Haven Financial Group Radio - 10/5/25

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Episode Transcript

Speaker 1 (00:00):
You worked hard for your money, but do you know
how to make it work hard for you. You need
a team with experience, vigilance, and a strategy to help
you live the retirement you deserve. Find your financial safe
haven with Haven Financial Group. Today, you're listening to the
new and improved Haven Financial Group Radio Show, where we
bring you comprehensive weekly financial wisdom from the professionals. It's

(00:23):
all about helping you solve retirement problems so you can
make your nest egg last. Your tune to the Haven
Financial Group Radio Show with your host Larry Kolvig and
Kim Karrigan your guides to weekly retirement confidence. If you're
interested in protecting and growing what you have, let us
be your financial safe haven. The full nines are always

(00:43):
open at six point two five four eighty four hundred.
Now get your financial questions ready because the Haven Financial
Group Radio Show starts now.

Speaker 2 (00:54):
Good morning, and once again welcome to the Haven Financial
Group Radio Show. I'm Larry Kolvig, founder and c of
the Haven Financial Group. Lance Lurston, our CPA on staff
at Haven, is with us today.

Speaker 3 (01:05):
Kim.

Speaker 4 (01:05):
We're going to talk a lot about taxes.

Speaker 2 (01:08):
Yep, Brase yourself for a tax discussion on this show.

Speaker 3 (01:11):
Kim.

Speaker 5 (01:12):
Well, nobody really likes to talk about taxes, Larry, except Lance.
So good. It's a good thing we've got Lance with
us today and it's an important topic, that is for certain.
And here we are in the fourth quarter of twenty
twenty five. Wow, where did twenty twenty five go? That's
hard to believe. So you know, it is that time
of year where we all start to think about what

(01:34):
we need to do towards the end of the year
when it comes to taxes. Let's take a look at
what we're going to cover in today's show. A first off,
Flant's great to have you with us. Like always, we
are going to talk about retirement tax strategies. We'll start
with taxation of your Social Security which is such an
important topic to everyone who's listening to us who is

(01:54):
in those retirement years understanding tax treatment of four to
oh one case as well, Iras, we're going to talk
about how is your home sale tax? And finally we'll
wrap up today with tech strategies that come with opportunities
and of course also come with risks. So a great
show today, Larry, I'm looking forward to it.

Speaker 2 (02:16):
Yeah, it is a discussion that again, nobody wants to
have a discussion on taxes, but we have said many
times we are very much forward thinking tax planners at
Haven Financial Group because we're dealing with retirement planning and
those that are in retirement and for many folks, taxes
can be affected more than any other time in their life,

(02:36):
so it's important to address it to minimize taxes where
we can. And we're going to have a lot of
discussion here in these four segments.

Speaker 5 (02:43):
Lance, am I right when I'm saying here, we come
into the fourth quarter and this is a really important
tax time, yes, Kam.

Speaker 6 (02:51):
So fourth quarter is typically where we do a lot
of the planning and year end moves. We have three
quarters in the book, so we know where we're sitting at.
It's pretty easy to project out this last quarter to
know where we're going to be at at the end
of the year and see if there's any opportunities that
we can do any type of money moves, whether it's

(03:13):
doing roth conversions, if we need to pay a little
bit more in so we don't hit those underpayment penalties.
This is the time that we start trying to figure
all those questions out before we.

Speaker 5 (03:25):
Get started talking about the actual topics. Larry, I'm sure
there's some people who are listening right now, going, well,
I don't really need to listen to this show because
I have a tax guy, and I'll be dropping my
stuff off on the fifteenth of April and I'll see
him on the twenty third with my return or whatever
it is.

Speaker 3 (03:43):
You know.

Speaker 5 (03:45):
You don't see it that way, and I know you
said your forward thinkers, but will you just elaborate on
that just a little bit more.

Speaker 2 (03:52):
Yes, because what we hear often it's just the way
that things are these days is well, we don't even
talk to or see our tax prepare now. Tax preparer
and tax planning are very different. So it's become a
drop off, pickup, get the taxes prepared here, I'll cut
you a check, and there's no tax discussions whatsoever. And
that may lead to gripes like, oh my goodness, every

(04:15):
year I owe money, I just don't know why. And
because there's no discussion, there's no nothing ever gets fixed.
And so by discussing these things, as Lance will mention
throughout the course of the year, and you adhere to
the tax plan well, tax preparation is easy. There's no surprises,
and believe it or not, you can actually lead Lance's

(04:36):
office with a smile on your face because bingo, it's
exactly what you thought was.

Speaker 4 (04:41):
Going to happen.

Speaker 5 (04:42):
Terrific. All right. So, having said that, let's take a
look at some of the strategies that you might need
to think about. Maybe you've never thought about, maybe your
tax preparer has never thought about it. That may save
you some money or make your life a lot better.
Let's start with this idea of taxation and social security, Lance.
I think a lot of people think that social Security

(05:04):
just comes and they deposit that check and Uncle Sam
doesn't get any part of that.

Speaker 6 (05:08):
Well, Kim, for the most part, there's a lot of
people out there that that is actually true, and that
is because they are just living on their social Security
and that's all they have. And so in cases like that,
it actually it is true that they just get their
social Security check put in the bank and Uncle Sam
doesn't get anything out of that. But more and more,

(05:29):
what we're seeing is that people have saved outside of
social Security so that they have their four one K plans,
that they have other income streams that are coming in.
Whether it may be from a rental property or a
family farm, or something else that's going on, and all
this other income that's going to come into their household,

(05:51):
it's going to affect how their social security is taxed.

Speaker 3 (05:55):
One of the things that for social security that people.

Speaker 6 (05:59):
Don't know about is that that up to eighty five
percent of your benefit is going to be taxable based
upon how much other income you have.

Speaker 3 (06:09):
And so when you don't have.

Speaker 6 (06:10):
A lot of other income, not much of that socialecurity
is taxed.

Speaker 3 (06:14):
But when you do have a.

Speaker 6 (06:15):
Lot of other income, whether it is from that four
toh one k or an ira doing a Roth conversion,
then we have to deal with how much that social
security is going to be taxed.

Speaker 5 (06:26):
Okay, so let's talk about that income threshold.

Speaker 6 (06:30):
So there is a calculation that we do, and so
the way that social security works at is we either
take eighty five percent of your benefit or this calculation
where we take half of the benefit plus all your
other income to get a number we call provisional income.
Then we use that number and we put it on

(06:50):
provisional income brackets there which are different than the tax brackets.
So for married filing jointly, those brackets are at thirty
two thousand and forty four thousand up to the thirty
two thousand, All that is at zero between thirty two
and forty four is fifty percent. Anything that's above that
forty four thousand is eighty five percent.

Speaker 3 (07:13):
And then we.

Speaker 6 (07:14):
Sum up all those numbers there to figure out how
much is that number for provisional income of taxable and
compare that to that eighty five percent threshold of your
gross benefits, and we take the lesser of Okay.

Speaker 5 (07:27):
What if you're drawing social Security from a spouse that
you've lost, or you know, if it's you're a survivor,
or you know, does is that tax the same way?

Speaker 6 (07:40):
It is?

Speaker 5 (07:41):
Okay?

Speaker 6 (07:42):
So we have people who will get Social Security in
a variety of different ways. Whether you're collected on your
own benefit for your own retirement, you can be collecting
off of a x spouse, you can claim it off
of deceased spouse. Children actually can receive it when they're
miners from their parents, and it is all going to

(08:05):
be taxed the same way. We'll pick on the kids
because it's really easy, and most of them don't even
have a job because they're miners, so their calculation. What
they look at is how much other taxble income they have. Well,
it's zero, and so because of that, when you look
at their taxable social security, it's going to be very
very minimal.

Speaker 5 (08:24):
Okay, all right, the way that you're filing your taxes,
So if you're single and you're drawing social Security, does
that make any difference?

Speaker 3 (08:34):
It does as well.

Speaker 6 (08:36):
So earlier I said that for the Mary Finding jointly,
the provisional income brackets were at thirty two and forty four.
For singles, it's actually a little bit lower. The first
threshold is at twenty five and that second threshold is
at thirty four. So if you have a married couple,
they typically will be bringing in about seventy eighty thousand

(08:56):
dollars on average for hash coming in to pay for
all their bills. Well, if most had social Security, then
most then that's not.

Speaker 3 (09:05):
Going to be that taxable.

Speaker 6 (09:06):
Whereas if you have a single person in order to
pay for the same things, maybe maybe they don't need
eighty thousand, but they definitely need probably about sixty. Well,
they don't have quite the same amount of Social Security
comes in, so they have to have more outside sources,
which then is going to make their social Security more
taxable than they would for their married counterparts.

Speaker 5 (09:28):
Are there ways to minimize these taxes though? The strategies right.

Speaker 3 (09:33):
There are strategies.

Speaker 6 (09:35):
The one, the biggest one is we want to live
in a state that actually doesn't tax social Security. Minnesota
took them some great strides a couple of years ago,
where beforehand they just had a very small subtraction on
the Minnesota return that if it was taxable on the
Fed side, Minnesota said we're taxing it as well, minus

(09:57):
maybe about five thousand bucks. Well, then Minnesota a couple
of years ago changed and it says, hey, you know what,
for your single people, if your adjusted gross income was
under seventy eight thousand dollars, no matter how much taxable
social Security that you had, just take it all away.
And so Minnesota GA made great strides to help reduce

(10:19):
the tax ability of the Social Security at the state level. Unfortunately,
for the Feds, it is what it is right there.
They what we talked about right now. The buzzwords out
there is with that big beautiful bill, Oh, the politicians
are now made our social Security not taxable.

Speaker 3 (10:38):
Well, unfortunately that's not quite true.

Speaker 6 (10:42):
What they did was actually gave us an extra deduction
to help relieve some of the tax ability of the
Social Security but the same calculations that we have done
for the last many years, it's still the same thing.
So if it was if you had the same situation
that you did this year did last year, you can
bet that you're don't have the same amount of tactual

(11:03):
social Security. It's just now you're going to have an
extra deduction which is supposed to be used against that
upsetting it.

Speaker 2 (11:11):
So anyway, I think a good takeaway from this segment
is if you have questions on taxation of Social Security,
which is the real deal, or maybe you don't know
when to take social Security or does it make sense,
It's precisely why we teach a social Security and tax
class several every month in various areas of the libraries

(11:32):
community centers. You can go to our Havenfinancialgroup dot com
and see all these classes. We're big into the education
and social security is one decision that shouldn't be taken lightly.
It's the biggest income stream for retired Americans, and a
lot of times people just turn it on. At sixty two,
almost seventy percent of Americans actually and one to two
way till age seventy What is the right age for you?

(11:56):
Come on in and visit with us, or simply give
us a call and we can have that conversation.

Speaker 4 (12:00):
I think it'd be very beneficial.

Speaker 5 (12:02):
Absolutely. Six one, two, five zero for eighty four hundred
is the number. That's how you set up a meeting
with the folks at Haven Financial Group. Sit down to
talk to them about your social security, whether it's about
the taxation of your social security or as Larry just mentioned,
what would be most beneficial for you when it comes
to drawing your social security. You can also sit down
and talk to them about a variety of retirement issues.

(12:25):
We're going to continue, however, today the conversation about taxes.
When we come back, we're going to talk about understanding
tax treatment a four oh one KSE and the iras
that you own. That's coming up next right here on
the Haven Financial Group Radio Show.

Speaker 3 (12:40):
Don't go too far.

Speaker 1 (12:41):
We're gathering more important insights and retirement pase gonent The
Haven Financial Group Radio Show will be right back. Stick around.
You've got questions, We've got answers. Your tune to the
Haven Financial Group Radio Show with your host Larry Kolvig
and Kim Karrigan no the show.

Speaker 4 (13:01):
Welcome back listeners.

Speaker 2 (13:03):
My name is Larry Kalbig, founder and CEO of the
Haven Financier Group, and you're listening to the Haven Financial
Group Radio show where every week we talk about retirement,
all the retirement topics that are so very important. I
call them the retirement puzzle pieces. Do you have all
the pieces? Is your puzzle missing pieces? And are these
pieces being coordinated in a way that you're maximizing the opportunities,

(13:26):
minimizing taxes and a variety of other things that sometimes
definitely go unnoticed, and it's why we're having conversations about
them so you can get ahead of the game a
little bit before you get there.

Speaker 5 (13:39):
Lance Larsen, a CPA at Haven Financial Group, is our
guest today and we're talking about taxes. We just talked
a bit about social Security and taxation associated with that,
and obviously Larry mentioned as we left the last segment
that about seventy percent of Americans rely on Social Security

(14:01):
as the main income when they're in retirement. But another,
of course source of income for retirees are there four
one ks and their iras. So let's talk about lance
how those are treated when it comes to the irs.

Speaker 3 (14:18):
Yeah, kam.

Speaker 6 (14:18):
So first thing to understand with four one k's iras,
what these things are is that they are rules that
allow employers or the individual to set.

Speaker 3 (14:30):
Up a retirement account.

Speaker 6 (14:32):
So four one K is set up specifically for like
corporates for corporations there then you can have four h
three b's, four fifty seven b's all these things. What
they are are just code sections that allow us to
contribute money into a retirement account, and specifically with its
retirement account, is that these rules allow us to take

(14:54):
a deduction up front for all the contributions we make
into these plans. So when you look at the amount
of money that's in your four to one K in
the four to three B in the IRA, all these
traditional ones, they are deferred tax deferred accounts, so when

(15:14):
we finally take the money out, that is when we
have to pay the taxes on them. Recently, they have
been making a push more for a WROTH account under
the same code section.

Speaker 3 (15:26):
So you can either have.

Speaker 6 (15:27):
The traditional where we get the deduction for it upfront,
or you can do it as a roth where we
don't get the deduction for it, but then we get
all the growth tax free. Now there's caveats on each
side of hey, you got to do this, you have
to wait for this period of time, So there's rules
that are associated with them. But that's the biggest question

(15:48):
I've been hearing recently is what's the difference between ROTH
and four to one k ROTH versus traditional IRA. What's
all these differences there? That's kind of where we sit at.

Speaker 5 (16:01):
Sure, it seems that this is where you really need
a partner making some tax decisions. How to draw this
money off of these accounts and not be hit with
a gigantic bill. So maybe you can walk us through
how you advise some of your clients to benefit from
their money but not owe Uncle Sam such big chunks

(16:24):
at one time.

Speaker 6 (16:26):
So one of the biggest things that we look at, Kim,
is how much money do we need to have and
then where do we pull things from. We've had come
across lots of clients that come in there and just
that says, hey, I need to pull out one hundred
thousand dollars, and they just do it.

Speaker 3 (16:44):
They don't.

Speaker 6 (16:44):
They just take it out of their IRA and they're
just like, hey, I just I'll jump out to pay taxes. Well,
depending on how much income that you're bringing in, you can.

Speaker 3 (16:53):
Jump tax brackets.

Speaker 6 (16:55):
There's a big jump going from a twelve percent bracket
to a twenty two percent bracket. There's another huge jump
going from a twenty four percent bracket to the thirty
two percent bracket. So do we really need to take
that much money out right now?

Speaker 1 (17:11):
Is that?

Speaker 6 (17:11):
Could we possibly delay that, especially now in fourth quarter?
Could you wait another three months until January to pull
out more money? We get a fresh new start as
of January first. So these are the questions that we
kind of look at, is the need versus how much
taxes are going to cost you.

Speaker 5 (17:30):
Then there's always the issue of required minimum distribution, which
hits at a certain age, and then you do have
to start drawing this money taxes.

Speaker 3 (17:40):
Or not correct.

Speaker 6 (17:41):
So, again, as we talked about with these traditional accounts,
this is all.

Speaker 3 (17:46):
Tax deferred money.

Speaker 6 (17:48):
And after a while, Uncle Sam has been very patient
with us, waiting for us to give them their tax
revenue on this income that we've earned. And so now
they say, oh, you have hit a certain age, which
right now is seventy three. I will go up to
seventy five here in twenty thirty three, so there's a
little bit of time until that, but you hit this

(18:11):
required minimum distribution age, and then there's a calculation that
has to be done every year based upon how old
you are, the actual table of when the IRS thinks
that you're going to leave this world, and then how
much money you have in those accounts.

Speaker 5 (18:27):
And that's not something that you can avoid.

Speaker 3 (18:30):
Nope.

Speaker 6 (18:30):
The only way you will avoid that, which isn't really
avoiding it, is by giving Uncle Sam at least twenty
five percent through a penalty because you did not take that,
which is an absolutely horrible thing to do. So we'd
rather you take that required minimum distribution even if you
don't need it. There are other things that we can

(18:52):
do with that, such as qualified charitable distributions.

Speaker 3 (18:57):
You can take that.

Speaker 6 (18:58):
I know Larry likes to tell the story about one
client who said, Hey, I don't need to have this money,
and Larry said, well, why don't you take your wife
on a trip. And then two or three years later
she came back said, Larry, you know what, he finally
took me on that trip.

Speaker 4 (19:15):
It worked.

Speaker 2 (19:15):
I just planted the seed, Kim, and it worked three
years later. So hey, sometimes we can assist in a
variety of different ways. But I want to point out
being we're talking on four to one k's rmds et cetera.

Speaker 4 (19:26):
For we do a lot of four to one k rollovers.

Speaker 2 (19:29):
So if you have a lot of orphan four one k's,
I had somebody in this week that had literally the
five to four to oh one k's. Was a consultant
jumped around, or maybe you're just retired. There's a variety
of reasons why you want to roll that into an IRA.
There's different rules with iras than employer plans. You have
better investment options, more options, a whole bunch of reasons

(19:51):
on rollovers. We were talking about income distribution taxes. They
all go together, and when people retire, you just entered
a different season of life. You were putting it away
in the four to one k. Now you have to
draw money and you have to create your own paycheck.
Where is it going to be drawn from. You want
to look at all your options and you want to

(20:14):
be as tax efficient as possible.

Speaker 4 (20:16):
We're entering the fourth quarter this week.

Speaker 2 (20:19):
This is a timeline where this quarter we look at
we have a conversation with everybody about is a roth
conversion a viable. Does it make sense? For some it doesn't,
but I'd rather have it not makes sense. Then it
makes sense, and then they not do anything about it.
And then maybe it draw from a non qualified brokerage

(20:39):
account with zero capital gains tax.

Speaker 4 (20:41):
Maybe that's the place to draw from.

Speaker 2 (20:44):
And also the timelines with rmds, it's rm ds have
to be the end of the year. We don't wait
till the end of the year. Our deadline is December first.
There's no guarantee that things get processed. If you wait
till the last second, maybe you would.

Speaker 4 (20:58):
Inherit it in IRA. Lost somebody recently.

Speaker 2 (21:01):
Just this week, I was with a sister and a
brother that law of one of my clients passed away
and I needed to help them with the paperwork to
inherit the IRA that mom left for them. Those also
have to have r and ds. So you don't want
to miss these timelines. You don't want to miss these opportunities.
You don't want to accrew any penalties for missing these

(21:22):
timelines as well. That's where a partner you can lean on.
That way, it makes all and it makes all the
sense in the world.

Speaker 5 (21:29):
Sure, absolutely, Yeah, you don't want to miss those because,
as Lance just told us, that twenty five percent penalty
is not anything that you want to play and pay,
and that's up and above the taxes that you're going
to have to pay once you draw that money out.
Let me ask you, guys, you know we're seeing constant
changes in the tax laws iras four oh one k's roths.

(21:52):
Will these be affected in the near future by any
of the changes that might be on the table right.

Speaker 6 (21:56):
Now, not really the coach sections that are sut for
these retirements. I'm not a political analyst by any stretch
of the imagination, but in my viewpoint, it just seems
like it would be political suicide for any of these
politicians to go through and try to monkey around with
all these tax laws to say, oh, you.

Speaker 3 (22:17):
Can no longer do a four one K.

Speaker 6 (22:19):
In fact, it's actually quite the opposite of there. We
saw in the big beautiful builders things that they're calling
the Trump accounts, where for children being born right now,
they're going to open up an account and the government's
going to give them like a thousand or two thousand
bucks of money to start a retirement account for these

(22:40):
new kids. So as far as changing the code sections,
for them. No, there's nothing that should happen that way.
If anything that would change in the future is just
going to be.

Speaker 3 (22:53):
The tax rates.

Speaker 6 (22:54):
That's where right now we have made the ten to
twelve of twenty two percent that we're used to for
the past eight years semi permanent. But again, as soon
as we get a new administration, we get the House
and send it a different control than that one, they
can change those tax rates and probably bring them back

(23:15):
up to what they historically have been at that ten
fifteen to twenty five rates.

Speaker 5 (23:21):
As Larson is our guest, he's a CPA with even
financial group. We're talking about taxes today and how they
relate to retirement. If you have questions about taxes, if
you have questions about retirement, these are the folks you
want to speak to. All I have to do is
pick up the phone. Call six' one two five zero
four eight four zero, zero tell them you heard us

(23:42):
here on the. Radio you'd like to come. In As
larry has said many many times and has repeated already this,
morning you, know the fourth quarter is a great time
to sit down and do some tax planning for the next.
Year you don't want to just wait and then wish
that you had made. Changes this is the time to
start planning and. Talking six one two five zero four

(24:05):
eight four zero. Zero coming up, next how is your home? Sale?
Taxt this is The Haven Financial Group Radio.

Speaker 1 (24:13):
Show ready to find your financial safe. Haven your dream
retirement is in. Reach don't go. Away The Haven Financial
Group Radio show will be right. Back are you worried
that your financial strategy might be missing, Something, well you're
in the right. Place Larry kolvig is back and ready

(24:33):
to help you find your financial safe.

Speaker 2 (24:35):
Haven welcome back to The Haven Financial Group Radio. Show
I'm Larry, kulvig founder AND ceo of The Haven Financial,
group on With Lance lurs at OUR cpa on staff
celebrating our ten year. ANNIVERSARY i want to point that,
out our ten year, anniversary and you know we're big into.
Education if you're interested in any retirement, classes go To
havenfinancialgroup dot com see all the classes we're teaching six

(24:59):
or call us at six, one, two, five four eighty four.
Hundred we'll tell you those. Classes and while we do
them In Dakota County, tech different, colleges community, centers and
we love Our Education CENTER. Cam i'm telling you they
have the fraud classes that we had with the local police.

Speaker 4 (25:15):
Department what a.

Speaker 2 (25:16):
Hit and now we're having medicare. Classes big changes In,
medicare and again We're isabella And glenn are very busy
learning all about the changes in that. Area and, UH
i Think Lance larson actually is actually going to teach
the big beautiful bill updates and their education. Center so,

(25:37):
again really beginto. Education you can never stop learning because
just when you stop, learning you get left in the.

Speaker 5 (25:42):
Dust that is for. Certain congratulations on the ten years
and thank, YOU i hope twenty, five thirty forty more
for that's. True and everybody there at Hayeen Financial, group
we're talking about taxes this. Morning we want to talk
about how your home is taxed if you sell. IT
a lot of retirees decide it's time to. Downsize they

(26:02):
want to get out of that big house that maybe
they raised a family and maybe they want to move
to another state and it's time to get out of.
It and there certainly can be some repercussions in times
when it is more advantageous to sell than, others especially
when we're talking about. Taxes so let's talk here With.
Lance if you're got a retiree and they come in

(26:24):
and they, say, listen we've been living in this big
house and it's time to get out of this darn,
thing and we're thinking about. Selling we'd like to see
some proceeds from it because obviously we've owned it for
all these years and this was one of our biggest.
Investments what do you warn them? About what do you
talk to them? About what are the steps they need
to start to.

Speaker 6 (26:44):
Take, So, kim the first thing we need to understand
is the house that we're.

Speaker 3 (26:49):
Selling what house is?

Speaker 6 (26:50):
It people come here and they say most of the
time it's their primary residence that they've been but there
are times people come in and, say, hey we want
to sell this rental property that we've, had or we're
going to sell our primary residence and then go live
in our rental. Property lots of different ways of going.
On so we just need to understand what we're. Selling

(27:11):
but for most people that we're looking to downsize our,
house it has been our primary residence for, many many,
Years and SO i kind of smile at this when
people come to ask me because they have this big
fear that they're going to owe a lot of taxes
on selling their primary residence because they know about these capital.

(27:32):
Gains in capital, gains to put it very, simply is
the appreciation that you have on an. Asset so you
bought it when it was worth very, little and now
you're going to sell it when it's worth a lot.
More that appreciation is the capital. Game and typically our
long term capital gains are going to be taxed at

(27:54):
fifteen percent on THE fed. Side, Unfortunately minnesota doesn't give
us a break and every dollars, Dollars so depending on
what bracket you're, In i'm usually going to be six
point eight or seven point eighty. Five if you have
a lot of, income it can actually be the nine
point eighty five percent on. That so they people come
in and just like how bad AM i going to get?

Speaker 3 (28:16):
Hit and so THEN i start the.

Speaker 6 (28:18):
Discussion and the first QUESTION i, Asked, hey has this
been your primary residence for at least two out of
the last five? Years and THEN i get a strange
look AND, i, well, Yeah, lance we've been living there
for the last Thirty, okay that's, Good so at least
two out of the last five, years because that's one
of the rules we. Have and THEN i start asking
some ballpark, Questions, well what do you think you're going

(28:38):
to sell it? For and how much did you buy it?
For and have you made some improvements to the house
over the, Years and so we go through some numbers
and for we calculate out what that appreciation. Is and
THEN i get to, say, well for a, married finally jointly,
couple because it has been your primary residence for two

(28:59):
out of the last five, years we get to use
the primary home, exclusion which means we can exclude up
to five hundred thousand dollars of capital. Gains AND i
just leave it there and watch the shock look on
the client's face and, right, wait what, like, yeah so
we just figured out the numbers that you bought your
house for like three hundred, Thousand now it's worth six point.

(29:20):
Fifty you've made six fifty to one hundred thousand dollars of,
Improvements so we have a capital gain of somewhere between
probably two to three hundred thousand. Dollars, well that's underneath
five hundred thousand, dollars and so we get to exclude
the whole. Thing they think about a little bit, more
and then they get to the realization that that means

(29:42):
that they're going to be able to walk away with
all their proceeds and not have to Pay Uncle sam, anything, right.

Speaker 5 (29:48):
Right which has got to be one of the happiest
days for a whole lot of, People no two ways about.
That let's say that unfortunately that's not the case for,
you that you cannot use that the primary residence. Exemption
so what happens then let's say you're.

Speaker 6 (30:07):
So a lot of times when if you're over, it
it's just the capital gain is going to be on
anything above and beyond that, exclusion and we can look
at other ways we can try to reduce. It we
go through those ballpark numbers they gave, us, say are
you sure that's all the improvements you? Made so for
somebody who's been living in a house for thirty, YEARS

(30:28):
i guarantee you that they've had to replace a, roof
they've probably replaced sighting how many times did they've replaced.

Speaker 3 (30:34):
The, carpet, cabinets did they do a kitchen?

Speaker 6 (30:37):
Remodel and when people start actually really taking a deep
dive into what they've done to the, house they realize
that they've put a lot more into.

Speaker 3 (30:45):
The house than they actually thought.

Speaker 6 (30:46):
About wouldn't worry too much about how much you spent
on that, one because if you don't have the, records
there are other alternative ways to come up with a
number to represent what you. Did it is most important
to know what you did and about when you did.
It so if it was twenty years ago that you

(31:07):
did that kitchen, remodel hey do you know how much
that check was for? It, nope that those records are probably. Gone,
well there are ways we go about doing it and,
say well was it going to cost? Today let's use
the consumer price index and say today's dollars what were
they twenty years? Ago and, say if it's going to
cost you eighty thousand, today, well it probably only costs

(31:29):
you about thirty thousand dollars at that point based upon
the consumer price. Index so again there's ways around to
try to figure out these, numbers and so we look at.
That then we also get to take any of the selling.
Expenses so nobody's going to go into closing and, say,
Hey i'm going to sell my house for six hundred
thousand dollars and think they're going to walk away with

(31:50):
six hundred. Thousand we know that there's the title company
is going to take their. Fees we have the government
recording charges to change the titles out. There we probably
used the realists an agent to list, it.

Speaker 3 (32:02):
And so you have to pay the.

Speaker 6 (32:03):
Commissions all these excelling expenses also help reduce that capital.
Gain so we look at as many things we possibly
can to help reduce that one to try to get
us underneath that that exclusion. Amount but if we have
a place that is not our primary, residence let's go
back to those rental. Properties so, unfortunately there is no

(32:28):
way that we can avoid the capital gains with that primary.
Exclusion if you're going to sell the, place we have
to figure out the sale, price we have to have
all the improvements and that capital, gain and it is
what it. Is, however if you just want to get
out of this particular house that you know that we're

(32:49):
renting here In, minnesota and you're going to move to
a different state and you just want to keep having
a rental, income well sell The minnesota. Place let's buy
a new place in the state that you're going to move.
To there's this opportunity that they call a ten thirty one,
exchange and we have to do it correctly to make

(33:10):
sure that we're not getting any of the proceeds out of,
it that all the money that we take out of
The minnesota place we are going to use to buy
a new rental property wherever we're.

Speaker 3 (33:22):
At there's a few more.

Speaker 6 (33:25):
Rules so if this sounds anything like that appeals to,
you make sure you're working with somebody who understands these,
rules because, unfortunately if you don't follow them one hundred
percent by the, book you can invalidate yourself and get
stuck with a huge tax.

Speaker 5 (33:41):
Bill, larry how about a personal story about somebody who
was selling and didn't know that these were the kinds
of regulations out.

Speaker 2 (33:50):
There, well we hear about it all the, time just
because there's very little tax planning done and they just
go about doing it and then they get hit with
a big tax. Bill All the number one thing that we,
hear because we are speaking a lot to those that
are getting close to, retirement maybe getting a little bit,
older is, that, man our knees are really hurting and

(34:10):
we need to move to one level, living one level.
Living we hear that all the time because those steps
we just are not getting up and down and it's not.
Safe so that may be you so whether you know
your home is where your heart is or the other way.
Around if you're expecting to sell in the near, future
some sort of home, sale rental, sale whatever that might.
Be you, know there's more that goes in that. Decision you,

(34:33):
know what's your financial. Situation it isn't one glove fits.
All make sure you understand these key tax implications that
could or maybe not happen to, you but make sure
they're not going To so if this is, you give
us a call at six one two five oh four
eighty four, hundred or come on and visit With.

Speaker 4 (34:52):
Lance you Know lance is in this.

Speaker 2 (34:54):
Discussion this is what the Conversation lance has in his
office with our. Client he would have his, whiteboard he'd
be standing at his. Whiteboard he'd be writing these numbers
down and also have a fun time doing it because
he loves to make Sure Uncle sam doesn't get any
more than they.

Speaker 5 (35:12):
Deserve Uncle sam is Not lance's favorite. Uncle that is,
yes six one two five zero four eight four zero.
Zero that's how you get hold of the folks there
At Haven Financial group when we come. Back attack strategies
come with, opportunities, yes but they also come with risks
and we're going to talk about.

Speaker 3 (35:32):
It don't go too.

Speaker 1 (35:34):
Far we're gathering more important insights and retirement ways The
Haven Financial Group Radio. Show we'll be right. Back stick.
Around you've got, Questions we've got. Answers your tune to
The Haven Financial Group Radio show with your Host Larry
kolvig And Kim. Karagan now back to the.

Speaker 2 (35:54):
Show good, morning and once, again welcome to The Haven
Financial Group Radio.

Speaker 4 (35:59):
Show thanks listening this. Morning feel free to.

Speaker 2 (36:01):
Give us a call at six one two five zero
four eighty four hundred or visit us online At Hanfinancial
group dot. Com Call hamanfinancialgroup dot com all kinds of retirement.
Tools we have a community site there clients get to
exchange recipes and pictures and their favorite pet and all
the fun, stuff because you, know a retirement can get

(36:23):
a little, complicated it can get a little, overwhelming and
why not have a little fun with a fun with
it along the, way, Right.

Speaker 5 (36:30):
God is for certain in, fact let's have a lot of.
FUN i think that's what most of the people are hoping. For,
yeah we've been talking about, taxes and while that may
not be a subject that's fun for a lot of,
people it certainly is an important one because you, know
that is where we spend a lot of our. Dollars for,
Sure Lance larson is with A cpa For Himen Financial

(36:52):
group And. Lance a lot of, PEOPLE i think believe
that when they get to retirement, age they're going to
pay less. Taxes and maybe in some cases that is,
true but in others it may not be.

Speaker 6 (37:03):
Correct so one of the things we hear a lot is, that,
hey sometimes we're making more money now retirement than we.

Speaker 3 (37:10):
Did while we were. Working so when.

Speaker 6 (37:12):
You have that increase in, income, well.

Speaker 3 (37:15):
The way our graduated tax brackets, work you're going to
be paying more in.

Speaker 5 (37:18):
Taxes so let's talk a little bit about some of
the levers that you have to pull when it comes
to tax questions in. Retirement let's start with. Pensions you,
know are there certain strategies that need to be used
if you're someone who's lucky enough to be drawing a.

Speaker 6 (37:34):
Pension so with, pensions one of the biggest things THAT
i hear from people is that it's not a lot
because a lot of the pensions people are, getting the
biggest one we see is From, delta and sometimes the
amounts that they get are very small and we need
to have withholding being done on. That, well, sometimes, no

(37:58):
you don't need to have it because it's not going
to make that much difference in your taxable income because
it is so. Small other people have larger. Pensions, yep
we're going to need to make sure that we have
pensions that have. Withholding there are people that are moving
To minnesota that have pensions from other. States, well that

(38:19):
can bring in a whole slew of problems right, there
because these other places are not going to do any
type Of minnesota. Withholding so when it comes to the
end of the tax, year we figure it out and, say,
hey because you're A minnesota, resident you have to pay
taxes on this. Income oh, wait they didn't do any.
Withholding so now you have a big tax bill due To.

(38:40):
Minnesota how do we avoid? That so that's where pensions
that we need to kind of understand where it's coming,
from what the third party administrator will allow us to
do as far as, withholding and then what do we.

Speaker 3 (38:54):
Do about all.

Speaker 5 (38:55):
That you, know so we've talked about pensions now and
what we do about. That we're talking about strategies specifically
and throughout the course of the, Show Lance you've talked
about strategies associated with retirement, accounts but let's just very quickly,
here if you were to sit down with someone today

(39:15):
in the fourth, quarter what would be a strategy maybe
that you might talk to folks about when it comes
to their retirement accounts and. Taxation so one of the biggest.

Speaker 6 (39:26):
Things the first Thing i'm going to look at is
how much income have we brought in this year so
far and figure out where we are sitting. At then
from there we can look at it doesn't make sense
to pull more money, in or does it make more
sense to stop taking money because it's going to be
pushing you into that next tax, bracket or you might

(39:47):
be getting close enough where we have to worry ABOUT.
Irma and so as far as medicare, Goes just last
WEEK i had a couple in here that they had
their or monthly income stream and when we did all
the projections, out it, says, hey you're going to be
right here if we continue, On, yeah we need to

(40:09):
stop these last three months and, like, yep we can do.
That they have enough money and they're checking account that
they're going to be just fine not taking this additional
money out of their. Iras and then on the flip
side at another couple that came in, there they were
coming in they were not even filling up the twelve
percent tax. Bracket so at this, point say, hey let's

(40:30):
pull some more money out AS ira and pay that
twelve percent because in the future your rmds will probably
push you into that third tier either at twenty two
or possibly even twenty five depending on if the tax rates.
Change why not get the more money out these lower. Rates,
sure then we had the decision of do we need
to have the money to pad us checking account or savings?

(40:53):
Account do we need the money or can we do
it as A roth. Conversion so these tax strategies kind
of just really depend upon where you're sitting at and
so that's why we look at the very first thing
is to have an idea what your income is for the.

Speaker 5 (41:08):
Year what if someone's tax strategy Is i'm going to
move to a state that's friendlier when it comes to,
taxes what's your advice, There.

Speaker 2 (41:18):
Now, cam why would anybody want to lead the state Of.
MINNESOTA i wouldn't condone, that but every listener knows That
minnesota is not a tax friendly. State Now i've lived
in my whole life and probably will for the rest
of my. Life maybe not, Probably but we're not a
tax friendly.

Speaker 5 (41:34):
State it's a friend, state it's just not Tax.

Speaker 2 (41:37):
Yeah minnesota, nice but not tax fairly. Nice AND i
know a lot of the listeners right now you have
if you're honest with, yourself you have considered yourself moving
to the ones we Hear, Florida, Arizona South, Carolina North,
Carolina South, dakota all of These we hear it all the.
Time AND i didn't start, yesterday so that is an.
Option but WHAT i will point out is make sure

(42:00):
you check out applicable, taxes other forms of taxes in other,
states BECAUSE i had a gentleman client of mine moved
to the western side Of South dakota and he, said,
yeah the income tax and that there's a lot of great,
things but the property, tax he, said it's just.

Speaker 4 (42:16):
Terrible so that's WHY i say. That you.

Speaker 2 (42:19):
KNOW a couple other things that Maybe lance will elaborate
is as far as strategies on this tax, discussion is you,
know are you doing tax loss? Harvesting you? Know or
is your partner that you're leading on do you not
even know what tax loss harvesting is do you have
the right investments in the right types of investment? Accounts

(42:40):
certain types of investments should go in rots in TRADITIONAL
i rays and certain ones in two brokerage. Accounts have
you utilized treasure reinflation protected? Securities what state do you live?
In are you using muni? Bonds are you using the
right muni? Bonds these are all the discussions that a
lot of people don't know the answer. Is yet they

(43:00):
may be doing, them they might not be doing, them
and maybe they should be doing. Them why not have
the discussion because fourth quarter is the time to be
having these. Discussions it's actually throughout the whole. Year we're
just entering the fourth, Quarter so why, not, Now.

Speaker 5 (43:14):
Lance is there something there that stands out that you'd
like to elaborate.

Speaker 6 (43:17):
On, well one of the biggest strategies THAT i talk
to people about just because again being In, minnesota we
are The Minnesota.

Speaker 3 (43:25):
Nice we like to give to.

Speaker 6 (43:27):
Charity so all, right let's do this in the best
tax advantageous. Possible let us look at the biggest thing
we look at is doing qualified charitable. Distributions so once
you turn seventeen and a, half you can actually pay
an amount directly from YOUR ira to a charity that

(43:49):
helps out a lot on the, taxes because that instead
of having to go work through all your itemized deductions
to see if it makes sense to be able to
use that charitable, deduction by doing a qualified charitable distribution
from THAT, ira we take it right off the top
and then we get our full standard. Deduction and that's

(44:11):
the best. Thing if to be charitable is the best
way to go about doing.

Speaker 5 (44:15):
It, yeah, Yeah charity one of one of many strategies
when it comes to. Taxes all, right so final, say, here,
gentlemen give us the final when you think of, taxes
what is it that you want people to? Know one final?

Speaker 6 (44:30):
Word WHAT i want people to know is that we
don't want to give more than we absolutely have to
To Uncle. Sam and if you're not, planning then you're
going to probably end up being paying more than you absolutely.

Speaker 2 (44:43):
Should and most people we've worked hard for every dollar we,
had just don't give it away because you don't have a,
discussion you. Know SO i take away from the, show you, know,
taxes it's real if you're taking it lightly and you're
not really having any planning and you're just barely getting things,
prepared and you don't know why you've had the same
questions for a long. Time come on and visit with.

(45:04):
Us and it relates to all retirement puzzle. Pieces you,
know annual and romans right around the corner for a
medicare big lot of. Changes should you be having That
roth conversion discussion fourth? Quarter you should be having, it
whether it relates to you or. Not do you have
your estate plan? Intact are your investments being looked? At
have you rebalanced the? Portfolio all of these things which

(45:27):
may seem so, overwhelming they can. Be but if you
have a good partner to lean, on they don't have to.
Be we can simplify, things we can consolidate. THINGS i always,
say there's no quote as to how many times you
could come. In you deserve the attention because you're paying for.
It But i'm guessing you're not getting the attention you really.

Speaker 5 (45:47):
Deserve six, one, two, five, zero four eighty four. Hundred
that is the number where you reach the folks that
have been financial. Group give them a call, today folks
set up that. Appointment we're in the fourth quarter and
now is the. Time that's for, sure. Gentlemen it was Great,
Lance thank you so. Much Thanks.

Speaker 4 (46:05):
Cam we look forward to next week as.

Speaker 6 (46:07):
Well investment advisory service is offered Through Guardian Well STRATEGIES.

Speaker 2 (46:12):
Llc Haven Financial group And Guardian Well STRATEGIES llc are
not affiliated, companies and investments involve, risk, and unless otherwise,
stated are not. Guaranteed please consult with the qualified financial
advisor and or tax professional before implementing any strategy discussed
herein and comments regarding its safe and secure investments and
guaranteed income streams only refer to fixed insurance.

Speaker 1 (46:33):
Products they do not refer in any way to securities
or investment advisory. Products fixed insurance and annuity product guarantees
are subject to the claims paying ability of the issuing
company