Roth Conversion Strategy for 60 Yr Old with $1,700,000 📈 || Retirement Planning at 60 & Roth IRA

[@yourfinancialekg]

**To schedule your virtual retirement and investment consultation with Drew, please select a day & time that works best for you: calendly.com/pearlwealthgroup/discoverycall **

[@EatLeadPal]

Thank you. This is very close to my situation.

[@yourfinancialekg]

You are so welcome

[@frankish5314]

Now do one with $1.7M, Oregon taxes and currently $23,400 in ACA subsidies.. Asking for a friend!..:)

[@yourfinancialekg]

😂

[@nickv4073]

Simple. Wait for Medicare at age 65 to kick in and start conversion that January.

[@johngill2853]

Why would you ask how many more dollars do you want to pay in taxes? You need to compare tax rates. The rate he's paying at the highest tax right now to do conversion and the rate he will pay effectively when he takes it out.

[@yourfinancialekg]

Thank you for your comment and engagement with the channel!

[@FIRE_DrNinjaTurtle]

I am doing a huge (to me) Self-Directed ROTH conversion in one year. It will raise my taxes, but I want to buy a rental for cash and have the income going forward.

[@yourfinancialekg]

Ok, cool!

[@johngill2853]

You want to drain the traditional IRA account? You'll lose years of the standard deduction and lower tax brackets and pay at a higher tax bracket (unless he has a pension or something that creates taxable income)

[@yourfinancialekg]

Appreciate you and your comment!

[@Snipely]

How does the standard deduction go away?

[@johngill2853]

@@Snipely if you drain your traditional IRA and have no other income. You must have missed the part in parentheses

[@Snipely]

@@johngill2853 Oh right because if your income is zero there's no deduction available. I didn't miss it, just didn't put it together. Thanks.

[@NYCNibbles]

Does this example with the 10k annual conversions (or even the 25k annually before) assume that he's paying the taxes out of the IRA rather than from external non-retirement investments? Likewise, the trip, new car, etc.? Otherwise, I'm not understanding the large net outflows in 2027-

[@damis2372]

I recently did an IRA conversion. I opted out from paying taxes on the conversion. Is there a way to pay taxes now? I want to avoid the penalties for not paying taxes on time.

[@yourfinancialekg]

Send an estimate to the IRS

[@rodrigok1220]

I’m 52, and will hit a similar situation. I’ve started to put all my contributions into Roth at a 24% bracket so I have a decent amount in a tax free account. I know it’s more than 22 percent bracket, but already have a large amount in tax deferred accounts. I don’t see going under a 22 percent bracket in retirement with having a pension

[@yourfinancialekg]

Thanks for sharing!

[@墨紫月]

I thought one main advantage of Roth conversion is so that we don’t run into large amounts of RMD after age 73

[@yourfinancialekg]

Yes it is as well!

[@amerlin388]

Sorry, sounds like very superficial analysis. Key focus should be on whether to go for ACA subsidy or Roth conversion, possible a combination. Generally, you're better off managing taxable income to qualify for ACA subsidy until year you turn 65. Once you're on Medicare you can focus on Conversion to Roth in the remaining years before you hit RMD age.

[@yourfinancialekg]

Thanks for commenting at least!

[@SeeVolmr]

9:00 $9,000 in extra taxes on a $25,000 conversion is 36%!! Of course he squirmed. My question is why didn't you realize the math error?! At 13.88% effective tax rate, his additional tax should be only $3450 on a $25K conversion.... right about where he was willing to go! 🤦‍♀ The error must have been in how much tax he thought he was ALREADY paying! (quoted at $3K) Because the tax calculations in your example were correct.

[@ryanfitzsimons7388]

At 25K per year how does that drain the account in 7 years? That’s only 175K and doesn’t take in consideration 6% growth.

[@yourfinancialekg]

Taxes and inflation on that 25k are calculated in

[@datbio7302]

In your example, why you only convert the IRA, what about the 401k? In general, there is no need to draw down the tax deferred account. we want to have tax deferred account over long run to pay minimum tax on it. There is also no RMD potential impact on his tax. I am totally disappointed.

[@wwz1011]

Someone with $1.7 million in tax deferred savings (traditional IRA and 401K) at age 73 will only have an RMD of $64,000. To avoid taxes on this money, he will pay hundreds of thousands in taxes converting to Roth. At age 60, he is going to need to convert $150K or more, every year if he wants to convert it all prior to RMDs kicking in. Converting $25K per year is not going to do it. Convert $10,000 per year, by the time he reaches 73, he will still have $1.7 million in tax deferred accounts (as they will continue to grow).

[@yourfinancialekg]

Thanks for sharing!

[@cheri466]

IRMAA Threshhold considerations.

[@aj_aka_alan]

You didn't highlight if he would actually save money on his taxes

[@yourfinancialekg]

I apologize if that was not clear. He does. Thank you for watching!

[@johnd4348]

What about the 5 year rule.

[@yourfinancialekg]

5 Year rule is important to remember on the gains inside the Roth IRA. Thank you for the comment John!

[@johnscott2746]

The five year rule on conversions doesn’t apply since he is over 60. As long as he has a Roth IRA that has been open for five years to convert the money into he is fine.

[@davJanko8052]

Each conversion starts a new five year clock

[@johnscott2746]

@@davJanko8052only if you are under 59 and 1/2. If you have had any Roth IRA open for at least five years and you are over 59 and 1/2 then all distributions are qualified and tax free. That’s straight from the IRS.

[@lorim4327]

​@@davJanko8052 doesn't apply after 59.5

[@jerrylabat550]

You have a mistake in your 10K conversion, at 6% earnings it will never be converted as the earnings are greater than $10K per year. It looked like you had data left behind from your $25K scenario which messed up your $10K one.

[@yourfinancialekg]

Jerry you’re exactly right but it’s not a mistake. The goal is not to convert the entire amount it’s to find out how much taxes does this gentleman actually want to pay period at $10,000 a year he feels comfortable paying taxes even though he will not fully convert all his IRA. Great observation and comment Jerry!

[@johngill2853]

No way I'd do Roth conversions at 22%, you want to spread those out and pay less tax especially taking advantage of standard deduction every year

[@yourfinancialekg]

Thank you for your comment. Keep in mind everybody's financial situation is different.

[@davidhawkins4108]

True, I’m wanting to avoid 32%.

[@headlibrarian1996]

If you’re single you probably have no choice, single brackets are too small to avoid 22-24% while converting meaningful dollars to Roth. Early social security, a pension, and liquidating taxable investments to pay your lifestyle easily fill up the 12% bracket. I expect to max out 24% converting because of this. If Congress allows current brackets to expire we’ll be back at 28% for what is now 22-24%.

[@johngill2853]

@@headlibrarian1996 single tax brackets are too small to convert any meaningful amount at 22%? That is not true for probably 95% of population

[@kenedward4585]

I can save you 1% to 2% instantly......don't ever use a CFP that charges an AUM fee. Duh.

[@yourfinancialekg]

Good point!

[@texastexas4541]

It does not allow one to comment. Why?

[@yourfinancialekg]

Maybe because this is an upcoming video? It premiers next week. Excited to show this to KZbin!

[@texastexas4541]

@@yourfinancialekg Thanks!

[@yourfinancialekg]

@@texastexas4541 👍😎

[@ronaldschulman4448]

This does not address how much more you will have in Roth growth with $25,000 vs. the extra taxes?

[@Snipely]

I thought he had 800K in pretax, not 250K.

[@datbio7302]

9:00 this person is not paying $3000 in tax currently for sure. Because adding $25000 roth conversion treated as income, 25000 * 22% = $5500. He should add $5500 to his tax, not $9000. Come on, simple math without the software, Mr. Drew!!

[@YankeeinSC1]

the repetitiveness and graphical channel identifier graphics nauseated me enough to immediacy stop watching. GET TO THE POINT.

[@yourfinancialekg]

Hope you feel better soon!

[@phildibello1141]

Sorry, but this was difficult to follow.

[@gimmpy91]

Single 60 year old male w/ no kids. I feel bad for him.

[@yourfinancialekg]

Don’t feel bad. He is a very accomplished and happy man!

[@johnd4348]

sounds like he is blessed. I am in the same situation With no wife or kiids have been debt free since 25 years old . Life is Good

[@yourfinancialekg]

@@johnd4348 Debt freedom is awesome! 👏 😎

[@1Mannco]

He can be very happy, no huge obligations/debt free, no kids/wife but has a full life. Wants to travel, maybe has a gf. Maybe he has lots of friends, family and nephews that are really close to him.