WEBVTT 1 00:00:00.240 --> 00:00:02.080 And our phone lines are open for you here at 2 00:00:02.120 --> 00:00:04.919 the station six oh eight three two one thirteen ten. 3 00:00:05.000 --> 00:00:07.960 That's six oh eight three two one thirteen ten. If 4 00:00:08.000 --> 00:00:10.759 you have any questions at all for our retirement planning 5 00:00:10.800 --> 00:00:14.080 professionals from Class Financial love to hear from you this morning, 6 00:00:14.080 --> 00:00:16.839 anything retirement related to Telful number again here at station 7 00:00:16.920 --> 00:00:19.679 six oh eight three two one thirteen ten. That's six 8 00:00:19.760 --> 00:00:21.800 oh eight three two one thirteen ten. Of course, you 9 00:00:21.800 --> 00:00:24.839 can learn more about Coss Financial on their website coss 10 00:00:24.879 --> 00:00:26.000 financial dot com. 11 00:00:26.000 --> 00:00:27.079 That's coss k. 12 00:00:27.399 --> 00:00:31.320 L aasfinancial dot com. Great website to learn more about 13 00:00:31.320 --> 00:00:34.000 Coss Financial. You can also listen back to this or 14 00:00:34.359 --> 00:00:37.560 previous shows podcasts as well. That all available to you 15 00:00:37.960 --> 00:00:42.119 at coss financial dot com. You canubscribe subscribe right there 16 00:00:42.159 --> 00:00:44.320 on the website. Speaking of subscribing, they've also got the 17 00:00:44.320 --> 00:00:48.799 weekly Market Pulse newsletter available to you at cossfinancial dot com. 18 00:00:48.920 --> 00:00:52.560 Really great website and a great newsletter as well that's 19 00:00:52.600 --> 00:00:54.920 free to you. Speaking of things that they're giving you 20 00:00:54.920 --> 00:00:58.240 at Coss Financial, that little weekly newsletter gives you a 21 00:00:58.280 --> 00:01:01.320 nice little snapshot of what's been going on in the markets. Also, uh, 22 00:01:01.679 --> 00:01:04.319 let you know a link to the most recent podcast, 23 00:01:04.359 --> 00:01:05.840 so you never miss it. Against head on over to 24 00:01:05.879 --> 00:01:08.480 class finance dot com telephon number for Class Financial six 25 00:01:08.560 --> 00:01:12.040 oh eight four four two five six three seven. No 26 00:01:12.159 --> 00:01:14.200 charge for that first get to know your appointment at 27 00:01:14.200 --> 00:01:16.920 class Financial. It will be complementary to you. I'm gonna 28 00:01:16.920 --> 00:01:19.319 tell number six oh eight four four two five six 29 00:01:19.439 --> 00:01:21.439 three seven and joining us this morning for a Class 30 00:01:21.480 --> 00:01:24.519 Financial or Nate Briby and Eric Schwartz. Nate, how you 31 00:01:24.560 --> 00:01:25.400 doing this morning? 32 00:01:25.799 --> 00:01:26.840 Hey, Sean doing good? 33 00:01:27.000 --> 00:01:28.640 Good to hear from be great to talk with you 34 00:01:28.680 --> 00:01:29.760 at Eric, how have you been? 35 00:01:30.760 --> 00:01:32.159 I'm doing great, Son, how are you doing? 36 00:01:32.200 --> 00:01:32.879 I'm doing good. 37 00:01:33.000 --> 00:01:35.640 We've got we've got some fun stuff r mds would 38 00:01:35.680 --> 00:01:39.200 be talking about this week, which is a really important, 39 00:01:39.319 --> 00:01:42.599 uh really important conversation and it's also a really uh 40 00:01:42.799 --> 00:01:45.879 really cool thing for folks to understand how they work. 41 00:01:45.920 --> 00:01:48.120 I think there's a lot of a lot of misunderstanding 42 00:01:48.439 --> 00:01:52.120 about what required minimum distributions are and how they apply, 43 00:01:52.159 --> 00:01:54.200 and we're gonna get the details from Eric and Nate. 44 00:01:54.239 --> 00:01:55.760 We will get that in just a moment. Mention the 45 00:01:56.000 --> 00:01:57.640 phone lines being open to you. I'd love to hear 46 00:01:57.640 --> 00:02:00.280 from six oh eight three two one thirteen ten. That's 47 00:02:00.319 --> 00:02:03.079 six eight three two one thirteen ten the website for 48 00:02:03.120 --> 00:02:05.799 Class Financial class financial dot com and they're telph number six, 49 00:02:05.840 --> 00:02:08.759 So eight four four two five six three seven. Before 50 00:02:08.759 --> 00:02:10.840 we get rolling on this week's conversation with Eric and 51 00:02:10.879 --> 00:02:13.840 Nate about required minimum distributions. One of the cool features 52 00:02:13.840 --> 00:02:16.039 of the program is, of course, the Class Quiz Question 53 00:02:16.080 --> 00:02:18.319 of the Week, your chance to win a fantastic prize 54 00:02:18.319 --> 00:02:20.719 this week, no exception, our friends from Class Financial have 55 00:02:20.840 --> 00:02:24.039 provided a twenty five dollars gift card to the cheesecake Factory. 56 00:02:24.080 --> 00:02:25.759 We'll tell you a little bit later on the program 57 00:02:25.840 --> 00:02:27.840 how you can win that with the Class Quiz Question 58 00:02:27.840 --> 00:02:30.039 of the week. Let's actually speaking up the Class Quiz 59 00:02:30.120 --> 00:02:32.400 Question the week. Let's actually look back to last week's show, 60 00:02:32.639 --> 00:02:34.599 get the question and answer there as well. 61 00:02:34.680 --> 00:02:38.759 Nate yep, thanks everyone for listening as always, and congrats 62 00:02:38.800 --> 00:02:42.080 to our winner from last week, Mark of Fitzburg, who 63 00:02:42.120 --> 00:02:46.159 correctly answered the true or false question, which was your 64 00:02:46.159 --> 00:02:50.879 beneficiary designations on your investment accounts will will override your 65 00:02:50.919 --> 00:02:53.520 will or trust and the correct answer is true. 66 00:02:53.680 --> 00:02:55.280 So definitely important to keep in mind. 67 00:02:55.560 --> 00:02:57.800 Yeah, really important, And that was a great show as well. 68 00:02:57.800 --> 00:03:00.599 You can listen back over at coss financial dot com. 69 00:03:00.800 --> 00:03:04.719 So you know, when we're talking about future retirement income, 70 00:03:04.759 --> 00:03:06.759 I know r m ds they are a big deal. 71 00:03:07.039 --> 00:03:08.919 What if folks need to know about those? 72 00:03:09.080 --> 00:03:11.919 Eric, Yeah, this is what we spend a lot of 73 00:03:11.960 --> 00:03:14.960 our time talking to clients about. And honestly, it's a 74 00:03:15.120 --> 00:03:18.039 I think a lot of the reason clients approach us 75 00:03:18.080 --> 00:03:21.280 to begin with, because not only are these pretty confusing, 76 00:03:21.319 --> 00:03:25.639 but they feel like they're constantly changing. But think of 77 00:03:25.800 --> 00:03:29.000 think of required minimum distributions or r m ds as well, 78 00:03:29.039 --> 00:03:31.520 we'll call them today. Think of them like the irs 79 00:03:31.520 --> 00:03:34.919 saying all right, we've we've allowed you to to uh 80 00:03:35.719 --> 00:03:39.520 put dollars into your retirement accounts pre tax uh and 81 00:03:39.520 --> 00:03:42.159 and defer tax on those dollars for all of these years. 82 00:03:42.719 --> 00:03:44.599 Now it's time that we want you to start taking 83 00:03:44.599 --> 00:03:47.080 it out so we can generate some some tax revenue 84 00:03:47.120 --> 00:03:49.759 on it. So they're gonna they're gonna make sure that 85 00:03:49.840 --> 00:03:52.879 your tax areferred. IRA money doesn't just stay there forever. 86 00:03:53.800 --> 00:03:56.280 And this is something I think that for folks has 87 00:03:56.319 --> 00:03:59.039 gotten a little more confusing because you know, they've heard 88 00:03:59.080 --> 00:04:01.680 certain ages they hurt seventy and a half, they've heard 89 00:04:01.759 --> 00:04:05.479 seventy two, seventy three, seventy five. You know, when does 90 00:04:05.520 --> 00:04:09.199 it start? So rm ds have changed in the last 91 00:04:09.800 --> 00:04:14.039 probably five years now, I think. And for folks born 92 00:04:14.080 --> 00:04:17.519 between January first, nineteen fifty one, in December thirty first, 93 00:04:17.680 --> 00:04:20.360 nineteen fifty nine, their rm ds are going to start 94 00:04:20.399 --> 00:04:24.439 at seventy three. And then anybody born after nineteen sixty 95 00:04:24.439 --> 00:04:27.680 their rmds are going to begin at seventy five. And 96 00:04:27.759 --> 00:04:30.439 I mentioned earlier it used to be seventy and a half, 97 00:04:30.519 --> 00:04:35.279 then it was seventy two. The the Secure Act and 98 00:04:35.279 --> 00:04:40.439 Secure Act two point zero legislation have pushed back rmds 99 00:04:40.480 --> 00:04:44.199 a couple of times here, and I think now for 100 00:04:44.279 --> 00:04:46.720 folks it's it's easiest just to think of it as 101 00:04:46.920 --> 00:04:50.199 if you're born before December thirty first, nineteen fifty nine, 102 00:04:50.319 --> 00:04:53.120 rm ds start at seventy three. Anybody after you're starting 103 00:04:53.160 --> 00:04:55.680 at seventy five. Now, if you miss your rm D 104 00:04:55.879 --> 00:04:58.879 there is a penalty. We'll get into the details of 105 00:04:58.920 --> 00:05:02.319 that later, but there is a penalty for not taking 106 00:05:02.319 --> 00:05:06.120 out your required amount when the time comes. And these 107 00:05:06.120 --> 00:05:09.959 distributions are taxable income. Okay, so unless you have after 108 00:05:10.040 --> 00:05:14.279 tax contributions in your retirement plans, which are less common 109 00:05:14.319 --> 00:05:16.399 these days. You are going to pay income tax on 110 00:05:16.480 --> 00:05:19.439 those distributions. Again, that's why the I R S is 111 00:05:19.759 --> 00:05:21.839 actually wanting you to take those dollars. 112 00:05:21.439 --> 00:05:23.399 Out, always looking for their money. 113 00:05:23.439 --> 00:05:26.199 Had they won't forget about it, Shohn, I don't worry. 114 00:05:26.240 --> 00:05:28.600 They won't forget about it. They certainly don't. 115 00:05:28.800 --> 00:05:31.240 Talking this morning with Eric Schwartz and Nate Brivey, our 116 00:05:31.279 --> 00:05:33.920 retirement planning professionals from Class Financial. If you've got a 117 00:05:33.959 --> 00:05:35.519 question for Nate and Eric, love to have you joined 118 00:05:35.600 --> 00:05:37.519 us this morning telephone number six oh eight three two 119 00:05:37.600 --> 00:05:40.279 one thirteen ten at six oh eight three two one 120 00:05:40.480 --> 00:05:41.199 thirteen ten. 121 00:05:41.319 --> 00:05:43.600 So Nate, what kind of accounts are we talking about here? 122 00:05:44.759 --> 00:05:47.000 Yep, So rmds are going to apply to any pre 123 00:05:47.160 --> 00:05:51.120 tax retirement accounts, Like Eric said, so think of traditional iras, 124 00:05:51.279 --> 00:05:55.240 step irays, simple iras, four oh one k's, four oh 125 00:05:55.240 --> 00:05:58.680 three b's, and four fifty seven b's. So most of 126 00:05:58.720 --> 00:06:00.680 you may have some of those accounts infully those names 127 00:06:00.720 --> 00:06:04.160 ring a bell for you. There is one key exception 128 00:06:04.560 --> 00:06:09.920 that if you are in past age seventy three, you 129 00:06:09.959 --> 00:06:12.240 don't need to take r and ds from your company 130 00:06:12.319 --> 00:06:15.279 sponsored retirement plan if you're still employed with them. Now, 131 00:06:15.519 --> 00:06:17.319 I do believe you actually have to be working through 132 00:06:17.319 --> 00:06:19.399 the full year. So it's not like you can say, well, 133 00:06:19.480 --> 00:06:21.920 I work New Year's Day and then I don't have. 134 00:06:21.879 --> 00:06:22.959 To take it for the whole year. 135 00:06:23.279 --> 00:06:25.319 I'm you know, Eric, you can correct me if I'm wrong, 136 00:06:25.360 --> 00:06:26.279 but I'm pretty certain you. 137 00:06:26.199 --> 00:06:27.879 Have to work through the whole year to get that exception. 138 00:06:28.040 --> 00:06:29.319 So true. 139 00:06:30.199 --> 00:06:33.240 Notice one important point in that simple and set plans 140 00:06:33.480 --> 00:06:37.120 are do not fall under that exception. So if you 141 00:06:37.160 --> 00:06:39.560 have a simple plan, your simpler set plan that you're 142 00:06:39.600 --> 00:06:41.360 self employed, and you say, well, I'm seventy three and 143 00:06:41.360 --> 00:06:43.839 I'm still doing electrical work, it's like, well, I'm sorry, 144 00:06:43.920 --> 00:06:47.240 it's a simple IRA and unfortunately not qualify for that 145 00:06:47.680 --> 00:06:52.319 I'm working past age seventy three exemption there. So, of course, 146 00:06:52.399 --> 00:06:55.560 notably excluded from this list is ROTH accounts, so Roth 147 00:06:55.680 --> 00:07:00.600 iras are made with you know, after tax contributions tax regrowth, 148 00:07:00.759 --> 00:07:03.000 so there are no required. 149 00:07:02.600 --> 00:07:04.759 Minimum distributions on those while you're living. 150 00:07:05.040 --> 00:07:08.160 I think Eric has a section on about inherited rm ds, 151 00:07:08.160 --> 00:07:10.600 which are a whole nother ball of wax, but for 152 00:07:10.680 --> 00:07:14.720 the original contributor to ROTH iras there is no required 153 00:07:14.759 --> 00:07:16.360 minimum distributions, which is great. 154 00:07:16.720 --> 00:07:19.399 Really, there was a wonky, a wonky. 155 00:07:20.839 --> 00:07:23.720 Nuance in the tax code where actually Roth four oh 156 00:07:23.720 --> 00:07:25.560 one k's required. 157 00:07:25.040 --> 00:07:27.000 A minimum distribution, which is wonky. 158 00:07:27.480 --> 00:07:30.160 But actually starting last year in twenty four that they 159 00:07:30.160 --> 00:07:32.879 got rid of that requirement. So Roth four oh one 160 00:07:32.959 --> 00:07:36.560 k's do not require a minimum distribution at this point. 161 00:07:37.480 --> 00:07:40.000 It's all that's stuff. I find that stuff so interesting. 162 00:07:40.000 --> 00:07:43.199 You mentioned, you know that they made that change back 163 00:07:43.240 --> 00:07:44.920 in twenty twenty four. I remember when we were doing 164 00:07:44.959 --> 00:07:48.279 shows previous to that change is always like what is 165 00:07:48.319 --> 00:07:50.399 that all about? And that's, you know, one of those 166 00:07:50.439 --> 00:07:52.480 one of those very fascinating things like how did that 167 00:07:52.519 --> 00:07:55.800 get forgotten? Of course, eventually kind of figure everything out 168 00:07:55.800 --> 00:07:57.600 and level it all out as well. As we talked 169 00:07:57.600 --> 00:08:01.199 this morning with Eric Schwartz today Briby retirement planning professionals 170 00:08:01.199 --> 00:08:04.279 from Class Financial talking this week about required minimum distributions. 171 00:08:04.319 --> 00:08:06.279 If you have a question, whether it's about required minimum 172 00:08:06.319 --> 00:08:09.120 distributions or anything as far as your retirement planning, left 173 00:08:09.120 --> 00:08:10.519 to get you on the air with our retirement planning 174 00:08:10.560 --> 00:08:12.800 professionals from Coss Financial, All I gotta do is dial 175 00:08:12.839 --> 00:08:14.639 in here to the station six soh eight three two 176 00:08:14.639 --> 00:08:17.240 one thirteen ten. That's six oh eight three two one 177 00:08:17.319 --> 00:08:19.199 thirteen ten. Of course, you can learn more about COSS 178 00:08:19.199 --> 00:08:23.040 Financial on their website coss financial dot com that's Coss 179 00:08:23.199 --> 00:08:26.399 k l aas Financial dot com and their telephone number 180 00:08:26.439 --> 00:08:29.199 six oh eight four four two five six three seven. 181 00:08:29.439 --> 00:08:31.160 No charge for that initial gets to know you appoyment 182 00:08:31.199 --> 00:08:34.679 at COLSS Financial. It will be complementary to you again 183 00:08:34.720 --> 00:08:37.320 that number six oh eight four four two five six 184 00:08:37.440 --> 00:08:39.600 three seven. So how do you figure out and how 185 00:08:39.600 --> 00:08:42.200 do they figure out what those RMD amounts are each year? 186 00:08:42.559 --> 00:08:46.320 And what if you slip up and maybe a miss one? 187 00:08:46.600 --> 00:08:49.320 Sure, this is a simple two party equation. So you 188 00:08:49.360 --> 00:08:52.960 start with your previous year ends balance divided. 189 00:08:52.559 --> 00:08:54.080 By your life expectancy factor. 190 00:08:54.120 --> 00:08:56.120 So if you're turning seventy three this year, you would 191 00:08:56.120 --> 00:08:59.320 take your twelve thirty one of twenty twenty four IRA 192 00:08:59.559 --> 00:09:02.159 balance and divide it by a factor that will get 193 00:09:02.799 --> 00:09:04.919 a number here, a factor that we'll getting tier in 194 00:09:04.960 --> 00:09:08.960 a second. But most individuals will use the uniform life 195 00:09:08.960 --> 00:09:13.120 table to find your life expectancy. This factor will decrease 196 00:09:13.159 --> 00:09:16.080 every year, and all else being equal results in a 197 00:09:16.240 --> 00:09:19.720 higher RMD going forward. Now it should be hopefully be obvious, 198 00:09:19.720 --> 00:09:22.519 but you will have a different RMD amount every year. 199 00:09:23.200 --> 00:09:26.320 So an example would be someone turning seventy three. Their 200 00:09:26.360 --> 00:09:29.960 life expectancy factor is twenty six point five years. So 201 00:09:30.039 --> 00:09:32.000 on one hundred thousand dollars account, you need to take 202 00:09:32.000 --> 00:09:35.360 out about three thousand, seven hundred and seventy four dollars. 203 00:09:35.759 --> 00:09:36.759 So for US math. 204 00:09:36.519 --> 00:09:38.879 Wizards, that's about three point seventy eight percent if you 205 00:09:38.879 --> 00:09:42.440 want to think about it that way. Rmds are calculated 206 00:09:42.480 --> 00:09:45.519 per IRA, so if you have three, you'll have three 207 00:09:45.639 --> 00:09:50.480 separate rmds. But now you can aggregate that total amount 208 00:09:50.559 --> 00:09:55.279 and distribute it from one single IRA IRA. But notably, 209 00:09:55.320 --> 00:09:58.360 this is only for iras. Once again another new liance, 210 00:09:58.440 --> 00:10:01.000 So four one k is or three b's four to 211 00:10:01.039 --> 00:10:04.639 fifty seven plans must be taken from each company's separate plan, 212 00:10:04.919 --> 00:10:10.200 so that's something to be aware of. Now another special note, 213 00:10:10.240 --> 00:10:13.759 because there's not enough already. If your spouse is the 214 00:10:13.799 --> 00:10:17.559 sole beneficiary of your IRA or retirement. 215 00:10:17.080 --> 00:10:20.200 Account and they are more than ten years younger. 216 00:10:19.879 --> 00:10:22.559 Than you, you actually get to use a different table 217 00:10:22.919 --> 00:10:28.639 called the joint life expectancy table to calculate your life expectancy, 218 00:10:28.679 --> 00:10:31.240 and once again, all else being equal, this will result 219 00:10:31.240 --> 00:10:34.960 in a slightly smaller RMD to account for a younger 220 00:10:35.000 --> 00:10:39.000 spouse potentially inheriting the money down the road. Now, you 221 00:10:39.039 --> 00:10:42.559 can delay your first RMD to what's called your required 222 00:10:42.600 --> 00:10:45.960 beginning date, which is April first of the year after 223 00:10:46.039 --> 00:10:49.159 you reach age seventy three or seventy five. But if 224 00:10:49.200 --> 00:10:51.759 you do that, you would actually be doubling up and 225 00:10:51.879 --> 00:10:54.960 having two years worth of minimums distributed. 226 00:10:54.480 --> 00:10:55.360 In the same tax here. 227 00:10:55.480 --> 00:10:59.600 Right, So if I take my defer my first year's 228 00:10:59.720 --> 00:11:02.240 RMB til next year in twenty six, I take twenty 229 00:11:02.279 --> 00:11:05.759 five's minimum in twenty six plus twenty twenty six minimums 230 00:11:06.799 --> 00:11:08.679 in that same calendar year as well, if you follow 231 00:11:08.720 --> 00:11:12.000 me there. So generally we don't recommend that, but just 232 00:11:12.120 --> 00:11:13.519 that's kind of a whoops, you shoe it. 233 00:11:13.559 --> 00:11:14.720 I forgot about the first time. 234 00:11:15.159 --> 00:11:16.840 They kind of give your grace period that for that 235 00:11:16.919 --> 00:11:20.600 first quarter of the following year there. But as we said, 236 00:11:20.759 --> 00:11:22.960 missing an R and D is kind of a big deal. 237 00:11:23.080 --> 00:11:26.720 Now they have dropped the penalty on this. It used 238 00:11:26.720 --> 00:11:29.559 to be a fifty percent penalty on any amount that 239 00:11:29.600 --> 00:11:32.879 you failed to distribute. That has been reduced to twenty 240 00:11:32.919 --> 00:11:35.960 five percent on the shortfall. If you do correct it 241 00:11:36.000 --> 00:11:39.240 within two years, you're eligible to drop that penalty to 242 00:11:39.279 --> 00:11:39.879 ten percent. 243 00:11:40.840 --> 00:11:43.360 Now you can still apply to actually waive. 244 00:11:43.159 --> 00:11:45.840 That penalty as well, basically begging for forgiveness with the 245 00:11:45.879 --> 00:11:48.799 IRS to potentially get that wave. So if you do 246 00:11:48.879 --> 00:11:50.559 miss one, the first thing you need to do is 247 00:11:50.559 --> 00:11:52.639 talk to your advisor or your bank wherever your money 248 00:11:52.679 --> 00:11:55.120 is held, get the get the missed amount taken out, 249 00:11:55.440 --> 00:11:57.720 and then talk to your account about what to do next. 250 00:11:58.080 --> 00:12:02.000 Sounds it's very important. It's just sounds that it's painful. 251 00:12:02.000 --> 00:12:03.360 You don't want to mess around with that souf as 252 00:12:03.399 --> 00:12:05.480 we talked this morning with Eric and Nate. Of course, 253 00:12:05.480 --> 00:12:08.639 our retirement planning professionals from Class Financial, Nate Briby. 254 00:12:08.440 --> 00:12:09.120 And Eric Schwartz. 255 00:12:09.240 --> 00:12:11.759 Learn more online the website COLSS financial dot com. That's 256 00:12:11.799 --> 00:12:15.399 coss k l AA S Financial dot com. Urtelphon number 257 00:12:15.399 --> 00:12:17.960 six so eight four four two five six three seven 258 00:12:18.159 --> 00:12:19.960 no charge for that initial get to know your appointment 259 00:12:20.000 --> 00:12:23.120 at COSS Financial. It will beat complimentary to you. What 260 00:12:23.440 --> 00:12:26.399 if you inherited in IRA, We'll get the details on 261 00:12:26.440 --> 00:12:28.519 that and so much more as we continue our conversation 262 00:12:28.600 --> 00:12:31.559 with Nate and Eric, our retirement planning professionals from Class Financial. 263 00:12:31.720 --> 00:12:34.240 We will do that next as Money and Motion continues 264 00:12:34.440 --> 00:12:37.399 right here. I'm thirteen ten wib A hanging out this 265 00:12:37.440 --> 00:12:40.919 morning with our retirement planning professionals, Eric Schwartz and Nate Bribe. 266 00:12:41.080 --> 00:12:43.360 Of course, they come to us from Claus Financial. The 267 00:12:43.399 --> 00:12:47.080 website Class financial dot com. That's Class k l a 268 00:12:47.320 --> 00:12:50.440 A s Financial dot com. Great website and resource to 269 00:12:50.519 --> 00:12:53.000 learn more about Class Financial, learn about their separate divisions. 270 00:12:53.080 --> 00:12:55.000 You can learn about the team at Coss Financially. You 271 00:12:55.039 --> 00:12:58.080 can also sign up for the weekly Market Pulse newsletter 272 00:12:58.279 --> 00:13:00.840 that available to you at coss financial dot com. Del 273 00:13:00.879 --> 00:13:03.399 for number six oh eight four four two five six 274 00:13:03.559 --> 00:13:05.720 three seven, No charge for that. Initial'll get to know 275 00:13:05.720 --> 00:13:08.480 you appointment tech Lass Financial. It will be complementary to 276 00:13:08.480 --> 00:13:11.159 you again their numbers six oh eight four four two 277 00:13:11.320 --> 00:13:14.759 five six three seven. Talking this week about r mds, 278 00:13:14.840 --> 00:13:17.399 of course, they are an important important thing to know about. 279 00:13:17.480 --> 00:13:19.519 And uh, as we kind of left off, I had 280 00:13:19.559 --> 00:13:22.919 mentioned inherited iras and Eric, let's talk a little bit 281 00:13:22.919 --> 00:13:23.240 about that. 282 00:13:23.279 --> 00:13:26.200 Let's say you inherited one. Are there any special rules 283 00:13:26.200 --> 00:13:26.559 for these? 284 00:13:27.639 --> 00:13:31.600 There are a lot of special rules fun before I 285 00:13:31.720 --> 00:13:34.519 before I kind of jumped into going over the the 286 00:13:34.559 --> 00:13:41.480 basics of inherited diaries. These are very very complex calculations 287 00:13:41.480 --> 00:13:44.799 in some cases, and make sure you're working with an 288 00:13:44.840 --> 00:13:48.720 advisor or or whoever is holding the funds that you inherit, 289 00:13:48.840 --> 00:13:53.440 because inherited diaries they'll usually have rm ds. But beginning 290 00:13:53.480 --> 00:13:56.440 back in twenty twenty, when the first Secure Act legislation 291 00:13:56.519 --> 00:14:00.120 went through, they changed a lot of the rules surrounding 292 00:14:01.080 --> 00:14:02.679 how much you have to take out when you have 293 00:14:02.759 --> 00:14:06.200 to do it. They passed that in January, well, it 294 00:14:06.000 --> 00:14:09.320 took effect in January twenty twenty, and then by about 295 00:14:09.440 --> 00:14:12.799 January twenty twenty one we finally had enough clarity to 296 00:14:12.840 --> 00:14:16.200 actually go ahead and make some judgments based on it. 297 00:14:16.279 --> 00:14:20.720 But inherited iras in general will have r and DS 298 00:14:21.159 --> 00:14:24.039 if you inherited those dollars before twenty twenty, so before 299 00:14:24.120 --> 00:14:28.559 Secure Act, the first Secure Act legislation. The distributions are 300 00:14:28.600 --> 00:14:32.759 based on your life expectancy. If you inherited in twenty 301 00:14:32.799 --> 00:14:36.440 twenty or later and the original owner had already started 302 00:14:36.480 --> 00:14:39.879 taking required minimum distributions, you will need to keep taking 303 00:14:39.879 --> 00:14:43.480 them out. And if you're a non spouse beneficiary, you 304 00:14:43.799 --> 00:14:46.039 have an additional rule that says you have ten years 305 00:14:46.080 --> 00:14:48.919 to draw down the account. Okay, so you only have 306 00:14:48.960 --> 00:14:52.840 to take your required amount for the first nine years, 307 00:14:52.840 --> 00:14:55.519 but in the tenth year if you haven't, if you've 308 00:14:55.519 --> 00:14:59.080 only taken out the minimum amount, odds are there's a 309 00:14:59.120 --> 00:15:01.200 big chunk of money leftover that you then need to 310 00:15:01.200 --> 00:15:04.840 distribute in the final year, and at that point it's 311 00:15:04.879 --> 00:15:06.919 hitting you all in one tax year. So this would 312 00:15:06.960 --> 00:15:08.840 be where you'd want to work with an accountant and 313 00:15:08.919 --> 00:15:13.279 advisor to figure out how you spread out those distributions 314 00:15:13.399 --> 00:15:17.000 and what makes the most sense for your situation. Now, 315 00:15:17.039 --> 00:15:19.559 if you're a spousal beneficiary, you do have the option 316 00:15:19.759 --> 00:15:23.080 to roll the funds into your own IRA. That way, 317 00:15:23.080 --> 00:15:25.120 you can defer your r and DS until you are 318 00:15:25.159 --> 00:15:29.559 seventy three. So basically in that case you're once you 319 00:15:29.639 --> 00:15:31.840 roll it over, the IRS views it as if you, 320 00:15:32.120 --> 00:15:34.759 the surviving spouse, actually saved all those dollars. 321 00:15:35.000 --> 00:15:35.799 It sort of. 322 00:15:35.759 --> 00:15:43.039 Loses the the inherited classification. And lastly, here as a 323 00:15:43.080 --> 00:15:46.399 spousal beneficiary, you can also leave it as an inherited IRA, 324 00:15:48.200 --> 00:15:51.240 in which case you take required minimum distributions based on 325 00:15:51.279 --> 00:15:54.360 your life expectancy. You might say, why would you ever 326 00:15:54.879 --> 00:15:58.639 do that? It seems to reduce your flexibility if you 327 00:15:58.639 --> 00:16:02.799 have an age difference where you know where, for example, 328 00:16:02.840 --> 00:16:06.879 maybe the surviving spouse was younger, or in the case 329 00:16:06.960 --> 00:16:10.840 of passing away earlier in life, you actually have access 330 00:16:10.879 --> 00:16:14.720 without a penalty to inherited IRA dollars before fifty nine 331 00:16:14.720 --> 00:16:18.120 and a half. So if someone passes away young and 332 00:16:18.159 --> 00:16:21.639 their surviving spouse thinks maybe they would need access to 333 00:16:21.679 --> 00:16:23.840 funds before they reach fifty nine and a half, they 334 00:16:23.919 --> 00:16:27.000 might leave it in an inherited IRA just to keep 335 00:16:27.080 --> 00:16:27.759 access to it. 336 00:16:28.279 --> 00:16:30.399 Eric, you know, as we talk about this stuff too, 337 00:16:31.120 --> 00:16:33.320 I feel like we've talked in the past rmds and 338 00:16:34.000 --> 00:16:37.799 charitable giving charities. There is there is an aspect to 339 00:16:37.840 --> 00:16:39.960 these as well that folks need to be aware of, 340 00:16:40.039 --> 00:16:40.480 isn't there. 341 00:16:42.000 --> 00:16:46.639 Yeah, So, as tax law has changed in the standard 342 00:16:46.679 --> 00:16:51.639 deduction has increased in the last eight years. Here, the 343 00:16:51.679 --> 00:16:56.679 ability to actually deduct charitable distributions through itemization has gotten 344 00:16:56.720 --> 00:16:59.559 a lot harder because most people don't have enough itemized 345 00:16:59.559 --> 00:17:05.920 deduction to actually exceed that standard deduction. So while while 346 00:17:05.920 --> 00:17:10.880 you're still doing good by by giving away giving away 347 00:17:10.920 --> 00:17:14.359 dollars to charitable organizations. It's many cases not shown up 348 00:17:14.400 --> 00:17:19.440 on your tax return. So qualified charitable distributions or qcds 349 00:17:19.559 --> 00:17:23.160 have become much more popular and much more talked about. 350 00:17:23.839 --> 00:17:26.640 Qcds that you donate up to one hundred and eight 351 00:17:26.680 --> 00:17:29.200 thousand dollars per year and that's for twenty twenty five 352 00:17:29.920 --> 00:17:33.640 directly from your IRA to a qualified charity. Okay, So 353 00:17:34.000 --> 00:17:37.200 when this happens, you're basically it's going right to the 354 00:17:37.279 --> 00:17:41.240 charitable organization. And you do not then need to report 355 00:17:41.319 --> 00:17:45.440 those dollars as taxable income. Okay, So it counts towards 356 00:17:45.519 --> 00:17:50.599 your required minimum distribution and and it's it's not going 357 00:17:50.640 --> 00:17:53.240 to show up as income on your tax return. Now, 358 00:17:53.240 --> 00:17:55.039 you do have to be seventy and a half in 359 00:17:55.119 --> 00:17:58.960 order to utilize the qcds. And it's you can't just 360 00:17:59.039 --> 00:18:01.079 say like, well, I see or I turned seventy and 361 00:18:01.119 --> 00:18:03.400 a half. Let's say in August and it's June, I'm 362 00:18:03.400 --> 00:18:05.640 going to do a QCD. Now you can't do that. 363 00:18:05.680 --> 00:18:07.960 You have to wait till you are actually seventy and 364 00:18:08.079 --> 00:18:12.279 a half to give away funds directly from your IRA 365 00:18:12.480 --> 00:18:15.440 to a charity. They do need to come out by 366 00:18:15.440 --> 00:18:19.319 December thirty first, and they have to go to an 367 00:18:19.319 --> 00:18:24.160 eligible charity or five oh one C three organization donor 368 00:18:24.200 --> 00:18:28.079 advised funds and other supporting organizations. Those are actually not 369 00:18:28.160 --> 00:18:32.519 eligible to receive qcds, and you're not getting a charitable 370 00:18:32.559 --> 00:18:37.799 deduction in addition to the QCD benefit, because remember the 371 00:18:37.839 --> 00:18:41.119 QCD benefit is basically, hey, if I give ten thousand 372 00:18:41.160 --> 00:18:44.079 dollars to this charity, that's ten thousand dollars less of 373 00:18:44.119 --> 00:18:47.680 income that I'm actually reporting on my tax return. So 374 00:18:47.720 --> 00:18:50.559 you don't get to claim a charitable deduction in addition 375 00:18:50.640 --> 00:18:54.400 to that. But you're actually you're actually coming out in 376 00:18:54.759 --> 00:18:58.240 many cases pretty well because you're actually able to deduct 377 00:18:58.279 --> 00:19:01.680 the full amount you're giving without itemizing. Now, last thing 378 00:19:01.680 --> 00:19:04.960 here is keep good records. Because you're ten ninety nine R, 379 00:19:05.119 --> 00:19:07.680 which is your your tax reporting form that you get 380 00:19:07.720 --> 00:19:11.480 from your retirement account in January, it doesn't actually show 381 00:19:11.519 --> 00:19:13.960 the amount that went to a QCD, It just shows 382 00:19:14.000 --> 00:19:16.240 the total amount that came out. So you actually need 383 00:19:16.240 --> 00:19:18.559 to let your accountant know, hey, I gave you know, 384 00:19:18.640 --> 00:19:21.519 five thousand or ten thousand dollars of that away, so 385 00:19:21.559 --> 00:19:24.519 that the accountant can then exclude that from your income 386 00:19:24.680 --> 00:19:25.519 on your tax return. 387 00:19:25.759 --> 00:19:29.400 Important important guidance and warnings there as well as we 388 00:19:29.440 --> 00:19:31.880 talk with Eric Swartz and Nate Briby. They are all 389 00:19:31.920 --> 00:19:35.960 retirement planning professionals from Class Financial. The website cossfinancial dot com. 390 00:19:35.960 --> 00:19:39.000 That's Class k l aas Financial dot com. It's all 391 00:19:39.039 --> 00:19:41.880 phone number six so eight four four two five six 392 00:19:42.000 --> 00:19:43.880 three seven, no charge for the initial gets to know 393 00:19:43.920 --> 00:19:45.119 you appointment tech Loss Financial. 394 00:19:45.359 --> 00:19:47.599 It will be complementary to you. 395 00:19:47.839 --> 00:19:50.440 So Nate, Eric, that kind of you know, we touched 396 00:19:50.440 --> 00:19:53.039 on qcds, would would somebody? 397 00:19:53.119 --> 00:19:54.079 Is Is there a reason. 398 00:19:53.960 --> 00:19:57.000 Why somebody would choose to use them even even if 399 00:19:57.000 --> 00:19:59.160 they're not required to take r mds. 400 00:20:00.400 --> 00:20:03.480 Yeah, So this is another interesting nuance in the tax code. 401 00:20:03.680 --> 00:20:06.519