Video transcription

Mon, Oct 07, 2024 6:00PM • 7:33

SUMMARY KEYWORDS

Roth conversion, future tax rates, tax cuts expiration, financial risk, tax-free growth, beneficiary tax rates, low tax rates, tax planning, retirement planning, tax strategy, financial advice, tax expiration, contact information, tax consultation, tax action

Talking through three very good to see you your favorite time of year, Roth Ober talking through three considerations before making a Roth conversion. So Roth accounts are an incredibly powerful tool when it comes to creating wealth. Roth IRAs are not subject to probate and can pass on to your heirs tax free. So if you are debating a Roth conversion, here are three things you need to consider, first and John. Number one is, what will your future tax rate be

Yes. And you know, we've done so many videos on this, and we will continue to put them out, because now is the time to act right. December, 31 2025 the tax cuts and job act expires, we are at some of the lowest tax rates in history if Congress does nothing, and really even to keep the tax cuts and Jobs Act, they have to go through several steps. So I think if Congress does nothing, which are very good at doing, then tax taxes will revert back to 2017 which you know, you see the projected income. And I know you don't like projections, Aaron, but in my opinion, and in the opinion of a lot of experts, this could potentially, if the tax cuts and Jobs Act does expire, this could potentially be your best case scenario, because we have an unsurmountable your best case, which is the amount of debt that no one is, you know, taking control of and there's been talk for decades now that the only way to control that debt is to raise taxes. Well, we're over $35 trillion of debt. So you do the math, we are at the lowest tax rates in history. I've made this comment before. When we look at investments right the behavioral finance, we are at the point of maximum financial risk when investments are at all time highs. The argument could be said for the same with taxes, that when taxes are at all time lows, that could really be your point of maximum tax risk. So you want to take control your destiny and start addressing it. Yep, safe bet that your future tax rate will be higher. All right, next consideration, ask yourself when you'll need access to those funds?

Yeah. And you know, when it comes to Roth, I really encourage people to say like, this is the last bucket of money you're going to touch. Why? Because it is tax free, compounding growth that is the most powerful financial instrument in your arsenal. You want to let this money grow. However, there is a topic that a lot of people are not talking about when it comes to Roth and Roth conversions, and it's a very important planning aspect, and that is, what if one of the spouses dies? Well, guess what? Folks, you have one year, the year of their death, to file married filing jointly, then that surviving spouses tax rates skyrocket. So that could be a point in time where you need to really utilize the Roth IRA to control all the tax bombs you have in retirement.

Yeah, good point.

And then last when considering a conversion, it comes down to one important question, do you want to pay the tax on that account, or do you want your beneficiary to pay the tax and what will their future tax rate be?

Oh, Aaron, you are making me so happy with this interview. I mean, how many people out there are really even thinking about their beneficiaries tax rates? They're not and it's very important, because, let's say you have a daughter that's a doctor and a son that's a police officer, like I was for 19 years. They're both great careers, but they're both very different tax brackets, and I see way too often that people are just splitting things 5050 and guess who's getting the tip? The IRS. The IRS is getting more money because you're leaving 50% of your IRA to your daughter that's potentially in the highest tax bracket in the land, and the IRS is making out more. So the Roth IRA can help solve that problem. And if your beneficiaries get good financial advice, they will be told, Do not touch that money. Let that money sit in that Roth IRA for the next 10 years, and hopefully they get an exponential growth, and all of that growth is tax free.

And John, you've touched on this already, but it bears repeating. We are living in a historically low tax rate now. Tax rate right now, many financial experts believe the tax cuts and Jobs Act of 2017 reduced federal income tax rates to the lowest they may ever be, and those cuts are set to expire at the end of 2025

Yeah. So if this was, you know, back in the good old days when the boy stood on the corner and said Extra, extra read all about it, it would say, the headline would say, we are in a tax Sale of the Century. You need to address this because, like the infomercial says, You need to act fast. This offer won't last long. We are less than 18 months away from this act expiring. You need to take action. Because what we don't want, folks is you sitting in 2026 having your $15 latte at the coffee shop, because that's what inflation does. Sit things right, Aaron and tax rates are higher than your golf score, and you're sitting here kicking yourself in the butt because you could have take action. You could have taken action when golf rates were lower than your pickleball score. So lots to consider, John. If somebody wants to talk through whether a conversion is right for them. What's the best way to reach you?

Yes, well, we always have a ton of education on our website, www.gosecurus.com we have videos, podcasts, blogs, all on our website. So we encourage you to go visit. And while you're on the website, you can visit the contact us tab, and from there, you can schedule a 20 minute phone call. Well, we're, we'll answer any general questions. Or you can schedule a complimentary vision and clarity consultation. Or if you like doing things the old fashioned way, give us a call at the office, 858-758-9889, and they will get you on my schedule. Wonderful John, thanks so much for your time today. I appreciate it.

Thank you, Erin.