WEBVTT 1 00:00:10.480 --> 00:00:11.919 Great opportunity right now. 2 00:00:12.000 --> 00:00:15.480 If you've got a question for our retirement planning professionals, 3 00:00:15.480 --> 00:00:16.920 give us call. We'll get you right on the air. 4 00:00:17.000 --> 00:00:19.960 Six oh eight three two one thirteen ten. That's six 5 00:00:20.079 --> 00:00:22.160 oh eight three two one thirteen ten gets you on 6 00:00:22.199 --> 00:00:24.440 the air with CJ Closs and Eric Schwartz again. They 7 00:00:24.480 --> 00:00:27.480 are our retirement planning professionals from Class Financial. 8 00:00:27.559 --> 00:00:31.160 You can learn more online the website class financial dot com. 9 00:00:30.839 --> 00:00:34.159 That's Class k l aa S financial dot com and 10 00:00:34.240 --> 00:00:37.320 their telephone number six oh eight four four two five 11 00:00:37.479 --> 00:00:40.079 six three seven. No charge for the initial get to 12 00:00:40.079 --> 00:00:42.679 know your appointment at Colss Financial. It will be complimentary 13 00:00:42.719 --> 00:00:45.000 to you again their telephone number six O eight four 14 00:00:45.039 --> 00:00:47.920 four two five six three seven. C J, how you 15 00:00:47.920 --> 00:00:48.759 doing this morning? 16 00:00:49.359 --> 00:00:51.119 I'm doing great. Is a little bit slick on the 17 00:00:51.119 --> 00:00:53.399 way in this morning, but besides that doing well. 18 00:00:53.479 --> 00:00:55.960 That is a little slippery out there. Good to hear. Eric. 19 00:00:56.000 --> 00:00:57.799 How is your drive in this morning? 20 00:00:58.880 --> 00:01:00.679 You know it was it was slip as well, But 21 00:01:01.119 --> 00:01:02.479 meet it in without any injuries. 22 00:01:02.600 --> 00:01:04.920 That's the That is the ticket that is key on 23 00:01:05.040 --> 00:01:07.079 days like dan as we're talking about this, do be 24 00:01:07.239 --> 00:01:11.079 carefully on those sidewalks even are very very icy this morning. 25 00:01:11.480 --> 00:01:14.840 We're going to talk about about conversions this morning and 26 00:01:15.000 --> 00:01:17.280 roth conversions and what folks need to know. It's a 27 00:01:17.359 --> 00:01:20.079 it's a really cool conversation, I head, so you're definitely 28 00:01:20.239 --> 00:01:21.760 gonna want to sit tight for that. A couple of 29 00:01:21.799 --> 00:01:23.599 things too, to keep in mind as we have our 30 00:01:23.640 --> 00:01:26.760 conversation with every tirement planning professionals from COSS Financial, don't 31 00:01:26.799 --> 00:01:28.680 forget if you ever miss part of the program, or 32 00:01:28.719 --> 00:01:30.239 you want to listen back to it, or you want 33 00:01:30.280 --> 00:01:32.319 to share it, if you head on over to Classsfinancial 34 00:01:32.400 --> 00:01:34.599 dot com. There's a link to the podcast right there 35 00:01:34.640 --> 00:01:37.879 again the website class Financial dot com. Telephone up for 36 00:01:37.920 --> 00:01:40.400 Class Financial six oh eight four four two five six 37 00:01:40.480 --> 00:01:42.079 three seven. I want to hold on to that telephon 38 00:01:42.120 --> 00:01:43.760 number as well, because later in the program we'll do 39 00:01:43.799 --> 00:01:46.079 the Class Quiz Question the Week, your chance to win 40 00:01:46.120 --> 00:01:49.159 a fantastic prize provided by our friends at Class Financial. 41 00:01:49.359 --> 00:01:51.920 This week's prize a twenty five dollars gift card to 42 00:01:51.959 --> 00:01:54.640 Texas Roadhouse. Pay close attention because most of the time, 43 00:01:54.719 --> 00:01:56.840 the question and answer to the Class Quiz Question of 44 00:01:56.879 --> 00:02:00.239 the Week come up during each week's program before. 45 00:02:00.000 --> 00:02:01.120 We get to this week's conversation. 46 00:02:01.239 --> 00:02:03.359 Let's actually roll back and take a look back at 47 00:02:03.480 --> 00:02:06.280 last week's show and get the question and answer there 48 00:02:06.359 --> 00:02:08.520 as well. 49 00:02:08.719 --> 00:02:11.360 Yeah, so thank you to everyone for listening. As always, 50 00:02:11.479 --> 00:02:14.400 our question for last week was what is the new 51 00:02:14.479 --> 00:02:18.599 standard deduction for single taxpayers in twenty twenty five? Your 52 00:02:18.639 --> 00:02:22.439 choices were ten thousand or fifteen thousand dollars and our 53 00:02:22.479 --> 00:02:26.360 winner from last week, Sandra from Middleton, knew the correct 54 00:02:26.400 --> 00:02:28.520 answer was fifteen thousand dollars. 55 00:02:28.840 --> 00:02:30.199 Congratulations Sandra. 56 00:02:30.319 --> 00:02:33.120 You two can be like Sandra's Pekle's Tension program your 57 00:02:33.159 --> 00:02:34.919 chance to win a twenty five dollars gift card to 58 00:02:34.960 --> 00:02:37.039 Texts Roadhouse and we'll do that a little bit later 59 00:02:37.080 --> 00:02:39.400 on in the program. As mentioned today, we're going to 60 00:02:39.439 --> 00:02:42.199 be talking about an essential topic for retirement planning, and 61 00:02:42.240 --> 00:02:44.840 that is roth iras WROTH four to oh one case 62 00:02:44.879 --> 00:02:47.719 and of course roth conversions CJ. 63 00:02:48.080 --> 00:02:50.080 What in those areas do we need to know? 64 00:02:51.360 --> 00:02:53.960 Yeah, this is This is a fascinating subject with a 65 00:02:54.000 --> 00:02:57.159 lot of nuances, So I encourage people to listen kind 66 00:02:57.159 --> 00:02:59.439 of carefully and closely, and obviously talk to your advisor 67 00:02:59.759 --> 00:03:01.800 or out to us if you have any questions after this. 68 00:03:01.960 --> 00:03:06.960 But many people are familiar with the traditional retirement savings vehicles. 69 00:03:07.000 --> 00:03:08.840 These are things like four to one k's, four H 70 00:03:08.919 --> 00:03:13.240 three b's, and iras. But understanding the WROTH options can 71 00:03:13.280 --> 00:03:17.520 really elevate your retirement strategy. The choices available to you 72 00:03:17.759 --> 00:03:20.240 do often depend on whether or not your employer offer 73 00:03:20.400 --> 00:03:24.319 certain of these elements, and of course your personal financial situation, 74 00:03:24.479 --> 00:03:26.159 so you know, make sure again that you talk to 75 00:03:26.159 --> 00:03:29.120 your advisor or your accountant as a follow up to 76 00:03:29.120 --> 00:03:33.840 anything we discussed today. But traditionally, contributions to retirement accounts 77 00:03:33.879 --> 00:03:37.680 have been made on a pre tax basis. That's often 78 00:03:37.719 --> 00:03:42.479 why they call them traditional IRA contributions. Traditional just means 79 00:03:42.800 --> 00:03:46.000 the longest standing and the longest standing rules were that 80 00:03:46.039 --> 00:03:49.360 you could make pre tax contributions to your retirement account, 81 00:03:49.560 --> 00:03:53.479 whether through your employer's sponsored retirement plan or a traditional IRA. 82 00:03:54.360 --> 00:03:57.960 This approach allows your money to grow tax deferred, but 83 00:03:58.159 --> 00:04:01.120 you'll pay taxes when you start withdrawing funds in retirement 84 00:04:01.280 --> 00:04:05.120 based upon your tax rate at that time in retirement. 85 00:04:05.240 --> 00:04:08.199 So you get the idea. The traditional contributions have been 86 00:04:08.240 --> 00:04:10.960 around for a long time. I earn one hundred thousand dollars, 87 00:04:11.000 --> 00:04:12.800 I put ten thousand dollars into a four to one 88 00:04:12.879 --> 00:04:16.199 K plan on a traditional pre tax basis, meaning I 89 00:04:16.279 --> 00:04:19.439 save the taxes on that ten thousand dollars. It then 90 00:04:19.519 --> 00:04:22.319 grows tax deferred, and when I get into retirement, then 91 00:04:22.639 --> 00:04:26.000 I pay ordinary income taxes on that when I pull 92 00:04:26.000 --> 00:04:30.639 it out. However, since the introduction of roth iras in 93 00:04:30.759 --> 00:04:34.240 nineteen ninety seven, individuals have had the opportunity to save 94 00:04:34.319 --> 00:04:38.680 for retirement using after tax dollars. And yes, you did 95 00:04:38.720 --> 00:04:42.800 hear me right, nineteen ninety seven, it's not that old, everybody. 96 00:04:43.120 --> 00:04:46.879 Roth IRA contributions are kind of a newer concept when 97 00:04:46.879 --> 00:04:48.800 we think of it in the in the grand scheme 98 00:04:48.839 --> 00:04:52.240 of things here. And while you don't get an upfront 99 00:04:52.319 --> 00:04:55.720 tax deduction on ROTH contributions, the key benefit is that 100 00:04:55.800 --> 00:05:01.360 qualified withdrawals in retirement are generally tax free. So often 101 00:05:01.519 --> 00:05:03.519 Eric and I when we're talking to people will say 102 00:05:03.759 --> 00:05:08.319 traditional contributions are pre tax, tax deferred and then taxable. 103 00:05:08.920 --> 00:05:13.639 WROTH contributions are basically the opposite. You get no tax 104 00:05:13.680 --> 00:05:18.519 deduction today on a WROTH contribution, it grows tax free, 105 00:05:18.680 --> 00:05:20.480 and as long as you abide by the rules, which 106 00:05:20.519 --> 00:05:22.360 we'll be talking about here in a little bit, when 107 00:05:22.399 --> 00:05:27.600 you get into retirement, you pay no tax on the withdrawals. Now, 108 00:05:27.639 --> 00:05:29.600 I will warn everybody as I start going into some 109 00:05:29.639 --> 00:05:32.160 of the key aspects of this, there are some errors 110 00:05:32.199 --> 00:05:35.959 that people make in their simple logic, which is tax 111 00:05:35.959 --> 00:05:38.279 free is better than taxable. So I'll do all wroth 112 00:05:38.319 --> 00:05:41.240 no matter what. Now, that's not really the way the 113 00:05:41.240 --> 00:05:43.600 math works out on this. If you don't believe me, 114 00:05:43.680 --> 00:05:45.319 call us and we'll walk you through the math. Then 115 00:05:45.319 --> 00:05:47.879 you'll have a couple of aha moments where you go, oh, 116 00:05:48.000 --> 00:05:51.759 that's true. That's true. So roth versus pre tax is 117 00:05:51.800 --> 00:05:54.519 a lot more nuanced than just one sounds better than 118 00:05:54.560 --> 00:05:57.240 the other. There's a lot that goes into that consideration. 119 00:05:58.480 --> 00:06:01.879 But here's some important aspects to consider about roth irays. 120 00:06:02.439 --> 00:06:06.240 So wroth iray contributions are made with after tax dollars. 121 00:06:06.360 --> 00:06:09.319 Again a meeting, there's meeting, there's no immediate tax deduction, 122 00:06:10.000 --> 00:06:12.639 and in essence, you pay taxes now to enjoy tax 123 00:06:12.639 --> 00:06:17.000 free withdrawals later. Contribution limits for roth irays are the 124 00:06:17.040 --> 00:06:20.720 same as traditional iras, so in twenty twenty five you 125 00:06:20.720 --> 00:06:23.199 can contribute up to seven thousand dollars to a roth 126 00:06:23.240 --> 00:06:26.680 ira if you're under fifty and eight thousand if you're 127 00:06:26.720 --> 00:06:30.839 over fifty. Thanks to what's called a catchup contribution, you 128 00:06:30.879 --> 00:06:33.639 do need to have earned income to contribute to a 129 00:06:33.720 --> 00:06:36.879 roth ira, and if your earnings are less than the 130 00:06:36.959 --> 00:06:40.680 contribution limit, then you can only put put in money 131 00:06:40.839 --> 00:06:43.839 up to the amount that you earn. Furthermore, you can 132 00:06:43.879 --> 00:06:48.399 do contributions for non working spouses, again provided that you 133 00:06:48.439 --> 00:06:52.319 have enough income to support those contributions. One of the 134 00:06:52.360 --> 00:06:58.199 most important things about roth contributions is income eligibility. In 135 00:06:58.240 --> 00:07:03.199 twenty twenty five, single file can contribute fully with income 136 00:07:03.399 --> 00:07:06.199 under one hundred and fifty thousand, and then they're phased 137 00:07:06.199 --> 00:07:09.040 out between one fifty and one sixty five, and for 138 00:07:09.160 --> 00:07:12.600 married couples filing jointly, contributions are allowed under two hundred 139 00:07:12.600 --> 00:07:15.199 and thirty six thousand, with phaseouts from two thirty six 140 00:07:15.240 --> 00:07:17.720 to two forty six. Some of you are going, what 141 00:07:17.759 --> 00:07:20.959 the heck are you talking about. Well, you have to 142 00:07:21.000 --> 00:07:23.519 have earned income to be able to contribute to a wroth, 143 00:07:23.800 --> 00:07:26.199 but you can't have too much earned income. That's the 144 00:07:26.240 --> 00:07:28.560 idea here, right, So if I want to do a 145 00:07:28.680 --> 00:07:32.639 roth ira, and the key component here is ira wroth 146 00:07:32.680 --> 00:07:34.279 war one days are different. We're going to be talking 147 00:07:34.279 --> 00:07:35.920 about that in a moment when Eric gets to it. 148 00:07:36.399 --> 00:07:37.920 But if I want to make a contribution to a 149 00:07:38.000 --> 00:07:41.360 roth IRA, I have to have earn enough earned income 150 00:07:41.399 --> 00:07:44.920 to offset that contribution. But if I have too much 151 00:07:45.000 --> 00:07:48.000 earned income, then I am phased out of having the 152 00:07:48.040 --> 00:07:52.519 ability to make that contribution. So some interesting things, and 153 00:07:52.600 --> 00:07:55.040 I will just say, you can contribute to a roth ira. 154 00:07:55.240 --> 00:07:57.920 One one quick point. You can contribute to it up 155 00:07:57.920 --> 00:08:00.639 to the tax filing deadline. You can do what are 156 00:08:00.639 --> 00:08:04.040 called like prior year contributions right before April fifteenth of 157 00:08:04.079 --> 00:08:06.279 this year. If you talk to your account and you 158 00:08:06.279 --> 00:08:08.920 account says you should do a roth IRA contribution, you 159 00:08:08.959 --> 00:08:11.839 can actually attribute that contribution to the prior year up 160 00:08:11.839 --> 00:08:14.959 into the tax filing up until that tax filing deadline. 161 00:08:15.040 --> 00:08:17.079 So there you go. A few things to know about 162 00:08:17.120 --> 00:08:18.480 roth iras. 163 00:08:17.959 --> 00:08:19.720 Really good stuff this week with CJ. 164 00:08:19.800 --> 00:08:22.879 Closs and Eric Swartz, our retirement planning professionals from Class 165 00:08:22.879 --> 00:08:26.639 Financial their website Class financial dot com. That's Class k 166 00:08:26.920 --> 00:08:29.199 l a A S financial dot com. I hope you've 167 00:08:29.319 --> 00:08:30.800 I hope you had a chance to stop by and 168 00:08:30.879 --> 00:08:32.799 check that out. If you haven't, head on over there 169 00:08:32.840 --> 00:08:34.480 this morning. Don't forget you can listen back to the 170 00:08:34.519 --> 00:08:38.000 podcast on the website and subscribe as well. Speaking of subscribing, 171 00:08:38.039 --> 00:08:40.759 there's the weekly Market Pulse newsletter. It's a great weekly 172 00:08:40.840 --> 00:08:43.039 email that gives you a link not only to the podcast, 173 00:08:43.080 --> 00:08:45.519 but little snapshot of what's been going on in the markets. Again, 174 00:08:45.559 --> 00:08:48.039 that is free to you at Cossfinancial dot com. Speaking 175 00:08:48.039 --> 00:08:50.000 of things that are free to you at Cossfinancial dot com. 176 00:08:50.000 --> 00:08:52.279 Telphon number six so eight four four two five six 177 00:08:52.399 --> 00:08:54.519 three seven, no charge for that initial gets to know 178 00:08:54.559 --> 00:08:57.519 your appointment tech Coss Financial. It will be complementary to 179 00:08:57.559 --> 00:08:59.559 you again their number six oh eight four four two 180 00:09:00.559 --> 00:09:03.759 three seven. So Eric, Now, let's just say you have 181 00:09:03.919 --> 00:09:07.960 access to a four WROTH four oh one K. Should 182 00:09:08.039 --> 00:09:09.480 you consider contributing to that? 183 00:09:10.720 --> 00:09:13.480 Yeah, that's a great question, Sean. And as TJ said, 184 00:09:13.480 --> 00:09:16.360 we were we've been talking here about roth iras. So 185 00:09:16.399 --> 00:09:20.039 those are individual retirement accounts, but when we get into 186 00:09:20.120 --> 00:09:25.639 the employer sponsored plan space, things get a little bit more. Well, 187 00:09:25.720 --> 00:09:28.440 you get a few more options. So a ROTH Flora 188 00:09:28.480 --> 00:09:31.480 one K is an employer sponsored retirement account that allows 189 00:09:31.480 --> 00:09:34.639 you to contribute after tax dollars, just like a ROTH IRA, 190 00:09:35.559 --> 00:09:38.519 which gives you the opportunity for tax free growth, tax 191 00:09:38.559 --> 00:09:43.679 free withdrawals in retirement, and these these were introduced around 192 00:09:43.759 --> 00:09:45.960 two thousand and six, but honestly it was a pretty 193 00:09:45.960 --> 00:09:50.240 slow adoption for employers. But they've gotten pretty popular here 194 00:09:50.240 --> 00:09:53.000 over the last couple of years, and as of a 195 00:09:53.039 --> 00:09:56.600 couple of years ago, now almost ninety three percent of 196 00:09:56.679 --> 00:10:00.440 employers offer a ROTH four one K option. Now, one 197 00:10:00.440 --> 00:10:03.679 thing to know about WROTH for one ks is it's 198 00:10:03.720 --> 00:10:06.600 not actually a separate account that you're opening. So often 199 00:10:06.639 --> 00:10:09.320 people say, well, I only have a pre tax four 200 00:10:09.360 --> 00:10:11.360 O one K or a ROTH four oh one K. 201 00:10:12.120 --> 00:10:14.200 It's all one account. It's just whether or not the 202 00:10:14.240 --> 00:10:17.519 employer allows you to put WROTH dollars into the account, 203 00:10:17.960 --> 00:10:21.200 and then the record keeper obviously is going to is 204 00:10:21.240 --> 00:10:25.120 going to keep those separate so that you can understand 205 00:10:25.120 --> 00:10:26.960 how dollars are going to be taxed when you're taking 206 00:10:27.000 --> 00:10:29.799 them out. But the fact that it's one account is 207 00:10:29.799 --> 00:10:31.840 going to come into play here when we talk about 208 00:10:31.840 --> 00:10:35.720 contributions in a moment. So whether you should contribute to 209 00:10:35.720 --> 00:10:37.879 a WROTH for one K, it depends on a lot 210 00:10:37.879 --> 00:10:40.240 of factors. I mean, it depends on your income. You 211 00:10:40.279 --> 00:10:42.399 know what your current tax bracket is what we think 212 00:10:42.440 --> 00:10:46.120 your future tax bracket will be. But here's just a 213 00:10:46.120 --> 00:10:48.440 few things to think about when you're considering whether or 214 00:10:48.440 --> 00:10:50.960 not you want to make WROTH contributions to your four 215 00:10:51.000 --> 00:10:53.279 oh one K or four oh three B or or 216 00:10:53.320 --> 00:10:56.519 four fifty seven whatever type of plan your employer offers. 217 00:10:57.639 --> 00:11:01.039 Unlike roth aires, there's no income limit for contributing to 218 00:11:01.080 --> 00:11:03.440 a WROTH four to one K, so this actually makes 219 00:11:03.519 --> 00:11:07.159 it accessible to higher earners. CJ was talking about some 220 00:11:07.200 --> 00:11:12.080 of those those upper upper end income limits that you 221 00:11:12.120 --> 00:11:13.840 know a which point you can't put money into a 222 00:11:13.919 --> 00:11:16.720 roth iray, we avoid that on the WROTH forur oh 223 00:11:16.759 --> 00:11:20.679 one K side, And speaking of contributions for for twenty 224 00:11:20.720 --> 00:11:23.960 twenty five, the total contribution limit to a four to 225 00:11:23.960 --> 00:11:26.240 oh one K, so that includes any dollars you put 226 00:11:26.279 --> 00:11:31.039 in before taxes or traditional and wroth, so the total 227 00:11:31.120 --> 00:11:34.200 is twenty three thousand, five hundred or thirty one thousand 228 00:11:34.200 --> 00:11:36.279 dollars if you're over fifty and you take advantage of 229 00:11:36.320 --> 00:11:39.759 that catchup and then we've talked about this before too, 230 00:11:39.879 --> 00:11:43.360 but if you're between sixty and sixty three, you can 231 00:11:43.399 --> 00:11:47.159 actually add an additional ketchup contribution of eleven, two hundred 232 00:11:47.159 --> 00:11:51.200 and fifty dollars, which brings your total to thirty four thousand, 233 00:11:51.360 --> 00:11:53.720 seven hundred and fifty dollars. Now you don't have to 234 00:11:53.720 --> 00:11:56.200 do contributions. You know, you don't have to choose to 235 00:11:56.240 --> 00:11:58.759 do all pre tax or all WROTH. You can do 236 00:11:58.960 --> 00:12:01.440 you can do some of both. And you know that's 237 00:12:01.480 --> 00:12:03.840 something that your advisor can help you determine based on 238 00:12:03.879 --> 00:12:08.080 your your tax strategy and where you are in life. 239 00:12:09.080 --> 00:12:10.960 One final update, and this is a this is a 240 00:12:10.960 --> 00:12:13.960 pretty new one. As of last year, r m d's 241 00:12:14.080 --> 00:12:17.600 required minimum distributions are no longer required for four o 242 00:12:17.679 --> 00:12:21.200 one ks. So previously you had to actually roll over 243 00:12:21.240 --> 00:12:24.559 the WROTH dollars before hitting r m D age or 244 00:12:24.600 --> 00:12:27.519 they would make you take out. You know that whatever 245 00:12:27.559 --> 00:12:30.519 portion was attributable to your ROTH dollars from your four 246 00:12:30.559 --> 00:12:33.120 oh one K, now you didn't have to pay taxes 247 00:12:33.159 --> 00:12:35.799 on it, but you lost the ability to continue getting 248 00:12:35.840 --> 00:12:38.600 that tax free growth. So this this is a fix 249 00:12:38.679 --> 00:12:41.120 that that allows you to avoid those rm ds. 250 00:12:40.960 --> 00:12:43.799 The really important updates there for sure. As we talked 251 00:12:43.799 --> 00:12:46.519 this week with Eric Schwartz and CJ. Colss, they are 252 00:12:46.679 --> 00:12:50.279 our retirement planning professionals from Class Financially. Don't forget their 253 00:12:50.320 --> 00:12:53.159 website a lot of great information that costs Financial. That's 254 00:12:53.240 --> 00:12:56.039 Class Financial dot com. That's Coss k l a a 255 00:12:56.080 --> 00:12:58.000 s Financial dot com. You can sign up for the 256 00:12:58.000 --> 00:13:00.519 weekly Market Pulse newsletter. You can learn more about the 257 00:13:00.559 --> 00:13:03.200 team at COSS Financial, get to know their personalities as 258 00:13:03.200 --> 00:13:05.000 well as a little tip. If you scroll over their 259 00:13:05.000 --> 00:13:07.720 photos on the our team section, I'll get a little 260 00:13:07.720 --> 00:13:10.080 insight into into some of their hobbies and some other things. 261 00:13:10.200 --> 00:13:12.240 Also why you're at cossfinancial dot com. You can learn 262 00:13:12.279 --> 00:13:14.399 about their separate divisions, how they can help you or 263 00:13:14.440 --> 00:13:17.320 if you're an employer. Again, all that information available to 264 00:13:17.399 --> 00:13:20.159 you at cossfinancial dot com. They're teleph number six oh 265 00:13:20.159 --> 00:13:23.399 eight four four two five six three seven. No charge 266 00:13:23.440 --> 00:13:25.559 for that initial get to know you appointment at Colss Financial. 267 00:13:25.720 --> 00:13:28.159 It will be complementary to you their number six oh 268 00:13:28.159 --> 00:13:31.039 eight four four two five six three seven. And if 269 00:13:31.039 --> 00:13:32.639 you've got a question, love to have you join us 270 00:13:32.639 --> 00:13:34.799 this morning telephe number here at station six oh eight 271 00:13:34.879 --> 00:13:37.480 three two one thirteen ten. That's six oh eight three 272 00:13:37.600 --> 00:13:40.720 two one thirteen ten. May have heard us mention Roth conversions. 273 00:13:40.720 --> 00:13:43.399 We're gonna get the details from CJ. We will do 274 00:13:43.559 --> 00:13:46.559 that next as Money in Motion with Costs Financial continues 275 00:13:46.639 --> 00:13:47.679 here on thirteen ten. 276 00:13:47.919 --> 00:13:48.639 Wiv A. 277 00:13:51.440 --> 00:13:53.879 Talking this week with our retirement plan professionals from Class 278 00:13:53.919 --> 00:13:56.679 Financial talking about Roth iras WROTH four oh one k 279 00:13:56.879 --> 00:13:59.240 is and Roth conversions and we'll get into those conversions 280 00:13:59.399 --> 00:14:00.000 in just a moment. 281 00:14:00.080 --> 00:14:01.039 But if you haven't been to the. 282 00:14:00.960 --> 00:14:03.759 Website yet, head on over there learn more about COSS 283 00:14:03.759 --> 00:14:07.080 Financial and so much more available at cossfinancial dot com. 284 00:14:07.080 --> 00:14:09.720 That's k l a A S Financial dot com. They're 285 00:14:09.759 --> 00:14:12.320 telling for number six O eight four four two five 286 00:14:12.440 --> 00:14:14.879 six three seven. No charge for that initial get to 287 00:14:14.919 --> 00:14:17.799 know your appointment at Costs Financial. It will be complimentary 288 00:14:17.799 --> 00:14:19.840 to you. Again, they're number six O eight four four 289 00:14:19.879 --> 00:14:23.639 two five six three seven. So we've talked about accessing 290 00:14:23.720 --> 00:14:27.000 WROTH and of course some things some of the interesting 291 00:14:27.039 --> 00:14:30.879 aspects of Roth. What about those Roth conversions, CJ, who 292 00:14:30.919 --> 00:14:33.639 might be a good candidate for the excuse me, I 293 00:14:33.799 --> 00:14:36.759 pardon me, Eric, who might be a good candidate for those. 294 00:14:38.600 --> 00:14:41.440 Yeah, that's a great question, and I think CJ probably 295 00:14:41.440 --> 00:14:45.120 can answer this question. A lot of our days talk 296 00:14:45.159 --> 00:14:48.120 to tell you talking about Roth conversions. Now it's it's 297 00:14:48.840 --> 00:14:51.519 it's become a really really interesting topic, mostly because there's 298 00:14:51.519 --> 00:14:55.039 a lot of strategies we can employ around roth conversions. 299 00:14:55.120 --> 00:14:58.840 And so a roth conversion it basically involves moving funds 300 00:14:58.879 --> 00:15:02.879 from a traditional ira or pre tax ira into a 301 00:15:03.000 --> 00:15:06.639 roth ira, So you're paying the taxes on the converted amount, 302 00:15:07.000 --> 00:15:09.120 and now you get the tax free growth of a 303 00:15:09.200 --> 00:15:13.039 roth ira and then obviously tax free withdrawals later. Now 304 00:15:13.039 --> 00:15:15.440 you can do this at any age, and it actually 305 00:15:15.440 --> 00:15:19.320 avoids that ten percent early withdrawal penalty that people in 306 00:15:19.440 --> 00:15:22.120 cur if they take money out of an ira prior 307 00:15:22.159 --> 00:15:24.360 to fifty nine and a half. So in this case, 308 00:15:24.399 --> 00:15:27.320 you're just taking money from a traditional moving it over 309 00:15:27.360 --> 00:15:31.159 to a wroth, so you're avoiding that ten percent withdrawal penalty. 310 00:15:31.840 --> 00:15:34.720 But remember the amount that you convert is tax in 311 00:15:34.759 --> 00:15:36.840 the year of the conversion. Okay, so it's going to 312 00:15:36.919 --> 00:15:42.039 increase your taxes the year that you actually perform the transfer, 313 00:15:42.600 --> 00:15:44.279 but then again you're going to get the tax free 314 00:15:44.279 --> 00:15:47.679 growth and then tax free withdrawals in the future. But 315 00:15:47.879 --> 00:15:50.320 why would someone actually choose to do this, right, Generally 316 00:15:50.360 --> 00:15:53.960 people are avoiding taxes and trying to defer them. Well, 317 00:15:54.080 --> 00:15:57.759 pre tax retirement accounts they are fully taxable upon withdrawal. 318 00:15:57.879 --> 00:16:00.879 So that's whether that's by you or by your your 319 00:16:00.919 --> 00:16:03.559 beneficiaries if you don't, if you don't spend all your dollars, 320 00:16:04.639 --> 00:16:07.399 but moving the money earlier it does allow you to 321 00:16:07.440 --> 00:16:10.399 control the tax rate and you can be strategic about 322 00:16:10.440 --> 00:16:13.879 how much you're converting and when you're doing it. And 323 00:16:14.159 --> 00:16:16.879 one thing I mentioned there was you know, taxes are 324 00:16:16.960 --> 00:16:20.759 due on your your pre tax withdrawals, either by you 325 00:16:20.960 --> 00:16:24.600 or your heirs. So keep that in mind because your 326 00:16:24.639 --> 00:16:28.440 beneficiaries or your heirs in many cases they are they 327 00:16:28.639 --> 00:16:31.480 benefit the most from moalth conversions. So that's something you 328 00:16:31.480 --> 00:16:33.559 want to talk through with your with your advisor, depending 329 00:16:33.600 --> 00:16:36.960 on your goals. But then this can be a really 330 00:16:37.000 --> 00:16:39.360 good strategy for taking a little bit more control over 331 00:16:39.399 --> 00:16:42.639 your your tax liability. So let's look at an example here, 332 00:16:42.639 --> 00:16:46.679 a recent retiree who maybe hasn't started Social Security yet, 333 00:16:46.799 --> 00:16:50.159 or they there's no pension income for them. Maybe they 334 00:16:50.159 --> 00:16:54.159 have a large retirement account and they do have you know, 335 00:16:54.200 --> 00:16:56.200 maybe they saved up for a couple of years just 336 00:16:56.240 --> 00:16:58.879 in their savings account before retirement, and they have tax 337 00:16:58.919 --> 00:17:00.799 free dollars they can live off of for a couple 338 00:17:00.840 --> 00:17:01.279 of years. 339 00:17:02.080 --> 00:17:02.919 Well, they're going to be in a. 340 00:17:02.840 --> 00:17:06.079 Really low tax bracket, and they actually might find it 341 00:17:06.200 --> 00:17:09.920 advantageous to convert funds during those low income years, right, 342 00:17:10.000 --> 00:17:14.599 fill up those those tax those lower tax brackets and 343 00:17:14.720 --> 00:17:17.480 get more dollars moved over to WROTH before they actually 344 00:17:17.519 --> 00:17:22.279 start their required minimum distributions. Right, So we're accelerating distributions 345 00:17:22.359 --> 00:17:26.200 to lower future rmds. We're taking advantage of those lower 346 00:17:26.240 --> 00:17:30.000 tax rates. There's lower tax brackets that they're in right now, 347 00:17:30.519 --> 00:17:33.079 and it's generally most tax efficient when you do a 348 00:17:33.119 --> 00:17:37.799 conversion to actually pay from a separate account like a 349 00:17:37.839 --> 00:17:42.359 bank account for the tax rather than actually converting more 350 00:17:42.400 --> 00:17:47.799 and then withholding dollars from the conversion, because it allows 351 00:17:47.799 --> 00:17:49.839 you to get the most dollars into the WROTH and 352 00:17:50.240 --> 00:17:51.640 the most tax free growth. 353 00:17:52.599 --> 00:17:53.759 Talking this morning with CJ. 354 00:17:53.839 --> 00:17:56.759 Glass and Eric Schwartz, they are our retirement planning professionals 355 00:17:56.880 --> 00:17:58.920 from Class Financial. I hope you have a chance to 356 00:17:58.920 --> 00:18:00.440 head on over to the website. If not, it's a 357 00:18:00.440 --> 00:18:03.160 great time to do that right now. Class financial dot com. 358 00:18:03.240 --> 00:18:06.319 That's Class k l aa S Financial dot com. Great 359 00:18:06.319 --> 00:18:09.319 resource and website to learn more about colass Financial mentioned 360 00:18:09.319 --> 00:18:11.160 the podcast. Not only can you listen back to this 361 00:18:11.200 --> 00:18:14.440 in previous shows, you can also subscribe right online at 362 00:18:14.480 --> 00:18:17.240 classfinancial dot com. While you're in the subscribe in mood, 363 00:18:17.319 --> 00:18:18.680 do what I did. It's been a number of years 364 00:18:18.720 --> 00:18:21.400 since I've signed up for the weekly Market Pulse newsletter. 365 00:18:21.480 --> 00:18:24.240 It's a great weekly email you received from Class Financial. 366 00:18:24.359 --> 00:18:26.480 Gives you a link to the most recent podcast. Also 367 00:18:26.519 --> 00:18:29.759 some pertinent, important and important information about things that have 368 00:18:29.799 --> 00:18:31.839 been going on in the markets. Again, just head on 369 00:18:31.880 --> 00:18:34.559 over to class financial dot com. That's k l a 370 00:18:34.720 --> 00:18:37.359 A S Financial dot com for that information. The telephon 371 00:18:37.400 --> 00:18:40.039 number for Class Financial six oh eight four four two 372 00:18:40.200 --> 00:18:42.960 five six three seven. Again that number six oh eight 373 00:18:43.000 --> 00:18:45.720 four four two five six three seven. No charge for 374 00:18:45.720 --> 00:18:47.680 that initial gets to know you appointment at Class Financial. 375 00:18:47.880 --> 00:18:50.799 It will be complementary to you. You heard Eric allude 376 00:18:50.839 --> 00:18:53.559 to what about kids, grandkids, the family? What does that 377 00:18:53.599 --> 00:18:56.160 have to do when it comes to Roth conversions? Are 378 00:18:56.200 --> 00:18:58.799 there reasons to be thinking wroth if you've got kids 379 00:18:58.880 --> 00:19:01.039 or grandkids. With the tails from CJ and we'll do 380 00:19:01.079 --> 00:19:03.880 the Money in Motion Class Quiz question week next. As 381 00:19:03.880 --> 00:19:06.559 Money in Motion continues right here on thirteen ten, wu 382 00:19:06.599 --> 00:19:10.519 ib A talking with CJ. Closs and Eric Schwartz. They 383 00:19:10.559 --> 00:19:14.599 are our retirement planning professionals from Class Financial the website 384 00:19:14.680 --> 00:19:18.160 Class financial dot com. That's Class k l a as 385 00:19:18.319 --> 00:19:21.440 Financial dot com. They're telephone number six oh eight four 386 00:19:21.519 --> 00:19:24.480 four two five six three seven. No charge for that 387 00:19:24.519 --> 00:19:26.720 initial get to know your appointment at costs Financial. It 388 00:19:26.759 --> 00:19:29.480 will be complimentary to you again that number six oh 389 00:19:29.480 --> 00:19:32.720 eight four four two five six three seven. Talking this 390 00:19:32.799 --> 00:19:37.000 week about Roth iras Roth four oh one ks Roth 391 00:19:37.079 --> 00:19:41.160 conversions and CJ. If someone wants to leave assets to 392 00:19:41.200 --> 00:19:45.160 maybe their kids or grandkids, does a Roth conversion? 393 00:19:45.200 --> 00:19:47.160 Does? Does that make sense in that case? 394 00:19:48.279 --> 00:19:52.279 Yeah? It can. Before I mentioned that, I just want 395 00:19:52.279 --> 00:19:54.920 to pause on what Eric was just referencing there regarding 396 00:19:55.039 --> 00:19:58.680 Roth conversions. Again, we often get people who go, what's 397 00:19:58.680 --> 00:20:01.960 the difference between a conversion a contribution? And just remember 398 00:20:01.960 --> 00:20:04.480 conversions are money that are already in a retirement account. 399 00:20:04.519 --> 00:20:06.920 As Eric mentioned, that gets converted from a pre tax 400 00:20:06.920 --> 00:20:09.319 bucket to a Roth bucket, and in so doing you 401 00:20:09.400 --> 00:20:13.119