Rendering unto IRMAA: Income Tax in Retirement

Welcome to finishing well brought to you by Cardinal.com certified financial planner Schild best-selling author and financial planners helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started.

Finishing well welcome back to finishing well or surrender with us today, where with the certified financial planner Hans Schild in on today's show we are rendering under Irma, which will tell you what that means later on if you have heard, Hans is going to help us all out and we can find out about Irma, but before we get there in a Proverbs 2120 is pretty cool thing it says that in the house of the wise. There is precious treasure and oil. That's a pretty cool thing. This is the full, swallows it up and so you know, one of the ways that in our culture here in America that fools get swallowed up as they get swallowed up in taxes that didn't necessarily need to be paid and so today showing to kinda get into that whole concept of you know, how can you maximize your resources what God gives you for the kingdom not only you know for how you take care your family but conserves big benefits for the church in this holder are starting with like the tax cuts and jobs that just past that when in effect this year. In 2018 is a good thing today is overall simplifies taxes, reduces taxes, in many cases, but there's some things buried in there by getting rid of deductions it. He really could be hurtful to charities and churches. Okay, meaning that a lot people with no you not supposed to be doing your tithing based upon income taxes. You're supposed to be doing your tithing based upon the percentage that you pay to God, but it's fact that people can rationalize some of this with the fact that they get a tax deduction. And if you now under the simplified tax code are not itemizing deductions. You no longer getting a tax benefit for charitable deductions. So were to show you some ways to still get that. Especially if you're over 70 and show you churches. Some of the ways that you could perhaps teach some of your folks in your church that are 70 and over, or their parents to donate to the church and to do it in a very tax efficient and tax was way right and as always you know you can find out a lot about what we talked about today in the complete cargo guide to planning for living in retirement and the accompanying workbook and of course if you go to cargo guide.com you can go to the seven words tab and go to the income taxes section and can get the free download of the income tax right under that particular one. Or you could get the whole book you need to spend seven bucks and get the book.

But we always want to make people aware of the resources gives were to be talked about some of things inside that workbook. But let's put a face on this Ponzi you got a story of a lady that really her her financial advisor was the fool and the effect it was a letter get letter treasure get swallowed up and I'm not sure he was a fool that he was giving her what he thought was the best advice we so I'm speaking in a group. It was actually one of the local ARP chapters in past out the book to everybody gave a talk she was there came to me at the back of the room called came over a couple weeks later and there was one thing that I said to her that really resonated with her. I said to just stockpiling money in an IRA for your whole life is not a good estate planning strategy K now I know you take minimum distributions at 70 1/2 she was over 70 1/2 since she's already taking minimum distributions. Actually, at the time she wasn't she's just gotten there now.

Whatever issue should she had been leaning toward just keeping her, taking as little out of her IRA as possible and I showed her in that seminar just briefly how unit which gives this money to her daughter, which is really her only air that her daughter is going to have to pay taxes on that money. She's probably going to need the money when she receives it and she's just going to draw all out and pay all the taxes and so it would be more wise for her to drawdown and little bits over her lifetime because she was lower income.

In her case, there wouldn't be much tax, if any. If, as she took money out correct well and so her other advisor which so she explained to me she had two accounts.

One was an IRA with about $200,000, which is to hers a lot of money to log people's lot of money and then she had another count that I think originally had about 100,000 in there any gotten down to about 80 through her withdrawals, but she had been making all her withdrawals. She won 70 1/2. Time out of her Artie paid tax on can counter that.

You know the nonqualified money and his logic was that she always go, what account should I draw from should take some from each he'd always lean toward the no tax account because his logic was, you have to draw less white white white drought money and pay taxes when you can. Drought money tax-free and after she got done talking to me. She figured out that actually the reverse was can be better for her yet because every situation is different, but that leads to a really important thing that you you you see a lot of companies that whenever they start giving all this information.

They say will wait were not in a better tax account to get tax advice but it's all in the footnotes.

It says this is not tax advice. We don't provide tax advice. Consult a professional tax advisor. You read through the brochure and you talk about fan enterprise. All they talk about is taxes amuses how can you talk about an IRA without taxes but anyhow I don't want to get going on that my firm. I'm completely independent and I'm not independent of the state regulators and the federal government anymore than anyone else, but I don't have a bunch of people in New York tell me what to do and we on the CFP of get three other certified financial planners in my firm and we give tax advice to just about everybody.

We talked and so you chat, how to measure aptitude to I mean I'm just curious how Noel could you do estate planning or you know retirement advice without tax advice and got me part of the equation was surely a semi-just something with as simple as Social Security so you know I just reading my own words in my own book where I simplified everything in this book is much is it possible that I am in its written in plain English, but there are certain things you can only simplify so far like the government's formula for paying income taxes on your Social Security so if you just put it to you in simple terms. If you have no tech, no income other than your Social Security your Social Security income is going be tax-free so I can just tell you that if you if you have no or very little income other than your Social Security check. You campaign from taxes on your Social Security. That's really nice thing now. If you have a lot of other income besides your Social Security you can't pay any more than 85% of your Social Security's taxable know a lot of people get mixed up and they think mean, I gotta give 85% of my Social Security check. The government no, we mean a future Social Security check was $1000 a month and you had this all other income 850 a month with the B taxable income height and got it hundred and $50 that's on taxable right so so you're always going to have some tax-free Social Security. But the formula to create the difference is just it's not that I got it all on one page, but I'm not can attempt to teaching that on the radio. I don't have a graph or anything else politically to this way is you can make a certain amount of money other than your Social Security and still pay no taxes on yourselves here. So when were doing retirement planning or were sit down with you and talking about where you can keep your money which you can, having invested and how you can create cash flows just to live and possibly save and donate to the church and create your state pass things on to your kids pay for long-term care and he almost cast things were going to be real well aware of minimizing taxes on Social Security and on that other bit of income K absolute, which leads to the big question. I know a lot of people's minds and hearts right now it's how with the new tax law. Can you give to the church and still get some pet tax benefit.

Okay so when you become 70 1/2 you have to start taking money out of your IRA or 401(k) or wherever you have it in a retirement plan unless it's a Roth.

You don't have to do this with Roth account, so you have to make what are called minimum distributions required minimum distributions and there is a way now with a qualified charitable distribution which they love these accurate and specific UCD QCD UCD out to me. I hate the stuff that is way as I try simplified as much as I can but it UCD can be a really wonderful thing because what you can do is take money from your IRA and give it directly to the church or other qualified charity directly and it's not can show up as income on your tax return so you knock you have to pay taxes on the withdrawal, but it does count as a minimum distribution and you can do up to hundred thousand dollars a year. So even if we even take the lady were talk about this a lot of now 70 1/2 and she has this IRA that she's getting money from so she would be able to give her tied to the church through that QCD right and it would, and there is no tax from it whatsoever. For anybody, which effectively makes it like tax-deductible right so so so that's the real real Robin this is that if you're 70 1/2� Say your seven-year-old or that you can do all your tithing, not just off of the IRA, you can do it through your IRA, you can do it on the husband you get on the wife if they both have IRAs and you can do the whole family tithing through that and effectively make it like it's tax-deductible all right you listing to finishing well today show is render under Hermine leaving that term of the certified planet non-child and again they all we hope you are enjoying finishing well brought you by Cardinal guy.com is a cardinal guy.com for free downloads of previous shows, including episodes about Social Security and Medicare, IRAs, long-term care, life insurance, investments and taxes as well as Han's best-selling book, the complete cardinal planning for and living in retirement.

Plus the accompanying workbook.

If you want to follow along with today's topic download free PDF cargo guy.com by going to the seven worries tab of today's show topic, just scroll down to useful documents once again for free resources shows going to get Han's book the complete cardinal planning for and living in retirement or the workload go to Cardinal.com you have a question, comment or suggestion for future shows. Click on finishing well radio show and send us a word.

Once again that's Cardinal guy.com Cardinal God.com now finishing well brought by Arnold guide.com back to finishing well certified financial planner on child day rendering on the ermine will determine an act that is mean hurricane Irma that this is another dinner we can get to that. But you know. Proverbs 2128 gives this wonderful advice and says in the house of the wisest person precious treasure and oil but a fool swallows it up so you know applying our heart to wisdom and and ways that we can maximize what God's given us and resources for the church, which we just talked about through Q CDs which if you missed that you can always go back to the podcast by the way, you know it Cardinal guy.com as well as the resources for today's book but we wanted it did tell a little bit more about our Lady bit you want to share a little bit about how she really is in a neat set up for her family.

Based on you know the house of the wise, her daughters in the house of the wise because she can have plenty oil and treasure not based on what she's done well yes of what we what we set up for his every year we pull out enough money out of the IRA, which was up around $200,000. We pull out pulling out 10 Republican increases to 15.

We we had. We meet with her. Toward the end of the year and we decide this amount, and she really doesn't pay any tax or just little bit of tax on that 10 or 15 that she withdraws it has no effect on her Social Security income taxes, and then we just deposited over and that other accounts is not like she spending the money she just realizing it as income and having either no tax or very little tax and then by this account. Building up the note tax account. If she does have some emergency percent and that she has to draw $50,000 for or something she's not going to have a big huge tax bill in that given year. So, not to mention her daughter when she inherits that will there be no tax bill. So get to go back to the people that me and missed the beginning this. This woman had at $200,000 IRA that was pretax and then she had another account that must been a Roth or something that was really not a Roth. It's just a regular savings Savings account but it's it was a mutual fund and it was a brokerage account but it was just a regular is a taxable account right so this money if you take it out all day long is no tax on it by some by taking it out of the IRA in a lower enough amount to not send her income up to a taxable level you're able to over a period of time different this tax-free money for her estate is an estate or for her use the she needs it and yeah, the reason for bringing out her as example I can't tell you how many clients we have that are in this situation. They're basically living off their Social Security.

They don't have a lot of bills and debts and then they've got these other accounts that they haven't done too much management on and then there also not managing the tax piece of that year-by-year because there really in control of a much income they realizing this for. We help people in the Q CD again, is this genius that whoever put that bill in Congress to make this possible. Where people could take us in a we talked about in previous show how many trillions of dollars are sitting out in IRAs that are available for the kingdom of God to move forward if people understood the tax benefits of doing QCD it's it's it's it's a wonderful way to give money to your church and if the furious church is planned in your estate. We we can sit down and just do a plan and if you've got some IRA money is and it just makes sense to just flow that in just never pay taxes and there's room treasure. I mean that a known treasure is filled up in heaven. This is you take your estate right and you put it towards the kingdom of God moving forward through other organizations, like the Jesus labor love freedom. If you know where you clearly were helping single moms in Windows you know that that are struggling with the we help people with this, that one thing Q CDs we talk to every client about that's over 70 and what were doing on South to Irma, who and malevolent.

What is earned.

Irma is has to do with Medicare. It has to do with people with high incomes.

It honks them off just once they completely understand most of them don't even hardly acknowledge them office at some kind of an Iowa term that makes really bad headaches is really mad yeah if you have a lot of decent yeah that is not. I grew up in outset, in the morning so I was there is the minor all know what you meant by hot yeah and some to do with parenting or docs design.coming up there okay sir Irma stands for income -related monthly adjustment amount that is just that that's a sweet term and what it really means is if you make too much money were going to charge a whole lot for your Medicare call at this fancy term, so it has pretty high threshold. So an individual that has 85,000 or more of the income, or a couple at 170,000 or more a more for their Medicare and that's about as far as I might go with it on the radio that there's things we can do to plan around these things such as a Roth IRA, having this is not large enough for somebody that has a lot of dough and they're making a lot of doubt and then there have a lot of savings to just rearrange everything to avoid this, five, 600 bucks a month of Irma per person, so it's a lot but it's still not large enough to just completely rearrange. Are you serious $500 and one other hocked off by medical insurance for five and they're charging you essentially free Medicare you right it's the means testing of Medicare now is talking, we should means � Medicare, we should we should make you people have money they should pay you know they should have to pay more for their Medicare what it's it's already there. The existence it's been there. It's called Irma okay and there's not planning things we can do with your income, starting with the BES Roth IRAs allow these folks that have these high incomes have big IRAs were they saved in their retirement money comes out of their gang.

Again, this thing by itself is not enough, but when you put together with the taxes on your Social Security and you get somebody that's kind of in the tween are people you know were there or not superrich but a lot of folks would call rich but this kind of stuff matters, and so we can do some planning where we could turn their Roth the trainer IRA into a Roth and pay a lot of taxes to do that within the have tax-free income and net income is not an account against his Irma Nourse again account against Social Security's is some other ways to battle the paying income taxes on Social Security besides just you know controlling the amount of money withdrawn. You could use a Roth IRA strategy and then after you get done with the conversion, then you're going to be having tax-free income that doesn't count that the beauty of listening to the shown hour on December 22 21 and is it you know I started listening to Hans and she said Roth IRA. I was out in left field summit. So if if you're like I used to be, and wondered what Rosie talked about the good news is you get plenty of podcast resources. You can go to the book because you begin to understand these things and unfoldment.

You can see why the house otherwise has treasure in the false-positive because he didn't, you don't know what you don't know about these things and and it's amazing resource again that we have the air at cardinal guide with ponds is people that are really just wants to know that there is there's wisdom out there it's crying out in the streets, but was sure it is we can tailor this to you know what I'm irritated cardinal guide.com we take in each chapter of the book in each chapter of the work book and under the seven worries tab.

If you click on the particular like this one. This shows taxes, income taxes, click on that you're going to find a PDF copy of the chapter on taxes and both you can download them for free.

In fact, you could put the whole book together so can cost you anything. Now you can also buy the book at Amazon and you can get to that right through our website that the Kindle version of this thing is a dollar 99 and the paper version. You can order 799 or if you just want to send me a message to Hans on the message thing on the website Mackenzies. My assistant that works with that I need to split book offer will be glad to mail your book. Please send us your mailing address or just tell us will email you did so, when I charge anything so I really want to get this information out to people.

I wrote it to help people and it's really the bringing together of all of the subjects of tax planning is the last chapter because I don't want taxes. I don't like that in the planning of some people come to us and they're just so mad about taxes that they just every decision they make involves taxes really just taxes as their first priority. What I'd rather do is just consider taxes, but I'd like to have you making financial decisions around what you want in income decisions. Those kind of things but we need to look at taxes and we need to have smart strategies to minimize them or avoid the one area that we have got to yet on this subject is long-term care and a way to use those strategies you talk about within this tell yeah I mean it starts out with being able to write off the premiums Friday if year eligible for tax deductions and then it becomes not paying taxes on the benefits or if you have to pay for long-term care yourself, then working at one of the real smart like this lady that we were just speaking out. If she all of a sudden ends up in a nursing home.

We got her a short term care policy so we get the first year that covered.

But if she has to start Ron down her money she's going to come to us in working to show her what account to be paying those medical expenses so that she doesn't pay taxes on to my wonderful time were having today. I'm finishing well in Hongqiao are certified financial planner remember cardinal.com it's your it's a resource to find out what in the world is not what the Roth let all these terms that were just completely foreign to most of us without your help on so God bless you again.

All this information@cardinalguide.com so much fun today.

Thank you think you read. We hope you enjoyed finishing well if you buy kind of guy.com visit cardinal guy.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows what you get. Hans book go to cardinal.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again, that's cardinal guide.com cardinal guide.com