Roth conversion

Can We Retire?

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We kick things off this week with Richard from New York who is wondering if it makes sense for him to start doing some Roth conversions? By far one of the most frequent questions to hit the inbox.

Next up was Liz from Buffalo who’s wondering if she and her husband have enough saved to call it quits when they hit 65 or so.

The summer travel season is officially upon us which means millions of Americans will be hitting the roads and taking to the skies to enjoy their long awaited vacations. 

Whether you want to hit the beach, blaze a trail off the beaten path or explore one of the major tourist destinations, there’s a smart way to do it. That’s where Seth Kugel, our latest guest, enters the picture.

With many credits under his belt, including the Frugal Traveler columnist for the New York Times, and author of Rediscovering Travel: A Guide for the Globally Curious, Seth is full of tips and suggestions to help you get the most out of your latest travel experience. 

Where to go? Where not to go? Drive, train or fly? From Brazil and Prague to India and Italy, we circle the globe with Seth and provide you with useful tips to easily reach your destination, with a few bucks left in your pocket.

For the tight-belted tourist and the first-class flyer, the eager student and the comfort-seeking retiree, Seth Kugel is all about showing how we too can rediscover the joy of discovery.

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Roth Conversion and Rent vs Buy

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We start the show this weekend with a call from Mike in the midwest who is wondering if it makes sense to start converting some of his traditional IRA money into a Roth.

Next up was Alan from the Bay Area with a question that never gets old: should I rent or should I buy? That’s the decision facing Alan and his wife.

The recent trend continues as hour two is nothing but emails as we continue to dig out from an overflowing inbox.

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Should I Do a Roth Conversion?

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When you leave a job, odds are you're going to have an old retirement plan out there. What should you do with it? You can usually leave it where it is, or roll it over into a traditional IRA, or, if the dollars are pre-tax contributions, consider converting it to a Roth IRA. That's the discussion on the latest call with Matt from Maryland.

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Backdoor Roth IRA

If you make too much money and are not able to contribute to a Roth IRA, I'm all for implementing the backdoor conversion strategy. But there are some rules associated with pulling it off, and that's what Jeff from Chicago was calling about on the latest BONUS call.

“Better Off” is sponsored by Betterment.

Have a money question? Email us here or call 855-411-JILL.

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#248 Year End Money Moves with Ed Slott

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Ed Slott, CPA is a nationally recognized IRA expert, television personality and best-selling author who has dedicated his life to educating Americans on saving for retirement and the intricacies of IRAs.  He was named “The Best Source for IRA Advice” by The Wall Street Journal and is the author of numerous best-selling books, which is why we are so happy he joined the show to help you make smart, year-end money moves.

  • Download the podcast on iTunes
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  • Download this week's show (MP3)

 Ed covered a lot of ground, including a great rule of thumb about filing for Social Security: "The longer you wait, the more you get!" Here's a quick list of things to remember to maximize the remaining days of 2015:

  • Make your 2015 Roth IRA conversion and consider a back door conversion, if you earn too much money to qualify for a contribution
  • Check the taxes on stock or mutual fund sales; use losses to offset gains
  • Max out your retirement accounts (yes, there's still time to get to $18,000 or $24,000 if you are over age 50)
  • Take Required Minimum Distributions: RMDs must start in the year you turn 70 1/2 or the year. Fail to do so and the amount you should have withdrawn will be taxed at 50 percent!
  • Donate your IRA distributions to charity: Although this is still in limbo, Ed recommends that you take advantage of it and assume that Congress will once again make it part of an extender package
  • Check / Update Beneficiary Forms
  • Bunch your deductions and if you are self-employed, project your 2016 income. If it will be higher than 2015, consider deferring income and expenses until next year, when you are in a higher tax bracket
  • Be aware of stealth taxes

Check out Ed's web site www.IRAHelp.com for more information!

Thanks to everyone who participated this week, especially Mark, the Best Producer in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 

5 Year-End Retirement Tips for 2014

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With just weeks to go before the end of the year, here are five potential money-making/money saving retirement moves to consider. 1. Fully fund employer-sponsored retirement plan contributions. Unlike IRA’s, the deadline for funding 401 (k), 403 (b) or 457 plans is December 31. This year, the limit is $17,500 per employee. If you over the age of 50, you can make an extra $5,500 as a “catch-up contribution”. Remember that a contribution into your employer-sponsored plan is an “above-the-line deduction,” which means that it is taken before you calculate your Adjusted Gross Income. I love above the line deductions because they are allowed in full -- many other deductions are phased out for high earners.

2. Consider converting Traditional IRA into a Roth IRA. A conversion requires that you pay the tax due on your retirement assets now instead of in the future. Whether or not a conversion makes sense for you depends on a number of factors, the most important of which is whether or not you can pay the tax due with non-retirement funds. If you have money available to pay the tax due, some advantages of conversion are: paying the tax at a lower tax rate, if you think that your tax bracket will rise in the future; eliminating the tax on future growth of assets; reducing future Required Minimum Distributions (RMD’s); and reducing the taxable amount of Social Security benefits. If you already converted your account this year, you may want to reexamine it. If the value went down, you have until your extended filing deadline to reverse the conversion. That way, you may be able to perform a conversion later and pay less tax.

3. Be aware of new IRA rollover rules.Starting in 2015, new rules apply for withdrawing and rolling over money from an IRA. Next year, you can only roll over an account once every 365 days (note: the rule specifies "every 365 days," not once a calendar year). The rule applies to IRA-to-IRA rollovers where the owner takes custody of the money him or herself. The rule does not apply to rollovers from employer plans to IRAs or to "trustee to trustee" transfers.

4. Take Required Minimum Distributions (RMDs). Generally, once you turn 70 ½, you must begin withdrawing a specific amount of money from your retirement assets (there are some exceptions). Remember, money that you have previously contributed to these accounts bypassed taxation - RMD’s ensure that the government taxes those funds. The penalty for not taking your RMD is steep -- 50 percent on the shortfall!

A few notes about RMDs: Even if you have multiple individual retirement accounts, you don't have to take the RMD out of each individual account. You are allowed to take one RMD from any of your retirement accounts, based on your age and the total value of the accounts. Also, filing a joint return doesn't mean you can take the entire amount for both spouses from one spouse's account - RMDs are calculated for each individual. Finally, if you inherit an IRA, check before year's end to see if you need to take an RMD on behalf of the deceased.

5. Consider a Qualified Charitable Distribution (QCD). Since its enactment in 2006, one way to sidestep the taxation on your RMD is to make a Qualified Charitable Distribution, which allows you to gift up to $100,000 directly from your IRA to a charity without having to include the distribution in your taxable income. However, you swap having to claim the income for making a charitable deduction. Not only does a QCD help avoid taxation, it also means that the extra income is not included in other tax formulas for Social and Medicare Part B premiums or for the Pease limitation on itemized deductions. As of this writing, lawmakers have not yet extended the QCD and while experts believe that it will be extended, you should be careful. If you choose to make a QCD, remember that the money must go directly to the charity, not to a private foundation or a donor-advised fund.

#194 Year-End Retirement Planning with Ed Slott

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What a treat to have retirement plan expert Ed Slott CPA join the show to help make smart year-end financial decisions! Ed is a nationally recognized IRA expert, television personality and best-selling author who has dedicated his life to educating Americans on saving for retirement and the intricacies of IRAs.

  • Download the podcast on iTunes
  • Download the podcast on feedburner
  • Download this week's show (MP3)

Among his many pearls of wisdom, delivered with his awesome Long island accent, Ed reminded us to do the following before the clock strikes midnight on December 31, 2014:

  • Make your 2014 Roth IRA conversion
  • Be aware of new IRA rollover rules
  • Max out your retirement accounts
  • Take Required Minimum Distributions
  • Check / Update Beneficiary Forms
  • Be aware of stealth taxes
  • Consider donating your IRA distributions to charity
  • Use Your Gifting Limits

In the first hour of the show, we had a terrific call from Mike in Texas, Sharon in CT and Mike in Maryland, all of whom needed guidance on financial advisors.

Thanks to everyone who participated and to Mark, the BEST producer in the world. Check out Mark's first-producing credit for this CBS Evening News segment that aired recently. If you have a financial question, there are lots of ways to contact us:
  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE