Women Talk Taxes (Part 1) | Jackie Cummings Koski | 148 - Catching Up to FI: Financial Independence for Late Starters

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
Hi, I am Jackie Koski, author of thebook, fire for Dummies, and also your
co-host here on Catching Up to FI.
So this is a special midweek episode.
We do these from time to time, and thisis actually a two part series about taxes
that I did with the We Wealth Collective.
We stands for Women Empowerment.

(00:23):
So.
We talk about whatevery woman should know.
About minimizing taxes in retirement.
And the topic is actuallygood for everyone, but it's
specifically geared toward, women.
And I had some things and someissues I had to think through when
I retired, early, back in 2019.

(00:44):
So I've got that, you know,I'm A CFP and I dive into.
All kinds of, tax considerationsthat you wanna look at, at different
ages and stages, in retirement.
So I think it's gonna bereally, really helpful.
So tune in, we'll airpart two next Wednesday.
And just a quick disclaimer that, Iam not a tax expert, everything that,

(01:06):
we this for information educationalpurposes only and there is a ton of
great discussion, great questions.
So I think you're gonna love it.

(01:47):
All right, we are rocking and rolling.
Thank you ladies for joining us.
Good morning.
We are excited to have our second insightsession, uh, Saturday session here.
Uh, and today we have a specialguest, Jackie, uh, I don't know
if anybody doesn't know whoJackie is, but Jackie Cummins.

(02:07):
Uh, she has written two books.
So she has, uh, shared her story ofreaching Fire, fire in her book, uh, in
her forties, making less than six figures.
And then even after overcomingpoverty, divorce, single Motherhood.
She officially retired from her corporatejob in 2019, um, and now she's doing
her dream of financial literacy towhere she has, uh, business there.

(02:30):
She also has a second book,uh, award-winning book,
money Letters to my Daughter.
And then of course,the buyer with Dummies.
And then of, you guys may knowher mostly from her, uh, podcast.
So she co-hosts the, uh, podcast CatchingUp to phi, which I think has like grown
tremendously in the last, like, even year.
Um, and for anybody who's not aware ofwhat catching up to PHI is, it focuses

(02:53):
on, uh, the late starters in theirjourney to financial independence.
Um, and Jackie's been featured allover the place in, uh, you know, the
Rachel Ratio, CNBC, um, and she isalso a certified financial planner
and an accredited financial counselor.
So she's got some credentials.
Uh, we are excited to have her hereand she is, uh, here sharing her

(03:15):
story and her knowledge with us.
Um, and so give a goodround of applause to Jackie.
Good morning.
And Jackie, it's all yours.
Thank you guys.
Um, it's an honor to be here.
I was talking to Sandy before wegot on and I'm like, uh, the main
thing, one thing that I've learnedsince I retired is the things,
the activities or presentationsthat I get more excited about.

(03:38):
And I was excited about this and I thinkit's because I love being around other
women and I, I love breaking thingsdown and making them simple things
that everybody else in the universehave made just way too difficult.
Um, and the other other thing Iwanted to point out was, um, so
I retired at the end of 2019.
I'll talk a little bit about my journey,but this will mostly be focused on you

(03:59):
and, uh, just some, some common tax issuesto consider and we'll talk through those.
But, um, for my CFP and the A FC,uh, of course if anyone is interested
in those, definitely hit me up.
But I didn't get those until.
Two years after I retired.
So I retired myself before Igot any of those credentials.
I didn't need those credentials to retire.

(04:21):
I just wanted to be ableto help other people.
And it helped me fill in some gaps becauseobviously when I was retiring, I was
worried about Jackie and the things thataffected Jackie, not the whole thing.
And so when I got the credentials,it just filled in some gaps.
Um, and, and I'm glad I did.
Uh, I'm proud of those credentials andeverything, but I just like to make it
clear that that's not what got me to fire.

(04:43):
Um, so everyone in here probably,uh, could, could get there, you
know, with the focus that youhave and attending a session like
this where you can learn a lot.
So, um, let me see if I, thankyou ladies again for having me.
Uh, Kim and Sandy work with me.
We did a little pre-think to makesure we had everything we needed.

(05:04):
They are very loving ofthis group as, as I am.
I, and I think many of you made itto economy and, um, that's kind of
where this, uh, group started, right?
You guys started from, uh, when SarahCatherine did a breakout session, and
that is correct.
Yeah.
Is correct.
It's a growing from
there.
So I'm, I'm very, veryproud of, uh, this group.

(05:25):
All right.
So I'm going to attempt to share hereand let me get it in slideshow, moded.
And can I confirm that you'reseeing everything okay, Kim?
Yep.
Okay.
Yep.
All right.
So I wanted to title this,uh, very women-centric and.
The one thing I've learned about the worldof CFPs and financial planning, it is

(05:46):
heavily male dominated, like about 80%,and I think it's right around 26% women.
And these are people thathold the CFP credential.
Um, so, you know, that'svery disappointing, you
know, for people of color.
Um, I think it's like 2% so much lowerthe general than the general population.

(06:08):
And I have people ask me allthe time, they'll say, you
know, do you know a woman?
Do you know a black woman?
Do you know?
And I have to really reach to try to findsomeone that fits what they're asking for.
And I hate that I haveto struggle to do that.
So, um, so yeah, it's, it's not great.
And again, I'll do the pitch for anyonethat's interested in getting the CFP

(06:32):
or the A FC or whatever, please ask me.
Um, I think a lot of women are, um,it looks kind of intimidating and
if there's another woman, it mightmake it a little more approachable.
I know that's what helps me.
I mean, some of the things I've done,um, I. I just felt way more comfortable
chatting with a woman that was justa little more, um, just understanding

(06:55):
and the approach was just different.
So, so I titled this, whatEvery Woman Should Know About
Minimizing Taxes in Retirement.
So that's everythingthat we're talking about.
Um, this tax stuff, it reallyis woven throughout almost
every financial planning topic.
So if you have questionsabout anything even loosely

(07:16):
related to it, do not hesitate.
There are no dumb questions.
I remember, um, I had a teacherthat said the only dumb questions
are the ones that you don't ask.
So it doesn't matter how basic.
There's just some terms thatpeople throw around and you
don't really know what they mean.
So feel free to, uh, speakup, put it in the chat.
Um, I'm more than happy to elaboratebecause more than likely someone

(07:38):
else has that same question, andit can help make the conversation,
um, more rich where you're not,um, missing important stuff because
that basic, you know, was not there.
So, um, just the disclaimer,especially talking about taxes.
I'm not a tax expert.
I do have these credentials whereit has been very helpful to, uh,
be able to understand, explain,and educate others on this.

(08:01):
But I always encourage peopleto do their own research.
Um, if you feel like it'snecessary, hire a professional.
Um, if you do it yourself or thereis a ton of information out there.
Not to mention, the mostauthoritative sources like the IRS.
The IRS website actually does a decentjob of, uh, covering some of these.
They, they don't like to give, like,you know, they don't wanna give

(08:23):
tax advice or anything like that,but there's a lot of resources.
So if any of these topics, any ofthese areas, you're like, I think I
need to do that, just make sure youdo the additional work to make sure
that it works for you and you'vegotten all the details that you need.
Uh, but primarily this is forinformation and educational purposes.

(08:45):
All right, so a little bit about me.
Uh, uh, thank you, uh,Sandy for, um, the intro.
Uh, that was great.
Um, so let me just highlighta few other things.
So I retired, um, atthe age of 49 in 2019.
It was December 6th, 2019.
And I remember for anyone that went to thefirst economy, um, that we call that the

(09:05):
COVID economy because it was March of 2020and it, and this was the first event that
I spoke at publicly to share my numbers.
And it was the first thingI did after I retired.
I, when I was working, I didn't feelcomfortable, I guess, outta respect
for my employer to talk about.

(09:25):
My numbers or my plans toretire early and be out.
But, um, I was there for 21 years, soI was, I was there for a long time.
I mean, these days nobody's working ata job for 21 years, whether you want
to or not, because, you know, there'sother, uh, decision makers in that.
Um, I am divorced African American,single mom, and I have one
daughter that's her back from 1996.

(09:46):
And I, I could share some goodnews with you, so I just found
out my daughter is pregnant.
She's 30 now, so that was a long time ago.
But, uh, she, I just found outshe's pregnant, so I'm gonna be
a grandma for the first time.
So I'm happy about that.
Um, so like I said,she's an adult daughter.
She's about to turn, uh, 30.
And, um, when I retired, I, backin the day, I would say I started

(10:07):
learning about fire in 2014, 2015.
And back then, if you guysknow, it was mainly the tech
bros. Engineers high income.
I. Uh, you know, a lot of times no kids,none of them looked like me or had a
profile like me with the, you know,divorce and kids and, and the lower
income compared to some of their incomes.

(10:28):
So, um, it took a lot to, for me toput the pieces of my puzzle together
because it looked so different.
I still learn a lot from them,but I had to do a lot on my own
because it wasn't tailored for me.
It was tailored for, you know,um, you know, young white
males primarily at the time.
We've come a long way and there'sbeen um, uh, definitely a huge

(10:50):
evolution of the fire movement.
Um, that to me makes a lot moreinclusive and waves a lot more people in.
So this was my big wake upcall and I wonder if any of the
ladies, if this sounds familiar,'cause this happens a lot.
I didn't realize that at the timeof my divorce, but excuse me.
At the time of my divorce, there wasa huge disparity of what I had in

(11:15):
my 401k and what my husband had inhis, and there's a number of reasons
for that, but he had a hundredthousand dollars more than I did,
so I had thought I was doing good.
I'm in my mid thirties at this point, youguys, and I had about $20,000 in my 401k.
And my husband had $120,000.

(11:36):
Huge disparity.
Well, I did some research and, andBank of America had done this, uh, the
survey where they looked at all theiremployees and they segmented it, segmented
it, segmented it by men and women.
And the disparity was veryclose to this, except I think
for women, it was like a hun.

(11:58):
For women, it was an average of30,000 for men, it was average
of like, maybe like 110,000.
But there's that big disparity.
I'm like, okay.
It wasn't just me.
You know?
It, it happens a lot.
And there's things like, my husbandwas a little more aggressive
in some of his investments.
We were saving nearly thesame, but his, um, salary was

(12:18):
increasing higher than mine.
So the, the 6% or 10% that we weredoing, uh, it was more for him, right?
Because he's got a highersalary and just over time, that
gap grows, grows and grows.
And plus he worked for a verylarge, one of the top three banks.
And back then you could put thebank stock inside of the 401k.

(12:42):
And this was way before 2008 whenbanks were doing really good.
So that was another reason.
So there was just a number of things thatonce I pieced it together and thought
about the compounding over 10 years andhow this grew, um, it, it was just crazy
when I saw this because I had no idea.
We didn't sit down andlook at the stuff together.
We should have been.
Um, but.

(13:02):
After that moment and after I realizedthis, I already felt bad going through the
divorce, you know, with a lot of stressand anxiety and uh, just so many things.
So I walked away from thatsaying I never wanted to feel
this financially ignorant again.
And that was my wake up call.
Um, one of the thing, first thingsI did, I ended up joining the

(13:24):
investment club, made me realizehow important community was to me.
And frankly, I just got tiredof talking about my divorce
with the people that I knew.
'cause you know, that's whateverybody's asking about and I'm
just tired of talking about it.
So, at least with these investment clubpeople, they didn't really know me before
then, and I could talk about somethingelse that was actually going to be
productive and got me off of a subjectthat I just was sick of talking about.

(13:48):
So, um, I'm very open with mynumbers and I started this in
two, in 2020 at the first economy.
And I just always said, you know, whenI was learning about this personal
finance stuff, it helped me so much thatpeople, for people that would show me
their numbers, give me something tangiblebecause you saying I made a good income.
So what does that mean?

(14:08):
80,000? You know, 150,000,you know, that's not helpful.
But if I could see a little morespecific numbers, I can adjust.
Just like, you know, the early guysof the fire movement, if I saw their
numbers, I knew that mine weren't gonnabe exactly like theirs, but it gave me
some reference point that could possiblyhelp me craft and customize my own number.

(14:30):
So it was so helpful that I wantedto definitely, uh, return the
favor and really do something thatpeople, especially in the financial
planning industry, don't do.
They don't show their own numbers.
If you ask them what they're investedin, they're probably not gonna tell you.
If they're gonna ask you how muchdebt they have and all that stuff.
They're not gonna tellyou any of that stuff.
It's like so taboo.
And I'm just tired of the taboo of, oftalking about money and that's why I

(14:51):
love this group, um, so much as well.
'cause, 'cause we'reopenly talking about it.
So this was my income and expenses.
Um, and, and this snapshot isfrom, uh, the time I retired.
So the end of 2019, 2020, I hadall these numbers together and I
decided to just put 'em on out there.
So my salary was, uh, about $80,000and that was my gross income.

(15:15):
All I did was go to my socialsecurity earning statement and it
will show you what you've earned.
So I took the last 10 yearsbefore I retired and I took
the average on the high end.
You know, I think I got up to likemaybe mid nineties and on the low end,
um, during that 10 year period, it waslike maybe in the high sixties, but on
average it was about $80,000 a year.

(15:37):
Then I had about 2000in, uh, other income.
You know, we all gotta have a littleside hustle, something going on.
Most of that was probably book stuff.
Um, had $70,000 in debt andI still have my mortgage.
Um, this was something that sometimesa little controversial or there's
always this big debate, and Idon't think it should be a debate.
I think people should do what makesthem feel comfortable as, as long

(16:00):
as they have done their researchand they have done it mindfully.
So, having such a low mortgageinterest rate, I proactively
decided not to pay off my mortgage.
And, you know, we've been in interest rateenvironments of, you know, 6%, 7%, 8%.
So, you know, this turned out pretty good,but it didn't bother me to have that debt.
If having the debt bothers you andit keeps you up at night, you should

(16:22):
definitely pay it off, even if it's0% because your peace of mind is worth
way more than you know, this decision.
And you know, it, for me, itwasn't, it didn't represent
a huge amount of my money.
So, um, I decided to keep that.
Um, now that mortgage is down,they're probably more like
$40,000, so it's almost paid off.
I just wanna pay it off as agreed.

(16:45):
Um, my annual expenses was about $45,000.
Um, for if you're in New York,that probably sounds ridiculous.
If you're in San Francisco, it probablysounds ridiculous, but that's okay.
Um, usually it scaled.
So you see my income wasreally not that great.
But then again, my housingexpenses weren't that great.

(17:05):
My, my overall expenses weren't thathigh, so $45,000, and I am not even
the great greatest budgeter for meto figure out what my expenses were.
I just backed into it.
I said, okay, this is my salary.
Um, this is how much I pay in taxes.
This is how much I'm saving.
So the rest, that's what my expenses are.
That's how I did the math.

(17:26):
Um, so my, um, fi number isjust 25 times my expenses.
So you just take 45,000, youmultiply that times 25, and you get
a little over a million dollars.
Uh, mentally I still was not readyto retire when I hit that number.
Um, I grew up in poverty, uh, raisedby a single dad with six kids.
So I, I just mentally felt like Ineeded a little bit more of a cushion.

(17:50):
So I finally retired, you know,back in 2019, uh, at 30 times my
expenses because I wanted more ofa buffer and I didn't even include,
uh, social security in my numbers.
So now that I realize that socialsecurity will be there in some form or
fashion, um, that's sort of my backstop.

(18:10):
So the thing I wanna pointout here is that even though
I was making $80,000 a year.
I was only spending 45.
So you guys probably all know howimportant it is to create that gap,
but I share this with even youngaudiences, high schools and college
students where they sometimes don'treally understand how important that is.

(18:35):
So next, these are, um, thisis my savings and investing.
So I started at 10%.
Sarah Catherine started this group.
She wrote that book, but first saved 10.
So at least when I was married andI had only accumulated the $20,000,
at least I was saving something.
So when I woke up after my divorce, I hadsomething, I was not starting at zero.

(19:00):
So I started with 10%.
Uh, by the time I woke up,I'm like, wait a minute.
What was I doing with allthis other money that I had?
I could have been doing the 40%savings rate, or at least I could
have been sliding up that way alot sooner if I knew what to do.
I just didn't know what to do.
So, um, what kind of fell underthat, uh, 40% savings rate was

(19:23):
I was maxing out my 401k 19,000.
Um, I was getting agenerous company match.
If I put in 7%, they put in 9%.
And then I was maxing out my Roth IRAand these are numbers based on 2018.
Um, I was maxing out myhealth savings account.
I found out you could invest in that.
And then, uh, I was a member of aninvestment club that I mentioned, and

(19:46):
I was putting about $2,000 in there.
So for these savings numbers,the really big takeaway is the
fact that, um, I started at 10%.
So at least I was doing something.
So if you're, you know, I I,when I talked to a lot of people,
they'll say, yeah, I don't havenear enough saved for retirement.
And I ask them, whyare you doing anything?

(20:06):
And usually they're at least on the 401k.
So that is helpful.
It means that you're not starting at zero.
All that adds up.
And with compound growth,um, that makes a difference.
So I was able to movethat to 40% savings rate.
So, um, even in the early days when Ithought I could save nothing, um, if you
save a little bit, no matter how smallit is, even if it's $5 a month, at least

(20:31):
it's something and it starts to build thatsavings muscle and you get used to it.
So as you make more, you'll save more.
And this was, um, how my networth broke out at the time.
Um, you know, you saw most of my moneywas going into my 401k, so that was over
half of my net worth when I retired.

(20:52):
Um, then, uh, traditional IRAI.
That was, uh, about 15%.
The next biggest was my HSA,my health savings account.
I, you know, sometimes we do things rightwhen we have no idea what we're doing,
but, uh, I started, I started saving andinvested at my 401k or my, uh, HSA as

(21:13):
soon as my company started offering them.
And I was mainly going for the lowerpremium because high deductible
health plans, they always, or theytypically have a lower premium.
In my case, it was a much lower premium.
And, uh, that was my goal initially.
And then I thought, oh wow,this does roll over from year
to year, what I put in my HSA.
So right now, even with themarket downturn over the last,

(21:35):
since the beginning of the year,my, um, HSA is over $200,000.
So that's always been abig chunk of my net worth.
And I'll talk a little bit moreabout that, um, for you guys.
And then my home equity, um, Roth,IRA investment money in the investment
club, and then a card that was paid off.
So this is kind of howmy net worth breaks out.

(21:55):
You know, some people don't includetheir home or their car, but I kind
of like to see, um, everything.
So this is how it, it broke out for me.
So you can just take a quicklittle look at this and realize
that, um, what about taxes?
You know, am I gonna payearly withdrawal penalties?
You know, what am I gonnado about our tax situation?
Because whatever you see here, you know,in seven years, it could easily double.

(22:19):
You know, and by the time I hit 75 where Igotta take required minimum distributions,
you know, that might become a problem.
So, um, but this, so this is kindof my starting point with trying
to figure out my tax situation.
And for the longest, I didn't even thinkyou had control over taxes, but, um,
but I learned that you do and that'swhy I wanted to do this session and

(22:41):
I was happy to, uh, talk about it.
So, um, these are some of mytax considerations and we're
gonna do something similarfor all of you guys as well.
So, prior to 55, these are the thingsI had to think about, or these are
the things that was on the table.
All right.
Roth conversions, right?
You guys had a session on that.
We are, we hear that buzzwordall the time, and I'll talk

(23:04):
a little bit more about that.
Um, for anyone that's under the ageof 50, I don't think it as is, as a
big issue as, say the baby boomersthat are retiring right now, that
are in their sixties and seventies.
Then, uh, the mouthful, thisword, that's a mouthful.
72 T-S-E-P-P, uh, I'll talka little bit about that.
Break that down.

(23:25):
It.
Put out there to be way moredifficult than it needs to be.
I set one up at the end of last year,found an expert, had 'em on the podcast.
So I feel so much better about, uh, theseare substantially equal periodic payments.
These are, you set it up witha traditional IRA and um,
you avoid the 10% penalty.
Um, then my a CA subsidies, thatwas a big tax consideration 'cause

(23:48):
I'm getting near the maximum, um,subsidy that you can get with acas.
But, but that means that my adjusted grossincome, which is what the a CA subsidies
are based on, I have to watch that.
So I had to be careful with my 72 TIhave to be careful with Roth conversions.
And then, um, my HSA has been alittle bit, it's been helpful.

(24:10):
Before I retired, I was stillcontributing to an HSA, but since
2020, since I retired, I have notbeen on a high deductible health plan.
And because I can get a really good onewith a good subsidy on the a CA, but
I can use my HSA to make distributionsif I need to, that are tax free,
that don't count towards my incomewhen I'm looking at a CA subsidies.

(24:33):
And then, um, I get alittle bit of earned income.
So, you know, when you retire young,you know, I think the thing that's not
talked about near enough is the fact thatyou, um, you have human capital and the
75-year-old can't say the same thing interms of being able to go back to work.

(24:54):
Or doing, um, you know, a job or tryingto run a business, it's just less likely.
But when you're much younger, count thatearned income, whether it's, you know,
mine was from, you know, 10 99, like,you know, I technically have a little
business that, um, you know, I can, youknow, take a lot of, you know, uh, tax
deductions, you know, for the business.

(25:15):
Um, and it doesn't addup to be a whole lot.
Um, I still have to make withdrawals frommy, uh, retirement accounts, but, um,
that's something to keep in mind too.
Um, the other part is after55 or between 55 and 65, so I
turned 55 December of last year.
So Roth conversions, a, a lot of theseare the same, but still Roth Con.

(25:39):
Yep.
Sorry to interject before you goon, there's a couple of questions
in the, in the, uh, chat box.
Okay.
Can you step back to the slidethat shows your holdings?
I think folks visually wouldlike to understand what of that
is taxable versus non-taxable.
Oh, my net worth.
Okay.
Yeah, let's go back to that.
Okay.
Uh, is this a slide?
Is this right one?
Yes,
it is.
Okay.
And, and it's a, we don't see a brokerageaccount, so we were just wondering if all

(26:00):
of your money is in any of these bucketsand not in a taxable brokerage account.
Okay.
Very, very smart.
So,
um, if I had.
One regret that I have and if I could goback and do something different, I would
put more money in a brokerage account.
So I did so, and this is the point I wastrying to make, like when I was retiring
early, I was thinking about Jackie.

(26:21):
And when I went on to get my CFP, it didbroaden my horizon a little bit more.
And one of those things is, youknow, having a brokerage account.
Now my investment club, thatwas about 30 to $40,000.
That is all brokerage accountmoney is after tax money.
But that ran out, right?
Um, I had a little, it wasn't evenenough to show on here, but um, I

(26:45):
had a little bit of company stock.
I worked for a company.
We didn't even get adiscount on the stock.
Um, most big companies, they willpublicly traded big companies, they'll
offer 15% discount on the stock.
I didn't get a discount on thestock, but I did do it because
again, that savings habit with itbeing automated and all of that.
So I had a little bit of that to, Idon't know, that might've been like
20,000, probably less than that.

(27:06):
Um, so that was it.
So that is the deficiency here.
Having a brokerage account is very,very powerful when you retire early.
So when I show you the list of taxconsiderations that you should consider
a brokerage account kind of flowsthrough almost every single phase.
That is one thing I wish Iwould've done differently.

(27:27):
Yeah.
Any other questions on this one?
So is this your today,your today net worth?
Or is this a glimpse of when you retired?
No, this is when I
retired.
So this is a snapshot probably.
Um, I really was doing thiswork like at the end of 2019.
Um, so this would've probably been,you know, I wanted to take the snapshot

(27:48):
from the time I actually retired.
So this is what this reflectsnow my net worth today.
Just to give you an idea.
So when I retired, I think my networth was right at 1.3 million.
And so now today, well thelast thing, last time I updated
my net worth was January.
So I'm scared to look at it again,

(28:12):
but it, uh, it was, um, Iwas right under $2 million.
So it has, um, not quitedoubled, but almost double.
And part of it's that Iam making distributions.
There was only one year out of these sixyears that I did not have to, um, uh, take
anything out of my retirement account.
So, so once my brokerage accountran out, okay, I started taking

(28:36):
my Roth contributions, whichthere's no penalty for that.
And then I started thinking, youknow, really your Roth money,
since it's tax free, you actuallywant that to grow the most, right?
Because you're not gonna pay taxes.
I'm like, why am I doing this?
And that's when I decided togo ahead and set up the 72 TI.
If I had a bigger brokerageaccount that was still around, I
may not have had to do the 72 t.

(28:58):
I'm kind of glad that I didbecause whenever I do stuff, I do
look at the time it takes to doit and, and all the research or
whatever, but I also put a value on.
What am I learning as I'm doing this?
And I'm really, really happy that Ilearned so much about a 72 t mostly
that everyone else was so scared ofit unnecessarily because even the

(29:21):
professional CPAs and CFPs, theyback away from the table really
quick with when it comes to 72 Gmainly 'cause they don't understand
it or they don't know, they haven'tworked with people to actually do it.
They just see two or three, um, differentthings and you know, they just so quickly
just say, ah, that's just too much.
Well, you know, I found a 72 expert thathe does this in their, in his sleep.

(29:44):
So, so when I talked to him andlooked at what he put out, he answered
every single question that I had.
He has this free guide and I'll,I'll mention what it is, but, um,
it's 72 t calc.com is the website.
But it really made meunderstand how a 72 T works.
And so I talk about it a lot morenow because there's just too many

(30:05):
people saying how hard it is, howdifficult it is, how bad the penalty
is, how easy it is to make a mistake.
And it's not to say that thosethings are wrong, but that's
true with almost anything you do.
That's true with the Roth conversion.
That's true with almost everything.
So
someone asked the questionas to what is a 72 T
Yeah.
We're gonna get into the 72 T. Yep.
Um, yeah, we'll, we'll get intothat and I'm glad that I'm bringing

(30:27):
a little bit of new information.
Yeah.
So yes, yes, yes.
Okay.
Any, any other prior slides, um, thatanybody had any questions about or
any other questions about this one?
Nothing else in the chat so far on those.
I
think we're
good to go forward.
Okay.
But keep 'em coming
in the, in the chat ladies.
Yeah, keep 'em coming please.
And, uh, if I don't pause myself,ladies, pause me just like you just did.

(30:50):
Um, so, so turning 55, there wasa few other, um, consideration.
Now, now this is just showing for mewhat, I'm gonna show you a similar slide
of almost all the things that you shouldconsider within different phases and
ages of, of your life, um, as you retire.
So 72 ts, so I still have that coming out.
So even though the 72 t, which which it'sjust a way that you can get money out

(31:14):
of your traditional pre re um, pre-taxretirement account without paying the
penalty, but you still have to pay taxes.
So I still have to watchthat even after 55.
It has to go on for the longer of fiveyears or until you turn 59 and a half.
So I turn mine on at 55.
I get these regular payments.

(31:36):
It has to be the same amount every year.
Um, but it's still, the moneythat's coming out still taxable.
I get $15,000 a year.
So again, I have to be carefulwith the a CA subsidies 'cause
I'm still not Medicare age.
Um, and then I still havethe option with the HSAs.
Um, I. So right now I'm notmaking contributions, so I'm

(31:58):
must have copied that over, butI'm only making distribution.
I, you know, I choose anew health plan every year.
So I guess it's possible that I could makedistributions if I choose an HSA plan.
But as of this year, I haven't hadan HSA, but if I do, I can still
make contributions prior to 65.
Um, then the earned income is still there.
And then I have this, um, manyof you may have this as well.

(32:20):
We know that company pensionsare going away, right?
Uh, even some governmentpensions are changing.
So the company that I workedfor for 21 years, um, I didn't
even realize we had a pension.
I started working for themwhen I was in my twenties.
So when I started in my twenties,they, the way that it worked is they
put money on behalf of employees.
I didn't put anything in there.

(32:42):
And so then they started talkingabout, oh, we are freezing the pension.
Now what that means is that youcan't make any new contributions
or your employer can't make any newcontributions, but it's still growing.
It's still invested in something.
I don't have control over thoseinvestments and I don't have, you
know, any kind of market risk.
So I don't have to worry about that part.
But it will continue.
It continued growing and Istill haven't turned it on.

(33:05):
Part of the reason is because Idecided to set up a 72 T, but that
small, small pension is growing.
If I were to take, you know, I'm,I think I decided to take monthly.
Uh, payments, you know, you callit ize it, uh, versus a lump sum.
'cause I was gonna take a lump sum, butit's only gonna be about $500 a month.

(33:25):
But you know what, that's nothing.
To shake a stick at $500 aa month is pretty darn good.
And it just said, it just, you know,at least puts me in a position where
that's $500 less that I have totake outta my retirement accounts.
So, so that's how that works.
So these were Jackie's and, and ifyou were to have any kind of exercise
after this, make your own slidethat says Kim's tax considerations.

(33:48):
Sandy's tax considerations so thatyou can kind of have a sense of
this is what you're looking at.
Some people don't have a pensionat all, so you would scratch that.
You don't need to use that.
Some people got a decent brokerageaccount, so they might not need the
72 T. Um, they may have a spousethat's still working, so they
may not need the a CA subsidies.
So yours is going to be unique for you,but I kind of just wanted to show you,

(34:09):
these are all the tax considerationsI had to think about as I retired.
Okay, so let's talk about you guys.
So unfortunately there'sa big problem with taxes.
Um, and this is the problemthat we're trying to solve for.
So for all these reasons, um, thishas been a difficult topic for a

(34:33):
lot of people, including myself.
So you got complexities withthe US tax system, okay?
I don't know if anyone's ever printedit out, but if you printed out the tax
code, oh my God, it would probably be.
Inch, oh God.
Ruler size, probably yards.
I can't even imagine how big it would be.

(34:53):
Um, but our tax system is very complex.
There's a lot of bells and whistles.
So when you hear people say, um, thesewealthy people are not paying any taxes,
well that's because they have either hiredsomeone and they take advantage of the tax
system so they can legally not pay taxes.

(35:13):
There's so many things you can do and thetax code isn't unique to wealthy people.
There's some of these taxprovisions that you can use.
Now, the wealthy people, you couldprobably add like three or four zeros.
But still, we all haveto use the same tax code.
It's just so complex that most peopledon't have, you know, their own CCPA

(35:34):
on speed dial or team of professionalson speed dial to be able to do that.
But you can, you can take advantageof some of these things that
are gonna be to your benefit.
Um, so paying more.
Uh, another problem would be payingmore in taxes than you legally need to.
That's, again, just not knowingwhat things that might be, uh,
what maneuvers or strategiesthat might be available to you.

(35:55):
And then just like I showedyou, there's multiple tax
considerations at the same time.
So while I'm trying to save by gettinga CA tax subsidies, I'm still like,
okay, I need to do my Roth conversionsand I need to take out money from my
72 T. So there's just so many things.
Conversion when it comes totaxes, so that's an issue.

(36:16):
And then, uh, having too much in IRAsand other pre-tax accounts subject
to RMDs require minimum distribution.
This is the big one that peoplethink about where they're like,
oh, I need to do Roth conversions.
This is the thing that usually getspeople attention that they don't
wanna end up with a supersized.

(36:38):
Uh, IRA.
That's subject to RMDs.
Um, for instance, if somebodyhad $3 million, then that could
equate to them having to takeout, let's say $200,000 a year.
And they're like, oh my gosh, Idon't wanna pay all these taxes.
There's some things you can do with that,and that should probably always be on
the horizon, which is why you see so manypeople talking about Roth conversions,

(37:02):
because that's a way to get money out ofyour traditional IRA into your, into a,
an account that is not subject to RMDs.
And you pay taxes when you do that.
But like, if somebody is, let's say, ifsomebody's like 69 years old, they may be
in a rush to do these conversions, right?
Because they're reallyclose to doing RMDs.

(37:22):
But if you're far away, you'vegot plenty of opportunities to
be able to do something about it.
Um, and then understanding whichaccounts are better to inherit.
So as we get older, even now, you know,I'm only 50 something, but, um, there
are a lot of things to think about interms of which accounts are better.

(37:42):
To for certain people in your life toinherit, you know, is there certain
accounts that are better for a nonprofit?
Um, is there certain accounts that'sbetter to try to spend down versus,
you know, leaving it to someone else?
So these are all theproblems that we have.
So our goal today is to give you someanswers to some of these problems to

(38:02):
make you feel a lot more comfortablewith some of these tax situations and
better understand how it applies toyou and how it will start to make a
difference to your financial life.
Because almost every financialdecision has a tax consideration.
Now, any quote questions?
You guys,

(38:24):
we good to go?
Okay.
All right.
So this is the one slide that we'regoing to, uh, keep coming back
to, but it is kind of gonna be theoutline or the agenda for, uh, today.
So we're gonna look at thesedifferent ages and stages and the tax

(38:44):
considerations you wanna keep in mind.
Okay?
And I will give a copy of this wholepresentation to you guys so that you
can share it as you, as you would like.
Um, okay, so pre 55.
So this is, so these are technical terms,but this is just really early, right?
If you retire before 55.
Alright, so many of these I did use,which you've got Roth conversions,

(39:06):
you've got 72 T, um, a CA subsidies,your health savings account.
Earned income because you're young enoughto where you may be doing projects or
bringing in money, uh, through someway that's considered earned income.
Earned income can be, um, either10 99 W2, maybe you work part-time.
But, uh, it, so the termearned income is an IRS term.

(39:32):
Okay.
Um, and then, uh, tax harvestingof your brokerage account.
So let me explain the 72 T again.
Um, I think I mentioned this is basicallya strategy, uh, and I, it's including the
IRX code, uh, 72 T that allows you to takemoney out of your, uh, traditional IRA.
You could use a 401k two, butto me that's a little tricky.

(39:53):
Um, it's better to do it witha, with an IRA, but it allows
you to set up what's calledsubstantially equal periodic payment.
That is a mouthful, but the problem thatis solving, it's for someone like me
that didn't have enough in a brokerageaccount, and I wanted to be able to
take money out of my retirement accountearly without paying that 10% penalty.

(40:15):
So you do have to make surethat they are equal payments.
Um, like I said, I'll include a resource,um, to learn more about it, but it is,
most people have never heard of this.
Um, so it is a little known provision,but again, now that you know that this
is, is an option where you can actuallyget money out of your retirement

(40:37):
account early without a penalty justby setting up these regular payments,
um, that could be an option for you.
It does have to continue forthe longer of five years or
until you turn 59 and a half.
So, um, this was some, I thoughtabout doing this ever since I retired
in 2019, but I didn't have to,'cause I still had brokerage money.
I had, you know, other money coming in.

(40:59):
Um, but last year I'm like, you know what?
I think I need to go ahead and, uh, set upa 72 T. So that's when I decided to do it.
So I only have to do it for fiveyears because I was 55 when I did it.
I have to have, have it for atleast 55, have, have to have
it for at least five years.
Um, so for me that's gonna be, uh,59 and a half in the five years is
gonna hit about the same time for me.

(41:19):
Um, so the a CA subsidies that standsfor the Affordable Care Act, um,
the, one of the biggest concerns thatpeople have retiring early is what are
you gonna do about health insurance?
So.
The answer to that is, um, for, formost people that I know in the PHI
movement, it's go to the marketplace.

(41:39):
Even if you don't end up using themarketplace, um, which is what it's
also called, that's okay, but youat least want to do your research.
You could go to a, uh, insurancebroker, they could help you with that.
Some people could be memberof certain, like organizations
that may offer health insurance.
Some people end up end up using likeone of the health share ministries,

(42:02):
technically not health insurance, butsome people use that for their healthcare.
Um, so there's a few of the thingsthat people do, but the, the big
deal with the, um, ACA and thehealthcare.gov, um, marketplace is that
you can qualify for subsidies if yourincome is long enough or low enough.
So when I say income, they go by what'scalled the modified adjusted gross income.

(42:26):
So adjusted gross income is, um, acommon term that most of us know.
It's on the front page of our taxes, andthat's usually a line that you look at.
If you look at nothing elseon your tax return, you see,
uh, adjusted gross income.
So modified adjusted gross income.
For most people, it's almostexactly the same, but I think it
makes you back out like foreignincome and a few other things.

(42:47):
So if it's, if you're able toget that number low enough,
you can qualify for subsidies.
And I'm gonna, um, just do alittle run through just so you
guys can, um, take a look at that.
But this is a big dealfor me because RAC rate.
For the plan that I have,and it's a really good plan.
I think it's like $500, um, uh,deductible, $1,500 max out of pocket.

(43:10):
Much better than these highdeductible plans I've been having.
So I think if I were to not get a subsidyand I would pay rec, great for it.
It was $700 a month and I endup paying, this year was about
$24 a month after the subsidy.
So these can represent a lot of dollars.
So this is why this is a common,um, option for a lot of people.

(43:34):
Uh, HSA, the health savings account,um, I'll include a resource for that,
but that's just basically where youhave to be on a high deductible,
uh, health plan to contribute.
But the money rollsover from year to year.
You don't pay taxes.
Um.
Is it, you normally will hearit referred to as the triple
tax savings, which is correct.
No tax going in, no tax goingout, no tax while it grows.

(43:58):
But there's a fourth thing, so Icall it the quadruple tax savings.
If you have your deductions or ifyou have contributions taken through
payroll deduction, you do notpay Social Security and Medicare,
though you don't pay that FICA tax.
Another nice little bonus, um, earnedincome is kind of self-explanatory.
W2 or 10 99, or if you have a smallbusiness, um, you can't include like,

(44:21):
um, income, like dividends or incomefrom investments and things like that.
That's not earned income.
Earned income is where it's from.
Some type of work that you have done.
Um, and the, the tax harvestingfor brokerage accounts.
So somebody mentioned this, right?
One of the questions wasabout brokerage accounts.
So brokerage accountsare very, very valuable.

(44:42):
Um, one they inherit well.
So when whatever you put in to,um, a brokerage account, that's
considered your cost basis,that's what you're starting with.
And then you have the growth.
You only pay taxes on the growth whileyou're living, but if someone inherits
it, they don't pay tax on any ofthat, not what you put in or the cost

(45:02):
basis and not what it has grown to.
So here's a good example.
All right.
So let's say you have a brokerage account.
You put $50,000 in that brokerage accountand 20 years later it grew to $200,000.
Right.
So $150,000 of thatbrokerage account is growth.

(45:23):
If you sell everything, you'regonna get $150,000 tax bill.
Now, the one plus is that the, you willpay what's called capital gains tax, which
is much lower than regular income tax.
Regular income tax.
It today, you know, uh, the Tax Cuts andJobs Act may expire, and this may go up,

(45:47):
but today the highest tax bracket is 37%.
Okay?
That's a lot for income, but this$150,000 worth of growth on that
brokerage account, if you sell everything,you're gonna get taxed at what's called
capital gains, which is much lower.
The capital gains iseither 0%, 15%, or 20%.

(46:10):
So the most you would pay is 20%.
Now 0%, I think you can make up to $48,000and pay zero in, in capital gains, okay?
If you have no other income.
However, um, after that, I thinkbetween 48,000 and I think close to
like three or $400,000, it's 15%.

(46:32):
And then if you make a lot more.
It's gonna be 20%, but themost you would pay is 20%.
This is why, this is why a lot of wealthypeople might end up paying less in taxes,
because if a big chunk of their moneyis coming from their investments in
their brokerage account, they're only,they're paying a maximum of 20% versus

(46:54):
the maximum of 37% on regular income.
So when it comes to the harvest, uh, Imentioned tax harvesting is because, um,
it's another, so tax harvesting, let'stalk first about tax loss harvesting.
Right now, we're in a really bad downmarket in a short period of time.

(47:16):
So if you sell, if you have a brokerageaccount, this does not apply to retirement
accounts, not an IRA, not a 401k.
This is only for brokerage accounts.
So if you sell something at a loss, youcan use that on your taxes to offset your
income, but you can only do $3,000 a year.

(47:39):
You can carry it forward.
So let's say if you sold something ata loss right now and it was $10,000.
You can't take a $10,000 loss inthat same year, but you can do
3000 this year, 3000 next year,and you can, you know, let it go.
So that's why peopletalk a lot about that.
Um, on the flip side, tax gainharvesting, which is not as common,

(47:59):
but tax gain harvesting, that'sjust where maybe you have a really
low income year and let's say yourincome was like $30,000 that year.
Taxable income that you haveto count on your taxes, right?
Well, you might say, well, wow,if I sold something at a gain, I
could go up to $48,000 and stillpay 0% and capital gain taxes.

(48:24):
So again, that doesn't happenquite as often as the, uh, tax loss
harvesting, where you can put, youknow, you can offset your income
by using $3,000 a year of losses.
So when you hear those terms, tome, they sound like a mouthful.
So tax loss harvesting, that's justyou're selling something in a brokerage
account at a loss so that it can offsetyour other income and you can carry

(48:48):
it forward tax gain harvesting, whichyou don't hear as much, but it could
be a low income year where you kindof wanna fill up the bucket of being
in that 0% capital gains tax bracket.
So I, I mainly wantedto mention these to say.
We hear these big terms all thetime, and to me it's just a mouthful.

(49:11):
You know, you sound really smartsaying them, so I just wanted to kind
of break them apart so that you canbetter understand what these, uh, tax
provisions are and what they really do.
So this is pre 55, soyou have any questions?
Um, with these,
uh, Jackie, there is like a, uh,loads of of side conversations

(49:31):
in the chat going on Okay.
With so many differenttopics, but one okay.
Topic that keeps coming up overand over is the a CA subsidies.
People are concerned aboutwhat if they go away.
People are asking what are other, howare people planning, uh, around that,
how do, how do you plan to account forthat or account for them going away?
And I don't know that anybody hasa crystal ball, but, um, but that's

(49:54):
definitely a repeated, uh, themethat comes up in every conversation.
Okay.
So thank you for bringing that up.
And so, and I've gotten asked thata lot and almost every single year
I get asked that, uh, because thetax Cuts and Jobs act, um, and, and
all these provisions, I'll quit evennaming the provisions, but there will
always be some type of tax provisions.
Typically there could bemajor tax provision provisions

(50:16):
when the president changes.
Right.
Typically for four years, youknow, that president is gonna
set the things that they want.
Okay.
So the way that I do it, because.
Uh, you know, when COVID hit,I thought, oh my God, I retired
at the exact wrong time.
There was, you know, COVIDand then there was a change in

(50:37):
precedence that very following year.
And that's what I got askedthe that question a lot and
I asked myself that question.
So, when you are doing yourplanning, the best you can do is
plan for the law as it stands today.
And I just remember, um, you know,this tax Cuts and Jobs act where it
increased the standard deduction,it did a lot of tax things, right?

(51:00):
Um, just six months ago, if you talked toa bunch of the professionals, all right,
most of them thought it would go away andnow we're back to the way it used to be.
But after the outcome of the election,the person that put the Tax Cuts and
Jobs Act in place is now in office again.
So now all those people, they're prettysure it's gonna stay and all these tax

(51:26):
provisions that is packed in there.
So you just never knowwhat's going to happen.
All you can do is workwith what the law is today.
And if you wanna estimate, go high.
Like for instance, with my a CA subsidies,I really didn't even plan on those.
My health insurance, I think I budgetedabout $500 a month and I continue

(51:50):
to budget $500 a month, even thoughI'm only paying about $23 right now.
So I do some mental accounting.
I. And I realized that that could change.
But my dad used to always, uh,have this say, he would say, you
gotta get why the getting's good.
So I don't know when it's gonnachange, but I've had, I've never

(52:10):
paid more than $30 a month for myinsurance since I retired in 2019.
So I have benefited from being a,from having this law in place now.
We don't know if it's gonna change.
We don't know if it's gonna go away.
We don't know if socialsecurity's gonna be there.
We don't know how it's gonna looklike, what it's gonna look like.
Same thing with Medicare.
We don't know.
So you gotta think about, okay,so if you don't try to plan,

(52:35):
so what do you do instead?
Do you just kind of sit and say,eh, let the chips fall away?
They may, you know,you gotta do something.
So come up with a reasonablenumber of what you think you would
pay or go with a higher number.
And that way if it's lower, thenyou got extra money in your pocket.
That's what I did withmy health insurance.

(52:56):
I went high and now I ha it gives meextra money now that it's low, but I
don't know if it's gonna change next year.
So those are always good questions,and I think those are good things
for, for you to, um, sort of processand think about that every hon.
Honestly, almost everything to do withtaxes is always subject to change.

(53:19):
Now most of these will take congressionalaction or congressional approval, so
they're not gonna be changing every year.
But they could easily be changing,you know, every three or four years.
So just know that the, the stuff we'retalking about today, this is the law as it
is today, and it could certainly change.
Um, and, and there's just allthis talk in Congress and with the

(53:42):
administration now of, uh, differentthings that they, they wanna do.
And some of it could be to thegood, some of it to the bad, um,
depending on what situation you're in.
So it, it's, it's hard to call itgood or bad broadly, but for you, what
is going to benefit you and what isnot, and how do you work around it?

(54:05):
You got anything else, Sandy?
Uh, some side conversations aboutthe rule of 55 and some 72 Ts.
Um, yeah, but I think, I think there's,uh, we're crowdsourcing knowledge.
There's some smart ladies in this group.
Yes.
Yes.
And we are, we're gonnatalk through those.
So this is, um, so specificallythis section is pre 55.

(54:27):
Okay.
So whoever mentioned therule of 55, definitely smart.
So this is where you wanna consider that.
All right.
So this is, you know, your Rothconversions is kind of always there.
And, and I know you guys had asession on that, but just broadly,
um, the Roth conversions, basicallyyou're taking pre-tax money in i,
in IRA and you're moving it to.

(54:50):
A Roth IRA that will not betaxed when you take it out.
However, when you make that, um, when youdo that, um, conversion from traditional
to Roth, that's a taxable event.
So it's smart to do it in a low tax year.
So if you happen to be retired, maybethe first one or two years you're
living off of money in a savings accountor brokerage account, ideal time to

(55:12):
do a Roth conversion, but you don'twanna get hit with a big tax bill.
So you do a little bit at a time.
And these, I, so a lot of what's inthis next section is gonna be the
same as what was in the prior section.
Okay?
So the only thing differenthere is the rule of 50 and 55.
And we'll, I dive into that a little bit.
I have a slide on that.

(55:34):
And then, um, I mentioned a pension.
'cause most pensions, even if youhave a frozen pension, like I had a
frozen pension, most of those, I mean,if it's government, maybe they'll
let you have that at 50, but mostof those, you can't start until 55.
Mine, I couldn't start until 55.
So even though I kind of havethese broken up by ages and
stages, these could easily overlap.

(55:55):
So this is kind of very loosely, uh,put together on things you should
think about through these different,you know, phases of your life.
So, um, so yeah, not much differentfor 55 and 65, but I'm gonna,
um, I'm gonna dive into each ofthese, um, just a little bit more.
But, um, while I had it on here, I justwanted to at least hit some highlights.

(56:17):
Uh, let's see here.
I. Then 65 and 75.
So we know 65 unlocks Medicare.
Uh, I hear a lot of people talkingabout Irma, which is another mouthful.
But, um, I have on the next slide, uh, orwhen I get into this, what it stands for.
It's income related monthlyadjuster, something like that.

(56:38):
I always get it wrong, but that's theMedicare surcharge is what I call it.
Easily Medicare surcharge.
If you make too much, you're gonnapay a little bit more, but honestly,
it's not as bad as you think.
It's only a little bit more and youhave to be making like over a hundred
thousand dollars or having a hundredthousand dollars or more in income.
That's for single person.
You have to have more than $200,000 comingin for that to even, you know, touch you.

(57:01):
Um, so Roth conversion certainlycan still be a consideration there.
Um, when it comes to thesixties, that's when I generally
recommend HSA distributions.
So, you know, I spent 12 yearsaccumulating funds in my HSA
investing it and growing it.

(57:21):
But the question is, when do you startprint, uh, paying it down or when do
you start, um, uh, drawing down on it.
And I say a good time iswhen you start Medicare.
You can use it for Medicare premiums.
You could use it for MedicarePart B and Part D for drugs.
Um, and you can use it forall of your out-of-pocket.

(57:42):
You can use it for ventvision, dental hearing.
A lot of things that Medicaredoesn't even cover, that you
might have to come out of pocket.
So, you know, now I think at 65,it's a good time to start using it.
And, you know, we start to have,you know, the aches and pains and
more health issues as we get older.
Uh, social security comes intoplay, you know, when are you

(58:03):
gonna take Social Security?
Uh, 85% of your social securitycheck is subject to tax.
So if you get a thousand dollars amonth, $850 is subject to income tax.
It's not tax free.
Most states do not tax socialSecurity, but on the federal
level, you absolutely are.
And most people are taxed these daysbecause the number they used, like,

(58:28):
like if you make over a certain income,the number that they used is, um,
it was not adjusted for inflation.
I think it's like $25,000, but mostpeople are making more than $25,000
or got that, that much coming in.
So the majority of Americans aretaxed on their social security.

(58:49):
Um, then earned income always in there.
Uh, the pension arekind of the same thing.
Um, and the tax harvesting.
So most of this is the same.
The only difference in this phaseis the Medicare piece and the
social security piece and, and therecommendation to take HSA distributions
if you have an HSA that's out there.
All right, this last one.

(59:10):
So before we move on, so, uh,there's a, so comment about the
HSA distributions here first.
Okay.
They're not required at any time, right.
You don't have to take them out, right?
Correct.
Which is
why they're so valuable because theyare not subject to, uh, required minimum
distribution and you don't even needan income if you are contributing.
Um, of course after 65, you reallycan't, if you're on Medicare

(59:30):
and Jackie, I think you're one ofthe first people that I've personally
heard that put a date on when it'sbest to start taking those out.
Yeah.
And I love that because here's thething is that the law just changed.
And when you, uh, when you leave anHSA to somebody, it becomes taxable.
So all of your pre-tax money that you'vesaved, that you could spend on health and

(59:51):
your own self goes away because now it'sa taxable account for whoever inherits it.
I was, I was bummed tohear about that one.
Yeah.
And, and that is one of the drawbacks.
Now, when I see drawbacks, I considerthem, you know, planning opportunities
and 75 plus that, that is somethingthat I, that's one that I put at the

(01:00:12):
bottom, prepping for inheritances.
So if you leave it to anyoneelse other than a spouse, it
becomes taxable that year.
Now, if it is a spouse, which we'reall women here, um, on average
women live longer than men, right?
So if your husband passes away before youand he leaves the HS and you get the HSA.

(01:00:40):
Then you're fine.
Okay.
You don't have to worry about thatbeing taxable, but by the time you
pass away, you may not have a spouse,or I don't have a spouse currently.
So I have definitelyhad to think about this.
So I'm like, Hmm, okay, whatcan I, I don't like that.
Right?
Just like you Sandy.
I don't like that.
How, and it's definitely notas advantageous as like, you

(01:01:01):
know, an IRA or a 401k or even,or a brokerage account, right?
So, um, so what do you do?
So what I did, and I don't know if thiswill work for you, Sandy, but I said okay.
Hmm.
So some of the things I, I, so the waythat I set up my beneficiaries, 'cause
my account has gotten really big.
Okay?

(01:01:21):
So my daughter pretty muchis getting everything.
She's a single, she's my only daughter.
So anyone else that I wanted to havesomething, let's say my siblings, my
niece and nephews, guess what accountthey're the beneficiary on that.
HSAI had think I have 18different beneficiaries on my HSA.
So Fidelity's gonna have alot of fun, divvying that out.
But also I put charities on there.

(01:01:44):
I've got three nonprofits that gets it.
Well, nonprofits don't pay any taxes.
And because I've got so many peopleon that account, they're each only
gonna get, you know, 10 or $15,000.
So it's not gonna change the world.
You know, they'll, they'll payregular tax, but, you know,
do you not want the $10,000?
You know?
So, so that's what I decided todo, to work around that provision.

(01:02:04):
So almost every problem or issue or thingthat sounds like it's not advantageous
to you, insert the word planning.
Is there any way that you canplan around this that's gonna
make more sense than another?
So, when I put prepping forinheritances, that's exactly what I mean.
Sandy, there's just certain accounts, likeI mentioned, the brokerage account, you

(01:02:28):
know, um, at 75, I don't really want youtaking money out of the brokerage account.
Why?
Because if you leave it to someone else,they're not gonna pay any taxes on that.
But you probably will, especiallyif you've got a lot of growth.
You know, back in the day alot of people were, um, uh.
Or buying like Coca-Cola, like theywould have those drip plans, you know,

(01:02:52):
which was dividend reinvestment plans.
And they've, or they worked for thecompany like Proctor and Gamble.
So Proctor and Gambleis in Cincinnati, right?
So many people, I think Proctor andGamble would give them shares of stock.
Well, some of them, you know, theyhave like 80, 80% of what they have
in that account is gains and growth.
So when they sell it, they'regonna be paying a lot of money.

(01:03:12):
And so, especially if theysell it all at the same time.
So, so that's something to think about.
Um, there's the pension again.
Okay, so Qds, QDS are qualifiedcharitable distributions.
I have a slide on that, soI'll talk more about it.
But then you also think about gifting.
You can give, I think this year thenumber is up to $19,000 a year to any

(01:03:33):
single person you could give it to.
If you got 10 grandkids, you cangive $19,000 to all 10 grandkids.
And this is thinking along the linesof the dive with zero concept that you
want to try to give away your money tothe people that you want to have them
so you can watch them enjoy it and nothold onto it to the end, and you're gone

(01:03:54):
and you can't even see them enjoy it.
Um, is
if
taxable for
the recipient?
No, it's not taxable on either side.
Hmm.
And, and, and for up to the $19,000,that just means that, um, like you
don't have to file any paperwork.
You don't have to doanything with your taxes.
It's easy if you give the anyone person more than that.
Then technically you're supposedto fill out a gift tax form.

(01:04:18):
I mean, I don't know that anybodyreally does it, just because the,
the estate tax is so high now.
I think it's like $13 million.
Nobody's really gonna, um, mostpeople aren't that close, $13 million.
But, um, but yeah, so 19,000.
So if you hear that number or youmay hear people saying, oh yeah,
you can only give, you know thismuch to each person every year.

(01:04:38):
But it is a good way to getmoney out of your name before
you pass away to someone else.
And maybe you give them guidance onwhat you'd like for them to do with it.
Uh, technically if it's a gift, you haveno, um, rights of ownership anymore.
You've given it away.
Um, but yeah, so, so there's somany cool things that you can do

(01:04:59):
with prepping for your inheritance.
So it'll come.
So think about, you know, what you'reputting in your will, who you're naming
as your beneficiary, if you have atrust, who you're putting in the trust.
Um, stuff like that.
So, um, so yeah, so the QCD is thequalify, um, uh, charitable con, uh,
qualified charitable distributions.

(01:05:19):
Those are basically where you're able totake some of your RMDs and you can make
a contribution to a nonprofit or charity.
And that helps with taxes.
Because, you know, you obviouslyget the tax thing without
having to itemize or whatever.
So, so, so yeah.
So you can see, again, many ofthese overlap with the stages.

(01:05:42):
Um, these are, this is kindalike a roadmap, if you will.
Um, so this page might be valuable to youto help you remind you of certain things.
This is absolutely not, you know,um, inclusive of every single
tax provision that could be outthere, but these are the big ones.
Okay.
You may have some other uniquething going on with yourself
that you need to consider.

(01:06:03):
Maybe you have a, a lotof real estate involved.
Maybe you have, you know, just someother things that you might wanna
consider, but this could serveas a really good, um, roadmap.
And this is sort of like the agenda,which we covered a lot of them today.
But I have a couple of fun things Iwanted to highlight on some of these.
Um, so I'll pause for just a minute.
Any questions, Sandy?
Kim?

(01:06:25):
More lively discussion about,uh, just planning around gifting
and, and strategies Yeah.
And things like that.
So yeah, some good stuff.
But again, we've got crowdsourcingwith some super smart ladies that are
great, are filling in some details.
Great.
Yeah, and, and that's the main thing.
Um, this is great food for thought.
So things that now that you know,some of these things, you can

(01:06:50):
add it into your overall picture,your overall strategy to make sure
that you are incorporating the taxconsideration of all of your decisions.
Which again, when you thinkabout the super wealthy people,
man, they got some really goodstrategies that they are using.
So when you hear people say wealthypeople don't pay taxes, that's partly

(01:07:11):
true because they are implementing someof these provisions and probably, and, and
there's again, several other, you know,more complex things that are out there.
Maybe, you know, they are morebeneficial to somebody that
does have a lot more money.
But there's, there's someother, uh, things out there,
but these are the big ones.

All Episodes

Women Talk Taxes (Part 1) | Jackie Cummings Koski | 148

Episode Transcript

Popular Podcasts

Crime Junkie

24/7 News: The Latest

Stuff You Should Know

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Women Talk Taxes (Part 1) | Jackie Cummings Koski | 148