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March 26, 2022 8:30 am
Hans and Robby are back again this week with a brand new episode! This week's title is a mouthful for sure. Luckily, you have Hans and Robby here to give you a mind full of information, to help you make informed and educated choices.
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Hey this is Mike Swick from if not for God podcast our show stories of hopelessness turned in a hope your chosen Truth Network podcast is starting to just seconds.
Enjoy it. Sure, but most of all, thank you for listening and for choosing The Truth Podcast Network this is Truth Network welcome to finishing well brought to you by Cardinal God, certified financial planner long shot of sowing alternate financial plan of helping families through 12/40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well is a general discussion and education issues facing retirees guide.com are no advisors on trial CFP some insurance this show does not offer investment products or investment advice welcome to finishing well certified financial planner Hans I would were talking about IRA money used for a hybrid long-term care life insurance policy. That's a lot of words but Hans covered a lot of ground with with one shell right we are and so in this idea of counsel that were going to share with you today. You know all the neat things that that we did as Christians as we get the wonderful counselor like we know that we've heard it handles Messiah that Jesus is a wonderful, most wonderful, counselor, and so where does he get that well. He gets it from the anointing they got from the Holy Spirit. And if you look at Isaiah chapter 11 actually people know me well knows what my favorite set of verses where we see how Jesus actually is this wonderful counselor because we see his anointing the anointing he gets from the Holy Spirit in the seven spirits that are described there and those seven spirits are wisdom and understanding, and counsel in my knowledge, fear the Lord and delight in the fear of the Lord so you know when it comes to any place were trying to get some help and we need a wonderful counselor will be good if you had all those attributes like the ultimate fiduciary right on. If you would. It's so good to have wisdom and understanding, but also I love the word counsel in the word counsel in Hebrew has to do with someone who can see what the right path is based on your needs. Right because all of us have different gifting in a Robbie's a lot different than the Hans and in the way that God built man so he knows what the right path for me will was not the car business. By the way, and so he knows what the right path is for you as well. But the beauty is as we get counselors in our life, especially if they are like Hans were there looking at your entire situation may have all the information then all my goodness, the wisdom and understanding, and in inputting you on the right track. Based on the resources that you have available give you so many more options and so much more that you can do in today's show is very much along these lines is what were talking about is you. You have an irate situation which has a tax liability to it but Honda let you take it from there you will and so we just did YouTube video which will email out to everybody. We did it on just what you said it's a mouthful. Were talking about using IRA money fund with a single premium piece of the person's IRA to get a long-term care policy for two people. In this example has been one yeah I decide to do the show because it just hit me.
Will we were presenting this and guided by you and this guy is been a good saver where I really got a lot of asking them a tough question is which I ask a lot of people so be ready for this. If you committed to financial planning with me becomes the IRA.
What's it for you know that sounds like a simple question. People good to say for me but you know you say most of the same people with their IRA money there there sandlot on pay taxes in their there.
Thinking that every time they pull money out of there.
They're gonna have to pay taxes so they put it off as long as they can, then they get paid 72 and they only take the minimum and they grumble about it. Typically and so you know I could go overall land in the different I do will and a different show what I want to ask people is is okay so what's this money for what what why you have this $500,000 or $800,000 that you've accumulated through 401(k) and always talked about his taxes to this point in postponing any withdrawals to have to switch the money ultimately for people have a hard time because at some point in time. Ryan thinks it almost becomes idle in that dentist, watching it grow in LMS so that you know because I watched it grow to this for so long. No, that we've lost sight as like like Peter and we we got out of the boat and we forgot that we could keep our eyes on Jesus and go think what will you puts it like this that people get so focused on you know I mean I can answer the question formats for security in retirement maintenance like like they know that there and I could get get it should have to pay taxes but I can. I could go get it if I needed to do so. I feel better going in my retirement, even though I probably won't go get it unless they make me go. When it says people talking in circles and when I really put pressure on but I don't let them off easy. When I got these big IRA, 401(k) balances, and I'm looking at all their other money in their income and their Social Security and their spending, because usually people that have big balances in their 401(k)s are not big spenders. Spenders don't usually make great savers and so were great savers are usually very slow to spend.
So those are the kind of people they can live off their Social Security and their other money for a long time and so it's real. I got to know what this for and then you know at some point. I turn this into a multiple-choice question. You know, and I'll go to one of the anything you could say it's for your kids, you know, if I have a single person or if it's for us, but the other spouse in a married couple. This is my wife or this is for my husband okay or the kids a mean or something like that in the church and then we teach about your CDs but want to turn this into a multiple question, but it's gotta be for some combination of those people for those organizations are what else would it be for it doesn't exist to pay taxes that exist to pay you, and that amount that you spend on some kids are going to spend it on something inside it really through hard questions we get to a point with people that we start making them allocate the 401(k) money to go do something with that message when I start to do my work in what I love for them to bring up instead of me. You know you know it's for is as if I get right can't take care of myself. If I have big medical bills are lots of people want it right square in the head with a really saying is if I have to go to one of those rest homes were.
I guess just something then that's right there and they'll use this money to take care of me. Okay, that's what I'm looking for is when somebody says that and then 25 years ago I would pull on my bag long-term care insurance policy and I'd start John and how they can spend three, 400 bucks a month for a couple probably more now to get into long-term care insurance of smarter to pay for this long-term care insurance and it is for straight out of your retirement money and so the point of the show today is if somebody has a large IRA large 401(k) that can be moved into an IRA tax-free or tax-deferred. And then what will show them how to do is take a portion of that money and it doesn't bid need to be as much of these people did and just roll it over into another IRA that is specifically set up to buy a long-term care insurance. That's what it really amounts to massage a hybrid right so it's got a text is also hybrid. So if they don't need it becomes life insurance.
What does and so were just were fundamentally taking like in this example $200,000 and moving it to the insurance company and it's still there same amount. Still an IRA is now tax liability and then out of that $200,000. It pays the premium at 1300 $22,000 a year for 10 years and empties the IRA so that you have this $290,000 life insurance policy so first and foremost if they never use it for long-term care. This couple and the second one of them dies discovery $290,000. This can go tax-free to the beneficiary so the very minimum. They've taken money that was taxable and that Scott passed to their heirs for the tax bill and turned it into something larger. That's going to go to their heirs texturing and then what we've also done with this is we've created a long-term care fund that is twice the size of the licensure. So when I call the life insurance 300,000 close in the long-term care benefit is 600 so the first 300,000 that they use to the tune of about nine grand a month from nine grand every month. The use of 300 grand. That's their life insurance earthly you got that 300,000 for long-term care during their lifetime. Then there is can be no licensure that's used up now to get into the insurance company's pocket and they're using up the 300,000 of extension writer. All of this is funded with an initial deposit of 200 and they can mix-and-match husband could use all 600,000 more wife could use all 600,000 more husband could use up 60,000.
The wife use up 20,000 and then they'd still pay a life insurance benefit of 240,200 20,000 so it's a very flexible it's it's at the planned arrangement over a person's lifetime.
Now, in this case, the people were 59 and 57 almost 6057 disappointed and does all this detail sounds. I hate we got to go to break, but we want to remind our listeners that the show was brought to my carnal guidance.com and a carnal guidance where their website is and you can click on the seven worries tab. Find out more about long-term care in those kind of things as well as email Hans or contact them if you want to custom quote for your particular situation was with what you need. Again, this video he's talking about is on carnal advisors in Q2 which is Cardinal advisors elitist in the nondisplaced, you can subscribe it out and get all their music without slowing him back and have more on this idea of thinking. IRA money to create long-term care in a hybrid right back. Hans and I would love to take our show on the road to your church and Sunday school Christian or civic room. There's a chance for you to advance the kingdom through financial resources by leveraging Hans expertise and qualified charitable contributions veterans aid and attendance, IRA, Social Security, Medicare, and long-term care.
Just go to Cardinal guy.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school or civic contact on Cardinal guy.that's Cardinal guide.com welcome back to finishing well, a certified financial planner Hans Shyla course is Cardinal guide as well as describe them. Hans's book complete Cardinal guide to planning for and living in retirement where he goes and some of this but in today's show are really going places where we had gone in the book Lauren and in the shows before talking about a very specific plan of using IRA money to create a long-term care life insurance hybrid, which when we started but were using financial numbers right.
Hans from somebody was 5959 it was 5070 double 63 older than that. 59 1/2 threshold where he can start you have to be that by this policy, we have other ways to do this if you're younger than that.
And he's probably in the youngest side of a lot of our clients are coming in there more early 60s, mid 60s in these numbers that I'm talking about are going to be relative not only to his age and they're both are ages, but there also have a relative to the size of their IRA mean if he only had $350,000 in his IRA. I would not be recommending that he put 200,000 of it in this policy. He's having a tough time answering what am I going to do with this IRA money hired me to help them with that but I I need him to answer the question. What's it for, and so you know he definitely wants long-term care insurance and he was considering just buying a regular long-term care policy. But until we got them in this idea and I just decide to do a show about it. So we took about 20% of his IRA money or $200,000. We can spend it.
We just moved it into an IRA annuity and this annuity shoots off a 10 year premium 22,000 a year. Immediately when you sign up to move the 200,000 all your IRA into another IRA, which is actually an annuity that's gonna be sent out at this 2200.
But the 200 is that is actually the interest coming on the annuity and then is he paying tax on that 2200 that's coming out every year is 22,000. I'm sorry I can't text that shown it income but were taking 200,000 and spread in over 10 years, which is part of a whole program were doing with his IRA but answer that is yes without create a little bit more expense will have to figure out how to pay that and but was really accomplishing is it's turning $200,000 of taxable money either to him or his beneficiaries into either 209,000 was caught 300,000 life insurance is tax-free for $600,000 were the long-term care coverage. That's going to come to them. Tax-free and it's part of a larger program of slowly moving this IRA money that pretax into an account with the taxes of Artie been paid so that he can freely spend in retirement were doing Matthew Roth conversions so working to convert about 800,000 million for him and his IRA to something that's after-tax and it's really going to be $600,000 of Roth conversions and $200,000 of hybrid life long-term care so by the time the student is 69 or 70 years old and I have a lease to promote positive standpoint, $800,000 of after-tax money either in a Roth or this life insurance fees and still have about 200,000 in his IRA re-unpaid tax time and that's something.
As you always talk about. That's the idea is if you just in your Social Security. There's no taxon on that in of itself. So your other income is really greatly affected in this OSU.
If you can make these, conversions of your IRA anomaly and making it available for whatever you need in retirement. Again, for whatever beneficiaries you have are the recipients of it that they too were going to be not have a big tax liability to go because million dollars is a big tax liability.
If he does ran up in the 70s somewhere that right there is usually focused on this is all this is all about.
Nobody had really ever asked him so amputated.
Taxes on the radio doing with the money for seven trouble Internet at the same time, he was communicating his mother-in-law is in a facility right now they are handling Riemannian their pan out a lot for that and said he would eat. He was already a very solid by some long-term care insurance. When I showed them how to do that is part of his plan with his IRA system hello I am one of them jumped in and so exciting to me when you brought it up that allow for not just a whole lot more.
You can get unlimited long-term care because the one you're talking about, you know you you're doing $9000 of essentially a month for what was it six years, but what was it 22,000 issued me to benefit your time, but in my it's 9000 a month for 6 1/2 years right asked for the two people, both the husband right right and they can mix-and-match it and then for an additional premium of about 6000 a year for 10 years or if the deposit to 60 into the IRA into the IRA right from the beginning, the IRA annuity then is policy would still be 300,000 licensure that doesn't change if they don't use it for long-term care but then instead of 600,000 For long-term care. It's unlimited lifetime so young about this, yet he's very seriously considering that option which I threw in at the end him that S yet because your time at two different people that do not possibly long-term care and how to have that unlimited thing is like you did. You just that would be one worry out the window completely right at that one. Well yeah and and you know people are going to be more inclined to use idle IRA money or plan for something for the future.
Then as we were sitting down talking to this guy about taking money that's in a brokerage account or savings account. And frankly I don't think he has that much laying around that he would actually do this. I think he would probably buy this thing with about a month are paid by the years by traditional long-term care now. I will tell you a place where I will use the lion share of an IRA. If I got some leaders like 75, 78 years old and they're kinda grumbling about minimum distributions. Anyhow, so that means they're not spending their IRA and maybe they've only got in their IRA, 250,000 left. Maybe there single leg at 200,000 left. They can take that whole 200,000 roll it into the same type of policy only covers one person and then it'll distributed over 10 years, settled, made all the minimum distributions and it's effectively providing a long-term care benefit for them or if they pass away without needing long-term care module. Create a big life insurance benefit for their kids so when somebody's in the mid to late 70s or even early 70s and they don't really have a purpose for the IRA other than give it to the kids when they die and they're keeping it in their worry about long-term care we can take the whole thing and turn it into a long-term care life insurance right which is genius.
When you think about it because you know if they just kept on with minimum distributions when their heirs got that money. It was all going to be taxable that and it would be 300,000 would be 200,000.
If it was not right and so what will yeah and these things have easier underwriting than regular long-term care insurance and will return you get some dinner 70s you got a number of ailments you get turned down for regular long-term care insurance, they could certainly turn you down for this deal. If you think serious about but there's a lot of people that are managing chronic illnesses pretty well in their 70s and the life insurance company is here sticking a glob of money in their they're going to be a little more considerate in the underwriting so we get a lot of people insured and stuff. We couldn't get him on regular, long-term care, and again it's it's beauty as it is, you have both the benefit of life insurance in case you never use it and then you have the benefit of of of creating taxable money and the nontaxable money. Whether using it on your own are using it for the long-term care and again this is it's important to remember that a lot of times, and we talked about facilities but a lot of times long-term care is in your house right.
Who wants to go to a facility if we can still get the care our house.
This is by private care.
You want to add some this doesn't only work with IRA money were it's actually an accommodation for IRA money. You just have regular savings and you got quite a bit of that and it idling you're not earning a lot and it's really there to pass on to your kids and your safety net for long-term care.
We can take it from you.
We can do a lot of work with $100,000 of, especially if you're willing to pay a little ongoing premium. The extension writer is safe to say that for people in their 70s weakness, we can take some of their savings and put it toward this and get him long-term care that they don't use the long-term care it pays off as a life insurance benefit after they die. People in their 60s is going to require a little more money because we need to write bigger benefits because they're not getting use it for several years and then added that they were covered two people and we got this pretax IRA, 401(k), single so they haven't dealt with in the center which are ages. I got some for one hour and as you can tell there's a lot more to be understood about the subject and that's why the first will have the video there at Cardinal advisors on YouTube you can watch the whole thing. Tom and Hans take you right through a lot of the numbers right there on the screen is absolutely beautiful as well as courses website Cardinal guide.com where you can click on the 71st tab. Find out more about this forget Hans's book the complete Cardinal guide to planning for and living in retirement and and so again, thank you.
Hans is been distant fun.
Thank you and God bless.
Finishing well is a general discussion and education of the issues facing retirees Cardinal guide.com Cardinal advisors and Hans Schild, CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by Cardinal guide.com visit Cardinal guide.com for free downloads of the show previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments and taxes as well as constant best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows what get Hans book go to Cardinal guide.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again that's Cardinal guide.com Cardinal guide.com this is the Truth Network