Radio Show Transcription
Investment advisory services are offered through foundation investment advisors, LLC. an SEC-registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice, and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. As performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they do not refer in any way to securities or investment advisory products, fixed insurance, and annuity product guarantees are subject to the claims-paying ability of the issuing company.
Brian Quaranta 00:39
You know, we’re hearing a lot about the Secure Act 2.0. So, what’s in it that could affect planning for retirement? The short answer is plenty. On today’s show we’re gonna break down securing a strong retirement Bill aka The Secure Act when we come right back here on Retirement You Radio.
And now Retirement You Radio.
Brian Quaranta 01:01
Any good retirement plan starts with the foundation
asset protection, tax reduction, holistic planning.
Brian Quaranta 01:07
You think that’s the difficult part? That’s just getting started!
Featuring Pittsburgh’s wealth financial and income Coach Brian Quaranta.
Welcome everybody. This is retirement you radio increasing your financial IQ with Brian Q. Brian Quaranta, of course president and CEO of secure money advisors. He is a fiduciary. He’s got over 20 years helping folks get to retirement and through retirement. And Brian, we are digging into some odd territory today secure act 2.0. Hi, how are you?
Brian Quaranta 01:38
Hi, how are you? And I’m glad, boy, am I glad we’re talking about this, you know, I, I can’t believe how many people I talk to these days that just don’t understand how the Cares Act and the secure act is impacting them. I guess people just aren’t being kept in the loop of what how big of a change this really is? Sure. You know, there and there are many parts to secure act. You know, at this time, it’s not just clear what will be in the final bill, but most agree it will be passed in some form by the end of the year. Another part of this is the Ways and Means committee’s draft of a major tax bill, it contains a number of provisions and that really are going to change retirement planning. And these are big changes. I mean, you know, the secure Act, the original secure Act that was signed into law, again, we’re talking about secure act 2.0. Here, original secure act, for those of you that are listening had a major impact on required minimum distributions. And it also had a major impact on inherited IRAs. So, for those of you that do not know what the required minimum distribution is that that is also known as your RMD. This is which time the IRS is going to require you to start taking money out of your retirement accounts. So, whether you need the money or not. So, you know, as I always say, you know, the reality of retirement planning today is that 85% of the people retiring, Steve are just not retiring with pensions. So, all those people that are retiring without pensions, are going to rely on their 401 K plan or some sort of a retirement plan to generate additional income.
One of the things that the secure 2.0 is going to do or could do is in state some automatic enrollment to a retirement account. And that’s not altogether a bad thing, is it?
Brian Quaranta 03:20
No, it’s not. I mean, the proposed legislation would start new employees automatically at a 3% contribution rate to their employer sponsored retirement plans, you know, and contributions would also increase 1% A year up to a 10% contribution, which is a good thing. And the reason is, again, this all comes back to the fact that 85% or more of people retiring today are not going to be retired with a pension. So how are people going to retire and have enough monthly income if they don’t have adequate savings, and this is a way for employees to start to save money immediately, and get the proper matching contributions that they need to accumulate the sum of money that is going to be required for them to generate additional income because the day is going to come when you want to stop working. And the question is going to be how do you replace that monthly income? Because when you stop working, you know, paychecks gonna stop, but bills, taxes, and all the things that you want to do in life that’s not going to stop. So how are you going to pay for those things? Well, you know, for most people retiring, you know, if you’ve got enough credits with Social Security, you’ll be able to get a Social Security check in you know, the amount is going to vary based on when you decide to collect that Social Security check. But if that’s your only guaranteed source of income, you know, having these automatic enrollments to a retirement plan where we have contributions starting at 3%, increasing up to 10 is really going to help people build up a significant savings so that they can generate additional income and that’s something we do really well here at secure money advisors Steve every day here. My team and I are working on getting people retired. Sooner than what they actually thought they could. And the reason is, is because we’re teaching them mathematically how to take what they’ve accumulated in their retirement accounts and generate monthly income from that. And we use a bucketing strategy that is very effective in building a strategy that positions you so that number one, not only are you going to get enough income right now, but also as the cost of living goes up, you can have the ability to increase that income, but more importantly, doing it in a way to where you’re not going to run out of money. And for most people, if you ask them what their biggest fear is going to be in retirement, they’ll tell you, my biggest fear is running out of money. So, a lot of good things happening, obviously, RMDs. Another big change here, you know, we’re talking about the secure act 2.0 would further delay the age over several years until somebody reaches age 75. For people who reach age 74, after December 31, 2031, with most retirees needing to withdraw retirement savings to support the retirement. Some have questioned whether to delay, age primarily only helps wealthier retirees, which technically, it’s going to because if you look at my client base, you know, we’ve successfully retired over 1200 people. And you know, if you look at the majority of my clients, I would tell you, about 75% of those people that we’ve retired are generating income from their retirement savings. So, if you’re already taking money out of your retirement accounts, and the IRS is now telling you have to, well, you’re not going to have to take more if you’re taking the adequate amount. So, it really is going to benefit those that just don’t need the money from their IRAs, the delay in half and take the RMD and a later date such as 75. So, a lot of big changes coming up down the way here, Steve? Yeah, absolutely.
There are. And keep in mind, though, all the things that we’re talking about here today are proposed. There’s nothing in stone yet. But you know, there is a final bill that’ll get passed. And we’ll certainly be on top of it as well. But these are the highlights of things that we think could happen. And one of them is enhanced annuities. What does that mean? Right?
Brian Quaranta 07:10
Well, there’s two other big things coming down the pipeline, the enhanced annuities, which I really like. And the ways and means proposal would also do away with backdoor Roth conversions. Now this is big, that’s a big deal. That’s a big deal. And we’re going to talk about more of that when we come back on the next segment. So you’re going to want to hang in there and stick with us because you’re going to want to hear about these two changes, especially with the backdoor Roth IRAs, for those of you that don’t qualify for a Roth, but this is why I’ve developed our right track retirement system here at secure money advisors, because there’s so many things that you need to know go into retirement that determine whether or not you’re on the right track. And for the next 10 callers who call in right now we’re going to create a one-page financial review. We call it our Right Track Retirement, we’re going to literally sit down with you and help build a plan right in front of you when you come in. We’re going to literally take the mystery out of financial planning, helping you map out where you are and where you need to go. Our planning model focuses on five key areas income taxes, investments, health care and legacy planning. So, in short, again, we’re going to take the guesswork out of financial planning, we’ve created a very simple but very powerful right track Retirement System take advantage of it. It’s not very often that you get to sit down with a fiduciary at no cost. Literally the risk is on us, but you got to do your part. You got to pick up the phone call us today and schedule that. So again, for the next 10 callers with a comprehensive financial review the right track retirement that we’re going to give away complimentary with no obligation.
Hey, that sounds fantastic, Brian. Folks don’t miss this opportunity to sit down and put together that financial roadmap. It’s a practical financial review. And if you’re looking for that second opinion, I know a lot of you are now’s the time to make that call 800-656-8616 10 callers get that comprehensive financial review, plus all the extras that Brian just described, you’re gonna see where you are today but more importantly, you’ll find that you’ve now got a roadmap that can help get you to where you need to be when it comes to retirement 800-656-8616 again 800-656-8616 Don’t
Brian Quaranta 09:06
go away when we come back. We’re going to be talking about the ways and means proposal that wants to do away with backdoor Roth conversions. We come right back right here on Retirement You Radio
Do you ever feel like you’re fighting for financial knowledge? Don’t let bad advice be a punch in the gut your retirement to take advantage of a complimentary no-cost no obligation consultation with a local trusted financial coach. Call Brian Quaranta host of Retirement You Radio 800-656-8616 or text Brian Q to 800-656-8616 we’ve made it easy for you to take advantage of this fantastic offer. All you have to do is call or text Brian Q to 800-656-8616
We are back on Retirement You Radio increasing your financial IQ with Brian Q. I’m consumer advocate Steve. Brian is president and CEO of secure money advisors. And he’s a fiduciary. He’s been helping folks for more than 20 years got a great team of folks behind you at secure money advisors and so much more than that. And you have been studying, Brian, I know we talk about this backdoor Roth, let’s let’s just jump into this thing. This is being proposed as part of secure act 2.0. Part of the Ways and Means Committee edition or their tax proposal, some form of this is probably going to get passed, Brian. So, tell me, what is a backdoor Roth? And why is it that they’re taking it away?
Brian Quaranta 10:46
Well, the backdoor Roth, we know there are income limits to contribute to a Roth IRA. However, one way around this income limit was to do after tax contributions to an IRA or 401 K, and then convert this over to a Roth IRA. So, this has often been referred to as a backdoor Roth IRA as it went around the income limits to get money into a Roth. So, moving forward, what they want to do is this new provision would essentially end the backdoor Roth IRA by disallowing any after tax contributions to be converted or rolled into Roth accounts or Roth IRAs. So, this provision, basically would kick in for tax year 2022. So, if passed, it would give people some opportunity to convert these after-tax contributions by the end of 2021. into a Roth IRA, it is still important to recognize that it would not end all conversions as tax deferred dollars could still be converted to Roth IRAs. So, people don’t realize that you can put a nondeductible after-tax contribution into a traditional IRA, you just don’t get a tax deduction, off of your gross income. And that after tax contribution to the IRA, was being able to be converted into a Roth IRA, which, you know, again, the advantage of the Roth IRA, is that all future growth of that account is tax free, and all future income is tax free. So, this is a way if you were outside the income limits, you know, let’s say you made too much money, and they didn’t allow you to make a contribution to a Roth IRA. Most people just, you know, don’t even know that there’s ways around it. Sure, there are. So, this is why it’s so important to work with a planning firm that understands these, you know, some people will say, Well, why do I need a financial planner, this is exactly why you need a financial planner, right? Because for those of you that have been out there doing it on your own, and making contributions to your 401 K, or your traditional IRA, and you haven’t been taking advantage of the backdoor Roth IRA over the last 10 years, boy, have you missed out on a huge planning opportunity to get money tax free. Sure. And this is the importance why you employ the services of a professional in any area of your life, you know, whether it be a professional accountant or attorney, or financial advisor, or you know, having the right doctor, because if you have people that know what they’re doing, and they understand how the system works, it gives you these advantages. And these are all done legally, this is nothing that’s you know, II legal outside of the bounds of where the IRS would come down on you. I mean, this is something that’s been done for years. So, but man that’s going away. And now you don’t have this ability to create this. There’s nothing better, Steve, when you’re looking at the planning model, and you’re looking at the five key areas of planning that when it comes to taxes, there’s no better tax rate in retirement than 0.
Absolutely. So, help me understand what an after-tax contribution to an IRA is, and how come that’s not taxed if we if we move it to a Roth
Brian Quaranta 13:54
well, so basically, as a Roth IRA, if I’m making a contribution to a Roth IRA, I’m making an after tax contribution, meaning I’m not getting a deduction on it, but the agreement from the IRS is, hey, if you don’t take this deduction off of your tax return, and you just put it into a Roth IRA will allow that account will grow tax free. And when you take income in the future, we’ll make it grow tax ratio, but if you make too much money, they don’t let you contribute to a Roth IRA. But maybe you can contribute to a traditional IRA, because any income limits really can contribute to a SEP IRA, a simple IRA, traditional IRA, these are all form of traditional IRAs. Sure, just with different contribution limits. So, you could make that same after-tax contribution. It’s called the nondeductible contribution to a traditional IRA. And you could get the same benefit of the Roth IRA, but you would have to convert it right to a Roth IRA. So, let’s say that you can only contribute $7,000 to a traditional IRA, that’s pretty much what you want, and you and you want to contribute $27,000 Well, $7,000 would be deductible, right? Yep. At $20,000 would be after tax money, which would be nondeductible. But at the end of the year, you could convert that $20,000, which was an after tax contribution nondeductible to a Roth IRA. So now you’re getting tax free growth and tax-free income. Well, I can see why that’s a cool thing. It’s a very cool thing. You know, there’s so many people out there that just are not getting good enough advice to make these important tax planning decisions. And again, folks, what we’ve got to understand is there’s a difference between tax preparation and tax planning. Tax Preparation is when you bring your receipts and everything you’ve got at the end of the year to your tax County and say, hey, help me pay as little taxes as possible. Tax Planning is when we’re looking at things right now. And into the future, we would say, okay, how can I put myself in most favorable tax position I possibly can into the future and do this through legal ways to avoid taxation, right, we’re basically using the tax law to our advantage and tax planning is very, very important in the retirement planning process, because the greatest erosion of your wealth folks is not going to be drops in the stock market, the greatest Serota of your wealth is going to be inflation and taxation. You know, and so think about if you need income, when you retire, and you haven’t done any tax planning, and all the money that you’ve got sitting in an account is all taxable monies. And let’s say you need $1,000 A month and you’re in a 20% tax bracket. Well, if you take $1,000 out of your retirement account, you gotta pay 20% on that, that means you’re only getting $800. But if you now tax brackets go to 30%. Now, you’re only getting $700. So, the same $1,000 withdrawal is netting you less money, because tax rates have gone up. Now, my question for those of you that are listening, think taxes are gonna go up or down in the future, which we’re going to talk about more when we come back on the next segment, Steve, but for those of you that are listening, take advantage of our right track Retirement System. Call today for the next 10 callers who call in right now, we’re gonna give you a complimentary right track Retirement System, no obligation, we’re truly going to take the mystery out of financial planning, we help you focus on the five key areas of financial planning, income taxes, investments, health care and legacy planning, folks, retirement planning is all about those five key areas. If you have an investment before portfolio, that’s great. But that’s not a retirement strategy. We’re literally going to take the mystery out of financial planning. In short, we take all the guesswork out of it. It’s comprehensive. It’s a financial review the right track review, but you got to do your part pick up the phone call us today. So, for the next 10 callers, that’s a comprehensive financial review, we’re going to give away complimentary no obligation
800-656-8616 10 callers right now, we’ll get that comprehensive financial review that Brian just described, you’ll see where you are today. But more importantly, you’ll find that you’ve now got a roadmap that can help get you to where you need to be when it comes to retirement 800 656 8616. Again, 800-656-8616,
Brian Quaranta 17:47
the market continues to be volatile. And now it’s more important than ever to make sure your portfolio is protected. We come back three steps to take right now to make sure you’re protected. Right here on Retirement You Radio.
He’s letting the clock run out on his social security to age 70 For maximum benefits. And here comes the Roth conversion. He’s got some outstanding coaching with that lifetime income plan. He’s created his own pension as well. And it looks like he’s going to go All! The! Way!
Play your best retirement game call Brian Q 800-656-8616. Or text Brian Q to 800-656-8616. Call or text Brian Q two 800-656-8616.
We are back on Retirement You Radio increasing your financial IQ with Brian Q, Brian Quaranta. Of course. I just like saying Brian Q.
Brian Quaranta 18:52
It’s a lot easier. You know that name has been butchered all my life?
Well, you know, well, let me know. It’s like a bond term. Mr. Q. Right.
Brian Quaranta 18:58
Yeah, that’s right. That’s right.
Brian Quaranta 19:02
You know, I was doing an interview, I was doing an interview with Jon Delano on KDK last week, and he had a hard time saying I said Well, you can just call me Brian Q because it’s a heck of a lot easier. When he finally he finally was able to get it with the phonetic spelling that I gave him. Ellis Cannon there’s a guy by the name Ellis Cannon that I do a lot of interviews with here in Pittsburgh. He has a pretty good job. But for any of you, those of you that have seen our TV show, which if you haven’t seen our TV show yet, just go to our website and you can see the listings of the channels that we’re on, but I’ve also have uploaded all the TV shows to the to the website so that you can watch them but Cynthia my host. Gosh, we’ve probably done 100 Plus shows together and she still can’t say my last
Oh yeah, people go figure. Let’s see. All right, so we’re gonna dig into some questions here? Brian, I, this is an important part of it. I think a lot of folks are wondering. And so, Maddie is first she says, My company offers a 401 K and a Roth 401. K, I currently contribute 6% to my 401k 8% of my Roth. Is this a good long term strategy? I want to contribute all to my Roth 401k, beginning in 2022? Is that a better strategy? Also, can I take out my principal if needed from my Roth 401 K, since it’s after-tax dollars? Interesting?
Brian Quaranta 20:33
Yeah. So first off, any time that you can put more money into a Roth component versus a non-Roth component is going to be get better. Again, why? Because all the money in the future when you start to take it as income is going to be tax free. So, use the example that I use in the earlier segment, right? You want $1,000 A month from your retirement plan when you retire. And you don’t do any Roth planning. And all that money is taxable, and you’re in a 20% tax bracket. After you pay the taxes, you’re only getting $800, tax rates go to 30%, you’re only getting $700 a month. So, taxes erode your well. So, we can eliminate the IRS as our partner right now, by just paying the taxes and then putting it into the Roth and getting that tax free benefit in the future. What’s better? To me, it’s very simple. If I take $1,000 out, and I don’t have to pay taxes on it, that’s a heck of a lot better tax rate than if I took $1,000 out and had to pay taxes on it. So I would tell you long term, unless you need the tax deduction for some reason, which I don’t, you know, run across many people that need the tax deduction, because it’s just a matter of are you willing to deal with the pain now or the pain later, because you’re going to deal with it one way or the other? Right? It’s like kicking the can down the road. I don’t know, this individuals age, I don’t know their entire situation. And as a fiduciary, I’m generalizing here. Ultimately, what I would do if I had was making contributions to a 401k. There’s a lot that goes into it, income levels, ages, whether you’re married, you have kids, so on and so forth.
All right, great way to go. Maddie 800-656-8616. Sounds like you’re walking down the right path there. Let’s go to Stuart Stuart says I’ve got a little over $50,000 to invest. I’m 62 I want to retire in three years, investing in a CD used to be a good idea. Now I’m not so sure. Are there any low-risk things I can put the money into and at least make something more than the bank rate? I don’t need the money anytime soon.
Brian Quaranta 22:30
Well, that’s an important question right there. I don’t need that… I was gonna you know, because you’re always what’s your need for the money? Right? If you don’t need it anytime soon. That opens your options up a little bit more. But boy, Steve, remember when CDs were paying like 10-12%? Oh, gosh, yes. Yeah, exactly. My grandfather had a Kirby vacuum cleaner. Kirby do remember Kirby’s? Yes, of course. And I worked servicing the vacuum cleaners, I could, you know, I could fix a vacuum cleaner, no problem. But my grandfather was always teaching me as a young kid, that it was important to save your money. And he would always tell me make sure you invest your money and live off the interest? Well, when he was doing it was simple to do, because he would just take it down to the bank and get a 10-12% CD. You know, now you’re lucky if you get 1% or 2%. And then you got to lock it up for a period of time. One of the things that I’ve personally used for myself, and this isn’t for everybody, but one of the things I personally use for myself, is a fixed annuity. And, you know, there’s pros and cons to it, but I’m very comfortable with the pros and cons, I actually think it’s a great alternative to the banks, because I can get about a three and a half percent rate of return fixed rate of return in a in a fixed annuity right now. If interest rates go up, the rate in the account will go up. If interest rates go down the account, the interest rate can go down a little bit, but they guarantee me a minimum of 2% Even if interest rates go down, but three and a half percent in a low interest rate environment, you know, think about the probability if interest rates, you know, probability is most likely interest rates are gonna go up, not down. Sure. So that means I can move up on that three and a half percent, I can also take money out of the account, you know, unlike a bank CD, you can’t take any money out when the money’s sitting in there so you don’t have access to any liquidity whereas the fixed annuities allow you to have access to liquidity so you know, I’ve got about $300,000 sitting in a fixed annuity I can pull out 30 grand a year if I needed it and then once my terms up you know, just like a bank CD, you’ve got a term once my terms up I don’t have to buy another one. Whereas a bank CD every time it comes do they want you to lock it up again into another account. So, those are some alternatives right now and you know, again, you know, I don’t know his whole situation, but you know, I’m just giving you an idea of what I personally use it as alternative you know, annuities there’s they’re complicated products and there’s a lot to consider when purchasing one but this is why we created the Right Track retirement System. These are the exact things that we can help with. Take advantage of our Right Track Retirement System. It truly will help you make good financial does decisions. I know it can be intimidating process to come to a financial advisor’s office. But we’ve created a very simple and easy process to follow to guide you through and open your eyes up to things that you might not know about when it comes to financial planning. So, call us today, we literally will take the mystery out of financial planning, but you got to do your part. You got to pick up the phone for the next 10 callers who call in. That’s a complimentary no obligation, Right Track Retirement Review, where we’re going to help you go through those five key areas that I talk about all the time, but you got to do your part. Call us today.
800-656-8616 get that comprehensive financial review, see where you are today. But more importantly, when you walk out the door, you will have in your hand a roadmap that can help get you to where you need to be when it comes to retirement. 800-656-8616 again, 800-656-8616 Brian is always a pleasure. This show goes by so quickly, but the information is so important.
Brian Quaranta 25:57
Steve, it always goes by quick and folks, thank you very much for listening. Thank you for all the wonderful emails that you’ve sent to us. We truly appreciate it. Keep sending your questions and we’ll see you again right here on Retirement You Radio.
Investment advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the use of drip information. Discuss exposure to ideas and financial vehicles should not be considered investment advice or recommendations, buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income stream for only two fixed insurance products did not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company