Roth 401k

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Episode Transcript

(00:00):
All topics and securities mentioned on straightTalk from the House or for informational purposes
only, and should not be usedas investment advice. T Anton Investment House
does not offer tax or legal advice. Investments or investment strategies covered are not
a recommendation or solicitation to buy orsell. The security's past performance is not
a guarantee of future performance. Thisis straight talk from the houseman certified financial

(00:22):
planner, Tracy outon righty, you'reon thirteen ten WIBA. Tracy comes to
us from t Anton Investment House,a fee only fiduciary with offices right in
Middleton. The website t Anton InvestmentHouse dot com. That's t A N
t O N investment House dot com. Now the twelve number six O eight
five zero one fifteen forty nine.That's six so eight five zero one,

(00:45):
fifteen forty nine. Tracy, Howyou doing this week? I'm great,
Sean. How about you? I'mdoing really well and we're going to be
talking about Roth four oh one casetoday. And before we get rolling on
this, by the way, Igotta mention to folks brought up the website
t Anton Investment House dot com.It is a great resource, a lot
of great information about you and theteam. Of course everybody at TNTON Investment
else also a great opportunity to setup an aployment with Tracy right at the

(01:07):
website that's t a n t oN Investment House dot com. That's t
a n t o N Investment Housedot com. And again the number six
to eight five zero one fifteen fortynine at six eight five zero one fifteen
ft nine. So what exactly we'retalking about today and what brings this conversation
about, Well, today we're talkingabout Roth fro one k, and the

(01:27):
Roth fro one k actually isn't reallynew. It started in two thousand and
six. So when I looked itup today, I was surprised that eighty
eight percent of US companies offer Rothfor oh one k, and that sean
is about double what it was adecade ago. The thing that I was
really surprised about, though, wasthat only seventeen percent of employees take advantage

(01:52):
of Roth four one k per Vanguard. So you know the reason I wanted
to talk so much more about Rothfor one case and really just concentrated on
it is because I feel like it'ssuch a great opportunity and for so many
people, even the people that arein the middle tax bracket, should be

(02:12):
considering contributing to a ROTH for oneK. And of course, you know,
getting detailed information and getting with anadvisor is probably best, but I
really think that people are missing outon this opportunity. And again, the
reason the ROTH for one K isso appealing is it offers the benefits of
contributing after tax and having those dollarsgrow tax free and never never be tax

(02:38):
And this is just really attractive todaybecause tax brackets are historically on the lower
end and due to our increased taxour debt burden, you know, it's
very appealing to shelter money in thefuture because we just don't know where those
tax brackets are going to be.Are they going to be higher, and
of course you know throughout our lifetimethey can go higher, they can go

(03:00):
lower, and this is typically normal, right, But what I see coming
through my doors a lot, andeven people who are retiring today is they've
got a lot of money in pretax and nothing in wrath for one k,
or very little in the wrath.And so yes, we can look
at conversion and those options too,but the thing is is that I think

(03:23):
a hybrid solution, and again we'lltalk about this little later in the program.
Contributing to both if you're in thehigher tax bracket is also a nice
option to consider contributing both to regularforellen K and the WRATH forellen K.
But anyway, I just was reallysurprised to see these numbers. I was
like, Wow, so now youknow it's no longer that well my company

(03:46):
doesn't offer it, because eighty eightpercent of the US companies do now.
But it's just that people are stillnot taking advantage of the ROTH because,
let's face it, people go,well, I feel like I pay a
lot in taxes, and so thenthey don't, you know, they go,
oh, okay, well I'm justgoing to do the pretext or I
don't have time to change it orthink about it, or I don't know
what to do. Oh, it'sgoing to be a good one. We're

(04:08):
going to see that number pop upabove seventeen percent today after folks learn all
about the fantastic benefits of the posttax option with a RATH four oh one.
K and Tracy, I've got toask kind of the big picture stuff
too, is how is this changingfor when it comes to employees retirement plans,
what effect does this have? Well, in my opinion, you know,
the biggest Advan advantage is that theRATH four one K creates that flexibility

(04:31):
for investors in retirement for tax planning, and it really allows the investor to
create an after tax account giving themall kinds of flexibility and distribution planning.
And again why is that. It'sbecause you do not have to take out
a require minimum distribution under your wrathfor oh one k. It's not like
iras or pre tax money where youhave to take out a require minimum distribution

(04:57):
when you hit age seventy three orfor some folks that say seventy five.
Right. So you know, oneimportant advantage too is that many people,
because their joint income is above contributionlimits to roth iras, it's really their
only avenue that they have to getmoney into after tax accounts, unless of
course they want to do conversion andconversions a whole nother separate issue. Right,

(05:21):
but you know this is just sohuge. So many people cannot contribute
to the roth irara because they're considereda participant in a plan and their income
is too high and they are notallowed to contribute regular to a roth IRA,
So this gives them the whole flexibilityof being able to contribute to the

(05:43):
rath forum K and they'll have thatflexibility for tax planning in the future or
distribution planning. So it's really reallycool, And I just again try to
encourage people look into the option.Does your four O one K have it?
And does that make sense for youfor at least some of the dollars?
Interesting? And you mentioned roth conversions. Folks that want to listen back,

(06:03):
I know we've done a few showson just that topic. If you
want to listen back and on overt Anton Investmenthouse dot com. That's t
A N t O N Investmenthouse dotcom. Listen back to the podcast.
There you get to know Tracy inour team as well, and schedule appointment
right online te Anton Investmenthouse dot com. Els The podcast available on the iHeartRadio

(06:25):
app the telephone number six O eightfive zero one, fifteen forty nine at
six O eight five zero one fifteenforty nine Talking this week we certified financial
planner Tracy Anton talking Roth four ohone ks, some of the some of
the really really neat little features andbenefits of having that flexibility in that option.
And Tracy, let's talk about oneof the other advantages of the ROTH
four oh one K over For example, the roth IRA well one advantage is

(06:49):
the amount of money you can contributeto a ROTH four O one K in
twenty twenty three is twenty two thousand, five hundred and if you're age fifty
and older, you can contribute upto thirty thousand, which is way more
than the maximum and the Roth Iarray which is seven thousand. So just
the dollar amount alone is pretty huge, right, and so you'll be able

(07:11):
to contribute a lot more into thatRATH four O one K. Plus with
the recent law change, employers cannow also contribute to an employees RATH four
one K, making an even largercontribution to that ROTH four owen K.
Used to be that employees employers couldnot contribute to the RATH for one K
even if they wanted to. Nowthey can, so again, just really

(07:35):
neat that how much you can squirrelaway in after tax money if you desire
to. That is great to hear. And as we talk with certified financial
planner Tracy Anton, if you havequestions, don't forget listen close to the
program. Tracy also, of courselook for money management or portfolio management.
Tracy would love to get to knowYou'd love to talk with you, augatives.

(07:55):
Head on over to the website tAnton Investment House dot com. That's
t A N T O N investmentHouse dot com. Great website again to
learn more about Tracy and the team. Also, great opportunity there to schedule
appointment at a time, at adate that's convenient to you. Again the
website t Anton Investment House dot com. It's Alphen number six O eight five
zero one fifteen forty nine. That'ssix eight five zero one fifteen forty nine.

(08:18):
You're probably hearing all these great thingsand wondering, willow Roth four oh
one K will that work for me? Doesn't work for everyone? We'll get
the details from Tracy on that nextas Straight Talk from the House continues right
here on thirteen ten w IBA.This is straight Talk from the House Swissert
five financial planner Tracy Anton here onthirteen ten WIBA. Talking with Tracy this

(08:39):
week about that, about that Rothfour oh one K and some of the
great features and some of the greatflexibility and benefits of a Roth four oh
one K, don't forget us.We talked with Tracy. Tracy comes to
us from t Anton Investment House dotcom. The website t Anton Investment House.
The website is t Anton Investment Housedot com. The telephone number six
O eight five zero one fifteen fortynine. That's six or eight five zero

(09:03):
one fifteen forty nine. Had gotgreat information on the website as well as
an opportunity schedule appointment at t AntonInvestment House dot com. So, Tracy,
we were talking in that last segmentjust about Rath four old one ks
and people who I guarantee their earsand their eyes are perking up, going
wait, this sounds fantastic. AndI think the question that everyone has is
will a Rath four old one Kwork for everyone? Yeah, you know,

(09:26):
it's a tough call. So edSlots had put out a article and
we talked about it, I thinkit was last time or time before,
and saying that you know, everyevery single person should have this. And
then you know, there was adiscussion that I went to a financial planning
talk and you know, some peoplewere saying, well, does that make

(09:48):
sense if you're in the highest taxbracket. So I would say, you
know, I really think it's agreat alternative for most people, and it
might be for everyone just because ofthat flexibility actor that I consider. But
deciding how to distribute funds from intoa rath versus traditional four one ks,
it can be hard because it's gotsome gaswork. You're trying to calculate,

(10:11):
you know, where will you bein the future, you know, what
will your spending be, what willyour future taxable income which is probably the
biggest component here, and life expectancyand just some other factors consider. So
obviously the you know, doing afinancial plan really can help you make this
decision. But again, the rathfor one K, I think is best

(10:33):
for investors that think that in retirementtheir tax bracket will be higher than they
are now. So obviously for theyounger person where they are in a lower
bracket and expect higher wage increases inthe years to come, it's kind of
an old brainer. Where a carteris where you're, say you're in mid
career, it's more difficult to estimatewhere you'll be in retirement when you combine

(10:56):
your soul security and other potentially evenlike say a pension or your spouse has
one, and where will your assetsize be So again, the article I
read said it was like impossible toyou know, estimate mid career, But
I don't think so. I thinkwith really good financial planning software you can
get a good sense of relatively ifyour assets will be large, and therefore

(11:20):
instead of being in a lower taxbracket, you're in the same or higher
bracket. But again, I've reallyfound for a lot of people who have
pretty good incomes and have been diligentsavers, that you are most likely not
going to be in a lower taxbracket. Yeah, you might be the
same, you know, and that'sthat's assuming brackets never change, which you

(11:43):
know that's unlikely too. So againI get I would just I would just
think a hybrid is really a niceoption for most people. You know,
you think your toolbox and you canhave every tool in the world. If
you don't make use of them,you say, well, what's the what's
the point? Well, these aresome great options, and we talk about
flexibility and other other benefits of havinga ROTH four O one K and as

(12:05):
we talk with certified financial planner TracyAnton this morning, if you want to
learn more, don't forge. Youcan always listen back to the podcast at
t Anton investment House dot com.You can also list to previous shows and
get subscribed there as well. Thewebsite t Anton investment House dot com also
is a great opportunity for you ifyou are looking for money management or portfolio
management. I'll give you as outon over the side. Scroll down a

(12:26):
bit. You will see Tracy smilingface a little which at that pop says
let's talk from there. You canschedule that appointment right online or pick up
a phone called the office right inMiddleton six O eight five zero one,
fifteen forty nine at six O eightfive zero one fifteen forty nine and Tracy,
let's talk about that situation. That'sscenario. So let's just say you

(12:46):
are in the same tax bracket.What do you need to know there?
Yeah, so you end up inthe same tax bracket and retirement. So
if you're in the same bracket asyou are now, then it really doesn't
matter which vehicle you shows, whetheryou did a traditional four one K or
a rath for one K, becausein the end, you know, when
you look at the dollars after taxes, you're in the same position. You

(13:07):
have the same dollar amount. Again, however, in this case, I
would opt for contributing to the RATHfor one K because the added flexibility,
and typically tax brackets do change overtime, they go up, they go
down. I mean, think aboutin retirement. You might have thirty years
of retirement, so it's unlikely bracketswill be the same. So I also

(13:30):
think that it's such an advantage toyou as well as your heir is to
have tax free money growing at marketrates. So it's just wonderful to have
that flexibility throughout your life, andyou're creating that flexibility for your errors as
well. So here's an example,Sean. Let's say you want to take
the family on an expensive trip andthat year your age seventy five, and

(13:52):
your require minimum distribution is quite largebecause it's not just yours, it's your
spouses too, And you know you'rethinking to yourself, Okay, well I
could do this, but you knowI'm going to be in the highest bracket
here and that's forty five percent.Well, now if you had some RATH
money then you could take it fromthere. Doesn't add to your tax burden
that year, so it gives youagain some more distribution planning in retirement that

(14:16):
is amazing as a really important thingto consider as well, and you kind
of game this stuff out and planthis stuff out. We talk about having
options. That's some of the greatstuff. And having that conversation with someone
like Tracy of course makes it easyto do. Schedule at appointment at the
Anton Investment House head on over tAnton investment House dot com from their ex
appoyment at a time and a datethat's convenient to you. We've talked about

(14:37):
all the great things. Are theresome other benefits to a raw four oh
one K, Tracy, Well,because the money is coming out tax free,
it can be helpful during those yearsfor retirees that might be pushed into
higher tax brackets, so you know, just having again that flexibility of avoiding
having to pay taxes at higher brackets. And starting in twenty twenty four,

(15:00):
own k's will be exempt from distributionsat the i R s will still require
from traditional accounts, so again thismeans that ROTH accounts can be left fully
intact for the beneficiaries who also obviouslydon't have to pay taxes on it.
One important thing to note though,obviously if you are a beneficiary of a
roth ira, you have to takethe money out within ten years, so

(15:22):
it's no longer over your life expectancy. That happened with the Secure Act.
Really important stuff, really great features. Of course, as we talked with
Tracy of the ROTH four o Kand using that option, we're going to
see you our conversation with Tracy.Don't forget You can learn more online the
website t Anton investment House dot com. That's t A N T O N

(15:43):
investment House dot com. Great website, great resource, it's no Tracy and
the team. Also an opportunity rightthere online to schedule appointment at a time
and a date that's convenient to you. You can also always call the office
right in middle ten six eight fivezero one fifteen forty nine. That's six
eight five zero one fifteen. Fornow, we're gonna talk about and talk
to younger workers. Maybe you're oneof those, maybe you've got a kiddo

(16:07):
or a grand kid that's going tobe in that in that working world.
Some great advice from Tracy and someguidance as well when it comes to ROTH
four oh one ks. We'll alsotalk about doing both options, whether it's
a pre yor post tax, withthe details from Tracy on that next straight
Talk from the House continues right hereon thirteen ten WIBA. This is straight
talk from the House with certified financialPlanet Tracy Anton right here on thirteen ten

(16:32):
WIBA talking Roth four oh one ksthis week and some of the great benefits
of the flexibility and taking advantage ofthat option, and a lot of folks
we learned earlier it's available to alot of workers. You definitely want to
check that out. Speaking of checkingthings out, getting to know Tracy and
her team, they'd love to dojust that with you. All you gotta
do is head on over the websitete Anton Investment house dot com. You're

(16:53):
looking for money management or portfolio management. Tracy and the team would love to
get to know you. They'd loveto work with You. Can schedule a
point right at the website at atime in a date that's convenient to you,
or pick up phone call the officesix eight five zero one fifteen forty
nine. That's six O eight fivezero one fifteen forty nine. What about
for younger folks, Tracy, youngerworkers, could they plan can they plan

(17:14):
on a four oh one K,a ROTH four oh one K option or
what should they be thinking with this? Well one expert Julia Kagan says that
the millennials are more likely contribute toROTH for one K than Gen xers or
baby boomers, And that makes moresense because year after year more and ROTH
contributions are offered in these retirement plans, so it's like something new that they're

(17:37):
aware of. And also, youknow, ideal ROTH candidates are those who
predict their they will be in ahigher tax bracket when they're older. So,
as Kagan stated, younger workers withyears of raises and promotions will most
likely contribute to RATH roth ier raise. Interesting, what about if you're kind
of in that middle tax bracket,like the let's say the twenty two percent
bracket, what do folks there,what should there takeaway be when it comes

(18:00):
to raw four O one case,Tracy, I would typically recommend splitting your
dollars between the RATH four O oneK and the regular traditional four O one
K. I just start talked toa woman this morning who was an engineer,
and so was her husband, andthey were in the twenty two almost
the twenty four percent tax bracket,and she was in her early fifties,

(18:22):
but at this point she had contributedlike ten percent a year, but always
to her traditional four O one K, So she has about twelve to fifteen
years of working life yet. AndI think it's just really a good idea
to have some of those dollars aftertax from retirement and not to have one
hundred percent in pre tax, becauseonce you start seeing those numbers as they

(18:44):
accumulate in the next decades for them, the numbers are quite large, and
that require minimum distribution is sometimes iseye popping. I mean, people are
like, wow, I didn't expectmy requirementimum distribution to be over one hundred
thousand, you know, so peopleare surprised, and again I think it
gives them just more flexibility and retirementyears for tax planning. And also again

(19:07):
we'll give their children ability to receivea tax free account at some point.
Right. So in this person's case, I had suggested fifty percent pre tax
and fifty percent RATH for all onek. You obviously can split it as
you know, any percentage that youwant. If it's too hard cash flow
wise, maybe you want to stilldo more to the regular traditional followen K.

(19:30):
But again in this case, becauseshe had no dollars that were after
tax, you know, we wantto get going we want to take this
next ten to twelve years and tryto build up a significant RATH contribution.
So I'd say just the one thingto be aware of though, is that
by doing this after tax contribution inessence, you're really contributing more. You're

(19:51):
right, so there's more you're lesscash flow. You're contributing more to following
case because you will have less cashand because you're paying the t max is
now on that RATH borrowing k.She said she had no problem with that.
She has plenty of cash flow.I estimated the dollar amount that they
were letting go off and it wassignificant. It was like eighteen hundred dollars

(20:11):
because you have to consider state taxtoo. But it was just interesting to
have the conversation. She said,I have plenty of cash and it's not
a problem. And she loved theidea of having a balance in retirement.
It's always, if nothing else,a great exercise and a great conversation.
As we talked with certified financial plannerTracy Anton right here on thirteen ten WIBA,

(20:32):
So we talked about younger folks justgetting into the working world and some
of the benefits and features and someof the considerations to make when it comes
to a ROTH four row one k. We talked about folks kind of in
those middle tax brackets. What aboutfolks on the higher end when it comes
to those higher tax brackets. Whatshould they be thinking about or how should
they be looking at roth fo rolone case? Tracy, Yeah, in
that case, it may be bestto contribute the max to a pre tax

(20:56):
because you're receiving a thirty seven percenttax bracket on federal. In addition,
you're taking you're receiving a state taxdeduction two. So total would be probably
closer to forty five percent. Andthat is a really a hard number to
give up, right, saving fortyfive percent of your money, it's almost
like fifty percent. But one thingyou could look to doing, say that

(21:18):
you do all pre tax, butyou retire early on their earlier side,
before you start taking Social Security.You could look at converting some of the
four oh one k to a rothiray and paying the taxes once you're no
longer working, because your income wouldbe lower. And perhaps you know,
you set up a system where betweennow between early retirement and when you finally

(21:42):
do take so security. Maybe that'smore sixty five sixty seven and you retire
at sixty and then every year youdo some conversion to get to boost up
your wrath four O one K.So again, if you're in a lower
bracket, you could look to conversionevery year before you have that additional income
of sol security and or pension.And you know, many people sean live

(22:06):
on a brokerage account for the firstyears of early retirement to keep their income
tax low. You know, thisis an opportunity for conversion. The only
thing that kind of puts a bitof a wrench in it is if you're
also trying to get a subsidy forhealthcare. So in that case, people
sometimes opt for the subsidy instead ofdoing conversion because conversion obviously increases your income

(22:29):
and might not qualify for the subsidy. Really important nuance there. And finally,
Tracy, before we wrap up thisweek, and a lot of folks
thinking what about both? What shouldpeople are out? Should people kind of
see this? You know, Ithink about maybe hedging your bets and putting
money in both. What's kind ofthe guidance there? Yeah, I mean
I'm for that. So, nomatter what your bracket is, this seems
to make the most sense to mebecause many people who save their whole lives

(22:53):
will never really be in a lowbracket and retirement and when you start adding
up to Social Security is if you'remarried a large require minimum distributions. If
you've been diligent saving savers with goodincome, you know, the tax bracket
will not likely be lower, It'lleither be the same or higher. And
the Rath four one k again givesyou that flexibility. Your airs receive it

(23:15):
tax free. And the reality isis if you want to max your maximize
your wealth through a retirement contribution,Rath fo ol one k allows you,
in essence to grow your wealth morebecause it's the same dollar amount you're contributing,
whether it's a pre tax twenty two, five hundred or thirty thousand if
you can, if you're fifty yearolder, you know, but it's growing

(23:36):
after tax. So which one isgoing to give you more wealth? Well,
it's actually the Rath fo ol oneK. So I opt for both
usually because I think it's nice tohave that all those benefits. It's a
pretty amazing opportunity. As we startedthis conversation off this week, it's very
much so available out there. Makesure if you have this option, you're

(23:57):
talking with your with your employer andof course making that plan. Tracy would
love to help you. If you'relooking for guys for looking for money management
portfolio management course, Tracy and herteam at t Anton Investment House would love
to talk with you. Yead onover the website t Anton Investmenthouse dot com.
That's t A N t O Ninvestment House dot com. From the
website, you can schedule appointment ata time and a date that's convenient to

(24:19):
you. Again, the website tAnton Investment House dot com and the telephone
number six O eight five zero onefifteen forty nine. That's six O eight
five zero one, fifteen forty nine. Tracy, it's always chatting with you.
You enjoy this most beautiful day.Thanks Sean YouTube