November 25, 2025 • 27 mins
#SafeMoney #JonHeischmanSr #RothIRABasics
In this week's episode host Jon Heischman, Senior covers the basics of a Roth IRA.
Call Jon at (888) 426-0177 with questions, comments or to get a free copy of Top 10 IRA Mistakes and How to Avoid Tax Traps. Visit www.heischmanfs.com/ for additional information
In this week's episode host Jon Heischman, Senior covers the basics of a Roth IRA.
Call Jon at (888) 426-0177 with questions, comments or to get a free copy of Top 10 IRA Mistakes and How to Avoid Tax Traps. Visit www.heischmanfs.com/ for additional information
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
People really don't know what their expenses will because they
don't know how long that they're going to live.
Speaker 2 (00:06):
The Americans are worried they won't have enough safe for retirement.
Now more than ever, retirement's going to cost for many
folks over a million dollars.
Speaker 3 (00:14):
He is no short thing in investing, but a lot
of people think that annuities may come close to that.
Speaker 2 (00:19):
It's going to more safe, safe, safe, safe things that
they know.
Speaker 1 (00:22):
If they know they're going to need that money to
supplement the retirement, well then you can't play that rest.
Speaker 3 (00:27):
This is the Safe Money and Retirement Show. But John
Heischman senior founder and partner of Heisman Financial Services serving
the Columbus and surrounding areas. John specializes in educating pre
retirees and retirees about safe money strategies and ideas. Now
it's the Safe Money and Retirement Show. Here's John Heischman, Senior.
Speaker 2 (00:48):
Welcome. This is John Heischmann bringing you Safe Money and
Retirement Show. Thank you for joining me. I'm going who
discuss roth iras now past shows I have done that,
but I've received several requests from listeners that would like
(01:15):
to learn and hear about the basics. So I'm going
to do that for you, and at the end of
the show, I encourage you to call me with your
questions and if you'd like to schedule a meeting to
see a roth ira would work into your planning. Here's
(01:38):
the number six one four eight, six one seven zero
five five. I'll repeat six one four eight six one
seven zero five to five. The main advantage of the
wroth ira lies in the tax free treatment of distributions
(02:05):
for the owner and the beneficiary. No deduction is available
when you make a contribution to a wroth ira. All
contributions are made with after tax dollars in exchange for
the tax free treatment of distributions. And of course, one
(02:31):
of the most important parts of the wroth ira is eligibility.
So wroth ira contributions are subject only to the earned
income requirement as well as the annual income limits. Neither
active status nor age is relevant in determining an eligibility situation. Now,
(02:59):
unlike traditional iras, roth iras do not require an individual
to determine the ductibility of a contribution or to determine
whether an individual or their spouse is an active participant.
(03:21):
For roth iras, determining eligibility is based solely on income.
Now you might be thinking that based on your tax
situation and you need the tax write off, you don't
have the tax deductible contribution with a roth ira, and
(03:47):
of course that's true. Many of my clients will have both,
and depending on their situation their taxes each year or
looking ahead from the previous tax year, they have an
option to make a contribution to a traditional ira or
(04:13):
a roth ira. Because they have both, both will continue
to grow whether you make a contribution or not. So
one year you may make that contribution to the roth ira.
Next year you need the tax right off, your contributions
(04:35):
go towards a traditional ira. In twenty twenty three, individuals
filing as single taxpayers with modified adjusted gross income up
to one hundred and fifty three thousand and married joint
filers with modified adjusted income up to two hundred twenty
(05:00):
eight thousand can and are eligible to contribute to their
roth ira. Unlike those traditional iras, where distributions must start
at age seventy three, those roth iras are not subject
(05:23):
to mandatory required minimum distribution rules, and that is the
major advantage of a roth ira in planning retirements for
many individuals over the years. I have often thought that
(05:46):
at the time a retiree is going to take income distributions,
they wish at that time that all of their accounts
were non iras, non t traditional iras or wroth irays,
because as I mentioned, the wroth IRA distribution is tax
(06:10):
free and those non traditional IRA accounts only the interest
earned is taxable. If you ever get to a point
where the growth has been distributed and you're into principle
that's a tax free source of income, couple that with
(06:34):
the WROTH IRA and you've drastically reduced your retirement income.
But typically that is not the case because there are
four to oh one k's qualified retirement plans traditional iras
that an individual has contributed to during their working years.
(06:59):
They got the deduction which helped in their peak earning
years and reduced their taxable income. So I see the
majority of money that's going to distribute retirement income coming
from qualified plans that are taxable. So I say to
(07:23):
younger people, establish a WROTH, get it started, let it grow,
have it available for making contributions to this WROTH account
when and if you can. Our firm, Heischmann Financial Services
has many different options. Quite frankly, all the options available
(07:49):
for a roth Ira. Be happy to talk about that
with you, depending on your risk tolerance as to what
plan would be right for you. Six one four eight,
six one seven zero five to five is our office number.
(08:10):
Establishing a roth ira would make sense. You've got a
younger person that is in let's say the twelve percent
tax bracket due to modest earnings. If their career progresses,
the tax bracket may go up to twenty four or
(08:34):
thirty two percent, or in some situations even higher. And
when this individual reaches age fifty nine and a half
or enters retirement, they may prefer to pay the taxes
on the funds contributed now and receive that tax free
(08:59):
distribution later. Also, anyone who suspects that the tax rates
may change for the worst in the future. US tax
rates for middle and upper income earners are low compared
to the rates that we saw in the nineteen sixties
(09:23):
and seventies. What about individuals saving for a first home.
For the first time home buyer, the unique ability to
take an early distribution without penalty makes the roth Ira
a very attractive vehicle for accumulating that down payment. And
(09:49):
what about individuals who want to pass on assets tax
free for their beneficiaries wealth transfer. But while there are
minimum distribution requirements with that rough IRA for beneficiaries, once
(10:09):
the five year holding period requirement is met, beneficiaries of
the account can still receive tax free distributions. And these
are reasons that the Wroth conversion has become so popular.
(10:29):
Is to pay the tax now, get that traditional IRA
over to a WROTH, satisfy that five year holding period rule,
and build up that account that's going to establish either
a tax free income or well I guess I should say,
(10:52):
and or a distribution to your beneficiary. When I plan
retirement income, I always take the spouse into consideration because
income is going to need to continue to the spouse,
and if there's any way they can be put into
(11:14):
a low tax bracket because they inherited a roth IRA.
What a great planning concept. I mentioned the Roth conversion,
and I'm going to discuss that in more detail after
the break, So stay tuned. I'll return in just amendment.
Speaker 1 (11:39):
Thanks for listening to the Safe Money and Retirement Show
with John Heissman. For more information, call one eight eight
eight or two six zero one seventy seven that's one
eight eight eight four two six zero one seven seven,
or visit their website at heismanfs dot com more of
the Safe Money and Retirement Show A moment.
Speaker 2 (12:06):
Avoiding mistakes can save owners of iras four oh one,
KS and TSP plans as well as other retirement plans
a fortune and taxes, penalties, fees and loads. These potential
(12:26):
mistakes are addressed in the free book entitled Top ten
IRA Mistakes. This is John Heischmann from the Safe Money
and Retirement Show offering a complimentary copy by calling eight
eight eight four to two six zero one seven seven
(12:48):
again that's triple eight four two six zero one seven seven.
Have you heard about the color of money which is
the model of investing where your money is categorized into
three different colors, yellow, green, and red. Yellow money is liquidity,
(13:13):
cash reserves, and an emergency fund. Green money has no
risk an average to above average rate of return. It
also generates additional retirement income guaranteed for life. Red money
is money at risk with maximum potential growth. This is
(13:37):
John Heischmann from the Safe Money and Retirement Show, and
I want to make sure your retirement plan assets are
positioned correctly in these colors. Call me at eight eight
eight four to two six zero one seven seven Again
(13:57):
eight eight eight four two six zero one seven seven.
Speaker 1 (14:07):
Welcome back to the Safe Money and Retirement Show with
John Heischman. To contact John, the number to call is
one eight eight eight or two six zero one seven seven.
That's one eight eight eight or two six zero one
seven seven. Once again, here's John Heischman.
Speaker 2 (14:24):
Welcome back to the Safe Money and Retirement Show. I'm
your host, John Heischmann. I've been talking about roth ira accounts,
and as mentioned, roth conversions are unique to the roth ira.
It's the ability to accept converted IRA funds of a
(14:49):
traditional ira. You can take a traditional ira convert that
to a roth ira with no time or income restrictions.
Pre tax dollars are subject to ordinary income tax at
the time of conversion, but they're not subject to the
(15:12):
ten percent early withdrawal penalty, even if you're under fifty
nine and a half. If a withdrawal of converted IRA
funds is made from the WROTH account subject to the conversion,
but let's say before five years has elapsed, such a
(15:34):
withdrawal is subject to the ten percent penalty. Now, I
think the fact that you can do a conversion underage
fifty nine and a half is a big benefit for those.
Let's say you're in mid late forties and fifties and
(15:56):
you want to convert. You're not subject to any type
of withdrawal penalty as you would be with a traditional IRA,
so convert as early as possible. Now, if there is
what we call a cost basis in a traditional IRA,
(16:18):
and this is non deductible contributions or after tax contributions,
and these contributions must be taken into account when calculating
how much of the conversion amount is going to be taxable.
In other words, all iras must be added together and
(16:41):
the tax on the conversion will be calculating using the
pro rata rule, meaning you cannot separate and convert only
non deductible after tax contributions to avoid the tax. All right,
it sounds complicated, and I understand that, but when you
(17:07):
know how to convert in all the aspect and rules
of converting, it's not that difficult. Before I recommend that
a client execute a ROTH conversion, I want to know
and make sure it's going to be a desirable move
(17:28):
considering the overall tax diversification of each client's portfolio. Let
me give you an example. If I have a client
and already has a large tax deferred accumulation but little
to no accumulation in a tax free account, I think
(17:52):
a conversion should be considered. Also if that client has
the cash to pay the tax that is going to
result from a conversion, or if they will be liquidating
another account and even possibly incurring a ten percent early
(18:14):
withdrawal penalty or transactions fees, So we have to take
this into consideration, find out how the tax on the
conversion is going to be paid, and quite frankly, that's
why I see more and more clients convert a small
(18:35):
portion each year. Example, you've got one hundred thousand dollars
traditional IRA. What about converting twenty five percent per year
for four years? The tax hit is less. We're spreading
it out over four years, and I think it is
(18:58):
more popular to to do it at younger ages than
getting ready to retire, because remember we have to satisfy
that five year rule. Now, knowing that each client that
we work with there may be some facing a higher
(19:18):
tax bill due to the w Roth conversion, so I
want to look at other opportunities to lower their AGI
for the year, and these possibilities could include increasing contributions
to a qualified plan which we call bunching, itemize deductions
(19:42):
from surrounding years, taking capital losses, and maybe contributing to
a health savings account or a flexible spending account. One
thing that has become very popular in employer retirement accounts.
(20:02):
Let's say a four to oh one K plan. I
see many are giving the employee an option to put
money into a roth IRA. That being the case, there
are two benefits to an employer wroth IRA that a
(20:23):
lot of people aren't aware of. That is, the annual
contribution limit is higher. Back in twenty twenty three, it
was twenty two thousand, five hundred dollars that may be
deferred in a WROTH four to oh one K, or
even a WROTH four h three B plus an additional
(20:47):
seven thousand, five hundred if the participant is age fifty
and older, much higher than an individually owned roth IRA.
Also contributions to employer roth accounts, they can be made
(21:08):
by all participants, regardless of income. Obviously, this isn't going
to be the situation with a roth IRA since contributions
phase out at two hundred and twenty eight thousand dollars,
and this was back in the year of twenty twenty three.
(21:30):
For a married couple filing jointly executing a what we
call backdoor roth IRA contribution can get around this difference.
Another important point I would like to discuss is what
(21:52):
we call ARISA protection. Now, this is where traditional iras
have up to one million dollars in assets protected from creditors.
Let's say in a bankruptcy filing. Assets in a qualified
(22:14):
plan include ROTH for a one case, they are fully
insulated from the claims of creditors. If the assets in
the traditional IRA originated from a qualified plan, say a
four to AH one K, then the amount can be
(22:36):
in excess of one million dollars, but the one million
dollar cap would apply if the IRA proceeds are then
rolled over into a second IRA. And one thing I
do want to mention so you can keep in mind
(22:58):
is a risk covers all judgments, not just bankruptcy. So
this means that any assets held in an ARISA protected
account have that additional layer of protection. Roth IRA conversions
(23:20):
they could be a great thing for each individual if
it's right for them. We have to look at each
individual situation to make sure. The important point is how
is the tax going to be paid and is the
(23:40):
tax going to make a difference on your taxable income
for that year that it is converted. But as a planner,
it's like every other aspect of retirement planning, I've got
to know the situation, meaning everything that I've discussed in
(24:03):
order to advise whether you should convert your traditional IRA
money or part of it to a ROTH IRA account.
Those of you that are still working but around retirement age,
(24:24):
maybe you're receiving Social Security income or a pension, but
the key is you're still working, we will want to
look at contributions going to an existing WROTH account or
a converted WROTH account. In any event, ROTH conversions could
(24:50):
greatly benefit your retirement income in the future, and we
want to review your situation to see if works. Call
me at six one four eight six one seven zero
five five at number again six one four eight, six
(25:12):
one seven zero five to five. I welcome the opportunity
to review your IRA accounts, maybe combining multiple iras into
one account, converting all or a portion in order to
(25:33):
get that ROTH account started. Visit our website Heischmann f
S dot com. H e I S C h M
A n f S dot com. That's for Heischmann Financial Services.
(25:54):
For more information about roth conversions, I will have forwarded
to you at no cost or obligation. Six one four
eight six one seven zero five to five. Thank you
for joining me with the Safe Money and Retirement Show.
(26:17):
I'm your host, John Heischmann.
Speaker 3 (26:21):
The Safe Money and Retirement Shoe, John Heisman Senior. To
get in touch with John, call one AA eight four
two six zero one seven seven. That's one triple eight
four two six zero one seven seven. For more information
about Heisman Financial Services, visit their website Heisman f S
(26:41):
dot com. That's h E I S C h M
A n f S dot com. Join us again next
time for the Safe Money and Retirement Show with John
Heisman Senior
People really don't know what their expenses will because they
don't know how long that they're going to live.
Speaker 2 (00:06):
The Americans are worried they won't have enough safe for retirement.
Now more than ever, retirement's going to cost for many
folks over a million dollars.
Speaker 3 (00:14):
He is no short thing in investing, but a lot
of people think that annuities may come close to that.
Speaker 2 (00:19):
It's going to more safe, safe, safe, safe things that
they know.
Speaker 1 (00:22):
If they know they're going to need that money to
supplement the retirement, well then you can't play that rest.
Speaker 3 (00:27):
This is the Safe Money and Retirement Show. But John
Heischman senior founder and partner of Heisman Financial Services serving
the Columbus and surrounding areas. John specializes in educating pre
retirees and retirees about safe money strategies and ideas. Now
it's the Safe Money and Retirement Show. Here's John Heischman, Senior.
Speaker 2 (00:48):
Welcome. This is John Heischmann bringing you Safe Money and
Retirement Show. Thank you for joining me. I'm going who
discuss roth iras now past shows I have done that,
but I've received several requests from listeners that would like
(01:15):
to learn and hear about the basics. So I'm going
to do that for you, and at the end of
the show, I encourage you to call me with your
questions and if you'd like to schedule a meeting to
see a roth ira would work into your planning. Here's
(01:38):
the number six one four eight, six one seven zero
five five. I'll repeat six one four eight six one
seven zero five to five. The main advantage of the
wroth ira lies in the tax free treatment of distributions
(02:05):
for the owner and the beneficiary. No deduction is available
when you make a contribution to a wroth ira. All
contributions are made with after tax dollars in exchange for
the tax free treatment of distributions. And of course, one
(02:31):
of the most important parts of the wroth ira is eligibility.
So wroth ira contributions are subject only to the earned
income requirement as well as the annual income limits. Neither
active status nor age is relevant in determining an eligibility situation. Now,
(02:59):
unlike traditional iras, roth iras do not require an individual
to determine the ductibility of a contribution or to determine
whether an individual or their spouse is an active participant.
(03:21):
For roth iras, determining eligibility is based solely on income.
Now you might be thinking that based on your tax
situation and you need the tax write off, you don't
have the tax deductible contribution with a roth ira, and
(03:47):
of course that's true. Many of my clients will have both,
and depending on their situation their taxes each year or
looking ahead from the previous tax year, they have an
option to make a contribution to a traditional ira or
(04:13):
a roth ira. Because they have both, both will continue
to grow whether you make a contribution or not. So
one year you may make that contribution to the roth ira.
Next year you need the tax right off, your contributions
(04:35):
go towards a traditional ira. In twenty twenty three, individuals
filing as single taxpayers with modified adjusted gross income up
to one hundred and fifty three thousand and married joint
filers with modified adjusted income up to two hundred twenty
(05:00):
eight thousand can and are eligible to contribute to their
roth ira. Unlike those traditional iras, where distributions must start
at age seventy three, those roth iras are not subject
(05:23):
to mandatory required minimum distribution rules, and that is the
major advantage of a roth ira in planning retirements for
many individuals over the years. I have often thought that
(05:46):
at the time a retiree is going to take income distributions,
they wish at that time that all of their accounts
were non iras, non t traditional iras or wroth irays,
because as I mentioned, the wroth IRA distribution is tax
(06:10):
free and those non traditional IRA accounts only the interest
earned is taxable. If you ever get to a point
where the growth has been distributed and you're into principle
that's a tax free source of income, couple that with
(06:34):
the WROTH IRA and you've drastically reduced your retirement income.
But typically that is not the case because there are
four to oh one k's qualified retirement plans traditional iras
that an individual has contributed to during their working years.
(06:59):
They got the deduction which helped in their peak earning
years and reduced their taxable income. So I see the
majority of money that's going to distribute retirement income coming
from qualified plans that are taxable. So I say to
(07:23):
younger people, establish a WROTH, get it started, let it grow,
have it available for making contributions to this WROTH account
when and if you can. Our firm, Heischmann Financial Services
has many different options. Quite frankly, all the options available
(07:49):
for a roth Ira. Be happy to talk about that
with you, depending on your risk tolerance as to what
plan would be right for you. Six one four eight,
six one seven zero five to five is our office number.
(08:10):
Establishing a roth ira would make sense. You've got a
younger person that is in let's say the twelve percent
tax bracket due to modest earnings. If their career progresses,
the tax bracket may go up to twenty four or
(08:34):
thirty two percent, or in some situations even higher. And
when this individual reaches age fifty nine and a half
or enters retirement, they may prefer to pay the taxes
on the funds contributed now and receive that tax free
(08:59):
distribution later. Also, anyone who suspects that the tax rates
may change for the worst in the future. US tax
rates for middle and upper income earners are low compared
to the rates that we saw in the nineteen sixties
(09:23):
and seventies. What about individuals saving for a first home.
For the first time home buyer, the unique ability to
take an early distribution without penalty makes the roth Ira
a very attractive vehicle for accumulating that down payment. And
(09:49):
what about individuals who want to pass on assets tax
free for their beneficiaries wealth transfer. But while there are
minimum distribution requirements with that rough IRA for beneficiaries, once
(10:09):
the five year holding period requirement is met, beneficiaries of
the account can still receive tax free distributions. And these
are reasons that the Wroth conversion has become so popular.
(10:29):
Is to pay the tax now, get that traditional IRA
over to a WROTH, satisfy that five year holding period rule,
and build up that account that's going to establish either
a tax free income or well I guess I should say,
(10:52):
and or a distribution to your beneficiary. When I plan
retirement income, I always take the spouse into consideration because
income is going to need to continue to the spouse,
and if there's any way they can be put into
(11:14):
a low tax bracket because they inherited a roth IRA.
What a great planning concept. I mentioned the Roth conversion,
and I'm going to discuss that in more detail after
the break, So stay tuned. I'll return in just amendment.
Speaker 1 (11:39):
Thanks for listening to the Safe Money and Retirement Show
with John Heissman. For more information, call one eight eight
eight or two six zero one seventy seven that's one
eight eight eight four two six zero one seven seven,
or visit their website at heismanfs dot com more of
the Safe Money and Retirement Show A moment.
Speaker 2 (12:06):
Avoiding mistakes can save owners of iras four oh one,
KS and TSP plans as well as other retirement plans
a fortune and taxes, penalties, fees and loads. These potential
(12:26):
mistakes are addressed in the free book entitled Top ten
IRA Mistakes. This is John Heischmann from the Safe Money
and Retirement Show offering a complimentary copy by calling eight
eight eight four to two six zero one seven seven
(12:48):
again that's triple eight four two six zero one seven seven.
Have you heard about the color of money which is
the model of investing where your money is categorized into
three different colors, yellow, green, and red. Yellow money is liquidity,
(13:13):
cash reserves, and an emergency fund. Green money has no
risk an average to above average rate of return. It
also generates additional retirement income guaranteed for life. Red money
is money at risk with maximum potential growth. This is
(13:37):
John Heischmann from the Safe Money and Retirement Show, and
I want to make sure your retirement plan assets are
positioned correctly in these colors. Call me at eight eight
eight four to two six zero one seven seven Again
(13:57):
eight eight eight four two six zero one seven seven.
Speaker 1 (14:07):
Welcome back to the Safe Money and Retirement Show with
John Heischman. To contact John, the number to call is
one eight eight eight or two six zero one seven seven.
That's one eight eight eight or two six zero one
seven seven. Once again, here's John Heischman.
Speaker 2 (14:24):
Welcome back to the Safe Money and Retirement Show. I'm
your host, John Heischmann. I've been talking about roth ira accounts,
and as mentioned, roth conversions are unique to the roth ira.
It's the ability to accept converted IRA funds of a
(14:49):
traditional ira. You can take a traditional ira convert that
to a roth ira with no time or income restrictions.
Pre tax dollars are subject to ordinary income tax at
the time of conversion, but they're not subject to the
(15:12):
ten percent early withdrawal penalty, even if you're under fifty
nine and a half. If a withdrawal of converted IRA
funds is made from the WROTH account subject to the conversion,
but let's say before five years has elapsed, such a
(15:34):
withdrawal is subject to the ten percent penalty. Now, I
think the fact that you can do a conversion underage
fifty nine and a half is a big benefit for those.
Let's say you're in mid late forties and fifties and
(15:56):
you want to convert. You're not subject to any type
of withdrawal penalty as you would be with a traditional IRA,
so convert as early as possible. Now, if there is
what we call a cost basis in a traditional IRA,
(16:18):
and this is non deductible contributions or after tax contributions,
and these contributions must be taken into account when calculating
how much of the conversion amount is going to be taxable.
In other words, all iras must be added together and
(16:41):
the tax on the conversion will be calculating using the
pro rata rule, meaning you cannot separate and convert only
non deductible after tax contributions to avoid the tax. All right,
it sounds complicated, and I understand that, but when you
(17:07):
know how to convert in all the aspect and rules
of converting, it's not that difficult. Before I recommend that
a client execute a ROTH conversion, I want to know
and make sure it's going to be a desirable move
(17:28):
considering the overall tax diversification of each client's portfolio. Let
me give you an example. If I have a client
and already has a large tax deferred accumulation but little
to no accumulation in a tax free account, I think
(17:52):
a conversion should be considered. Also if that client has
the cash to pay the tax that is going to
result from a conversion, or if they will be liquidating
another account and even possibly incurring a ten percent early
(18:14):
withdrawal penalty or transactions fees, So we have to take
this into consideration, find out how the tax on the
conversion is going to be paid, and quite frankly, that's
why I see more and more clients convert a small
(18:35):
portion each year. Example, you've got one hundred thousand dollars
traditional IRA. What about converting twenty five percent per year
for four years? The tax hit is less. We're spreading
it out over four years, and I think it is
(18:58):
more popular to to do it at younger ages than
getting ready to retire, because remember we have to satisfy
that five year rule. Now, knowing that each client that
we work with there may be some facing a higher
(19:18):
tax bill due to the w Roth conversion, so I
want to look at other opportunities to lower their AGI
for the year, and these possibilities could include increasing contributions
to a qualified plan which we call bunching, itemize deductions
(19:42):
from surrounding years, taking capital losses, and maybe contributing to
a health savings account or a flexible spending account. One
thing that has become very popular in employer retirement accounts.
(20:02):
Let's say a four to oh one K plan. I
see many are giving the employee an option to put
money into a roth IRA. That being the case, there
are two benefits to an employer wroth IRA that a
(20:23):
lot of people aren't aware of. That is, the annual
contribution limit is higher. Back in twenty twenty three, it
was twenty two thousand, five hundred dollars that may be
deferred in a WROTH four to oh one K, or
even a WROTH four h three B plus an additional
(20:47):
seven thousand, five hundred if the participant is age fifty
and older, much higher than an individually owned roth IRA.
Also contributions to employer roth accounts, they can be made
(21:08):
by all participants, regardless of income. Obviously, this isn't going
to be the situation with a roth IRA since contributions
phase out at two hundred and twenty eight thousand dollars,
and this was back in the year of twenty twenty three.
(21:30):
For a married couple filing jointly executing a what we
call backdoor roth IRA contribution can get around this difference.
Another important point I would like to discuss is what
(21:52):
we call ARISA protection. Now, this is where traditional iras
have up to one million dollars in assets protected from creditors.
Let's say in a bankruptcy filing. Assets in a qualified
(22:14):
plan include ROTH for a one case, they are fully
insulated from the claims of creditors. If the assets in
the traditional IRA originated from a qualified plan, say a
four to AH one K, then the amount can be
(22:36):
in excess of one million dollars, but the one million
dollar cap would apply if the IRA proceeds are then
rolled over into a second IRA. And one thing I
do want to mention so you can keep in mind
(22:58):
is a risk covers all judgments, not just bankruptcy. So
this means that any assets held in an ARISA protected
account have that additional layer of protection. Roth IRA conversions
(23:20):
they could be a great thing for each individual if
it's right for them. We have to look at each
individual situation to make sure. The important point is how
is the tax going to be paid and is the
(23:40):
tax going to make a difference on your taxable income
for that year that it is converted. But as a planner,
it's like every other aspect of retirement planning, I've got
to know the situation, meaning everything that I've discussed in
(24:03):
order to advise whether you should convert your traditional IRA
money or part of it to a ROTH IRA account.
Those of you that are still working but around retirement age,
(24:24):
maybe you're receiving Social Security income or a pension, but
the key is you're still working, we will want to
look at contributions going to an existing WROTH account or
a converted WROTH account. In any event, ROTH conversions could
(24:50):
greatly benefit your retirement income in the future, and we
want to review your situation to see if works. Call
me at six one four eight six one seven zero
five five at number again six one four eight, six
(25:12):
one seven zero five to five. I welcome the opportunity
to review your IRA accounts, maybe combining multiple iras into
one account, converting all or a portion in order to
(25:33):
get that ROTH account started. Visit our website Heischmann f
S dot com. H e I S C h M
A n f S dot com. That's for Heischmann Financial Services.
(25:54):
For more information about roth conversions, I will have forwarded
to you at no cost or obligation. Six one four
eight six one seven zero five to five. Thank you
for joining me with the Safe Money and Retirement Show.
(26:17):
I'm your host, John Heischmann.
Speaker 3 (26:21):
The Safe Money and Retirement Shoe, John Heisman Senior. To
get in touch with John, call one AA eight four
two six zero one seven seven. That's one triple eight
four two six zero one seven seven. For more information
about Heisman Financial Services, visit their website Heisman f S
(26:41):
dot com. That's h E I S C h M
A n f S dot com. Join us again next
time for the Safe Money and Retirement Show with John
Heisman Senior
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