would be, but didn't know how much to put in which accounts and the method in which to withdraw for retirement. Exactly what I needed!

[@brianminotti2777]

This is great info, but to be able save these amounts, your income level will likely be above the Modified Adjusted Gross Income (MAGI) for a Roth IRA, or will be partially phased out during your best income years..

[@hschwarzwalder]

I think you can get around the income limitation with a backdoor Roth IRA conversion

[@MoneywithKatie]

Hi, Brian! Yes, you're right-you'll have to use the Backdoor Roth IRA. Here's an article about that and some watchouts to be aware of w/r/t the pro rata rule: moneywithkatie.com/blog/how-to-contribute-to-a-roth-ira-if-youre-over-the-income-limit

[@TravisTomsu]

Just a point of clarification: The $83,350 you can pull from your taxable account is the _capital gains_, not the original amount (the basis). Unless your wealth is super concentrated on a single high-gain security, your sales proceeds will likely be a much more reasonable mix of basis and gain, no? Thus, over the 15 years (age 45-60) that you need the brokerage account to last, you're selling $83,350 worth of stock (proceeds), but the capital gains is only on a fraction of that amount. Am I getting that right?

[@brentt15]

Actually I believe the entire $83,350 would be considered capital gains. When you put money into a traditional 401(k) or IRA, you are putting it in before taxes. So your cost basis in your account is essentially zero. 100% of the withdraws from a tax deferred account are subject to tax. That is unless you put money into your 401(k) after tax or through the Roth portion of your account. Under that scenario you are paying taxes today and your account is growing tax free and withdraws are not considered to be taxable income.

[@MoneywithKatie]

Yes, Travis, I think you're correct-theoretically if that taxable account was large enough to be generating $83,350 of sheer returns, you could be pulling ONLY capital gains, but to your point, it's likely you'll be pulling out principal as well (especially in the example shown where we're actively depleting the taxable account). SO yes, theoretically you've got even more room!

[@KellyEnterprises]

@@brentt15 In this example we are talking about the Non Qualified account (TAXABLE) so Travis is correct, only the REALIZED gains are RECOGNIZED (realized means you sold an asset at a gain, recognized means you ARE going to pay taxes on it that year). For example if you sell out of a 10,000 dollar position that had 5,000 in basis (what you paid for it) then the 5K is the only taxable amount for that transaction.

[@brentt15]

@@KellyEnterprises I stand corrected. I misread the part of his comment about pulling money from your taxable account. I thought he was referring to an employers qualified retirement plan or a traditional IRA.

[@taylorsoucy9407]

Hi Katie! Huge fan, long time listener first time caller. How do taxes work with the Roth conversion step? Do you have to pay taxes on that? Or since you are theoretically having zero income tax (from the taxable brokerage) at the time of that conversion you don’t have to pay taxes?

[@MoneywithKatie]

Hi, Taylor! The idea is that you'd have no other taxable income at this point (because your realized long-term capital gains are all within the 0% threshold), so you'd allow the standard deduction to tell you how much to convert to keep the total conversion under the standard deduction limit! Ideally, your tax bill would be $0, but could theoretically have some cost associated if you convert more than the standard deduction.

[@gmpitluk]

I was wondering the same thing!

[@taylorsoucy9407]

Yes that’s what I was thinking, was just double checking that it made sense. Thanks for this podcast and all you do generally!

[@janna9785]

Couldn''t you technically take out more than $40k a year from the taxable brokerage because the cost basis you put in wouldn't be subject to the capital gains tax?

[@Newlinjim]

Yes but you would generate less capital gain in future years and have to adjust the fund timeline.

[@keithmachado-pp6fv]

If you don’t have unrecognized cap gains would you suggest using your other Roth account for years 1 to 5 while waiting for the 5 year rule on the new Roth.

[@lorieposton6744]

Hello Katie, awesome video! How about a video for individuals quitting their job to become self employed for a while before pulling the trigger on FIRE. What strategy/retirement account set up would you recommend for those self employed?

[@LLaughingwillow]

What are you talking about? I’ve never heard of a limit on amount of capital gains that can be taken in 0% bracket. Everything I’m looking up says there is a limit on income to be in 0% bracket. But no limit on capital gains. I didn’t understand where your 83,550 # came from. Basically, in order to use a Roth. Conversion ladder you would need at least 5 years of expenses in a brokerage account and more since you are keeping your income low in this scenario you can’t convert more than the top of the 15% tax bracket. Not enough for us single folks.

[@ceeIoc]

1. If you have a sizable chunk in your tIRA, won't it continue to grow? So converting only around 14K a year for a single person, it will take a really long time to convert it all. 2. The zero cap gains on up to 41K for a single person is just the gain amount right? In other words, you can withdraw more since you also have basis? 2. In year 6, when you can now access your first converted 14K, now you get back the standard deduction to apply to your taxable account withdrawal right?

[@juanzendejas7981]

Hi Katie, can I keep contributing to my existing Roth IRA while I am taking "chunks" out of the rolled over 401k (traditional IRA) and putting it in my new Roth IRA?

[@wilsliu]

You can only contribute to a Roth IRA if you have earned income so in Katie’s example they don’t. However if you do have earned income then yes, you can contribute up to the annual max. Roth conversions of pre-tax IRA funds don’t count toward the annual Roth IRA limits

[@emmahsax]

This episode was the best. But.... $80k per person is still a decent amount, and even in moderately-priced cities, it's easy to spend more than $40k/year. I can see why people feel like they cannot purchase a home or have children 😢

[@MoneywithKatie]

It's hard out here!

[@Newlinjim]

You’d think the government would see it as well….

[@keithmachado-pp6fv]

Great video. HSA should not be lumped in with 401k as there is no tax due when withdrawn. It is more like Roth bucket with added benefit of up front deduction.

[@janiebutler6335]

Love the nitty gritty details of this episode! I just wish you had an example for a single person in addition to the couple example. If you could write out what the numbers monthly would be, I’d appreciate that!

[@MoneywithKatie]

Take everything from the couple and split it clean in half! Sorry about that.

[@X-Holdings]

Thank you for digging deep into it and presenting it in a manner that was easy to follow (just 👍 &subscribed)...so informative...great job!!!

[@curtisgibson3591]

Thanks Katie, Luv this episode and your insight and looking for advise. Unfortunately I'm 59 1/2 and my wife is 62. No IRA, no Roth but am in process of opening a IRA thru Ameritrade with a substantial amount of my 401K. Would love to hear your math and advise on opening in addition to the IRA, a Roth account in Ameritrade. I may have to backdoor it as we are over the $206K annual limit. I know i will not get the greatest advantage of the Roth because i'm opening so late in the process but we do plan on working an additional 5 years. Thoughts.

[@joecochran7797]

The part of the episode that dealt with possibly feeling guilty about not paying taxes and giving 4 reasons for not feeling that way gave me some thought. This was because you made a comment about the tax code and those that are super rich, but realistically aren't they too playing by the same rules that Congress created. Not that I'm sticking up for them, but they do operate within the same tax code as the rest of us.

[@brentt15]

I think you bring up a very valid point. The super wealthy are constantly criticized for paying a small portion of tax. But unless they are breaking the law, they are following the Code that was passed by Congress. So instead of people complaining about the super wealthy, shouldn't the complaints be made to those that make the laws?

[@MoneywithKatie]

@@brentt15 Yes, I agree with both you and Joe-as long as everyone's playing within the bounds of the tax code, I don't believe it's fair to criticize. The irony is that the lawmakers themselves are often very wealthy. The median net worth of an American congressman or woman is $1 million, nearly 10x that of the average American. Moreover, the ten richest members of congress all have net worths of greater than $100 million. It's worth asking *why* those lawmakers don't take pains to tax the wealthiest among us (hint: Because many of them are part of that group). Anyway, that's my conspiracy theory for the day.

[@MoneywithKatie]

Yes, I agree! Commented below to reply to Brent but wasn't able to tag you.

[@brentt15]

@@MoneywithKatie same reason they don’t enact term limits too…..

[@robtompkins1887]

I would love to see this scenario with a person who is 59 years old and looking at selling two rental properties in retirement by age 65.

[@DONTSHOOT999]

Why sell an appreciating asset that pays you every month?

[@Newlinjim]

I would as well.

[@michaelboone5113]

Hey Katie! What about us late 20s married’s who earn too much to contribute to the Roth. Are we reliant on just backdoors?

[@Rk-m84]

This is awesome and that’s why I Love this show. That’s annual $20500 each contribution would also have employer match( $5k each or $10 k total) so so don’t have to work until 45. May be you would retire at 42.

[@Rk-m84]

Also don’t forget HSA 🙏🏼

[@dr.amybacharach4044]

Thanks so much for this! Someone asked about a Roth 401K an I have a related question. My government employee has a (nonmatched) 401K AND pension plan, both of which I contribute to. But I don't have access to a Roth IRA through work. I DO have access to a Roth 401K, which I've also started contributing to. Should I instead find another place to contribute to a Roth IRA instead of the Roth 401K, in addition to the traditional 401K, pension, and brokerage account? Thanks! (I'm 46 and still learning!)

[@keithmachado-pp6fv]

Even if retired you can contribute to an HSA and harvest stock losses to add another $12k of room to convert over the standard deduction

[@jazminlozano5098]

where should i save this video so I can look at it in 20 years?

[@MoneywithKatie]

HAHA, Notes app? 🤣

[@keithmachado-pp6fv]

Withdrawal from tax deferred is not taxed liked earned income/salary as there is no FICA tax liability and possibly treated differently by states.

[@amerlin388]

What does she think you are going to live on for the decades you are converting IRA money to Roth (in the amount equal to your standard deduction)? Take 75k out of your post-tax brokerage account, after all you won't have to pay tax on whatever portion is capital gains? How many 35 year old early retirees also have over a million in their post tax investments in addition to the large 401k or Tradition IRA accounts they theoretically have?

[@ahmaurya]

This is worth gold!

[@artsycoder533]

Interesting video, one thing I’m still missing is isn’t it likely that a single person will run out of time before they reach full retirement age to convert all of their pretax account over? Especially if they’re maxing out each year and the standard deduction is not far from only Being half of what they contributed each year let alone the gains. I guess this is essentially just a way to get as much money out tax free as you can so you can lower your withdrawals from the pretax money that’s left?

[@mims2582]

What would you live on if you don’t have a taxable brokerage account

[@nancyf9986]

On Year 6 - Do you recommend opening a different Roth IRA account to continue the roth conversions? To keep the money separate since you will start drawing down the conversion from year 1

[@Newlinjim]

Yes.

[@ChiBStudio]

So this is a little hard for me to follow, but I suppose my first main concern is... my husband and I don't make that kind of money. We make about 42k/year (each). Were about 34 years old. We do have some "play" money, but it's not much. Is this method even possible for someone like me/us?

[@erics2124]

So just to test my understanding here: If you own a large amount of dividend-paying investments in your after-tax brokerage accounts, such that the yearly dividends already exceed the standard deduction, this approach won’t work, correct? Because your standard deduction is already spoken for by the taxable dividends. We own a lot of legacy investments (Vanguard mutual funds, etc) that push our yearly dividends above the standard deduction.

[@Newlinjim]

Yes. That’s one of the reasons Berkshire Hathaway doesn’t pay dividends. For this to work on a risk adjusted basis you’d need a non dividend paying ETF to manage the capital gain drawdown.

[@RoselleFoley-td7vt]

Can this apply to over 60 folks?

[@hschwarzwalder]

Katie, I'm curious for your opinion on contributing to a Roth 401k instead of a Traditional 401k, and rolling that over in early retirement to a Roth IRA. If you opened the Roth IRA at least 5 years earlier, you should be able to withdraw any amount of the Roth 401k roll-over from the Roth IRA right away? I ask because I anticipate struggling to be able to fund the taxable brokerage account to be able to withdraw the $83k number you referenced & wonder if this is a different plausible method to get there

[@brentt15]

The best thing you can do while you are employed is to start contributing to your Roth immediately. Nothing big if you don't want to but that way you start the Roth clock (the 5 years). You can contribute 1% for one pay period and change it back to 0% afterwards if you want but that 1% will start your 5 years.

[@MoneywithKatie]

The only challenge with the Roth 401(k) > Roth IRA rollover is that it doesn't trigger that "conversion" event, so the five-year settling rule is voided and the 59.5 thing still applies (to my knowledge). If you're able to contribute to both a Traditional 401(k) and Roth IRA, that may give you the best diversified outcome.

[@Newlinjim]

@@MoneywithKatieI agree but with the exception to fund the 401k first up to the limit of the company match if available. The match is a guaranteed return while capital gains are not.

[@jacquelineelizabeth5946]

Initially listened to the podcast via Spotify and am now re-watching! Thank you for sharing, Katie. Although, as a single 25 year old I would have loved a separate example. Rough estimates of about 50% of your MFJ example will suffice for this vacuum experiment 😆 I am absolutely fascinated and intrigued by the FI/RE movement. Love your channel and context across the board. Thank you for spreading awareness and opening up this dialogue!!

[@ShawnOfTheDead-v6o]

You still pay sales tax and property taxes and gas tax...

[@junrath72]

What are your thoughts on retiring early using SEPP 72(t) distributions from pre-tax accounts? I may be thinking of this incorrectly, but I project that my wife and I will have approx $2M in our combined 401(k), 2x Roth IRAs, and HSA by age 50. With $2M, the IRS SEPP calculator says if we retire at age 50, we can take out ~$103k per yr for 10 yrs. Meanwhile, we'll still have $3.1M left in our collective tax-advantaged accounts at age 60. Do you know if the entire $103k can be taken tax-free (cap gains)? Or should we expect it to be taxed as regular income? Is our plan completely wrong in some way?

[@JimBasilio]

this is a great question if you figure it out pls post back here. :)

[@PeterPyo]

SEPP just means you get to avoid the PENALTY of early withdrawals…itll just now be like any other dollar you earn and itll get taxed at whatever tax bracket youre in. but at least you can touch the money early without the additional early withdrawL penalty.

[@JJ-xv3gs]

Great video, exactly what I was looking for. Does the $83,350 have to be long term capitol gains or short term gains also apply? Thank you!

[@Newlinjim]

Long term.

[@FantasySports_Sitch]

So I have to be officially retired from my job to be able to convert my tradition 401k from my job into a traditional ira to then be able to start the Roth conversions ? Is there a way to start converting portions of my work traditional 401k to a traditional ira before retirement to get the Roth conversions started pre retirement?

[@tassiapaschoal2290]

Your 401k with your current employer would have to allow withdrawals while you are employed with them to do a rollover to a traditional IRA. 401k accounts from past employers can already be rolled over to an IRA. I would ask you HR payroll department about rollovers while still employed with them.

[@MoneywithKatie]

Hi, Chris-yes, you're correct. Most 401(k) providers won't let you roll over portions or the entirety until you've left your company, but the key is that-in order to pay 0% taxes on the conversions-you don't want to have any other earned income (since you're trying to leverage the standard deduction to get the full conversion to Roth tax-free). But, if you wanted to begin 5 years before retirement and just pay taxes on the initial conversions, you could use a Rollover IRA from a previous employer, assuming you have any!

[@murreca82]

Am I following correctly that the conversions would have to occur when you have no other taxable income to take advantage of the standard deduction and bring the tax impact to $0? If so, what are you living on during that 5 year period when the initial conversions are occurring? I listened to the podcast and then watched this, and I'm still not fully understanding. Thanks for breaking this down!

[@PeterPyo]

she said it several times; you are living off of the taxable brokerage account that generates income through long-term capital gains and qualified dividends, which you keep below your respective bracket to keep yourself in the 0% long term capital gains bracket.

[@Newlinjim]

@@PeterPyoI don’t think ‘qualified dividends’ fall under the ‘long term capital gains bracket’ though.

[@PeterPyo]

@@Newlinjim qualified dividends are taxed the same as long term capital gains. please see IRS “Topic Number 409 Capital Gains and Losses.”

[@IWI-s7c]

Her heart is in the right place, but she's mistaken on many of the rules and how these strategies work (I'm a CFP / IRS EA / AEP). First off, opening multiple IRAs/Roth IRAs makes no difference. For Roth IRA specifically, contributions can be withdrawn at any time tax and penalty free. Conversions can also be withdrawn immediately and no taxes apply because you already paid the taxes when you originally converted. However, you will owe a 10% penalty if the withdrawal of converted funds is

[@fly51256]

Roth 10% penalty doesn’t go away after five years. It goes away at 59.5. But agree with most of this. And the standard deduction part agreed, you’re exposing your other income to taxes.

[@IWI-s7c]

@@fly51256​​⁠ incorrect. The 10% penalty for Roth IRAs is a 2 pronged test. You must have funded and held the account for 5 years AND have a qualified distribution (death, disability, 59.5, etc.). If you meet one test but not the other - the growth on the Roth is subject to OI tax plus a possible 10% penalty.

[@danieltuckercatholic]

Hey Katie! Question about inflation and rate of investment return. Do you mean that the assumed 7% annual investment return is really a 10% return that accounts for 3% annual inflation? In other words, if I'm using a compound interest calculator, I should set the annual investment return to 7% and then annual inflation to 0%, right? Because if I set the return to 7% and then inflation to 3%, I would be "cheating myself" out of projected future money by mistakenly accounting for inflation twice?

[@KellyEnterprises]

She states that she's ignoring inflation for the purposes of the exercise. If you want inflation adjusted return on your example you'd type in 1.03 INPUT, 1.07 Upshift %chg for a result of 3.8835 which you'd then use as your I/YR

[@gregeardley5601]

I don't think you totally understand how capital gains taxes work. When you withdraw 85k from your taxable account it's not all taxable. Your strategy also runs out of steam because the large standard deduction is most likely very temporary expected to reset in 2025.

[@caseyjamesboynton9299]

Hi Katie, this episode was awesome! This is only tangentially related but since you've talked about different possible after-tax accounts here I thought I'd ask. I hit my pre-tax contribution limit to my 401k this year, would it be more advantageous to keep contributing after tax to my personal brokerage account or to contribute after tax to my 401k (my company allows up to $10k in after-tax 401k contributions). Thank you!

[@JimBasilio]

i'd recommend personal brokerage. 401k's are wonderful but once you hit the maxes the money gets all mixed up and more difficult to get out. a brokerage is a much cleaner approach and there's no difference in the end with taxes paid each year i don't think. you also get many more choices with after tax brokerage and can use something like vanguard funds with low fees.

[@caseyjamesboynton9299]

@@JimBasilio Thank you - makes complete sense

[@emmahsax]

Katie mentioned (somewhere in some episode) that 401ks often don't provide you with a lot of choices. Your company chooses firm and fee structures, and don't provide as much flexibility and options. If you go with a personal brokerage, you have the chance to do the research yourself to get to pick all of that for yourself. However, keep in mind that taxable personal brokerage accounts mean you pay taxes on gains, while roth 401k and pre-tax 401k aren't taxed on gains. So I'd say depending on whether you're contributing the additional funds to the Roth or the Pre-Tax matters. If the contributions go to the Pre-Tax, they may get muddled. If goes to the Roth 401k, then that may be sufficient to use. But another question... the IRS is what has the limit of ~$20k per year into 401k. Are you saying your company is trying to tell you put in ~$30k? Because you may run into unforeseen tax issues if that's the case.

[@Newlinjim]

Put it in your personal brokerage account with an eye towards investing for pure capital gains not dividends. For her strategy to work smoothly you’ll need to be able to control when to take ($ amount) capital gains per that tax bracket and since they need to be long term that should probably be an ETF like SPY.

[@aliyanu5012]

Love the hair!

[@MoneywithKatie]

Thank you so much!

[@GundamUnicornYes]

Capital gains stacks on top of ordinary income. I don't believe you'd have the full range of 0% capital gains tax bracket to live off of. You'd have the top of the 0% bracket ($80,000 whatever) minus the standard deduction.

[@andrewpaterson4672]

You'll still have to pay tax on that "chunk" of pre-tax that is converted to ROTH

[@tassiapaschoal2290]

Incorrect, as she explained, If you only remove the standard deduction amount, you are not taxed on the conversion. Period. The definition of a standard deduction is 0%tax.

[@profmcnameemath1127]

The key is to not have any earned income so that all of the conversion is below the standard deduction. Brilliant Katie!!

[@MoneywithKatie]

@@profmcnameemath1127 Thanks a bunch! 💗

[@MoneywithKatie]

@@tassiapaschoal2290 Yes, correct-the standard deduction is our saving grace here.

[@karasweeney2166]

@@MoneywithKatie I'm late to the party here but if we will be receiving a military pension, the pension will be considered taxable income so we wouldn't be able to benefit from the saving grace that is the standard deduction?

[@alekseyzhi]

I am from Canada and this plan doesn't work here. so this is only USA plan

[@Morricone33]

after 59,5 years old, a lot of people don't even live that long and not everyone live in America

[@rejeanorscott1555]

Can a person convert a traditional IRA if he is already 72?

[@JimBasilio]

when you convert you'll pay taxes on the conversion. the RMDs at that age will also incur taxes on what you are forced to take out. you CAN convert, but why bother at that point, there's no advantage and you have to pay the taxes on what you convert at that point anyway.

[@jayellenberger7000]

Why would anyone take her advice rather than a certified financial planner?

[@JimBasilio]

it's free and it gets you in the ballpark and advances your knowledge? :)

[@j10001]

Just saying it’s hugely misleading to carry on about rich people not paying taxes when you’re largely talking about accounts where they _already_ paid the taxes! So yes, having already paid taxes, they can use their money without paying more income taxes…. but that statement is not so different from saying you’re free to spend the direct deposit from your job without paying taxes on it-you already did! (Both your statement and mine here are oversimplifications, but yours is seriously misleading people and is just a popular talking point that confuses basic accounting concepts. I’d expect better from Brew.)

[@MoneywithKatie]

Hi, James-my point wasn't that billionaires are evading taxes if they're playing within the bounds of our tax system-just that your average American with a $2 million net worth is not the "big potatoes" that would affect tax revenues. Per Washington Post (an entity that Jeff Bezos owns), Jeff Bezos's paid $973 million in taxes on $4.22 billion in income last year, resulting in a 23% effective tax rate. I paid around $95,000 in income tax last year on a little over $410,000 of income, resulting in a 24% effective tax rate. I'm not in the business of applying ethics to something as black-and-white as the tax code, but when your richest 10 congressmen have net worths that exceed $100 million, it doesn't surprise me that (legal) loopholes exist to allow the very wealthy to hold on to more of their money. My point in the video is that "regular people" should not feel guilt about exploiting those same loopholes.

[@j10001]

@@MoneywithKatie Thanks. My comment was admittedly a bit of an overreaction to 0:05 - frankly I didn’t bother watching more than a minute past that because you had just lost some credibility, in my view. I apologize to be reacting to the opening comment rather than the whole video; still, while I’m on the topic- I’m more than familiar with the tax situation in the country (and have an accounting degree from the #2 program in the US). It would strengthen your credibility more to speak of the tax code’s treatment of different types of income, rather than speak of something millionaires “do” or “don’t do,” in the same language as we say they do drive Ferraris and don’t swim in motel pools. As if they choose not to pay taxes on a whim. Their tax accountants just follow the law. So take it up with the law, not the millionaires. Moreover, in today’s popular talking points about the unfairness of the tax system, the economic arguments that led to separate tax rates for ordinary and capital gains income are rarely mentioned. I’d love to hear any KZbinr say something like “Thanks for taking the risk to invest your assets in stocks and VC, millionaire, so we can have businesses to hire us! We are glad to lend a small discount on the tax rate to make such investments more palatable.” Or whatever glib or more-sophisticated version of this argument you wish to script.

[@j10001]

@@MoneywithKatie Also, having watched a bit more, thank you for giving a detailed and well-prepared exposition of how regular folks can take advantage of some smart tax planning. I should have said that first!

[@keithmachado-pp6fv]

Good luck living on $6k per month. I assume no kids LOL.

[@ryanbrown171]

I don't understand why you would use an example where the married couple is contributing the maximum to their 401k and Roth each year when most people can't even do that. How about an example of how this would work for the average person.

[@CBW0314]

69,000…nice😎