Oooh. I feel famous for sneaking one of my questions into your videos, Ari! It's great to see this kind of case study. It does confirm the thoughts I had about this type of situation, but it's so helpful to see the same conclusions coming from "the experts". I also think it's helpful to think about taking extra income vs extra Roth conversions if you know you'll have an RMD "problem" in the future. I expect that by the time I hit 70, that our income + SS will be WELL above what we will need, and tapping traditional OR Roth accounts will be unnecessary, but it has made me start to think about the best use of my investment accounts pre-70: Weighing the thought of converting to Roth, vs just spending more $$ in the early years of retirement, to gifting to children now vs later. Like many people with this "problem", I have been fairly frugal and in "saving" mode for decades. Preparing myself to get into a "spend" mode sooner than later is a big mental change, but shouldn't we reap the benefits of our diligence? It seems better to spend what we can reasonably than piling up a large Roth account simply to transfer to kids upon death. I know you like to show the increased vacations or increased monthly expenses in many of your examples, and it's great advice for people who are projecting ever-increasing portfolio balances.
The rise in tax rates is why I decided to roll over my 401k to a Roth IRA. I don’t want to be 59 and paying taxes on withdrawals from my retirement account.
Pre-tax contributions can help lower income taxes during your working years, while after-tax contributions can reduce your tax burden in retirement. Both have their advantages, but it’s also smart to save outside traditional retirement plans, such as individual investment accounts or with guidance from a financial advisor.
I completely agree. I'm in my mid-40s, getting closer to retirement, with over $2 million in non-retirement funds. I'm debt-free and hold relatively little in my retirement accounts compared to my total portfolio over the last three years. Honestly, you can't ignore the value of a good financial advisor-just make sure to do your homework and find a trustworthy fiduciary.
I recommend seeking out financial advisors like Rebecca Lynne Buie, who can guide you through investing, insurance, securing retirement funding, exploring tax benefits, and creating a volatility buffer to manage investment risks. Given the challenges ahead, effective personal finance management will be crucial.
Rebecca Lynne Buie appears to be a well-regarded expert in her field. I looked her up online and found her website, which provided detailed information about her credentials, education, and experience.
To one of the points of the original question, it's not always easy to determine what your income is if a big chunk of it comes from dividends. Those dividends could be qualified, non-qualified, Sec 199A, Return of Capital, etc.. some of which you don't know until you get your EOY Brokerage statements and file your taxes the next year.
Thanks for sharing this. I'm thinking we could fill up our 12% bracket with Roth conversions and keep some of it in cash for expenses in the near future that we don't want to pay from traditional IRA accounts so we can avoid jumping up to the next bracket.
Hi Ari. Can you please talk about how to target the right tax payments. For example: Should you aim to under or over pay a little. What to do if you have some gains or losses you might take but aren’t sure so then the withholding is off by a few thousand dollars. Should the tax payments be estimated and paid quarterly or maybe withheld from the pension payment every month. How much can you under pay and not get an irs penalty. How bad is a penalty. How do federal rules compare to state rules in general. How much do state taxes influence how large a conversion to do. Thanks in advance.
Hi Ari. Love your content and the fun way you present it. I used the right capital software and found it odd that it thinks 32% bracket is what I should fill. I do have a a modest pension and I’m only 60 so no SS yet. I do have more in my brokerage account than rollover IRA. But I’m really struggling to understand why it’s showing that. Can you think of scenarios where this makes sense? Thanks!
@earlyretirementari we're in our 40s and want to get ahead by converting a $40k 401k now, instead of waiting until it's larger. Our provider does not offer in-service rollovers, and they're saying we can only do a distribution. Is a distribution-contribution combo the same as a rollover? What do we need to watch out for and factor in?
Great info for sure ! My wife and I (age 62 and 60) are still working(for 3-5 more years) and now contributing in our Roth 401K's. Prior we have saved aggressively in traditional IRA/401K, and have a sizeable amount (approx. 3,200,000 that will keep growing), so we are concerned about taxes especially at RMD time (75 for us); the issue is we do not have that much outside cash to do much Roth conversions to pay the taxes, we would consider QCD's to help with this. Paying the taxes from the conversion itself I've read is not ideal so not sure if its worth it. Would love to hear any suggestions and strategies you can offer. And does the software you offer if joining, would this assist us in potential strategies ? Much appreciated and thank you !
@Earlyretirementari, Hi can you do an example video of a couple retire at 61 & 64, have all in pretax + Affordable care + income 34K a year? Should they do Roth Conversion? Will it impact their ACA? Thanks
Hi Ari. Love your content and the fun way you present it. I used the right capital software and found it odd that it thinks 32% bracket is what I should fill. I do have a a modest pension and I’m only 60 so no SS yet. I do have more in my brokerage account than rollover IRA. But I’m really struggling to understand why it’s showing that. Can you think of scenarios where this makes sense? Thanks!
@ I understand. Guess I was just hoping that you may have come across scenarios where 32% makes sense. I’ve never watched a show from someone who showed a situation where 32% made sense. Seems odd to me.
@ Rarely. There may be a setting off or you’re truly not spending enough where conversions are required but there’s a lot I don’t know about your plan. You can get on the waitlist for a power planning session if you’d like!
Oooh. I feel famous for sneaking one of my questions into your videos, Ari! It's great to see this kind of case study. It does confirm the thoughts I had about this type of situation, but it's so helpful to see the same conclusions coming from "the experts". I also think it's helpful to think about taking extra income vs extra Roth conversions if you know you'll have an RMD "problem" in the future. I expect that by the time I hit 70, that our income + SS will be WELL above what we will need, and tapping traditional OR Roth accounts will be unnecessary, but it has made me start to think about the best use of my investment accounts pre-70: Weighing the thought of converting to Roth, vs just spending more $$ in the early years of retirement, to gifting to children now vs later. Like many people with this "problem", I have been fairly frugal and in "saving" mode for decades. Preparing myself to get into a "spend" mode sooner than later is a big mental change, but shouldn't we reap the benefits of our diligence? It seems better to spend what we can reasonably than piling up a large Roth account simply to transfer to kids upon death. I know you like to show the increased vacations or increased monthly expenses in many of your examples, and it's great advice for people who are projecting ever-increasing portfolio balances.
Yes, reap the benefits!!
The rise in tax rates is why I decided to roll over my 401k to a Roth IRA. I don’t want to be 59 and paying taxes on withdrawals from my retirement account.
Pre-tax contributions can help lower income taxes during your working years, while after-tax contributions can reduce your tax burden in retirement. Both have their advantages, but it’s also smart to save outside traditional retirement plans, such as individual investment accounts or with guidance from a financial advisor.
I completely agree. I'm in my mid-40s, getting closer to retirement, with over $2 million in non-retirement funds. I'm debt-free and hold relatively little in my retirement accounts compared to my total portfolio over the last three years. Honestly, you can't ignore the value of a good financial advisor-just make sure to do your homework and find a trustworthy fiduciary.
@@FerdLerd This is the direction I want to take with my finances as I prepare for retirement. Can you recommend the advisor who helped you get ahead?
I recommend seeking out financial advisors like Rebecca Lynne Buie, who can guide you through investing, insurance, securing retirement funding, exploring tax benefits, and creating a volatility buffer to manage investment risks. Given the challenges ahead, effective personal finance management will be crucial.
Rebecca Lynne Buie appears to be a well-regarded expert in her field. I looked her up online and found her website, which provided detailed information about her credentials, education, and experience.
Another great video.....
To one of the points of the original question, it's not always easy to determine what your income is if a big chunk of it comes from dividends. Those dividends could be qualified, non-qualified, Sec 199A, Return of Capital, etc.. some of which you don't know until you get your EOY Brokerage statements and file your taxes the next year.
Thanks for sharing this. I'm thinking we could fill up our 12% bracket with Roth conversions and keep some of it in cash for expenses in the near future that we don't want to pay from traditional IRA accounts so we can avoid jumping up to the next bracket.
Hi Ari. Can you please talk about how to target the right tax payments. For example: Should you aim to under or over pay a little. What to do if you have some gains or losses you might take but aren’t sure so then the withholding is off by a few thousand dollars. Should the tax payments be estimated and paid quarterly or maybe withheld from the pension payment every month. How much can you under pay and not get an irs penalty. How bad is a penalty. How do federal rules compare to state rules in general. How much do state taxes influence how large a conversion to do. Thanks in advance.
Hi Ari. Love your content and the fun way you present it. I used the right capital software and found it odd that it thinks 32% bracket is what I should fill. I do have a a modest pension and I’m only 60 so no SS yet. I do have more in my brokerage account than rollover IRA. But I’m really struggling to understand why it’s showing that. Can you think of scenarios where this makes sense? Thanks!
How do you cover the taxes on the conversion? Do you withhold taxes? Thanks
You think you’re so cool…love it!
@earlyretirementari we're in our 40s and want to get ahead by converting a $40k 401k now, instead of waiting until it's larger. Our provider does not offer in-service rollovers, and they're saying we can only do a distribution. Is a distribution-contribution combo the same as a rollover? What do we need to watch out for and factor in?
Great info for sure ! My wife and I (age 62 and 60) are still working(for 3-5 more years) and now contributing in our Roth 401K's. Prior we have saved aggressively in traditional IRA/401K, and have a sizeable amount (approx. 3,200,000 that will keep growing), so we are concerned about taxes especially at RMD time (75 for us); the issue is we do not have that much outside cash to do much Roth conversions to pay the taxes, we would consider QCD's to help with this. Paying the taxes from the conversion itself I've read is not ideal so not sure if its worth it. Would love to hear any suggestions and strategies you can offer. And does the software you offer if joining, would this assist us in potential strategies ? Much appreciated and thank you !
Yes. You’re welcome!
where do i find the link to join and have access to the software ?
@ ari-taublieb.mykajabi.com/early-retirement-academy
@Earlyretirementari, Hi can you do an example video of a couple retire at 61 & 64, have all in pretax + Affordable care + income 34K a year? Should they do Roth Conversion? Will it impact their ACA? Thanks
th-cam.com/video/kGE4p8OqYtY/w-d-xo.htmlsi=8hEjq9AZBFXuqh4b
how do you handle ira inhertited disbursements and tax deductions, seemed like there is nothing
th-cam.com/video/INspbpNglXI/w-d-xo.htmlsi=8J3DcZu1HcO3ycv0
Can you please give me your opinion on investing in bitcoin and cryptocurrency? My nephew is my CFP and he is not a fan of it. Thank you!
Hi Ari. Love your content and the fun way you present it. I used the right capital software and found it odd that it thinks 32% bracket is what I should fill. I do have a a modest pension and I’m only 60 so no SS yet. I do have more in my brokerage account than rollover IRA. But I’m really struggling to understand why it’s showing that. Can you think of scenarios where this makes sense? Thanks!
Thank you. I’m sorry I don’t know your situation so I can’t comment!
@ I understand. Guess I was just hoping that you may have come across scenarios where 32% makes sense. I’ve never watched a show from someone who showed a situation where 32% made sense. Seems odd to me.
@ Rarely. There may be a setting off or you’re truly not spending enough where conversions are required but there’s a lot I don’t know about your plan. You can get on the waitlist for a power planning session if you’d like!