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9032 Lesch Rest

At 2:54 you say, "like in a tax-deferred account, you don't have to pay tax on the gains, while they are still inside the Roth account". True. But this would have been a great place to add in that with a Roth, you NEVER have to pay tax on those investment gains. To me, that is probably the top, or at least 2nd great thing about a Roth.

Great podcast. Andy's realistic and down to earth approach is a joy to listen to.

This was one of the best podcast episodes I have listened to. Thank you both

Jaskolski Shore

Marks Station

Love to hear your interviews, Andy. <boasting> I'm happy to report I actually made (a small amount of) money on my fixed income in 2022. My total return on fixed income in 2023 was a surprising 15%. This was mostly from changing to short and ultra short duration in 22Q2 and then looking for and finding mispricing in floating rate instruments (partly b/c of the LIBOR controversy) later in the year. </boasting> While I know that fixed income isn't there to make me a lot of money, I have a hard time with just holding a broad market index bond fund when interest rates are on the rise and simply changing the duration of my holdings can reduce or prevent losses. I know that people would argue that involves timing the market, but I think it's just a question of listening to Chairman Powell, taking his statements literally and adjusting (the duration of) my bond holdings appropriately. And though I have great respect for you as an advisor and would certainly recommend you to friends and colleagues, you would never accept dealing with me as a client because I have fairly strong opinions about how my money is invested. 😉🤷‍♂

This was a fantastic episode. I appreciated Andy's deeper responses to the questions.

Need help here. I think I made huge mistake. I started doing backdoor Roth and made contribution at the end of year 2021. However, the rollover didn't complete until the beginning of 2022. In this case, how should I fill out 2021 8606?

Great video!

Outstanding role reversal! Thank you very much!!

Also, great questions!

This video was valuable and a nice idea. I now have a great understanding of Andy and his philosophy and would feel comfortable using him as a financial advisor.

The answer is something that no one should consider purchasing almost certainly.

Very good interview , very insightful

Good info, thanks!

I am sure this good. But holy shit...1.5 hours...

I do all my trading on the toilet too. I am glad this video was recorded in the bathroom.

Why not just re-finance/borrow against the property in 27.5 years rather than sell it? I don’t think the borrowed money is taxable like earned income or capital gains

If you are on SS pension, and you have RMD from your 401(k) and IRA, must you file tax returns?

Thank you! One of the best and straightforward explanations of this strategy on youtube and without hype! I struggle with bond funds in my 401k because my employer sponsored plan only gives us two options and both are almost 100% government backed treasuries with no municipal weight to them. Also, both have high fees (or at least higher than I like to pay in my 401k). In this case, would key guaranteed fund (basically cash), or their Nuveen Lifecycle retirement date fund (higher in bond mix) be a better choice or just keep in equities? I know you cannot give financial advice but for those who have terrible options in regards to 401k bond funds, it's like we're sitting ducks for equity volatility. It's very disappointing to get terrible bond choices in a 401k and with 10-13 years to go to retirement, I feel like my 90% equities in my 401k is threatened in the overvalued market we're in. I relegated to 50% small caps, 40% large caps and 10% key guaranteed (cash) and still feel vulnerable.

Thanks Andy!

I always get great insight from this channel. Thanks so much!

Very clear and informative! Thank you Andy👍🏻👍🏻

So the gov't is taking money out of social security every year to use for other gov't programs. Even if it's paid back, how is that not raiding the social security system😂😆 That money should be in social security, not lent out to a gov't that can't control its' spending. We don't need our social security trust fund mismanaged because the gov't can't balance it's budget.

I can't even believe you have to pay federal income tax for social security payments. Ridiculous.

I am a dividend investor and retired early. I hold VYMI which has a P/E of less than 10 and Yield close to 5%. Its sister ETF VYM (American) has 18.5 P/E and around 2.7% yield.

Thanks for the great chat, Victor and Andy. Well done!

Usually, I never comment on videos, but your video is so convincing that I am unable to stop myself from doing something about it. You’re doing a great job Man, Keep it up.

A 50% result shouldn’t be interpreted as a coin flip as to whether or not you’ll be successful. Rather, should be interpreted as there is a 50% chance you’ll need to make some changes along the way ( perhaps large , perhaps modest) in order to be successful. And those changes might be rather modest such that success is easily obtainable provided you make changes. As this individual indicates, this is largely within our control.

Hi Andy I have one more question I have $400K in Roth IRA Also $500 K in high yield savings account I’m living in apartment which I like very much without all the hassle from Owning home But rent is kept going up and I was Thinking buy $400K Condo Am I making right decision ? I’m 65 and 75( husband ) retired I need your advise Thank you always

Hi Andy If both of us ( husband and wife ) has only social security income Do we have to pay tax ? If so what will be the maximum amount for No Tax ? Looking forward your answer Thank you always

As someone who is trying to start as young as possible (23) this was very helpful to understand what is going on. I don't have enough experience reading complex legal paperwork to understand the breakdowns online on what each thing is, so I can make the best informed decision. This video was very helpful in understanding what each ira means as l try to transfer from my first job with a 401k!

Can you give a sense of scale on this? What is the normal annual tax % for just holding an s&p500 or global all world tracker through vanguard

Why? Are they hiding?

So which ones should I buy? Please only give us the stone cold lead pipe locks. ;-) If you look at a chart of the relative value of the US dollar over decades and when international beats domestic, you'll quickly realize that that international vs. domestic is really mostly a bet on the direction of the US dollar and that other than that, the large multi-nationals tend to perform about the same as the other companies in their sectors. The real hang-up here is the inappropriate fixation of "cap weighting" all your funds and allocations to match exposures to the world at large. That really has nothing to do with one's individual investing priorities, so there is no reason to believe than trying to cap weight everything to effectively overweight large cap multi-national companies results in a better portfolio for any particular purpose (and it doesn't). Modern best practices written about by Larry Swedroe and many others in the past decade suggest that domestic vs. international is just not a very good primary differentiator, especially when everything is cap weighted, and that using Fama-French factors as primary differentiators provides a superior approach to diversifying a stock portfolio. Rather, international vs domestic works best as a secondary differentiator, and organizing portfolios around strict cap-weighting should be discarded, as its just not a very useful framework. Yet there is almost a fixation in personal finance circles that we have to keep using the approaches some Great Guru person in days of yore came up with 15-20 years ago because they have talismanic Boglehead or other significance. Frankly, a lot of DIYers and advisors are just intellectually lazy and don't want to update their knowledge bases as long as they can get away with not having to do so, because "Personal Favorite So-and-so Guru Person said something once." But this slavish adherence to outdated ideas is not a good approach to investing, or really anything else that is personal-finance related. It is better to treat personal finance not as a religion with gurus to follow, but as an evolving technology that gets better over time if the newer best practices are adopted.

Germanish? 🤣

Good video. Personally I think international stocks add complexity to a portfolio without necessarily adding to the performance or stability. I hold a small international position, but you could argue that it's not large enough to move the needle. One decision I made about 6 or 7 years ago was to try to remove any direct exposure to so-called emerging markets. I'm not saying there's not the potential for opportunity there - I'm saying that there are huge uncompensated risks. I made this decision when I realized that around half of all so-called emerging market equities were at that point incorporated in China or Chinese based. The problem I have there is that this means a Communist totalitarian state had direct control over the fate of a non-trivial portion of my portfolio. In fact many so-called emerging markets are run by fascist dictatorships or other problematic political structures. This realization has led me to conclude that investing in these markets makes me culpable for how they treat their citizens and it also puts my retirement at the mercy of these governments. Being in either position is simply unacceptable, so I cannot invest in any investment that invests in emerging markets.

Loved all your points!

The pure math is that a pension payout of 6%, the breakeven is 25 years if you can get 4% on the lump sum (based on lump sum of annuities which should be very similar to pension lump sum). So if you are 65 today you would need to live to 90+

You mention pension as less risky but There is risk in pension. Risk of dying and inflation risk. You can buy life insurance to mitigate the first but not the second.

Good video. After weeks of calculating the break even I ended up taking the lump sum for the following reasons 1. I did not want the forced income on top of SS and RMDs. 2. Ability to pass it on to my heirs. 3. I will delay SS to 70, providing some inflation and longevity protection. 4. I don’t need the money to meet my expenses so will invest it.

Good video. You bring up good points. Some ate unlikely such as IRMAA surcharge being an issue due to RMDs. Unless you have significant income other than RMDs and SS you will not have an IRMAA surcharge issue. IRMAA limits increase annually for inflation. The tax time bomb catch phrase is stolen from Ed Slott and is a made up thing with no basis of fact. For most people taking advantage of the standard deduction and low tax brackets, both adjusted annually for inflation, RMDs can be paid slowly over many years at a lower effective tax rate. The expiration of the current tax brackets may or may not happen in 2026, no one knows for sure.

thank you man you´re the one 👍

Thanks for this video. I'm in the process of renewing my life insurance license. Part of the study for the exam is about Qlacs

Excellent video as usual! But I think maybe you miss the point with these pitches. People that sell these Roth conversion "Plans" are probably basing their pitch on the fact that if you convert everything to Roth now, you will avoid taxation on all the future earnings that account might have. This GUARANTEES you will pay substantially less in taxes over your remaining lifetime. It's even possible this could be on the order of a million or more. The reason it's a scam is that the fact that you pay more taxes in total is IRRELEVANT to the analysis of your Roth conversion strategy. The only thing that is important is how much of that money you ultimately KEEP over the remainder of your life. If you do Roth conversions over the course of one to a few years, you could easily wind up in much higher tax brackets and therefore send a higher percentage of your total distributions to the taxman. This leaves you with LESS money. In fact you get to keep LESS money in part BECAUSE you paid the taxman LESS! The reason these scams are so attractive is because so many people are focused on avoiding taxes at all cost. Often the don't see that avoiding the taxman in the future could be harmful to their own success.

$10,000 is outrageous for a Full Financial analysis and plan for your total picture.. let alone just a Roth conversion plan.. New Retirement is a software you can get a free trial on or pay about $120 a year for great analysis. It is only as good as the numbers you put in.. you have to decide the rate of return you are likely to get in the future, the inflation rate, the tax brackets going up in 2026 like they are set to do now.. your longevity, and that of your wife too.. lots of factors. But it is the same estimates that the planner will have to guess on and you save 10 grand.

Does child family benefits received under the wage earner social security gets added to social security disability income received? If I receive a seperate ssa1099 for my son with his name and social security number if so is that considered as earned income,?

I learned so much. Thank you for fantastic video and providing handouts! Watching this replay for my new accountant in the hopes it will help him since he wasn't familiar with form 8606 and how it relates to the pro rata rule! Very frightening!! Only kept him because he started my taxes and I was forced to file an extension. When I went to sign my return on April 13th, he asked me a question as to the backdoor roth and that put up a red flag. Wanted me to contact Fidelity over the weekend. Needless to say, I requested he file an extension since nothing would be accomplished in 2 days. As soon as my taxes are filed, I'm firing him!

Good video. Very balanced. I do believe that a Roth conversion can make sense to avoid the widow trap or if tax rates rise in the future AND cause you to pay a higher % tax when you or your heirs otherwise take distributions. I can’t make the math work otherwise, although I do plan on spending down my tax deferred account as much as possible to leave the brokerage, life insurance, house and cash to grow, all tax free with step up in basis to my heirs. If I die early before drawing down the entire IRA that will be icing on the cake for my beneficiaries. In my lifetime I just don’t see the benefit. If you are 60 years old today your first RMD is 15 years away. Since the standard deduction, tax brackets, and IRMAA surcharge limits adjust each year for inflation, even the year 1 RMD on a $5m IRA will be less than $200k. If you plan your finances properly so you don’t have much income other than RMDs (for example stocks you don’t sell or cash value life insurance) those RMDs are not going to create a problem and in 15 years is likely what you will need to live on (at least in MA). I am not advocating waiting for RMD age before withdrawing and living off the money to enjoy life. I am just saying I don’t see a benefit in withdrawing extra and paying tax up front in your highest marginal rate or higher to convert to a Roth. Remember even if you are in a higher tax bracket later and pay more tax, you can still come out ahead by deferring if the AVERAGE tax % paid is less than your current marginal rate. For example, if you are in the 32% tax bracket today 6% state and convert you pay 38% on the entire amount. If you are in the 35% bracket when RMDs take effect, you will pay the majority of tax at lower rates so the average will be less than 30%. If you have retired to Florida or another tax free state, the savings could be significant, as much as 40% more tax to convert in an example I just ran (38% conversion vs 27% not).