Based on your advice, I promptly notified my wife that it would be more beneficial to have a spouse 10 years younger. It did not go as planned. However it has indeed reduced my RMDs since the divorce awarded half of my IRA to her. Mission accomplished!??? 🤔 On a serious note, great content as always.
@deemcclanahan5 ай бұрын
hahahahahahahaaaaa
@catherinemiller26723 ай бұрын
😂
@michellebudinick-dores67592 ай бұрын
Too funny!
@bernaclischurchill4463Ай бұрын
I could not stop laughing. Thanks for that.
@rangelet7 ай бұрын
I’ve spend the last few days watching retirement strategy videos and everyone speaks way too fast and doesn’t take the time to slow down and use illustration to help explain what they are teaching. You do an amazing job communicating and slowing it down for easy note taking and understanding. Thank you!!
@benqurayza78726 ай бұрын
You can slow down the playback of a KZbin video. Stop the video with one tap. Click on the gear wheel displayed on the upper right corner of the screen. One of the options is playback speed. I usually select 75% of normal speed. Then, you can resume the video with one tap on the screen.
@lmb48766 ай бұрын
You can SLOW-down or SPEED -UP any ANY KZbin video by going to the “wheel” on the page, click on that and either decrease the speed or decrease the speed..easy peasy
@user-js3ee5qv6gАй бұрын
I just wish all these videos would keep their Written material tad bit longer on the screen to give us chance to read them, after all its not the young ones but over 60’s you are targeting so keep at our pace please 🙏🏽
@July.4.17765 ай бұрын
Retire early and start taking distributions….This will lower your total amount in your account at age 73 to 75 when you have to take RMD’s plus you will get more healthy years to enjoy it. That’s a win win….
@DaveS2468 Жыл бұрын
James, you do a tremendous job of explaining very complex issues in a clear and concise manner. I really appreciate and enjoy your videos. Thank you for creating such excellent content!
@RootFP Жыл бұрын
You are very welcome
@suzanneemerson9787 Жыл бұрын
This is a great explanation. Wish I had heard it way before I turned 70 1/2 and had to start taking RMD’s. That was over a decade ago, and no one was talking about it much back then, so now my RMD is added on to my government pension income, and I am in a higher bracket and paying higher taxes on my pension as well as the RMD on both State and Federal returns. 😢 I wish I had done Roth conversions, but I didn’t know about them. I do use QCD’s, though. No more mailing personal checks to charities.
@splitliving8 ай бұрын
Yes! First, there was no such thing as Roth when I began investing. And, now, all that good planning to minimize taxes in retirement went out the window! Adding insult to injury, RMD’s jumped the Medicare “punishment” up. No way to win at this point.
@shawnbrennan75268 ай бұрын
Just remember: if you are complaining about having to take RMDs, you are in a great situation.
@richj11347 ай бұрын
Likely true, but having the government force you to sell something you may not want to sell, so they can take part of it, does not mean I should not take advantage of ways to minimize their confiscation. Plus if you mess it up they will raise your medicare costs because they forced you to take the RMD. So you have to be aware of the rules.
@pelekeososhio56276 ай бұрын
Yes, that is why I was glad I never inherited a $5million dollar IRA. I would hate to have to give 35% of it to the government even if I never had to exert one ounce of energy and time to acquire it. Can beneficieries refuse to accept inheritances? If that is possible then they can just refuse the money and avoid paying the taxes. That seems like a good financial strategy.
@LTVoyager6 ай бұрын
Absolutely. However, that doesn’t mean you shouldn’t try to make a great situation even better, right?
@jimhoge32525 ай бұрын
#4- keep working should be last resort if at all! As soon as you quit, you have RMDs so why bother???
@johnkasianowicz65365 ай бұрын
@@pelekeososhio5627With a $5M IRA, a 3% RMD would be $150K income per year. The total Federal tax on that (single filers) is 19.6%.
@daveschmarder-1950 Жыл бұрын
I'm all set with my planning. I wished YT was around 50 years ago when I first started. I did recommend this video to a couple that are in this time of their life. My IRA is modest, but along with my RMD, I'm planning a Roth conversion too. I'm waiting until the end of the year when I will know my income, then do the Roth conversion. I switched to making Roth contributions in 1998. Somehow I got that one right.
@RootFP Жыл бұрын
Thank you for sharing the video 🙏🏼
@PH-md8xp Жыл бұрын
Great video. I’ve decided to go find my self a woman that is 10 or more years younger than I am, mainly for the RMD benefits, and nothing else :)
@JingLi-pw3du5 ай бұрын
test
@Laborkei10 күн бұрын
Don't forget, you can raise the cost of your Medicare if you do too much of a Roth Conversion. Me personally I watch the Tax Tables for IRMA and take the difference to know how much to Roll to Roth.
@frankdombrowski37178 ай бұрын
By far the best and most comprehensive explanation of RMDs available out there. Very easy to understand and very well laid out. Great job James!
@haroldcoleman7497 Жыл бұрын
Wow! James, you made my day with the younger spouse revised RMD schedule. She's 19 years younger, this is REALLY helpful.
@RootFP Жыл бұрын
Glad that part was so helpful!
@tommason81046 ай бұрын
This strategy actually works better if the woman is the older of the two. Both financially and otherwise. Go find a cougar.
@hogroamer260 Жыл бұрын
That was a very well thought out video. I'm a 1%er! No, I don't have $11.1M. I'm the 1% that intends to convert my entire IRA to a Roth IRA. I don't intend for my beneficiaries to pay taxes on their inheritance. They most likely will still be working at the time of my death, and any taxable inheritance would be taxed at their top bracket and possibly push them into an even higher tax bracket. They already make very good money, so I'm converting up to the top of the 24% tax bracket. Also, there is no state income tax where I live, but they live in greedy New York State. Growing up, I couldn't see how I could possibly be in a higher tax bracket in retirement, so I opted almost exclusively, to contributed to a traditional IRA. After three years of Roth Conversions, I still have three times as much in my traditional IRA than the Roth. Due to growth, dividends and intrest, it's hard to bring down the balance even after a conversion. I'm trying to make a point to those that are foregoing the Roth to gain a small tax advantage now.
@Post4JM6 ай бұрын
I advised my husband to take 401K Roth because he was at a lower tax bracket. I’m glad he listened to me as now we have a combined 500K in Roth. But he still has a lot of conversions to do before RMD hits in 10 years.
@janetkenny486111 ай бұрын
I love that you lead with living a quality of life in retirement and money is to have a fulfilling life. I only want to not outlive my money, have great experiences, and leave a little to my one child. My projections look very good, and I appreciate the giving to charity with RMD’s. That would be a blessing all around. As always, thank you for some more ideas and strategies.
@jimlow6824 Жыл бұрын
Great content. Alas, I didn't use the window for Roth conversions between retirement and RMD age. Also, RMD and Roth conversions hit your income line and could increase your IRMAA medicare payment.
@layson9061 Жыл бұрын
XL z .xxz. ,🐏
@ericliu53197 ай бұрын
Thank you, James. I have never thought about your points 6 & 7 and this changes my planning.
@everettcalhoun8197 Жыл бұрын
I don't understand why it's 10 years for a modification of the joint life expectancy tables for RMD's. Should start at 6 years and younger. Also I think the default thinking should be to apply for SS benefits at 70. Then back off of that number for personal reasons like health, marital status, income needs and dependent children. Put enough away in your retirement accounts to get to 70 from 55. Don't forget to fund your HSA account. I did that in a round about way. I was going to collect SS at 62 but did some research and there are a number of benefits to delaying SS. Not the least of which is the favorable taxation of SS benefits and the reduction of RMD's at 73. I did the two bucket system putting enough cash in my laddered bonds and CD bucket to reach 66. When I reached 66 and my retirement accounts were larger at 66 than 62 and I was healthy I did a rinse and repeat to 70. Now my RMD's are manageable, my Roth has increased substantially. I can live on SS alone, but don't have to. Same with my wife when I pass. Also if you have a health issue that will affect your life expectancy after FRA you can get 6 months of SS benefits retroactively. Hope this helps someone in clarifying how to look at retirement.
@rudester755711 ай бұрын
I think a discussion of what happens to the inheritors of a regular IRA vs a Roth IRA.
@conureron3792 Жыл бұрын
I like that QCD idea!
@RootFP Жыл бұрын
Same!
@toddmaniatoddmania98442 ай бұрын
@@RootFPJames, maybe you should make a video about how to handle RMD’s during a bear market, with various strategies/options for those who can’t do Roth conversions for different reasons.
@MrLopez7468 ай бұрын
Is it smarter to do a Roth conversion than to withdraw the same amount as the standard deduction from your IRA/401K in retirement years before RMDs kick in?
@cliffluxion7019 Жыл бұрын
Thank you very much for this helpful and interesting content! 😀
@RootFP Жыл бұрын
Glad it was helpful!
@rodneynapier8264 Жыл бұрын
What about an 8th option. Begin taking out higher amounts from IRA when you can to preserve brokerage account that can be passed to heirs without 10;year withdrawal rule. Lower IRA balance early in retirement will lessen amount of RMD then switch over to brokerage withdrawals when you need to.
@xporkrind2 ай бұрын
If have worked for multiple employers. If I rolled over 401k retirement fund from a prior employer into a personally directed IRA, but now have a new employer with whom I have a new 401k, can i roll over my traditional IRA funds into the new employer's 401k, so that if I continue working beyond age 73, I can delay my RMDs? Or am I stuck with the traditional IRA with no way to roll it over to my new employer's 401k plan. LOVE ALL YOUR VIDEOS. Keep up the great work. Some of the best and clearest explanations on youtube.
@alrockyАй бұрын
401(k) plans typically allow employees to roll their traditional IRA into their current 401(k). Ask or look at plan documents.
@kinggeek1960 Жыл бұрын
You need to address SORR (sequence of returns risk) when discussing RMD's
@ElisaAvigayil2 ай бұрын
Delaying SSA to give yourself more time to do a Roth conversion is an interesting concept. For USG employees, we can retire at 50 and get a supplement until age 62 which is combined with our pension. If we delay taking SSA until age 65, our income will drop between ages 62 (when our supplement ends) and age 65 (when we start SSA) so we could do Roth conversions then. We could also take the decade between retiring and drawing on our TSP (ages 50 to 59.5) to do Roth conversions. But if we do that, we'd have to afford the tax bill as we only collect our pension and supplement during those 9.5 years.
@Imsierrabound6 ай бұрын
There are a couple of other methods to help reduce RMD’s, especially from a 401K plan that contains company stock. The retiree can execute an NUA on some or all of the company stock, paying taxes on the cost basis and taking the stock in-kind which would be subject to lower capital gains taxes. The entire 401K would have to be rolled-over during the same year. The cost basis can also count towards the RMD if the NUA is timed when the owner must take the first RMD. Reducing the value of the roll-over through an NUA can significantly reduce RMD’s as RMD’s do not apply to the stock taken in-kind, but beneficiaries of in-kind will not enjoy a step-up.
@lindad6223 Жыл бұрын
This can be complicated. I am retiring very soon, with a small pension and survivor's benefit - switching to my own SS down the road. I worked hard to pay off the mortgage and other debt. I'll have just enough of a pension that my SS starts being taxable. The combination will be enough for needs and most wants. But not so much that I won't need to think about "wants". I'll want to spend down some of that savings on some extra travel. One day, hopefully at least a dozen years down the road, I'll need to replace my old reliable car. Just like everyone else, I'm hoping that there's no huge emergency or crisis that consumes what I was able to put away. If it does, I'll try to be thankful that I had it. But that pension gives me no wiggle room for converting "a little bit" without taxing my SS too. So, I'm planning on taking the convert it all option my first or second full year in retirement. Not "ALL" all... I'll leave enough for tax free charitable contributions when the RMDs hit. One more big tax year, rather than getting chewed up by the SS tax torpedo year after year.
@FIRE_DrNinjaTurtle Жыл бұрын
I love your channel
@RootFP Жыл бұрын
Thanks for your support!
@loakland27736 ай бұрын
Excellent video with very detailed easy to understand presentation.... Great job James... Just became a sub.... Be well...
@keithware57686 ай бұрын
Well done! Great food for thought
@hagakuru Жыл бұрын
Thanks for this pertinent and informative information.
@RootFP Жыл бұрын
Glad it was helpful!
@maxcorder22114 ай бұрын
“You were PLANNING to take $20,000 from your IRA, but your RMD is $200,000”? Say what? There is literally no one who has ever been in this situation. Well, maybe a modern-day Rip Van Winkle. There are more sensible examples.
@reflective660210 ай бұрын
As per the usual, another excellent video James! But I'm curious... Why did you choose not to mention QLACs?
@pbr5497 ай бұрын
Very good video. Thanks for making it.
@Jean579-jv2bm4 ай бұрын
This is great info for those who are under 75. Can this benefit those over 78?
@bridge178 Жыл бұрын
Maestro! What a fantastic video.
@RootFP Жыл бұрын
Thank you kindly!
@1106gary8 ай бұрын
The charity idea works only on IRAs but not on 401k's
@CheckThisOut77 Жыл бұрын
Minor point: Switch the way you use your hands. Higher hand (earlier time) on OUR left.
@charlesmalone43796 ай бұрын
Just to confirm what others have said. When my RMD is what I can live on , life is good. When the returns on my account exceeds the RMD and the account grows, life is good. Remember, my children now only have TEN YEARS to take and pay taxes on what is left.
@Cindy-ee5ou3 ай бұрын
The 10-year rule is in effect for those passed away after December 21, 2019! Not mentioning the nuance sent to to a search storm …
@raycortopassi40309 ай бұрын
Great advice but too late for me. Stuck with RMDs and higher tax bracket. Should have converted to Roth before age 70 😟
@robkeshav8002 ай бұрын
Excellent points and presentation! I seem to have done everything that you have suggested. Currently I am taking RMDs. My "good" problem is that I have a significant portion of my IRA in Tesla stocks which could go up 10X (if you believe the "experts") in the next 5 yeras. If this happens then my RMDs will skyrocket putting me in the top tax bracket and also raise our SS Part B premiums in the highest bracket. Is there anything that can be done to mitigate this issue? Should I sell Tesla stocks and buy a lower growth stock/bond fund?
@dforrest4503 Жыл бұрын
Great video. I really think I’ll do some Roth conversions from my traditional 457 plans, and the leave the rest of my 457 to charity through QCDs, assuming I don’t need it. One question I have is that if you’re still working when you reach RMD age, you do not need to take the RMD. Is there a lower limit on that earned income to exempt you from RMDs?
@austinquinn63216 ай бұрын
Love the content! Considering RMDs through the lens of deciding between Roth and traditional 401(k) contributions, what would you recommend in a scenario where your RMDs alone would put you in a similar or higher tax bracket as when you are making contributions? I would think this would favor going with the Roth 401(k). Of course this would require a large enough retirement account balance. Additionally, the amount you would need to convert in order to lower your account balance enough by RMD age would put you in as high or higher of a tax bracket because it’s recognized as income. Not to mention that in this scenario your account would likely be growing by more than the amount you are converting. Again, assuming you plan to have a very large retirement account balance
@jasonperry9020 Жыл бұрын
Would you favor placing a dividend portfolio in your traditional IRA, Roth IRA, or brokerage account during retirement years with the goal of using all of the dividends it produces each year?
@chemquests7 ай бұрын
Dividends are taxed as regular income, so you don’t want it in your brokerage account. Generally you want your highest growth assets in Roth to maximize tax free growth and the more risk off assets, like bonds, are kept in the traditional. Since the brokerage gets taxed each year, you want tax-efficient investments like index funds that are primarily earning long term capital gains.
@celloplayermom6 ай бұрын
@@chemquests qualified dividends are taxed at a much lower rate than ordinary income, so dividend-paying stocks can be pretty tax efficient in a taxable account. I did some analyses on this and in my case, it was noticeably better to put the qualified dividends in a taxable account (even though paying 15% tax on them) and put things like bonds and REITs and BDCs and some preferred stocks (depending on composition of income) into an IRA.
@darlythomas3295 Жыл бұрын
Excellent
@RootFP Жыл бұрын
Thank you
@yvonneschermerhorn866 Жыл бұрын
This is complicated, but stuff I never knew until I hit 70 1/2.
@tomgee19494 ай бұрын
What about Qualified Life Insurance Contracts?
@Cindy-ee5ou3 ай бұрын
Does anyone know what the cost base is for NUA for 401K inheritance before 2019? Some say it’s the fair market value of the day the person died; some say it the purchasing price…
@robertjohnson44013 ай бұрын
Charitable Trust. If your goal is to maximize the lifetime net proceeds from your IRA to your heirs, I suspect the charitable trust is not the way to do it. I suspect your heirs would get more proceeds during their lifetime by paying the taxes during the 10-year distribution phase. The charitable trust would make sense if you want to leave money to a charity and also leave some money to your heirs.
@LTVoyager6 ай бұрын
I don’t see how the QCD helps. If you use the QCD in your example, you save $3,750 on taxes. However, you now lose the $15,000 charitable contribution deduction, right? And at the 25% tax rate, that would also be $3,750 so it seems to me that the net result is the same. You either save the $3,750 on the RMD withdrawal or you save it later as an itemized deduction.
@frankkeel84106 ай бұрын
At 78 year's old is a Roth a Advantage if you are worth millilns?
@RootFP6 ай бұрын
Yes
@TheMarpalm4 ай бұрын
Great stuff thank you. One question- I know there is a way to convert a 401k so that it can be used to start a business- do you still have to take the RMDs if you have done this? For example- I use money in my 401k to build/buy some apartments. When I turn 73 would I be forced to sell/convert those apartments in part to do a RMD?
@richardblack57106 ай бұрын
What about a Qualified Longevity Annuity Contract (QLAC) to reduce RMDs?
@samkitty58944 ай бұрын
I am going to take a chance on running out of my money...instead of dying and leaving it all to vultures. I know many people who never collected a single SS payment or took a single RMD withdrawal. Tomorrow is not guaranteed to anyone. Live for today...
@likethesky Жыл бұрын
James, minor point, but when you say $100k **per spouse** can be gifted out of one’s’ IRA, that’s a bit confusing. One cannot gift to charity $200k out of one IRA even if married; both spouses need to have worked and they both have to have separate IRAs, and then yes, then each one can gift $100k out of each IRA… hope this helps!
@robertdahl8049 Жыл бұрын
What is the best time of year to take your yearly 401k withdrawal. Is it better to take early in year or later in year ??
@RootFP Жыл бұрын
Usually it makes sense to take it when you need it
@datbio73027 ай бұрын
Hi James, I have option to put into 401k Pre-Tax or 401k Roth, do you think I should put all into 401k Roth and pay more tax today. In exchange, I won't pay any tax for the growth on the roth account?
@Post4JM6 ай бұрын
It depends on your current tax bracket. I advised my husband to choose 401K Roth because he was at a lower tax bracket. I’m glad he listened to me as now we have a combined 500K in Roth. But we still have a lot of conversions to do before RMD hits in 10 years.
@gregmori51615 ай бұрын
If you don’t need your minimum distribution can you take it into your Roth account?
@drbassface Жыл бұрын
When you put money in a Roth, most of it is locked up for five years….
@JohnsDeb8 ай бұрын
All of this is way over my head😅
@keith832511 ай бұрын
James, is it better to do a DAF with Roth conversions before 70.5, or a QCD afterward; since qcd's are age limited?
@axeguy853 ай бұрын
Taxes are unavoidable for the most part. Pay now (convert to ROTH) or pay later, your choice. Now if you want to donate all of your assets you can live in poverty and pay zero.
@mrjb85028 ай бұрын
Method 8) Reduce the balance of your IRA at age 73 by spending more of it in your early go-go years.
@danwaller53126 ай бұрын
I’m required to start my RMD this year. Would a Roth conversion be beneficial to me now?
@samkitty58944 ай бұрын
no... ROTH is great for young people only. Put some money in and pay taxes at the same time. Let the money grow for 30-40 years and NEVER pay taxes again. It's like paying taxes on crop seeds but not on the crops you will grow for years.
The 8th way is to use tax-deferred money to buy a QLAC.
@conureron3792 Жыл бұрын
What do you recommend to do with the surplus RMD withdrawals, if they should happen? Just park them in a brokerage or savings account or in a Roth IRA?
@RootFP Жыл бұрын
Depends on your plan. Sometimes it’s best to spend it though!
@sergiosantana4658 Жыл бұрын
Uncle Sam does not allow you to take a RMD and contribute it into a Roth account.
@MrEscape314 Жыл бұрын
@@sergiosantana4658 not directly, but you can use the RMD to pay the taxes on a conversion. It's much more efficient than paying taxes out of the conversion and will work to reduce all future RMDs.
@catchristo940611 ай бұрын
I think you can't contribute to a Roth unless you have earned income that year.
@jonyoon10 ай бұрын
Can you take your 401K RMDs and put them towards a Roth IRA? Not talking about a rollover, but just part of your RMD that you'd be taxed for. I know that a 401K distribution is taxable and considered income, but it's it "earned income"?
@jessymadsen26996 ай бұрын
You can only have a Roth IRA (or any kind of IRA/retirement fund) if you have earned income: aka a job.
@LTVoyager6 ай бұрын
If I get a second wife who is much younger, can I then use the joint table? 😂
@EdNichols-qj4xk8 ай бұрын
I thought there was no inheritance tax unless the estate was over a certain amount. What is the tax that you were speaking of regarding leaving the estate to the heirs? I know some states do tax the estate but if you live in a state that doesn’t, what does this mean?
@dougstuart85538 ай бұрын
I wondered the same.
@celloplayermom6 ай бұрын
income taxes paid by the beneficiary on the distributions from the inherited IRA.
@jeffthom77144 ай бұрын
Why is that a strategy to give your money away? What's the purpose of even saving it?
@billphister5 ай бұрын
One of the important factors is determining how many years you are likely to face RMDs. For me, they don't start until I reach 75. Given that neither of my parents reached the age of 60, for how many years, if any, am I likely to need to worry about RMDs? It's a lot like the discussion of when to take Social Security, 62, 67 or 70? It really all depends on what assumptions you make. You won't know if you were right until after it's too late.
@hoss6981 Жыл бұрын
Step 3 gets washed out at tax time anyways it just cuts out the Middle Man
@snowfirel7108 Жыл бұрын
Will be happy to know I've changed the legacy for the children, and grand, leaving at least 5 million for them to live on the dividends, that way, i will not worry about them while in Heaven's realms.
@howardcrane59027 ай бұрын
Stating the IRS will “force” you to take an RMD is like saying the police “force” me stop at red lights. Congress makes the laws. The IRS is the enforcement agency of congress.
@Post4JM6 ай бұрын
You love IRS 😅😂 The rest of us don’t. 😢
@Post4JM6 ай бұрын
They literally rob our hard earned money 💰 😢😢😢😢
@MichaelCarpio-vd1dh Жыл бұрын
Can you let me know if insurance products like whole life or index universal life is a viable retirement account option? To me, both products seem too good to be true. Heck, who wouldn't want limited downside risks and tax free growth. I just watched a KZbin video (kzbin.info/www/bejne/m37PoaCkbbaHmNE), stating that it's because financial advisor either don't fully know about their benefits or that they work for companies that don't encourage use due to paying a listing fee, etc. I don't think that can be true for financial advisors who take a wholistic approach such as Root Financial. As it was pointed out in the video, it makes sense for a particular/select group of people, but it's often push by other influencers who I'm guessing have an agenda (i.e. commission).
@weddingmom20007 ай бұрын
Consider researching what Dave Ramsey has to say on this.
@DennisAllard5 ай бұрын
I don't buy that putting money into your Roth has much to do with whether you're paying RMD's or not. You have to pay taxes on the money before it goes to the Roth in any case. Once you're doing your RMD's, you have to withdraw the money and you have to pay taxes on it. Once that's done why not put it into your Roth there is zero cost to do so at that point. it is true that you should try to shift money to your Roth in years when your income is less so that the money you're putting into the Roth is after tax money in years where you pay less taxes.
@alrockyАй бұрын
Can't put t-IRA RMD into your Roth IRA.
@southbound1969 Жыл бұрын
Young man, you have some big pipes hanging off of those shoulders.
@wharrison71315 ай бұрын
Take out enough to keep your taxes below 12%.
@liammclaughlin28816 ай бұрын
Dumb. Don't forget you have to pay taxes on Roth conversions and you have wait 5 years before you can withdraw any gains on the Roth conversion. Best way to save money is to avoid using any financial planners. They have no skin in the game and play with YOUR money.
@markbowker59369 ай бұрын
DO EARLIER IRA DISTRIBUTIONS (LIKE IF TAKE AT AGE 69) COUNT TOWARDS YOUR REQUIRED RMD AT AGE 73? THANKS FOR THE VIDEO
@July.4.17765 ай бұрын
It would lower the total balance available at 73. 🤔