Here’s How to Pay $0 Taxes on $100k Retirement Income

[@mpat146]

I'm a CPA who specializes in taxes. What's impressive to me is not that you have the software, but you understand in detail how the tax laws work to optimize their tax situation. Not many financial advisors could do that.

[@Random-ld6wg]

maybe you could explain why a regular ira withdrawal is taxed at LTCGs rates instead of marginal rates. tax deferred ira withdrawals are always treated as regular income for the whole amount even if it was in individual stocks is the general understanding.

[@flyoverpeasant8016]

@@Random-ld6wg watch again around 7:30. The dividends did not come from an IRA but from a taxable investment account outside of an IRA in which $250k post tax dollars were invested.

[@flyoverpeasant8016]

@mpat146 is there any specific software you would recommend for a similar analysis to the video? I suppose it could be done just using turbo tax for a experimental dummy return?

[@pete4096]

@@Random-ld6wg I didn't follow that reasoning either.

[@kryptonsa36]

@@Random-ld6wg When the income exceeded the standard deduction, the "excess" was categorized as coming from qualified dividends, which are LTCGs.

[@hamiltonjames7382]

Pretty brilliant. This is the type of service that financial planner should offer to clients, but which few do. Kudos to you.

[@RH-cv1rg]

When rich people do this it's called a tax loophole, a dodge. Why don't they pay their fair share. When people who have an IRA and are drawing social security do it, it's called financial planning and kudos to them.

[@lesahofmeyer5735]

This is the most cheerful and uplifting talk on taxes ever!

[@dtovar2]

Great video. For those of us fortunate to get a pension at retirement, we will have to pay taxes. I've been converting pre-tax dollars for years to minimize taxes at retirement. It's been hard work but I'm proud to be a Roth millionaire.

[@wlee3400]

Did you convert after retirement when the tax bracket was brought down?

[@conradb209]

Congratulations!

[@grannygoes7882]

@@wlee3400 See that is what I don't get about Roth's. If you aren't in a lower income bracket when you retire then why are you saving for retirement?? I did regular IRA's to get the tax break when I filed taxes. When I start drawing out of my IRA, I'll be in a much lower tax bracket.

[@mirozen_]

@@grannygoes7882 Personally I wish I had put much more into my ROTH when I was working because my investments did extremely well and in that ROTH it's all tax free. When you have a cost basis that is less than a tenth of current value having your investment tax free is fantastic!

[@StressLessFinancial]

That's fantastic! Your dedication to converting pre-tax dollars and becoming a Roth millionaire is truly inspiring. For those of us planning for retirement, what strategies did you find most effective in managing your tax liabilities and maximizing your Roth conversions?

[@bvoyelr]

Life lesson for those of us younger folks: put money in different buckets to give your financial advisor more options when it comes time for you to retire.

[@pglover19]

I agree. Having a huge taxable account gives you more flexibility in optimizing your tax strategy. There is a lot I would have done differently if I just had access to information. That is why these videos from Root Financial is so educational and informative.

[@SS-qr5qk]

Yes! Many people have all their retirement held in pretax accounts that can’t be touched (penalty free) prior to age 59.5. This locks many people into extra working years that otherwise could’ve retired earlier if they created different accounts that create flexibility.

[@rodneylw10]

@SS-qr5qk That's becase they were telling us a different story- When I started my career it was all about TSAs and Pre-Tax plans were the way. Consider that it was not until 1998 that Roths were even available. Overall, there was less planning for taxes IMO.

[@charliehargrave7458]

Keep money the hell out of the 401k and IRA bucket they will tax you to death when you retire or your spouse dies. They are a tax trap for the IRS.

[@markreid7]

⁠@@charliehargrave7458 But you don’t get taxed on it initially. So say you’re making 250k working. You’re in a high tax bracket. In retirement, you may be in the $80k tax bracket.

[@paulallen5267]

James, as a retired financial accountant, I applaud your ability to explain this information. Most financial folks understand the nuts and bolts, but struggle teaching their clients how this works. Thank you.

[@maxcorder2211]

He said the clients took $11,600 from their IRA. At their ages (65) they do have that option to take out or not. Once they reach age 73 they will have Required Minimum Distributions and the amount could be more than enough to put them in a taxable position. I have clients with $Millions in their IRA/401k. They always have a tax bill and the RMD gets larger each passing year.

[@AscDrew]

Good problem to have!

[@bindurao3463]

If you have a Roth, then RMD can be avoided I think, but not in 401k

[@joycewright5386]

That’s why I do Roth conversions every year.

[@bernardsimsic9334]

if they reach 73.

[@timothypropst238]

Since the money that was deducted for FICA was post tax dollars why are we paying taxes on our social security benefits again?

[@shawnbrennan7526]

Great video. As I’ve said before, I prefer the ones where you demonstrate something in your software instead of just speaking all the numbers or concepts.

[@KAndGrm]

Perfect timing, now I know why we owed 0 in taxes. A major tax software company was unable to explain this to me. Our taxable income was about half of what was shown in your video. Our situation was almost identical to your sample couple. Definitely will be moving some funds to a Roth over the next 6 years minimizing the tax bite.

[@StressLessFinancial]

yas! this is one of those videos thats clarified things for us.! Moving funds to a Roth IRA is a smart strategy for managing future tax burdens. What other tax-efficient strategies are you considering for your retirement planning?

[@jimludlow5675]

I figured this out when I retired 8 years ago. I have some interest income b/c I have cash reserves, but I pay less than $800 in taxes with a $100K income. Good to see someone else doing it.

[@andrewrivera4029]

What about state taxes?

[@DzDivz]

Best video I've seen on this. Exactly what I'm laying the foundations for. Cheers!

[@retiredat60.5]

He did kind of gloss over the fact that the dividends in the example are all qualified vs. ordinary, so it made it look like he was saying the IRA distribution was taxed as capital gains, but it is actually the qualified dividends. I had to go back and re-watch that part to figure that out...

[@lavonnewhelchel7506]

Yes, I’m still confused about the $11,600 he took out of IRA. My understanding is that IRA withdrawals are treated the same as “regular income” (like wages) for tax purposes.

[@globalwanderer]

How can IRA withdrawal/distribution be treated as long term capital gains? That’s wrong…

[@Davek111]

@@lavonnewhelchel7506 He certainly didn't clarify that there must be "stacking" laws within the IRS rules that permits the additional LongTerm gains to be considered last, and therefore not be included within the marginal income. Because in reality the IRA and Brokerage withdrawals would absolutely put the taxable income much higher then what his model is showing.

[@tr9066]

⁠@@lavonnewhelchel7506yes, it is still treated as “regular” income, but it doesn’t exceed the threshold amount to become taxable, so it is in essence, free from tax until the amount becomes large enough to push past the line.

[@jroseborough45]

Starting at 9:54 he does in fact say the IRA is ordinary income. Requires multiple viewings to completely understand

[@alexlathom9320]

Been working for 28 years. I recently started to learn about investing in a taxable account. I was so pissed with my 401k. Can't wait to Cash it out and take control of my money.

[@d.4201]

It would be nice to have these examples done for a single person. Why is every example always done for married couples?

[@mikerodent3164]

Because everyone hates us cranky grumpy old singletons. 🙃

[@gordo3582]

The math isn't much different because you likely have half the social security, half the standard deduction, and probably half the withdrawals/dividends/cap gains but it won't matter that much. Just enter everything into your favorite tax software and you will see what you owe pretty easily. You can play around with the numbers in the software to see how different moves impact taxes.

[@Brad4083]

It's harder for a single person to live on a comfortable income while paying zero tax. Even with an income of $70,000, achieving the zero-tax goal would be difficult. The tax code should be changed to treat singles and married couples more equally.

[@grannygoes7882]

@@gordo3582 That is what I wanted to hear. Tax software knows how old we are right? It seems like a silly question but I had no idea we qualified for more deduction after 65. I don't figure anything, the software does it for me.

[@circus14]

with an hour of work it's possible to set up a spreadsheet following his clear examples and the provided limits and figure it out, if have spreadsheet skill.

[@j10001]

The best of all your videos that I’ve watched. It was shorter and to the point, and dealt with the complexities of retirement income 🏆

[@Believe_the_Bible]

Great job. Thank you. Is this software program you are using available to me?

[@wiseview1444]

Best video on KZbin on taxes, hands down.

[@stellad1115]

Thank you for sharing, James! Being an accountant, I understand explaining tax concepts to the general public is not easy. Great job!

[@markb8515]

Thanks James for a great explanation of how you can get money out at retirement without paying any taxes by taking the money from various types of investments! I do understand that just because you can doesn't mean it's the right thing to do because of possible future taxes.

[@EarthSurfer]

James, thanks for the extremely enlightening example. I would be interested in seeing an equivalent analysis for a similarly situated early retiree including the ACA subsidy impacts and potential state income tax. How much would California’s income tax affect the example for this couple? Does it shift the gains harvesting strategy if they plan to relocate from CA?

[@THEL0NEARRANGER]

Since I retired 12 years ago I have not had to pay any tax at all and make $90,000+ (on average per year) and won't pay any taxes for at least another 5 years. I have Capital Loses I have to write off from years of investing I am still using. i have made $77,000 already in 2024 in 3 months time.

[@jfvalejandrino]

James, super awesome video and very clearly presented. thank you for doing this.

[@circus14]

James, thank you for this phenomenal walkthrough of the taxability thresholds of SS and other unearned income. You've made it extremely clear starting from the ground up. I'm a "basic" volunteer tax preparer and a long-time investor nearing retirement. Very well done.

[@StressLessFinancial]

Fantastic! also im curious As you are a volunteer tax preparer and seasoned investor, what strategies have you found most effective for managing tax liabilities as you near retirement?

[@patrickgibson2792]

This is exactly the information I have been looking for. Was going to sit down and figure this all out but you showed super clearly how this works.

[@BrucePritchett]

I enjoy your videos a lot. Am planning to retire at the end of 2024 and am doing a LOT of research. This one was very helpful. Is there a way that us "normal people" can get access to a tool like you used in this video that just lets us play "what if" with our various potential income streams? It would be worth paying for!

[@lark-v9w]

Is it possible to move only some over to a Roth where you would still be, say for example, a 12% tax bracket, versus a 22% bracket for the year. I am asking for myself. Thanks!

[@charliehargrave7458]

You can move any amount, there is no limit. @@lark-v9w

[@ArtifactRescues]

@@lark-v9w yes

[@MSWMW]

Fantastic video. All facts and education with a great example. No fluff or BS trying to sell nonsense. Thank you!

[@jibberishballr]

Very thorough and easy to follow! It'd be great to see something similar taking into account California (state) taxes to keep taxes as low as possible.

[@bonegunner958]

Great presentation on tax saving in retirement. I have been retired for 6 years, but have not tapped my IRA. My wife is fully retiring next month, and we wil begin taking IRA and brokerage acct. distributions. YOU ROCK!!!

[@BensonBMD]

Do you live in poverty?

[@11Bretired]

This is the best explanation I’ve ever seen. Thank you for this presentation.

[@ric-morris7763]

I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.

[@kenmtran]

I read "The Power of Zero" and it was eye-opening. I'm glad to see that a CFP is talking about this as not many do. Do you recommend on planning out a retirement strategy in advanced, or this is something I should be doing 5-10 years before retirement?

[@mkmac9539]

I had no idea... This is really eye opening. Thanks for the info.

[@mikengai4791]

I thought money pull from the ira is taxed at ordinary income?

[@TienTran-lc2wu]

Exactly! This guy treats it as long term capital gain….which is a lie

[@2660mh]

I don’t see how IRA distribution is taxed in this example. My software taxes it as income! Ergo taxes due on April 15.

[@grannygoes7882]

@@2660mh I thought Roth's were tax free?

[@Kimmer]

James, is the goal to minimize taxes or maximize wealth during retirement? The strategy may be the same, but not necessarily, and my goal would be to maximize wealth. Considerations of having pre-tax or after-tax funds at the end of life is also important for inheritance. Thanks for the great video!

[@sherimcgreen4915]

Hi James! I've been listening to your podcast on retirement for the past four years. I retired two years ago at age 62. This episode was especially interesting because I don't really understand how to reduce to my tax liability in retirement. I currently receive survivor Social Security benefits and have since turning 62. I plan to switch over to my own Social Security benefit at age 70, and it should be higher than what I am currently receiving. I currently live off of pension and Social Security and investment income for a total retirement income. I filed with an H&R Block tax specialist (cost $385 - $450) the past few years and itemized my deductions because for these years it was more beneficial than taking the single standardized deduction. Going forward, I wonder if you'd recommend I work with an accountant that can help me realize more tax advantages? I had no idea I could actually pay $0 in federal taxes in retirement. Thank you so much of your content. I have found it to be solid information on investing in retirement and now how to save on taxes in retirement. Retirement is absolutely THE BEST!!

[@beb10]

Great clear video. That is very helpful. For this example, what would be the total amount above $100,000 that they could take out before paying any taxes?

[@J.Radwan]

Very informative and easy to follow in deciphering this maze. thank u.

[@MichaelHBaker]

Love the example. My only concern would be the IRA withdrawals of $11,600 is well beneath where they would be once RMDs kick-in. It's only likely that the brokerage account wouldn't be as clean with the distribution strategy as gains are often skewed through various positions. You'd likely distort the allocation over time. Either way, love the tax planning!

[@lisab1312]

Your videos have been extremely helpful! Thank you.

[@Jamesjerome0]

This is such an important topic. I have family in FL and TX and I tell people all the time not to fall for the no income tax narrative. Both of these states have no income tax and my relatives always complain about their absurdly high property tax, sales tax and other various fees. You have to look at the total tax (and fee) picture, not just income tax.

[@Armstrong741]

I am impressed with your update with these strategies, I am looking for tax efficient way to rebalance my 800k retirement portfolio without triggering capital gain tax. what asset location strategies should i use?

[@curiouscurious6558]

very nice BUT very few retired people I woud think, have all their investments in QUALIFIED DIVIDENDS. Most probably have part of their retirement in cds, money market accounts bond funds, etc. Many may be at a fifty fifty splt stocks. vs bonds treasuries, bond funds, REITS, mms cds. I personally had to pay more last year because of money market dividends and some cd interest. SO HOW DOES ONE GET AROUND PAYING TAXES ON THOSE?? Thank you for what you do.

[@jeffro221]

Totally agree. I don't think many people have qualified dividends.

[@this_epic_name]

You can't. That's the huge catch in vids like these: they typically assume zero regular income. Due to contribution limits, the majority (more than 50%) of my investments are in a taxable account. The dividends, interest, and distributions I receive from that account (all re-invested, which doesn't matter for tax purposes) generate a substantial amount of taxable regular income. That will continue to be the case when I retire, so I don't see these strategies as being of any value to me personally.

[@darryls8066]

I dont think Taxes can be avoided altogether, the best that we can hope for is to minimize them into a more acceptable range. I will owe over 120k in Income taxes this year after cashing out some large investments but over the next few years I hope to be in the "paying very little" income taxes category.

[@amadeofuentes7654]

How will this work for someone receiving a pension, and with funds in a 401K as well as a Roth IRA? Have you made a video covering this scenario?

[@OldManDave1960]

It’s exciting- I’m planning on retiring next year, so I’m trying to educate myself. But it makes my head spin. I need to watch the social security video, to understand how the taxable portion is calculated.

[@Jack51971]

The smart play is to get as much of your savings into anything ROTH. PAY the government now and take your contribution and any earnings taxes already paid and no MRD! Thus is clear. You will pay taxes either now or later! Period! He mentions the MRD comong up later for these 2.❤

[@aaronkurz864]

You are allowed to immediately reinvest the tax-harvested gains? Even if it is into the same security?

[@mattrodewald7883]

This helps me in my retirement strategy thanks so much for your advice!😊

[@darbyohara]

If they are in retirement how is the 100k earned income to be subject to payroll tax? Why isn’t it investment income?

[@bathilda1]

Terrific video. Are capital gains included in provisional income?

[@roberthuff3122]

🎯 Key Takeaways for quick navigation: 00:00 *💼 Explaining the idea of paying zero tax on retirement income* - Explains that video is not about putting all money into a Roth IRA. - Pledges to walk through an actual client case study to explain creating a significant tax-free income. 01:10 *📊 Assessing tax implications in working years* - Case study of 'John and Jane', hypothetically earning $100,000 in wages, to assess tax implications. - Breaks down the standard deduction for tax year 2024. 02:38 *🧾 Calculating total tax* - Shows how the marginal tax brackets work, calculating the total federal tax they would pay. - Mentions FICA taxes or payroll taxes as an add-on cost. 03:48 *👴🏼 Introducing the retirement scenario* - Introduces the retirement scenario with John and Jane each receiving social security benefits. 04:57 *💭 Creating the tax-free retirement income* - Explains how to create $100,000 of tax-free income in retirement for the client. - Introduces the tax plan software they use for tax liability projection. 06:49 *💰 Incorporating dividends into taxable income* - Adds dividends from the client's taxable account into the taxable income. - Explains why Social Security is still tax free. 09:28 *👛 Adding IRA withdrawals for income* - Adds specific IRA distributions to the income and shows how it affects the tax. - Tactical tax planning is conducted to see how much more income they can generate before paying taxes. 12:07 *💵 Selling assets from the brokerage account* - Demonstrates the process of selling assets from the brokerage account to generate income. - Explains how the tax liability is calculated from the gain. 13:59 *🎯 Emphasizing the goal for minimizing lifetime tax liability* - Emphasizes the goal is not to pay zero tax in a single year but to minimize lifetime tax liability. - Suggests taking full advantage of tax gain harvesting. - Recommends considering a Roth conversion strategy to minimize future tax liabilities. 15:50 *🚫 Reviewing Common Tax Mistakes in Retirement* - The video ends by pointing out the common tax mistakes by retirees. - The video suggests watching another video to learn about those mistakes. - Invites viewers to visit the website to know more about Root Financial's services. Made with HARPA AI

[@mikerodent3164]

Pretty amazing. Here in the UK they are fast abolishing Capital Gains Tax allowance. This new tax year 24-25 it has gone down from £6000 to £3000. As for the state pension ("social security"), when I finally get mine in a few years it won't be enough to pay my wine bill (it's about $1000 a month).

[@ramrack6301]

Am I right to say the large RMDs will make this strategy unusable?

[@RobertaEastman-q3o]

Hi James, thank you as always for such great info! When does or what caused the IRA distribution to turn from being taxed as ordinary income to capital gains?

[@sierratiffany1238]

Thank you for a great video. You're so clear that even a physician could understand it!

[@Mugwart1]

This is a really informative video. One reality from the proposed model is that as the client sells stock from the brokerage account, the dividends portion of their income will reduce each year, requiring them to sell a greater portion of their brokerage portfolio each year to cover the difference. This will somewhat “snowball” and will shift the tax liability above zero in maybe a year or two (I’m guessing and have not forecasted this out). So, although this is great information and super positive for the client in year one, it is not a “forever no tax” model for the client. Hopefully viewers of the video realize this and don’t assume that they’ve just found the magic, no tax formula. That noted, if my assumptions are not correct, i’m open to listening to logical course correction.

[@BadPhD777]

There's something I'm missing: at the point where you say there's $2,780 in taxable income, I'm confused. Why is this amount taxed at the long term gain rate? You took $11,600 from their IRA - shouldn't that be taxed in the 10% bracket and the $10,000 in dividends don't get taxed because they are long term gains?

[@lifestream4191]

I guess there's some type of sequence involved... To be honest, I got lost in his analysis. Seems like a Rube Goldberg way of retirement. He does make it clear that although it's possible, but probably not prudent. I just don't see how it can get any more idiot proof than Roth, I am an idiot and I am putting all our money in Roth and HSA's.

[@wlee3400]

same question here.

[@ronlulich3694]

The 2,780 comes from dividend income I think, and it is taxed at the dividend rate, which for that amount is zero percent. Furthermore, you can have long term capital gains, which will be taxable, but at the long term rate, which for the amounts demonstrated, is also zero. Not all income is taxed equally.

[@gregnicholson689]

The basic strategy is to ensure taxable IRA distributions + Social Security taxable amounts are less than the standard deduction, then backfill the rest of the income from a brokerage account that has qualified dividend income less than the long term capital gain taxable threshold. Also, $8,000 was actually investment basis in the brokerage account, so not technically income, but return of capital. The point is that there are two main income taxing regimes in the US federal code - ordinary income and capital gains/qualified dividends, each with separate thresholds before the income is taxable. The key is to take money from these two types of accounts to take advantage of those thresholds.

[@Davek111]

You are correct!!! This video is totally fucked up! There is no "stacking" type rule that would allow you/we to take that amount above the standard deduction and only consider it as a Long Term Capital Gain. This is what he is doing here.... and it is totally fucked up guidance. That amount above the standard deduction would be taxed a 10% because there is no additional subtraction. We would not be responsible for the 20% capital gains tax because the total income is below the Federal income requirement for capital gains tax.

[@Fishouta]

I don't understand. It looks like you are treating each income stream separately in your software.

[@SunAtNight731]

This video is life-changing James! Thank you. I'm still a little confused on cost basis and I was wondering if you'd address this in a future video: If my money has "moved around a lot" over the decades, among different investments and different custodians, and I have "lost track" of my contributions vs. gains as that has happened, is there a way for me to accurately determine, or find, my cost basis? How would someone in my position proceed?

[@Outspoken2012]

This is a great video. Using case studies make it much easier for the average person like myself to understand. I would love it if you could make a video using a case study where the individual receives a pension in place of social security. There is not much information out there to support educators who pay into a pension plan like calstrs or calpers in CA. There are 15 states total where educators do not pay into social security but a pension plan. Please and thank you.

[@zuesbenz]

You got yourself a customer sir. Will be calling you soon.

[@MikeNokesGolf]

Awesome videos James especially this one. I live down the road from Encinitas. Would love to set up a consultation/meeting in the near future.

[@Angelavaldess]

Investing in Roth IRA can be a good choice. I have been managing my portfolio myself, When I withdraw from my Roth IRA in retirement, I won’t have to pay tax on it, which will help me keep more of my hard-earned money.

[@Jaymilnere]

I agree with you, especially for near retiree and does who knows nothing next to finance it is the best thing to do speaking from experience.

[@jenniferg3251]

This is great. Wondering if you could do one for a single person. Maybe contrast if they were retiring early like 55 vs. 65 just interest and those in FIRE.

[@EricPatterson-sc2un]

Great video, I plan on retiring in a few years, but prior to SS benefits. My plan is to spend those years realizing 94k in long-term capital gains in my investment portfolio every year for as long as I am able.

[@SarahStuff-p5u]

You just blew my mind, OMG thank you so much, the Tax Harvesting will be so hugely beneficial for me....

[@darryls8066]

Very impressive. Do you guys do online consultations I would like to have you evaluate my current retirement plan and make suggestions that might help me minimize taxes in retirement.

[@MrRiedemanJACC]

So a couple of questions on this scenario. 1) If they were being paid less in social security (ie they started social security at an earlier age). How does that affect the amount taxable social security? I'm assuming it goes down? 2) Couldn't John and Jane start to take out more from their brokerage account tax free since the tax threshold is higher than where they are? And lastly 3) What happens if this scenario takes place before the draw from social security? For instance they are age 60 and retired at 59.5?

[@todddunn945]

I haven't watched the video yet, but I will hazard to say that for a couple the way to pay zero taxes is to structure their income so it is a mix of social security, qualified dividends and long term cap gains. The only trick is to have your social security low enough that 85% of it is less than the standard deduction. The only issue is state tax since lots of stated do tax qualified dividends and long term cap gains. That is often offset by the state not taxing social security though.

[@jakepapa6516]

I would like to pay for a meeting but says you won't accept meetings without considering employing you guys long term. Unfortunate... i am hands on with my own money and just looking to learn abd create a clearer vision.

[@bobby350z]

I need to watch it again as I dint understand how that $11600 from IRA became long term gains. Isn't that normal income as it is coming from normal IRA?

[@HappyPenguin75034]

It didn’t

[@Lion_McLionhead]

Good for the married filing jointly who can keep it together. The 100% stonk portfolio is a recent phenomenon of the last 10 years. 30 years ago, the advice was to be manely in cash earning 8%. It's unlikely to revert, but there is a chance.

[@mrrazr8079]

You gave me a better view on how to strategically minimize taxes. Thanks, James.

[@user-st2ix9qh4v]

Can you do this for a single person? this is so helpful

[@Iexposeyourlies]

why would the 11,600 from IRA be a long term gain rate vs regular income??? With a traditional IRA, withdrawals are taxed as regular income (not capital gains)

[@todddunn945]

It is taxed as regular income, but the standard deduction wipes it out.

[@mikeliu106]

I have the same question, I don't think that part is correct, putting the whole theory in question.

[@Sylvan_dB]

The long-term is the dividends, not the IRA.

[@Sylvan_dB]

Also the sale of the stock fund in the taxable account has basis and long-term gains.

[@randomusperson8023]

I was also mystified - found this video that explains how to mingle and then separate out income from long term capital gains using the Qualified Dividends and Capital Gain Tax Worksheet: kzbin.info/www/bejne/naK1fKqkacqZbZY

[@freedomwillring6749]

Great advice on how to keep more of your own money that you have earned. Thank you.

[@OnCashFlow]

Woah! This was a much more in-depth and advanced video than I was expecting! That is some really cool software!

[@louiselocker3591]

I am so appreciative of your video! This is outstanding!

[@drz400sy8]

Great video. Would like to see max they could take out without being taxed. Then where to invest this extra. Would like to see a program that can optimize the withdrawals from different buckets, potentially reinvest extra taken out, with all the distribution requirement constraints.

[@bfrock01]

Great video, obviously the larger challenge is do you minimize taxes now or are would you be better off doing Roth conversions? Also, would you mind telling us what tax software you use?

[@alsavery9306]

Nice example but the one thing you can't control is your dividend and long term capital gain. The market can ruin your long term planning. Companies like Intel can cut their dividend so your yearly dividend amount is unpredictable. And I wouldn't want to take capital gain in a down year like 2020 and 2022 where my portfolio is down 30 to 40%. Likewise in an up year with NVDA and META this year, my capital gain is way over the tax limit. So, it's impossible to plan for $0 tax each and every year.

[@BrandonTran]

Very smart! When it's time for me to retire in 10-14 years, will all of these rules still apply? So much can change in that time frame.

[@jumpflip1]

Did I understand you correctly? You took out $16,000 from the brokerage account. So your dividend from your now $16K less brokerage account for the subsequent years is reduced by $320. I know you said at the end of your video we need to switch the goal to minimize lifetime taxes, but is reducing the brokerage/dividend income each year sustainable as a strategy? After 5 years for example, income will be $98,400, not $100,000.

[@AscDrew]

Probably but it’s a concept. Feel free to only take out 1.5% and leave the other .5% to keep the fund growing. Typical you should plan on taking out less than the gains each year so your funds continue to grow. But then again I think he plainly took out exactly 2% which equaled his 2% dividend gains, thus leaving the original basis in tact. Remember that fund earned 2% in dividends, so he only withdrew the earned dividends, not principal balance.

[@MrWaterbugdesign]

Little bit of word play here. $8k from the the broker account is, as stated, not taxed because that's a return of principle. Withdrawing money from a savings, checking account isn't really "income". But I get the point.

[@drewjet1]

Can you do this same scenario for a single person, will obviously be less that $100,000. Thanks

[@Gary65437]

How do you figure the cost basis if you invest monthly for 20 yrs into a taxable or IRA account? Figuring out your regular divs, qualified, long term and short term gains seems challenging unless you use some magic software.

[@TheCoachSimon]

IRA distributions are taxed as ordinary income and not as capital gains. Why did you consider the $11,600 IRA distribution creating $2,780 taxable income as long term capital gain and not ordinary income?

[@davidperry2725]

I think his explanation made that more complicated than necessary. he meant that the IRA $$ + the Social Security hit pushes the total amount of "taxable income" above the standard deduction by $2780. I wouldn't have described it that way since the capital gains income isn't really directly related to standard deduction. I guess the point is that all of that income is taxable, but taxes on gains can be zero depending on your ordinary income.

[@HappyPenguin75034]

Watch again. The standard deduction covers it. LTG was from dividends. He didn’t do it. Software is smart.

[@jaspersanfellipo7184]

Another outstanding video. Thank you.

[@denny5564]

James, I like that tax report program you were using. Is that something we can download or use online?

[@victoriaaldrin]

Scale of preference is something that applies everywhere.. thanks for this video.. in conclusion, diving in isn’t ideal for investment uplifting

[@johnkenney7217]

One thing not quite right: All international stock funds will have at least part of their dividends be non-Qualified, whereas the video assumed they were 100% Qualified. In that situation you will pay a bit of foreign tax (withheld from the dividend) and get a dollar for dollar Foreign Tax Credit. All this does not materially alter the useful and true message of the video.

[@DawnGolder-h1p]

I just looked up "provisional income" on social security - it is $32,000 for joint filers in total - what did I miss here, how did he double that?

[@greggrisner2337]

So, not until John and Jane hit the 32,300 in auto deductions will they get into a taxable event, correct?

[@estjam4998]

@james - is your financial planning software proprietary? does one need to be a Root client to have access to it?

[@BiggMo]

How does this work when RMD’s kick in? I suspect this isn’t sustainable throughout retirement.

[@melissakirk6545]

Can you recommend someone that can give a detailed analysis for tax planning for my husband and I? We don't meet the requirements on your website as most of our assets are in cash producing real estate. We'd still like to tax plan for retirement. Thank you

[@spdog3344]

My mind has been blown 🤯 that’s awesome

[@nyameyen.4060]

Excellent advise! I was literally cheated in 2023! Which state are you located in?

[@grguthrie108]

Is the calculation tool available? Not the pdf of the results, but a spreadsheet like tool to do calculations.

[@Sylvan_dB]

Since everything but SocSec and IRA is qualified, couldn't they have taken more from the IRA so it plus the SocSec would fill the standard deduction? With 18K in cap gains and 17K taxable income it sure seems like there was room to get more out of the tax deferred IRA, especially if it wasn't needed for spending and was converted to the Roth.

[@HappyPenguin75034]

It was just a scenario