On this week’s episode of On the Money with Secure Money, Brian Quaranta discusses how to manage your Roth IRAs, taxes, and required minimum distributions in retirement.
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Radio Show Transcripts
Announcer 00:00
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.
Steve 00:39
Brian, the Roth IRA is a big deal right now.
Brian Quaranta 00:42
Tax Free is a big deal, Steve. That’s right, great tools for investors to leave wealth to their heirs, but also great for tax management in retirement and these tax-free Roth IRAs, you also don’t have to take a required minimum distribution. When we come back, we’re going to talk about some more of these strategies right here with On the Money with Secure Money.
Announcer 01:01
And now On the Money.
Brian Quaranta 01:03
Any good retirement plans starts with the foundation,
Announcer 01:08
asset protection, tax reduction, holistic planning,
Brian Quaranta 01:12
these are the things that start to move you towards having a retirement plan.
Announcer 01:15
Retirement doesn’t have to be complicated.
Brian Quaranta 01:19
You think that’s the difficult part. That’s just getting started,
Announcer 01:24
and now, on the money with secure money.
Steve 01:29
And welcome, everybody. This is on the money with secure money. And Brian Quaranta is here. Of course, he is president and CEO of secure money advisors, and consumer advocate, Steve, so at all, and this is going to be a good one. I like tax free, Brian. Hi, how are you?
Brian Quaranta 01:44
Yeah, who doesn’t like tax free? Yeah, exactly. And it’s legit. It’s legit tax free. Yeah, let’s see for how long but as of right now, they still let us do these things called Roth IRAs. And there’s a number of different ways you can do them, you can either make a contribution, you know, of course, you have to make sure that you don’t make too much money, otherwise, you can’t contribute to them. I think the total income needs to be under $140,000 In total income, don’t quote me on that. But it’s somewhere around that number. If you make more than that you can’t contribute to a Roth, you can also do something called a Roth conversion. This is where you actually take money from your traditional IRA. And you can convert it to a Roth IRA. Now, the good news about that is it doesn’t matter how much money you make; you can make a million dollars a year and they’ll let you convert your traditional money to a Roth IRA. And then you can also do something called a backdoor Roth. But that’s starting to close to, and this is where, if you’re outside of those income parameters of $140,000, you can make a contribution to a traditional IRA, and then you could immediately convert it to a Roth IRA. But why a Roth IRA is so good. Well, number one, as you said, Steve, it’s tax free, and who doesn’t like tax free money. So, this in retirement is important because at secure money visors, we talked about the five key areas of planning, we talked about income taxes, investments, health care, and legacy planning. And of course, tax has been number two on our list is because the biggest erode or of your wealth is going to be inflation and taxation. Now, I don’t know about you, Steve. But do you think taxes are going up or down in the future?
Steve 03:27
Let me think up.
Brian Quaranta 03:30
Most people would agree. And if anybody out there doesn’t agree with taxes going up, I’d love to hear your reason why, please send us a message to secure money advisors.com. And we’d love to talk to you about why you feel taxes are not going up. But it also helps us in retirement generate tax free income. So why is this important? Well, the challenge we’re having right now, in retirement is the fact that most people don’t know when they can retire because nobody’s getting a pension anymore. There used to be these things called retirement parties, you don’t see that as much anymore do. And the reason is because people just don’t know if they’re going to be able to retire and when they’re going to be able retire. But the other fundamental challenge is that people are retiring without a pension plan. So, the only source of income people are going to have a social security check. And if you’re a married couple, you got two social security checks. But for most people, they’re probably going to need to take income, they’re going to need to generate income from their retirement savings. And typically, most people are putting money into some type of 401k. If you work at a hospital, or maybe you’re a teacher, it could be a 403 b or if you’re military, it could be a 457 plan. But most people are contributing those plans. That is the replacement of the pension. The only difference is rather than it being guaranteed that money is at risk. So, it can go up and down at the market goes up and down. And if you start taking money out of it and you don’t I’ll take money out of it the right way, you could potentially run out of money, which according to AARP, that is the largest fear of retirees today. Matter of fact, they did a survey and they interviewed 1000 people, Steve, and they said, What do you fear most running out of money or death. And you know, over 90% of those people say they fear running out of money more than they fear death alone. But let’s talk about creating income and retirement, let’s talk about creating it tax free. So, let’s suppose that you maybe have five to 10 years before you retire, you’re contributing all kinds of money on an annual basis to a traditional 401 K. And you finally realize that, hey, I better start getting a plan together, because I’d like to retire. And by the way, I better figure out how to control taxes and retirement. So, let’s take person A and person B, person A, let’s say, they’re going to retire with a million dollars. And let’s suppose that they’ve been contributing this money to a traditional retirement account, like an IRA or a 401. K, when they start pulling money out of those accounts, they’re gonna have to pay income taxes on those withdrawals. So, let’s suppose they need $1,000 A month, okay, well, let’s suppose that they’re in a 20% tax bracket, so they take 1000 out, but they have to pay income tax on that. So now they pay 20% in income taxes. Now, they’re only going to net $800. Let’s say income taxes go from 20% to 30%. That same 1000, with dollar withdrawal is only going to net $700. So right there, just with tax rates going up, we’re losing purchasing power. So where does a Roth benefit you? Well, let’s suppose that I do some tax planning right now. And I start moving my money from a traditional IRA or a traditional 401 K to a Roth IRA, a Roth 401 K. Now that money that’s in those Roth retirement accounts are going to grow tax free. But folks, listen to me when you take the money out, it’s also going to be tax free, yay, yay, we need a button a clap button. Yes. So, let’s say they take that $1,000 out. Same example, person B is taking it out of a Roth retirement account. And let’s say they’re in a 20% tax bracket, well, that $1,000 withdrawal is going to net them $1,000 Because it’s tax free. And let’s say tax rates go to 30%, that $1,000 withdrawal is going to net them $1,000 Because again, they’re not impacted by tax rates on withdrawals from Roth IRAs. Not only that, but Roth IRAs create tax free legacies, they can pass money on to your beneficiaries, tax free, you don’t have to take required minimum distributions from these accounts at age 72. There are so many great benefits to utilizing the Roth IRA, the Roth retirement accounts. So, number one, remember, do tax planning, number two, create as much tax free income as you can. And utilizing a Roth, you can do that. And in today’s world, for most of you out there that are still working, check with your employers, they probably have a Roth component to the 401k plan that you could start contributing right now to the Roth component of your 401 K and start getting tax free growth right now. But folks, what I want to do for the next 10 callers who call in right now, we are going to give you a complimentary right track retirement analysis. The number one thing we hear in our office every single week is Brian, are we on the right track? Are we doing the right things? Are we going to have enough money to retire? Folks if you weren’t on the right track? When would you want to know that we’re giving an opportunity for the next 10 callers to schedule a complimentary appointment with our office to go over five key areas of your plan, your income, your taxes, your investments, your health care and your legacy planning. But you’ve got to do your part you got to pick up the phone and call us today. The appointment that you’re going to get is truly going to take the mystery out of financial planning is going to help you give you the clarity and peace of mind you deserve going into retirement. Give us a call today.
Steve 08:43
Brian could take some complex financial world turn it into something that really just makes sense. It’s a practical financial review and it’s a phone call away 800-656-8616 10 callers right now get the comprehensive financial review you see where you are today. But more importantly, you walk out the door with that roadmap that can help get you to where you need to be 800-656-8616 again 800-656-8616
Brian Quaranta 09:09
Sometimes it’s a little things that can make the biggest difference when we come back we’re going to highlight some simple things to help you achieve the kind of retirement you’ve always wanted when we come back right here with on the money with secure money
Announcer 09:28
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 your radio 800-656-8616 or text Brian cue 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 two 800-656-8616
Steve 10:05
We’re back on the money with secure money. I’m consumer advocate Steve Sinhala. Of course, Brian Quaranta says here, Brian is president, CEO of Secure Money Advisors. He’s a fiduciary, he’s an independent, he’s been helping folks for better than 20 years get to and through retirement and always with an eye on taxes. And, you know, we talk about little things making a big difference. And boy, there’s quite a list of things here, Brian, that I’ve been kind of impressed with that, you know, you don’t think about them often. But if you do, you can end up with a better retirement.
Brian Quaranta 10:33
Yeah. Well, you know, it’s often said that saving for retirement is simple, but not easy. And here’s why would you say? Yeah, would you agree? It’s not it’s not easy, but simple, because all we have to do is save money. Not easy, because it can seem overwhelming. And here are some really good tips that I think can make a big difference in retirement. So, let’s start with number one, Steve? Sure. Save 1% or more. That’s a that’s a novel idea.
Steve 11:01
So just arbitrarily or, you know, annually bump that up at least 1%. Yeah. So
Brian Quaranta 11:06
look at it like this, a small increase in your savings, obviously can result in a big increase in your retirement nest egg over time. So, let’s say you earned, I don’t know, $50,000 per year, okay, you save one 1% of that. Okay, that’s about $42 per month, and you earn 6% annual returns on that money. You’ll have an extra $57,517 After 35 years. If you’re close to retirement that 1% may have to get kicked up a notch. Right. But it’s a start. Just a small little sometimes people say, Well, I can’t save any money. Could you save 1% of your income? can get you started? Yeah, this is something that I taught my sister, my sister’s been a makeup artist in California cost of living in California, obviously, extremely high. Yes. So, when we sat down, I showed her by just saving just a little bit of money. And that’s how we did it, just a little bit of money can add up to a whole lot. And I remember just over this Christmas, we were sitting down, she says I can’t believe how much money I have in my account. And she doesn’t even miss it, because it’s just automatically deducted each month. And folks, if you haven’t started yet, it’s never too late to start redirecting your race, right? This is.
Steve 12:26
Yeah, this I don’t know, Brian, it’s very tempting.
Brian Quaranta 12:29
I just, I just got a raise. I’m gonna go by that Tesla exam. I just talked to my wife. She’s Yeah. I just, I just gotta raise, we’re gonna put that addition on the house. But let’s say you could say discipline, I mean, if you redirect your raise, that can really boost the amount you’re saving for retirement without reducing your take home pay. Sure. So, the next time you get a pay increase, rather than finding a way to spend it, consider tucking it into a portion of your retirement accounts. So, and this is this is even more important, especially if you’re close to retirement. That’s really where you got to show some discipline and, and make those things happen for yourself. Well, it’s a sacrifice, but there’s a payoff it is. Yeah, that’s right. That perfectly said, you can contribute your tax refund. You know, a lot of people get tax refunds. Well, who are they? Yeah, well, you know what? I refunded yours. What, you know, people in Western Pennsylvania like to overpay on their taxes?
Steve 13:30
Well, this is this is a good thing, then. Yeah.
Brian Quaranta 13:33
And that’s okay. I mean, they get a chunk of money, you know, at tax time that they will typically use for vacations or, you know, add to their emergency funds. But if you are one of those that do get a tax refund, how about you contribute your tax refund, you can deposit your tax refund into a traditional IRA or Roth IRA using IRS Form 8888. You can also elect to apply the IRA contribution to your current tax return for the following year. Seems like a no brainer, but you never you know, you never had the money. So you won’t miss it. But again, simple but not easy,
Steve 14:11
right? So tempting. Right? Especially with a tax refund, you know what I mean? It’s like, oh, my gosh, found money. But it really isn’t you paid that in? They’re just giving it back.
Brian Quaranta 14:23
They’re just giving it back to you. They borrowed it from you. And you know, at tax time, they said, Oh, we borrowed too much money from you, thank you for loaning it to us and not charging us any interest. Think about that. You know, when you when you overpay your taxes, you’re actually loaning money to the IRS, and they’re not giving you anything for it. It’s a it’s a 0% loan to the IRS. So because we’re generous people, yes. Yeah. Well, this is these are tactics that people use for themselves to try to add some more stability into their savings plan or you know, they’ll say, Well, if that money comes to us, we’re not going Be disciplined enough to save for our vacation. So, we’d rather overpay the IRS. How about reallocating windfalls? I mean, if you were to receive a bonus and inheritance prize money, or any other windfall of cash I but I had a client probably six years ago, I got a phone call at the office. They said, Brian, they said Mark’s on the line. I said, what’s happening? And they said, he needs to talk to you immediately. I said, Okay. So, I got I got on the phone. I said, what’s happening? He says, I’m in the parking lot at the gas station. I said, Okay, You okay, buddy? He said, Yeah, he says, I just won $300,000 on a scratch.
Steve 15:39
Fantastic. Wow. Wow. So, for those
Brian Quaranta 15:43
of you that have been fortunate enough to win on a scratch off, you know, you gotta you gotta send this ticket into Harrisburg for them to send you. But he drove it to Harrisburg, but he was smart. He used a little bit of money to pay off some debt to do some things he wanted to do. But he invested a chunk of it too, which was very, very smart to him. So reallocating windfalls, right, you can avoid some tax implications of receiving extra income if you tuck it into a 401 K or an IRA. So, think about those things. How about getting a 401 K match, you know, talk about a no brainer, be sure to save enough to qualify for an employer contribution to your 401 K, that’s an easy way to get some extra money. And then of course, you can claim a lot of tax breaks or money will grow faster without the drag of taxes. So, you can delay paying income taxes use utilizing a traditional 401 K or an IRA or you can prepay the taxes like we were talking on the last segment with a Roth 401 K or Roth IRA. But folks, this is why it’s secure money advisors, we always give you the opportunity to come into our office and sit down with us. As a fiduciary, we have to do what’s in our client’s best interest. And that’s exactly what we do here every single day. So, for the next 10 callers who call in, we are going to give you a complimentary right track retirement review. This review is going to help go over five key areas of retirement planning. It’s going to go over your income taxes, investments, health care strategy, and your estate planning. What if we could show you ways to save on taxes? What if we could show you ways to minimize risk and potentially increase the rate of return, you’re getting? What if we could show you to pay less in taxes. These are all really great things. But you’ve got to do your part, call us and schedule this complimentary right track meeting. It truly is going to take the mystery out of financial planning. It’s going to give you the clarity and peace of mind you deserve. But you got to do your part, pick up the phone and call us today.
Steve 17:32
Call right now. 806 5686162. And while you’re thinking of it, don’t procrastinate. Simply make that call, you’ll get a comprehensive financial review, you’ll see where you are today. But more importantly, you’ll find you now have a roadmap that will help get you to where you need to be 800-656-8616 10 callers right now. 800-656-8616 We do need to take a quick break. And we’ll be right back with lots more on the money with Secure Money and Brian Quaranta.
Announcer 18:04
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!.
Speaker 2 18:21
Play your best retirement game call Brian Q 800-656-8616. Or text Brian Q to 800-656-8616 Call or text Brian Q to 800-656-8616.
Steve 18:40
We are back on the money with secure money and Brian Quaranta and consumer advocate Steve’s at all having a great show today prime unemployed, fast paced lots of stuff going on. So, as we round the corner into the new year and things are people are feeling a bit more optimistic. What kinds of things have you got planned for the new year that there’s going to help that education process that you care a lot about you care a lot
Brian Quaranta 19:02
about that? We do not I mean, you know, and you know, Steve, not only do we do on the radio show, but you know, we have the TV show that airs which by the way, if you want to see any of the TV show, the schedule of when we’re on is on our website. So, you could go to WWE dot secure money advisors.com You can see when we’re going to be on, but we’ve also taken the TV shows and radio shows and we’ve archived them on our website. So, if you want to go in and get educated and you can do that right on the website by watching the TV show or radio show. So, it’s really great. Not only that, but we’re also going to be updating the list of educational events. We’re going to try to do about 60 educational events this year where you can come out at one of the universities like Robert Morris are LaRoche college and sit down with us and go through an educational course on this right track retirement system where we really teach you from start to finish how to build a really good plan and most importantly keep it very Simple and easy to understand. Because I’m telling you when you have a plan that’s simple and easy to understand. And it’s a tangible physical plan, a written plan. This is, this is what people are missing so much, Steve is that they have a pile of investment statements, but they don’t have a real written plan. Folks, I’m telling you, when you get a real written plan in place, and it’s in, it’s easy to understand, and you get it, boy, the confidence for you to retire, stay retired, do the things that you want to do on your bucket list in retirement with a peace of mind security, that you’re not going to run out of money that you’re not going to have to go to work. Boy, that’s a real position of strength that you’re in. And we hear that all the time from our clients. The other big thing that we hear is when clients are coming in to see if they can retire, they’ll say I want to retire in five years. Great. You want to try and fire five years? Why don’t we look at two plans? Why don’t we see what retirement two years would look like? And what five years would look like, oh, I’m not ready to retire in two years? Well, let’s build a plan around two years and five years, okay. So, we do that we build a plan around it, they love it, they wind up going forward with us. And what do we do a year later, we get a call, and they say, you know, I think I’m gonna retire in two years. Okay, great. I mean, what a great position to be in, right? You walk into work one day, somebody ticks you off, you don’t want to be there anymore, right? You’re just fed up with it, you’re burnt out, and you go, you know, I don’t need to do this anymore. I know, I’m going to be fine. I’m putting in my paper for retirement. And that’s the type of leverage we want to give you. That’s the type of clarity we want to give you, and confidence to be able to do what you want to do when you want to do it. Right.
Steve 21:29
Wow, that’s fantastic. 800-656-8616. I love it. When you get all passionate like that it really makes sense. So, let’s see what let’s see what the listeners are saying today, Lillian has checked in, she says, I don’t have a retirement plan through an employer, what’s the best way I can save money and lower my taxes? While she’s thinking? Right?
Brian Quaranta 21:49
She’s thinking, right? Yeah, but she’s thinking, right, because obviously, if your employer is not giving you a plan, there’s a few things you could do. If you could, you could open up a traditional IRA account. And you can make contributions to that, which would also give you a tax deduction. But keep in mind with that tax deduction, you’re now going to have an account an IRA, that’s tax deferred. So when you need that money later on in life, you are going to have to pay the taxes. And if taxes go up in the future, that could be a problem. So, you know, you may want to consider a Roth IRA. Now, that may not help with lowering your taxes, but it certainly would help with lowering your taxes in the future. And I’d rather you have you have no taxes to pay in the future, versus paying a little bit of taxes right now.
Steve 22:33
I like that too, Lillian. And if you’d like to know some more 800-656-8616. Steve has checked in and he says I’m 65. And I’ll be retiring early next year, I’ve got about 150,000 in my Roth IRA, about 450,000 in my 401 k. Now, does it matter which one I start taking money from first? Or should I just take a little from each? Well, if we were just talking
Brian Quaranta 22:57
about that? Yeah, well look, you know, if you believe like we do, that taxes are going up in the future versus down, then your order of withdrawal would be the IRA money first, right? And this way, when that IRA money is drawn down, right, that the money that you had to pay the tax on, you have this big pot of tax-free money still growing boy $150,000 in his Roth IRA, if that’s invested correctly, he could wind up having four or $500,000 in the next 10 years, which would be all tax free. Right? So, some advisors might say, well, let’s take the Roth money first, because you don’t have to pay any taxes. I disagree with that. Because if you’re healthy, and we believe taxes are gonna go up in the future, what pot of money? Would you rather have a lot of 10 years from now, I would rather have a lot of tax-free money for 10 years from now versus taxable money. So, the order of withdrawal here would be taking the 401 K money, right? And pay the taxes on it, and then maybe, maybe defer the Roth now again, I don’t know Steve’s exact situation. So that might not be the best thing for him. But speaking theoretically, that could potentially be the best way to do it.
Steve 24:04
Right? Well, again, you know, you make sense when you talk that way. And Steve, again, I would suggest you give Brian a call 800-656-8616. Let’s see, we got time for another one here. Let’s go to Kate. Kate says I’m a 64-year-old single woman trying to get rid of some of my debt. I want to take $125,000 out of my IRA to pay off my mortgage. And everyone tells me not to. What do you think?
Brian Quaranta 24:29
Well, again, this is a tough one as a fiduciary because, you know, I don’t know the rest of her situation. Right, exactly. You know, I don’t know how much is in her total 401k or her IRA? Have we’ve done that strategy before? Sure, we have. This is exactly why we offer the right track retirement review. This is what the system is all about. This is why we’ve built it because these are the questions we hear every single week at our office. We see 25 to 30 people a week at our office, and everybody’s got some in more situations, but everybody’s situation is different. for the next 10 callers who call in take advantage of our right track retirement review. We truly are going to take the mystery out of financial planning help you map out where you are where you need to go, we will run a fee report for you. We’ll run a tax analysis we’ll show you how to build income, utilizing proven strategies that can literally help turbocharge your income in retirement. Most importantly, we take the guesswork out of financial planning make it simple, clear and easy for you to understand, which gives you a peace of mind and security go into retirement. Do your part though. This is not the time to procrastinate. start the new year off right call us today. for the next 10 calls. It’s a comprehensive financial review. We’re giving away complimentary with no obligation
Steve 25:42
800-656-8616 You’ll receive that comprehensive financial review; you’ll see where you are today. But more importantly, you’ll find you have a roadmap that can help get you to where you need to be when it comes to retirement. Call right away. 800-656-8616 10 callers right now 800-656-8616 As always, we appreciate you listening and we’re going to come back again next week with new topics and questions and more all right here On the Money with secure money.
Announcer 26:17
Investment Advisory services are offered through foundation investment advisors, LLC, an SEC registered investment advisor Brian Carranza 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 streams refer only to 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.
