Episode 20250412 - Roth Conversions and Tax Efficient Planning

Episode Transcript

Speaker 1 (00:00):
All these years you've saved up planning for a secure retirement,
but if you're not careful, it will be the irs
that's living it up when you retire by taxing your
hard earned money. Welcome to the Maggie Tax and Financial
Hour with Robert and Chris Maggie of Maggie Tax Advisory
and Financial Group. With over thirty years of combined experience
in tax savings, income planning, and investment opportunities, Robert and

(00:22):
Chris share advice and tax planning strategies designed to protect
your retirement nest egg from Uncle Sam. Your questions and
comments are welcome during today's program by calling eight one
three three two two twenty five twenty. That's eight one
three three two two twenty five twenty, or visit Maggie
Tax dot Com. That's Maggi tax dot com and now

(00:46):
your host for the Maggie Tax Financial Hour on nine
seventy WFLA. Robert and Chris Maggie.

Speaker 2 (00:53):
Welcome everyone, and thanks for joining us today. My name
is Robert Maggie and I'm here with my son, Chris Maggie.
You're listening to the Maggie Tax and Financial Show. Be
sure to visit our website Maggie Tax dot com and
register for our upcoming seminars. We have seminars on a
state planning and we will have seminars on tax planning,
very very important. We'll keep mentioning this every week. But
go to our website, Maggie Tax dot com. It's right there.

(01:15):
You can give us a call and register, and don't forget.
Every Sunday on ABC TV at ten thirty, tune into
the Maggie Tax and Financial Show. We have a lot
to talk about today. You all know that we do
a lot of things like tax planning, income planning, investment planning,
insurance planning, and just proper planning for everybody. We've learned
a lot from you folks out there coming in because

(01:36):
you're confused and you don't understand certain things. So we're
going to talk today about a Wroth conversion because this
is very important right now to understand that all of
you have a debt to the irs, and when the
subject of converting your IRA to a Roth tax free
IRA comes up, you get many different opinions. And most
often what we hear is my advisor or CPA or

(01:57):
investment manager told me that I just need to invert
to the top of my tax bracket every year. Not
a bad idea, but they will also tell you it's
not worth it to pay a higher tax. And we
disagree in what you have to understand from a tax
standpoint when we do tax planning, and Chris will talk
about this in a minute, but you've got to do
it from a mock tax return. What does your tax
return look like? How much tax can you pay if

(02:19):
you go to the next level. So all of you
have a tax time bomb and it's ticking louder and
louder every day, and you have a debt to the irs,
and at some point you or your beneficiaries will have
to pay the tax and it could be a higher tax.
And some people tell me they have developed their own spreadsheets.
I love that one because the spreadsheets basically don't tell

(02:39):
you what the tax is you're going to pay, and
it looks like conversions aren't going to be worth it
to me. If they have a spreadsheet, how can you
say that it's just not true. We have a client
in Tampa and she called us the other day first
time and she said to me, you know, she could
not believe we were actually recommending what she had and
listen to this what she had questioned her CPA about
tech ten years ago, right after the tax rates were

(03:02):
lowered by the Tax Cut and Jobs Act. So the
question today is what will happen in twenty twenty five,
and if you don't know the Tax Cuts and Jobs
actors getting to expire, her CPA told it would not
make sense for her to convert any more than just
enough to get to the top of her current low
tax bracket. She lost the argument with the CPA. So
the problem is she lost the opportunity to get conversions

(03:26):
finished before she would have to take the required minimum
distribution to R and D. I know that may sound
confusing to you, but when we show you this, this
is what's going to happen to a lot of you
when you start taking your R and D. And Chris,
this is the part that people sit back and they go,
we didn't know that. But you know, if CPAs aren't
helping you, or tax advisors aren't helping you, right now
is the time to pick up the phone and give

(03:47):
us a call. Sit down with Chris and me, and
we'll talk about conversion because we want you to see
it from the ground up. It's not just an opinion,
it's a fact that you have to do it right. So, Chris,
I mean you see it all the time that we
talk about this, and we're going to talk about se
questions that people should be asking about growth conversions and
one of the things what we always say, if you
don't know what you don't know, then don't say no.

Speaker 3 (04:09):
Right, Well, that's just said, you know. Welcome everyone, I'm
Chris Maggie and thanks for tuning into the show. And
my dad said a lot right there, because there's so
much to talk about. Many people have iras and formal
k's and TSPs and set iras. These accounts are what
we call infected with taxes. So if you're listening today,
if you have these accounts, you have accounts that are
infected with tax What does that mean. That means when

(04:30):
you take a distribution from these accounts, you have to
pay the tax. There's a ten nillion nine that's issued
and you have to report it on your tax return. Now,
you have maybe five hundred thousand in your qualified account.
You might have a million, you might have one point five.
It doesn't matter what it is. The fact of the
matter is, it's all taxable. So at the end of
twenty twenty five, the Trump tax cuts expire, what does

(04:51):
that mean? That means that tax rates will revert back
up at least three percent, if not higher. So that
means when you take a distribution, you're not only paying tax,
you're paying higher tax. So what can you do now
to start converting money from an infected area of tax
to a tax free environment. How do you get there?
And that's the biggest question that many advisors try to

(05:14):
talk to their clients about, but they have no idea
what the tax ramivocations are going to be. And a
Maggie Tax Advisor and financial group we do because we
take a tax approach and everything. We understand tax planning,
we understand investments. We do investments, we do insurance planning,
we do complete planning. And that's what we do for
our clients. So what we're going to talk about today

(05:35):
is taxes. What do you believe will happen to income
taxes in the future. Will they be higher or will
they be lower? So Dad talk about this.

Speaker 2 (05:44):
One thing that I also want to mention to help
you understand. Going to ol website maggietax dot com. The
top right you'll see the retirement tax calculator put in
your information. In thirty seconds, I can send you a
report to give you an idea what your tax bill
is going to be. So what Chris just said, what
do you believe will have happened to income tax rates
in the future. Most people tell us it's going to
go up. So there is another common misconception floating around

(06:07):
out there that portrays Wroth. Conversions has something as simple
as whether you'll pay a higher rate or of tax
today or tomorrow. It depends on your situation, and that's
why you have to sit down and do it from
a tax return. Your tax return and the clients that
we've worked with see huge tax savings regardless of whether
tax rates increase or decrease. But there's some value in

(06:29):
considering the impact of possible tax increases as a motivation
for choosing a faster conversion timeline. Listen, the IRS loves
you if you're a millionaire, because you're a millionaire and
you're leaving a million dollars of taxes on the doorstep
of the IRS, and you don't think about it that way.
So you can convert. You can do a conversion. We
can talk about that because the Tax Cut and Jobs

(06:50):
Act of twenty seventeen, it drove us to a fifty
year low in the rate of income taxes that we
pay in America. So the Tax Cuts and Jobs Act
is set to expire at the end of time twenty
twenty five. What does that mean. It means you have
a window of opportunity between now and the end of
twenty twenty four twenty five to convert to pay the
lower tax and be done with it. How many of

(07:11):
you would like to do that, Chris? When we tell
this to people that they well, my guy never told
me about it. Well, why don't you ask? I mean,
it's not simple.

Speaker 3 (07:17):
Well that's it. Well, many people just really just don't
know know about what to do. And that's why you're
listening today. And that's okay. So pick up the phone,
schedule time to meet with us. Come on in. We
have offices on both sides of the bay. We have
three convenient locations to help you. So visit our website
at Maggie tax dot com. That's m A g GI
tax dot com. So we talking about here is let's
just say you have an IRA and then let's just

(07:39):
say you have five hundred thousand dollars IRA. Well, you
take an income from social security. You might have a pension,
but maybe you need ten thousand go on a cruise,
or fifteen thousand to do some planning or whatever. The
bottom line is that you've got to pay tax on
those that distribution, right, So what's that tax rate going
to be? But what if you're sixty five years old

(08:01):
and you don't need the money, Well, you're required to
take a distribution at age seventy three. It was seventy
and a half, then it was seventy two, now it's
seventy three. So from those retirement accounts, you have what
they call the required minium distribution. You have to take
a distribution at seventy three years old. But go back,
if you are sixty five and you don't need the money,

(08:22):
why not start taking that five hundred thousand dollars IRA
that's infected with tax and why don't you start converting it,
meaning start taking a distribution and converting it to a
roth ira that's tax free money. So think about this.
Over the next seven years, eight years you have, you
can slowly take that five hundred thousand and convert it

(08:42):
to roth ira. So when you are seventy three, you
have tax free money that you can take out and
not have to take a lot from the requirementum distribution.
So what do you do now? You are in position
and in control, so when they do change tax rates,
you don't have to pay them. That's what we're talking
about here. So pick up the phone, schedule a time
to meet with us. Let's talk about the Roth conversion.

(09:05):
Let's talk about if you should do it. That's what
we're talking about here. Planning planning, planning, planning, tax planning,
investment planning, income planning eight three three Maggie tax.

Speaker 2 (09:15):
And most people, you know, when we ask them, do
you need the RMD, they say no, and what can
we do with it? Well, what's going to happen is
you'll probably take it and reinvest it. That is going
to cause a tax too. It's going to bring into
a higher income level. So how much of your future
income will you need from investment or savings accounts? And
what Chris was talking about, if you stop and think
about the guaranteed income that you have like pension and

(09:38):
social security, and we ask everyone this question, how much
do you need to come in the front door every month?
Like I say, if you need eight thousand bucks and
you know you're short one or two, then you're going
to take it from the IRA, but it's going to
become taxable. Why not learn how to convert this and
what Chris mentioned a minute ago. When you're ready to
take that out, it comes out tax free. Think about it,

(10:00):
say it to yourself tax free. I'd rather have a
tax free account than a taxable account.

Speaker 3 (10:04):
And that's just it. So what type of planning are
you doing today to help yourself and your family moving forward?
You know, many people who have been in the accumulation
phase have have saved enough money. Now what about the
distribution phase? And that's what we specialize in. So if
your advisor is not talking to you about tax planning
or roth conversions or ways to have tax free retirement,

(10:27):
then guess what you need to get a second opinion.
So pick up the phone today, schedule a time to
meet with us. Eight three three Maggie Tax. Visit our
website at Maggie tax dot com. There's so much information
right at our website to help you. We do complete planning.
Why because that's what it's about. It's not just about
managing your money. And about the investments. There's the tax

(10:47):
side of this whole thing, in the income side. So
pick up the phone. Let's put together a plan. Eight
three three Maggie Tax eight three three Magi Tax.

Speaker 1 (10:58):
Stop planning for Uncle Sam's or time, and start planning
for your retirement. As we return to the Maggie Tax
and Financial Hour with your host, father and son Robert
and Chris Maggie. For additional information on how you can
create a tax free retirement, visit Maggie Tax dot com.
That's ma gg I tax dot com. Or call eight

(11:19):
one three three two two twenty five twenty. That's eight
one three three two two twenty five twenty. Now your
host for the Maggie Tax and Financial Hour, father and
son from Maggie Tax Advisory and Financial Group, Robert and
Chris Maggie.

Speaker 2 (11:35):
Welcome back. My name is Robert Maggie, and you're listening
to the Maggie Tax and Financial Show. And I'm here
with my son Chris Maggie, and we're talking about debt
to the irs because a lot of folks out there
when they start taking money out of the IRA, and
many of you have great iras. In four oh one,
K's you're going to pay a tax. And remember the
definition of debt something especially money owed to someone else.

(11:56):
Does that sound like taxes in an ira? Chris, absolutely so.
If you have saved in a four to one k
on IRA or any tax deferred vehicle, you owe a
debt of taxes to the irs. And let me remind
all of you. You have a debt to the irs.
And the bad news is a debt that grows with interest.
This is the problem that we don't realize, or a
lot of people don't, because as it grows and the

(12:18):
interest it grows as well, you're going to pay them
a lot more tax. So you all owe taxes not
only on your contributions, but also on the growth and
the funds in your accounts. You talked about something before
investment risk and investment growth. How does that apply like
when we talk about this when people come in, well.

Speaker 3 (12:35):
There's a regular debt, and many people think about credit
cards and bad debt, and then you got investment debt,
which is what we're talking about here today. And we
talked about this last segment. It's a question mark tax
rate when you retire. That's the thing when you put
money away and you're doing a great job if you
have an IRA A four one K and a TSP
off your federal employee. But the bottom line is you
really kind of follow the crowd and you're really not

(12:57):
doing it the right way because you're investing and putting
your money away for a question mark tax rate in
the future that when you need the money, you have
no idea what that tax rate's going to be. You
have no idea what that amount is going to be
sent to the irs, So what is going to be yours?
And that's where most people when you start planning and
you start planning on what is actually yours, and they

(13:20):
talk about the irs, and it's theirs, thrs, the to hrs.
And what you really want to think about here is
that when you talk about income and planning, you want
to make sure that you have after tax accounts giving
you income so you can plan on it. That's why
ROTH iras is so important. That's why ROTH form and
KSER is so important. But the traditional ira is and

(13:40):
the tax deferred accounts, these accounts are huge and there's
trillions of dollars there that Uncle Sam knows how much
they're going to get in taxes. But that means less
income to you.

Speaker 2 (13:51):
And basically it can add up to a lot of debts.
So call my office at eight three to three Maggie Tax.
Here's what I want you to do. Tell the operator
that it's urgent that you want to get out of
debt to the irs, and set in a pointment with
Chris and I eight three to three Maggie Tax. And
make sure you tell them it's urgent because it is.
Because a lot of people don't understand, well, let me
defer it, let me worry about it later in two

(14:13):
years when the Trump tax cuts expired, there's going to
be a lot to worry about. People are going to
be shocked, Chris when they see that they're going to
pay another thirty percent more in taxes. Negative go why?
And this hurts a lot of people. So if you
don't do some proper planning, you're going to be hit
with this tax time bomb. And it's ticking, it's ticking louder.

Speaker 3 (14:29):
So one of the things I can do, because let's
talk about this, when you come in and meet with us,
we're going to help you defuse this big tax time bomb.
We're going to show you how much money you have
in pre tax money, and how much you haven't after
tax money, and what if there's a strategy where we
can get the money out of an affected area of
taxes into tax free accounts. Would you want to know?
That's what we'll do for you. So when you come in,
we'll look at that investment plan, and we'll look at

(14:50):
the debt that you have on the investments, and we'll
show you how you can have after tax accounts and
do it the most beneficial and strategic way possible to
pay lease amount in taxes.

Speaker 2 (15:00):
So one other way to look at this is many
people look at it through a micro lens, which means
right now today, what about a macro lens later on?
How is it going to affect you. That's proper planning,
that's tax planning, that's income planning. One of the biggest
questions we get, well, I think I'm going to run
out of money. We have millionaire clients that come in here,
and Chris, you can tell the story on these, but

(15:20):
they're worried that they're not going to have enough money
to live on the problem is they don't have no
plan to get what the income they want. And that's
the problem that a lot of people have. So give
us a call eight three to three Magi Tax. Make
sure you visit our website, Maggie Tax, click on the
retirement calculator and see for yourself. You're going to get
a report back in thirty seconds. We're going to give
you a call, or you call us and let's get together.

(15:41):
So the question you might ask Maggie Tax is how
do I reduce my IRS debt? And there are ways
to reduce your debt to the iras and now it
may be the perfect time to help you do it.
So eight three to three Magi Tax. Tell the operator
it's urgent, and we schedule a meeting to get out
of debt with the IRS. That's what you have to do.
You have to take control. You can't sit in the
back and procrastinate. That's not a retirement plan. And many

(16:05):
experts have said the US is likely entering get to
a period of higher taxes for American savers. So here's
the question. Do you think taxes are gonna go up?
What do you think taxes are going to go down?
And what's the question answer we get all the time.

Speaker 3 (16:16):
Most people think the taxes are gonna go up, and
it's gonna happen and why it is so important because
that's what they're talking about. Many experts are talking about
how we're going to enter a period of higher taxes
for Americans, and what are you going to do about it?
Think about this, say you're retired. You can't do anything
about it. You're retired. You sound like you're gonna go
back to work and earn more money. Now you're gonna

(16:36):
have to sit there and just bite the bullet on
whatever the tax rate's gonna be. Do you want to
be in that situation?

Speaker 1 (16:42):
No?

Speaker 2 (16:42):
So what do you do?

Speaker 3 (16:43):
You need the plan. That's why it's so important to
meet with us. Pick up the phone, schedule time to
meet with us. Eight three to three, Maggie tax Why
because you have a debt to the IRS, investment debt,
and it's growing each and every day, and it's a
ticking time bomb and it's getting louder each and every
day day. If taxes are higher in the future, actually,
when taxes are higher in the future than they are today,

(17:05):
you will be paying the IRS a higher share of
your retirement assets. Don't let that happen to you. And
remember you have a partner with IRS. That's why you
have investment debt, and that's why you have an incomplete plan.
We can help you. Pick up the phone, schedule time
to meet with us. We have offics on both sides
of the bay. Eight three three, Maggie Tax. As my
dad mentioned before, tell the operator that it's urgent. Why

(17:28):
because you need to diffuse your big tax time bomb.
And again, you did a great job of saving, you
did a great job of listening to other people. But
the end of the day, it's gonna hurt you because
you have an account that's infected with taxes. I don't
care how much is in there. I don't care if
it's one hundred thousand, I don't care if it's two million.
It doesn't matter. The fact of the matter is you

(17:49):
have a debt, an investment debt to Uncle Sam. So
visit our website, Maggie tax dot com. Schedule time to
meet with us. Let's discuss what options you have, what
you have put together a plan for you. Eight three
three Maggie Tax.

Speaker 2 (18:03):
One of the things Chris just said about options, there's
something called a strategic rollout, and this is something that
we do with a lot of clients. I know you
don't see what I'm talking about. Now, but we do
it over a five or ten year period to reduce
the tax so that later on, when you're ready to
take out the IRA, your ire is lower, less tax
And on the other side, you may have a roth

(18:23):
IRA that's tax free, which would you rather have, So
that's the choice you want to make. So when you
come in, we'll go over with this whole thing with you.
We put a balance sheet together, We have questions for you.
We need to get the right answers from you to
design the plan. Eight three to three Magie Tax. And remember,
the Maggie Plan is a tax plan, it's an income plan,
it's an investment plan, it's an insurance plan, and it's
in a state plan. So if you don't have any

(18:45):
documents for a state planning, we can help eight three
to three MAGI Tax. Be sure to visit our website
Maggie tax dot com, click on the retirement calculator and
see for yourself. In thirty seconds, you'll get the report
back eight three to three Magi Tax. And when you
call tell them it's urgent that you want to meet
with Chris and Bobby.

Speaker 1 (19:03):
Stop planning for Uncle Sam's retirement and start planning for
your retirement. As we return to the Maggie Tax and
Financial Hour with your host father and son, Robert and
Chris Maggie. For additional information on how you can create
a tax free retirement, visit Maggie Tax dot com. That's
ma gg I tax dot com or call eight one

(19:25):
three three two two twenty five twenty. That's eight one
three three two two twenty five twenty now your host
for the Maggie Tax and Financial Hour, Father and son
from Maggie Tax Advisory and Financial Group, Robert and Chris Maggie.

Speaker 3 (19:41):
Thanks for tuning into the Maggie Tax and Financial Show.
Welcome back everyone. I'm Chris Maggie and uh, there's a
lot going on in today's environment. We all know a
lot of people are scared. Some people really just don't
know what to do, and that's why they need to
seek advice. Advice is so important. You know, we're in
a yoyo economy. You're on your own, but you really
not if you work with a team who has a

(20:02):
holistic view to help you. In a Magi Tax Advisor
and Financial Group, we you tax planning. We take a
tax approach and everything we do we talk about tax
free buckets. We have income planning, we do investment planning.
There's a lot that we do a state planning to
help you. So pick up the phone, schedule time to
meet with us. Eight three three Maggie. Tax and in
today's a volatile political climate, I mean, two new risks

(20:25):
are so important than ever before. And those two risks
to be aware of are closelyly aligned. Dad, Let's talk
about the two risks that people need to understand what's
out there? Sure?

Speaker 2 (20:35):
The first is tax risk. And tax risk is simply
the risk that your taxes will not be significantly lower
in retirement than they are today. And that's pretty much
what people think. Okay, how exposed are you to tax risk?
And it depends on how much of your investments, well,
your in retirement assets are in tax deferred vehicles. So

(20:55):
think about it for a minute. Most of you have
four to one k's or IRA's, like any of you do,
those are tax deferred, which means you were able to
save in those accounts, defer the taxes. You got a
tax break. But the answer is all al, most of
this is taxable. If that is your answer, then it
could be you could be faced with a big and
I'll say it again, a big tax bill in retirement

(21:17):
if your taxes don't go down. So let's just talk
about that for a second. Because in three years the
tax is going to be raised by three percent, maybe more,
we don't know. So have you thought about that and
what it's going to do to your retirement when you're
getting when you're planning to retire.

Speaker 3 (21:33):
Well, that's just said. I mean, how big a tax
bill might you face? You know, talk about it now,
think about it now, and if your current advisor is
not talking about it, you need to pick up the
phone and schedule time to meet with us because this
is a big deal. Your biggest expense is taxes. It's
going to be big, especially in retirement when you need
those funds. What you could do is you can request

(21:54):
an after tax statement. And what I mean by that
is if you have a formal k in IRA, you know,
think about it. Say it's five hundred thousand, Say it's
a million dollars, use even numbers, say it's a million dollars.
Well you don't have a million dollar IRA. Yeah, you
did a great job of accumulating money, but guess what
it's not all a million is yours So there's an
after tax statement that we need to generate to show

(22:16):
you really what is really yours because Uncle Sam's gonna
get paid first. And that's why when you keep deferring
money and you keep putting money in these accounts, then
guess what you're facing an unknown question mark tax rate
in the future. And that's what's scary, because we're all
going to face that if you have these iras and
form on kes. But let's be on the other side

(22:36):
of that. Well, we can eliminate Uncle Sam. So give
us a call, pick up the phone eight three to three,
Maggie Tax, request the after tax statement and to find
out really how big your tax bill will be.

Speaker 2 (22:48):
And then with that you can make adjustments and do
some some strategic planning to reduce that at tax. We
do it for a lot of clients. So, like Chris said,
pick up the phone eight one three nine zero nine
zero zero two two, visit our website, Maggie Tax dot com,
and let's get together. So the second risk that we're
going to talk about is one that a lot of
people don't talk about. It's called legislative risk. And I

(23:09):
bet many of you never heard of legislative risk. So
let me explain what that is. Because legislative risk is
the risk that Washington change is the rules. And remember
Congress wrote the rules in pencil, and you know, Congress
can do what they want. They can change it when
they want, and when they change it, they're going to
change it to you know, obviously benefit them and not
benefit you. So be careful of that because those changes

(23:32):
will negatively impact your retirement income. And Chris, we've seen
this time and time again when people come in they
don't understand what their tax is going to be. We
run the income plan, We've show them what they're going
to get, and then all of a sudden they go, well,
what about the IRA and the four to one K?
Well what about it? What about it? Is you're going
to pay tax when you take that money out because
it's going to be added to your income. Am I

(23:54):
right or wrong?

Speaker 3 (23:54):
Absolutely? And that's where people really just don't know because
they wait to the last minute to do planning. That's
why it's so important now to pick up the phone,
schedule time. Let's get together. We have three offices in
the Tampa Bay area. We can help you. Let's sit
down have that conversation today. So you can feel good
about your future and your retirement years knowing how much

(24:15):
you're going to pay in tax and what you're going
to keep. We saw a powerful example of legislative risk
back in September as House Democrats unveiled the three point
five trillion dollars spending bill that made significant changes to
how iras and Form one k's and even WROTH accounts.
And you know, now's a time to really understand what

(24:36):
you have. You know a lot of people have statements
out there, they have these accounts that they get. They
get statements every month or maybe every quarter, and they
really don't know what's taxable or what's tax free. I mean,
now's the time, especially if you have iras and Form
one k's, they have a big bullseye on them as
our government looks to do what raise new tax revenue
to fund runway federal spending. And this is what's happening.

(24:58):
So now's the time to to be in controls as
opposed to being controlled by what they're gonna do.

Speaker 2 (25:06):
And one thing that Jeff to understand is financial professionals,
it's up to us to help you understand this. And
that's why we do the show that's why we talk
about this, that's why we educate you. That's why we
wrote books on this, because we want you to learn,
you know, and prepare for it, because you don't want
to be, you know, with a cold shot to the
head and all of a sudden you don't know what
it is. So at Maggie Tax Advisory, we can help

(25:27):
you hedge against tax and legislative risk by using a
product we use cause Index Universal Life or maybe a
Wroth account because this is tax free money. And one
thing that's really important. We do bucket planning and I'll
repeat it, bucket planning. And if your advisor is not
doing bucket planning, then you need to sit down with
us and let us explain what that means to you,

(25:48):
because maybe you can do a combination of all three,
maybe a WROTH, maybe an Index Universal Life, and maybe
bucket planning. And you've done it many times for clients
where we put some in a safe bucket for income,
now put some for you know, future income, and then
later on and then maybe if they want to put
a little bit in the market, they can but protect
the majority of the money because you need income and

(26:10):
tax risk is what you're talking.

Speaker 3 (26:11):
About absolutely, and that's why we have now money, later money,
and also never money. So think about this. We talk
about bucket planning. When you come to meet with us,
we're going to educate you, we're going to help you.
We're going to discover what your goals are and also
how much income you need in retirement. You know this
is your money. You need to make sure that you
put this together the right way. So pick up the phone,
schedule time to meet with us. Eight three to three

(26:33):
magi tax. That's eight three to three magi tax.

Speaker 2 (26:36):
Some things you need to look out for if you
have an IRA or four oh one K and it's
called a ten percent penalty, but there are exceptions. We
want to talk about this because we get this question
all the time. And for IRA owners and retirement plan
participants who are under the age of fifty nine and
a half, taking a distribution from a retirement account is
typically off limits. The distribution will most likely be taxable,

(27:00):
and there was a good chance that a ten percent
penalty will also apply. And sometimes life gets in the way,
and what role needs to be made and what I
mean by that, like with COVID, and sometimes you need
money for something, maybe you lost your job out there
and you've got to take it out. But be aware
there's a ten percent IRS penalty if you're under the
age of fifty nine and a half.

Speaker 3 (27:18):
And that's just it, and a lot of people aren't
really not aware of that. And then think about it,
if you need to pay thirty thousand, well, there's a
ten percent penalty for early distribution. That's three thousand dollars
plus got to pay the tax on those funds. So
a lot of people aren't really educated on how to
take or pull money out of these retirement accounts. And

(27:38):
at Mage Tax Advisory and Financial Group, we understand iras,
we understand the tax code, we understand what needs to
be done and how you need to handle these accounts.
So some of the exceptions they do apply to iras,
just so you know, my dad mentioned COVID, but that
wasn't a reason why people could avoid the ten percent penalty.

(28:00):
Some apply only to plans and some apply also to
the IRA as well, but exceptions to both irays and
other plans, including step iras and simple iras to avoid
the ten percent penalty are pretty much a couple of
these where if you die, you know death, then there's
no ten percent early distribution penalty. If you're under age

(28:20):
fifty nine and a half, if you're disabled, you can
avoid the ten percent early distribution penalty. Or if you
do what they call seventy two T. It's a tax
code that you can use. It's substantially equal periodic payment.
So if someone is needing income before age fifty nine
and a half, there are tax codes that you can use,
like at seventy two T to avoid the ten percent

(28:41):
early distribution penalty. So if this is something that you're
looking to do, definitely pick up the phone. Let's have
a conversation, and let's get together and put a plan
together for you. Some other exemptions are medical expenses if
they exceed seven point five percent of your adjust the
gross income, if you have an IRIS levy active reserve,
you know, even birth or adoption, so some of these

(29:03):
avoid the ten percent early distribution penalty. But if you
have iras and formal case, be very cautious in regarding
what you can do and how you take a distribution
from these accounts.

Speaker 2 (29:14):
And the way we find the shat is when you
come in by tax time and we see that because
sometimes you don't think about it, but always ask your
planned participant what the exception is before you take it out.
Higher education expenses, first time home buyer, that's a big one.
Health insurance if you're unemployed because things have changed, you know,
like life events happen, maybe you lost your job. And

(29:34):
exceptions apply to plans only, and they exclude SEP and
simple iras if you're age fifty five, if your age
fifty for public safety employees, section four to fifty seven
government plans, divorce, they told quadro qualified domestic relations order,
phased retirement distributions from federal plans. Why are we talking
about this because this is where people Chris make mistakes.

(29:57):
They think they know what to do. They go, I
didn't do it on their own, and they call us
when they get a letter from IRS and they say,
what happened? How come this got applied to me? What
do I do now?

Speaker 3 (30:09):
And that's just it. So these are the things we're
talking about because we understand iras. You need to work
with an advisor who understands IRA planning, and at Maggie
Tax Advisory, that's what we do. We do tax planning,
income planning with time and planning, investment planning, that's what
we specialize in doing a complete plan for you. But
one of the things that we didn't mention here, if
you want to convert before age fifty nine and a

(30:30):
half from an IRA to a ROTH, well, there is
no ten percent early distribution penalty. It doesn't apply be
to have to pay the tax. So that's why it's
so important to meet with the qualified advisor, meet with
someone that is going to go over the tax side
of this, the investment side, the future income. So pick
up the phone, schedule time to meet with us eight
three three Maggie Tax. Visit our website at Maggie Tax

(30:51):
dot com. There's so much information right there at your fingertips.
But now's the time. Now's the time, especially in the
crucial environment that we're living in, to get us an opinion.
Pick up the phone, schedule time to meet with us.
Eight three three Maggie Tax. That's eight three three Maggie Tax.

Speaker 1 (31:08):
Stop planning for Uncle Sam's retirement and start planning for
your retirement. As we return to the Maggie Tax and
Financial Hour with your host father and son, Robert and Chris,
Maggie for additional information on how you can create a
tax free retirement visit Maggie tax dot com. That's ma
gg I tax dot com. Or call eight one three

(31:30):
three two two twenty five twenty. That's eight one three
three two two twenty five twenty. Now your host for
the Maggie Tax and Financial Hour. Father and son from
Maggie Tax Advisory in Financial Group, Robert and Chris Maggie.

Speaker 2 (31:46):
Welcome back. You're listening to the Maggie Tax and Financial Show.
I am Robert Maggie and I'm here with my son
and co host Chris Maggie. Be sure to pick up
the phone, give us a call eight one three non
zero nine zero zero two two. Set an appointment so
we can do that after tax statement for you and
see if you're going to be paying more in taxes
or less than taxes. And don't forget watch our TV
show every Sunday at ten thirty am on ABC TV.

(32:08):
We cover a lot of information there a lot of
education because we take a holistic approach. And what I
mean by that is that Chris and I have developed,
you know, a division of tax division, income division, legacy division,
investment division, and legacy planning and a state planning. How
many of you are missing a state planning. It's a
simple question that we ask everybody. And the other question

(32:31):
that we ask all of you, and you should hopefully
look for this. Who's your beneficiary? Who's your beneficiary on
your bank accounts, on your savings account, on your iria's
your four to one ks? Is it someone that you
want that when you pass away that they get it?
Or do you want to go through probate? These are
questions Chris and I always ask everyone when they come
in because this is complete planning. On my website, Maggie

(32:52):
tax dot com, I have a video there for roth conversions.
I have a video for four to one K rollovers
because many of you make stakes when you roll over
your four to one K, and the truth is you
don't know and that's the problem. So pick up the phone,
give us a call. And one more thing we tell
people when someone passes away and you get an inheritance,
I'm going to tell you what to do. Do nothing,

(33:14):
Do nothing, because Chris, we've seen this time and time again.
People make a big mistake and they're always like, well,
I didn't know.

Speaker 3 (33:20):
Well that's just said. You know, many people don't know
what they're inheriting. They can be inheriting in an account
that's effective attacks and if they just get a check,
then they stop the inheritance, they stop the stretch or
the inherited ira ten year rule. So there's a lot
of things that you need to understand before you actually
take possession. So the questions I have for you listening
today are the questions that we get from a lot

(33:43):
of people when we meet with them. They always ask
us about risk. But my question to you is are
you over exposed to risk? Do you understand that a
lot of volatility going on in the market? Are you
over exposed to risk? Is that really where you want
to be? You know, what's your appetite for risk? What
kind of roller coaster do you want to ride? Do
you want to ride something smooth and has little up

(34:04):
and ups and downs? Or are you okay with riding
the kumba where it goes up and down, up and down,
it's crazy. It's up to you, and every person that
we meet with has a different appetite for risk. What
is yours? And if you're not answering that question, then
actually you could be losing a lot of money or
really not gaining a lot of money because you're not
in the right risk environment exactly. So that's why it's

(34:26):
so important to get a second opinion. You know, we're
a specialist in the distribution phase of retirement. You know,
we understand tax diversification, we understand income planning. You know,
this is what it's about. This is the second half
of the game. I mean, this is your retirement, the
distribution phase, and you need to understand how to handle it.
And that's what we do. So pick up the phone,

(34:47):
schedule time to meet with us. Let's put together an
income plan, Let's put together a tax plan, Let's put
together an investment plan. Let's analyze your investments, and let's
analyze and see what type of risk you're taking and
give you a second opinion.

Speaker 2 (35:00):
Exactly. Is there someone at the Internal Revenue Service that
you are so madly in love with that you want
to leave them a whole bunch of their money, because
that's what you're doing. So without a tax review, how
are you going to know that? You know, when the
government needs more money in the future, where are they
going to get it. They're going to get it from
qualified accounts. Chris from iras in four to one k's

(35:20):
and yeah, they gave us a nice deal years ago
to say, hey, save it and we'll tax defer it.
But later on they forgot to tell you something. You
have to pay a tax later on.

Speaker 3 (35:29):
And this is it unknown question mark tax rate. And
that's what's scary about this whole thing, especially what we
see in the market today. We talked about this earlier
in the show Legislative Risk. They can change the tax code,
they can change the rates. We're at a low tax
rate rate now, and many people don't know that the
brackets are low. Go back years ago, they were very high.

(35:49):
Think about when you start taking a distribution from those
retirement accounts that are infected with tax. Guess what, you're
paying a high rate. You don't have to if you
eliminate Uncle Sam's That's what we do for our client.
So pick up the phone and schedule time to meet
with us. Let's show you tax free buckets. Let's show
you strategically how to get the money out of an
affected area of tax to a tax free environment and

(36:11):
leave Uncle Sam forever exactly.

Speaker 2 (36:13):
And here's the question you need to ask yourself. Do
you want to be ritual? Do you want an absolute,
positive guarantee that you're never going to be poor and
think about it. You've worked for thirty years, maybe forty years.
So now it's the second part where Chris talked about
the second part of the game. What are you going
to do in the second half when you retire? How
are you going to generate the income that you had
when you were working? And do you have any idea

(36:34):
what the tax consequence is going to be? Well, let's
just say it.

Speaker 3 (36:36):
Think about it. I mean, I don't know if people
look at the stats of Mount Everest, but you know
there's the accumulation phase where people go up the mountain,
then you reach the peak. Well, many people have saved,
they've done a great job of saving. But guess what
they have to go back down?

Speaker 2 (36:51):
Right?

Speaker 3 (36:51):
But the stat is that most people die. More people
die going down Mount Everest than they do going up.
So why do I bring that up? Because in the
distribution phase of your retirement, most people run out of money.
And you don't want to die in retirement with running
out of money. So what you have to do is
meet with a specialist. And that's what we are, a

(37:11):
distribution specialist. And when you come to meet with us,
we're going to analyze your accounts We're going to put
together a plan for you, an income plan, a tax plan,
and investment plan. And that's what we're going to do
for you. Because why even millionaire people who come in
to meet with us, they have tons of money, but
guess what their main concern is, what outliving their money?
So I don't care how much you have, if it's

(37:31):
two hundred thousand, if it's two million, if it's twenty million,
it doesn't matter. The same thing applies. We need to
put together a plan for you that takes care of
everything from income planning, tax planning, investment planning, also a
state planning.

Speaker 2 (37:44):
And this is the last question that I'll ask all
of you. Do you have enough confidence in your current
advisor to get a second opinion? And the reason why
we say that is because he can't tell you anything
different except what he has, So get a second opinion.
Bring in your tax return, your IRA four to one.
Let us do advanced tax planning for you guys, and
it's going to help you understand what you're going to

(38:05):
wind up pain in retirement. So make sure you visit
our website Maggie tax dot com. I have the videos
there that we're talking about here during the show thirty
minute videos very simple. Give us a call eight three
to three Maggie Tax and Don't Forget. Every Sunday on
ABC TV at ten thirty tune into the Maggie Tax
and Financial Show. You get an education and there's some
really powerful points we make. But the bottom line is

(38:28):
it's all about you. It's all about you in retirement,
it's all about you for income planning, and it's all
about you to avoid the tax risk and the legislative risk.
You're listening to the Maggie Tax and Financial Show.

Speaker 1 (38:43):
You've been listening to the Maggie Tax and Financial Hour
discussing tax planning investment strategy. He's presented by Robert and
Chris Maggie from Maggie Tax Advisory and Financial Services with
offices in Hillsboro and Panela's County. Visit Maggie Tax dot
com or call eight one three three two two twenty
five twenty that's eight one three three two two twenty

(39:05):
five twenty and tune in next Saturday at five for
the Maggie Tax and Financial Hour.