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November 20, 2021 8:30 am
With 2022 quickly approaching, Hans and Robby go over some need to know details about new RMD's and RMD Levels.
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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 you by Cardinal God, certified financial planner long shot of sowing alternate financial plan of helping family spiritual over 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 upon trial CFP some insurance this show does not offer investment products or investment advice welcome to finishing well certified financial planner Hans Schild today as were looking into the end of 2021 we got new required minimum distributions new required minimum distribution levels for 2022 and to be getting into that.
But as I was praying about this actually thinking about it with Hans that I'm pretty certain that God has sort of these required minimum distributions as well in the car seat. He taught about that you know in the parable of the mean is where you're familiar, where he gave you know the one serving.tan another servant at five. Another got one and in the course patently based on the fact that the wicked servant didn't do anything, but Barry has one Mina.
He did not meet the required minimum distribution and so there was a severe penalty that you might remember us in being gnashing of teeth is not meant to anticipate that particular penalty and and so the overall thing I'd like that to me, that I see here that I would love to just become for second is that God has been investing in me personally in all my goodness in each and every one of the season better than investing in or healing us through illnesses. Helping our families get through this and that and he's been obviously supplying our financial needs and so now we get to be a good steward not just of of our financial minimum distributions which clearly were tied by that minute. But oh my goodness, you know in in second Corinthians. It talks about comforting others with the comfort that we've been comforted with like you. You are a recipient of phenomenal recovery may be from alcoholism or or or maybe from some other addiction or your family.
You went through a prodigal situation or whatever it is he invested in that and now we have the amazing opportunity of trusting him because God loves risk. I mean if you don't think he did.
He risked giving Robbie D'Amore free will so it's a risky God only made the he believes in risk and he he wants us to risk going out with him on the adventure of giving him a return on all the things that that we've invested in me that he's invested in us and I think is you listen to the show today to talk about that the required minimum distribution is not the abundant life. If you just do what's required.
You know that then then then that isn't all that that could be available to you and your family as you think about what what God is invested in you.
We get a chance to give back so along those lines.
Hans this is this is near and dear topic to your heart. Based on all the study that you do what most people in community. They know what an RMD they know the required minimum to many of us sat back and really looked at the word that the second word in the three words minimum the government telling you this is the minimum you have to take out any change starting at age 72, 72, now. Used to be 70 1/2 going up and governments to sandlot when you have a balance in your IRA you're now retired.
You have to take some of this money out and here's the minimum amount that you have to take and what I'm thinking is that people come into me and a lot of merchants terrified that I know minimum distributions and they'll keep asking I'm talking about different things and about those RMD about that required minimum distribution don't have to do something. There yeah you do we do this whole financial plan written more than meet the required minimum that something that I really would just prefer you don't have to worry about your retirement. You let me worry about it wouldn't be taking out more out of your IRA and the absolute minimum that we have to satisfy me. The reason we have IRAs and 401(k)s and we have these big balances is because 3040 50 years ago these really didn't exist for the common people they could my pensions, and the only way you get a pension payment if you worked at the same place for 34 years. Then, you know, when you retire than they would pay you a check every month and they wouldn't give you a big hunk of money to manage his qualify for so much and when people started changing jobs, changing careers, a lot of things going on is weak, we got into the self-directed defined contribution retirement account, so there there instead of the company.
Keep in the money and having a big pool so that they can pay out these monthly incomes are annual incomes: pension now. The money sits in your account under your name and then you're in charge of your target investment on it during charge of the contribution amount that you put in and then you you're not responsible for taxes during the time he get big break from the government. To the extent that your employer deposited in their negative break from the government to so this is a great system and many people have done extremely well and they all of a sudden have the balance and they can get used to it and they're just watching them grow and growing not only because the investments are growing and growing. Because the keypad might and along comes retirement now. That thing means a different thing, or it should been because now when you're retired when you choose to retire now. That thing instead of you put money in it is put money in you. But again, you're in charge. You get to decide how much you distribute out of your IRA or if you leave it in the 401(k) out of the 401(k) and then you have the problem of well I start taking too much. There will be any left when I'm 80, 85 years old and I'll be grow so maximizers not a lot of people really does.
People are just terrified to take anything out here and then they reach 72 and all I want take very much at age 72, and I can see how it's I think you did a great job explaining that that here's this person thinking the last thing I want to do is run on a money and at the same point in time. From a financial planning standpoint. This has huge tax ramifications for as we talked about on many many shows. So something that we need to give some more thought to then certainly what's the minimum air will meet.
We could start with the fact that many people view the savings account and when I look at their balance sheet when they're coming in for retirement planning.
A lot of people really might have $470,000 in their IRA they got $8400 in their savings that that's a little bit of an imbalance unit which is showing that they basically spent their after-tax income to live in. The reason they have savings, is because of the 401(k) and 470 grand so the first problem were in a run into is that they all of a sudden rented some kind of emergency in retirement where they would all of a sudden need $50,000 to pay for something for their children work by something for themselves. There could be something very necessary that they Geico access that money is pretax account. So if you want 50 grand out of a $470,000 account you're really going to need to withdraw about 80 or 92 net 50 elements tax and that some people retirement just cruise along. This is the same so that the first place that accumulating money and not really take anything out of it, but I'd much rather see people do is begin a process of a Roth conversions Roth IRA conversions moving the money from a taxable account into a tax free account going and paying the taxes at a much younger age in the 60s so that they building up a tax-free savings account they could go access in an emergency without tax so San's son success and I'm not semi-Tejano mean to be going about this kind of thing yet, but actually it's something even in your late 50s. You need to be thinking about you can't take money out of your IRA until 50 9/2 without Van Pelt left to do some maneuvers which you can do a Roth conversion earlier than converted from traditional to a raw data. Taxes. The only catch is you gotta pay the taxes out of other money so we start doing Roth conversions in the 50s were going have to come up with the money from other sources to pay the income tax, Rotenberg restarted 60 we can actually pay the taxes out of the traditional IRA. So in other words, if we were going to take $100,000 of our money and converted and that generates $30,000 in taxes we can actually pay the 30,000 in taxes out of the IRA and then really can end up with 70,000 in the raw but were much better off work as we now have a tax-free life savings account and we never asked to go to our children are heirs completely tax-free. So as not to mention those who are in their 30s or 40s or whatever that date, they can start switching their stuff top Roth IRAs rather than using traditional IRAs right now. But before we get in all that and and more this table and all that stuff for so we got to go to break, so we want to remind you that the show today is brought you by Cardinal guide.com in a cardinal at advisors is the name of their YouTube channel where there's also a YouTube video on this whole new levels of RMD's for 2022 so that information is available cargo guy.com or you can get Constance book, the complete guide to planning for and living in retirement so we can have more of these new RMD levels which were come back. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care.
Just go to cargo guy.com and contact Tom to schedule a live recording of finishing well at your church Christian or civic contact on Cardinal guide.com that's Cardinal guide.com welcome back to finishing well certified financial planner Hans Schild today show new required minimum distribution levels for 2022. So take away Hans, what are the RMD required distributions will first of all, they start at age 72 and there to keep going for the rest your life.
Many of you there Arianna distribution plan.
Don't need to worry about this because of your article and so much your IRA every month or every year to live more than likely in excess of this but let's just assume that your 7273 7475 if you're not there yet. Just prepare to get there and I was talk about these what they are costing so simple example is if you have or you had hundred thousand dollars balance in your IRA as of December 31, 2020. Last year, and you haven't taken your required minimum distribution have taken any distribution for the year.
Right now that hundred thousand dollars. You gotta take 3.65% out of your IRA and pay the tax so that would be $3650 of your hundred thousand needs to be distributed to you and then whatever taxes are due on that amount of money you're in your fire detector so people that are on the minimum distribution plan. Many of them they are in way more than 3.65 in a return on their investments that they take a distribution that they earn it back and more every year. Account keeps going up.
Despite the minimum distributions that real common for people that are in their 80s 90s that it only worked on the minimum distribution plan to have a larger balance than they did 15 years ago when I started to expect so on hundred thousand and eight, 72, $3650 on a million at 36,500 something that is a very large IRA or 401(k) balance and they are $70-$36,500 and generate a pretty nice tax bill specially mom money, naturally you by definition didn't need this number doesn't get up over 4% until 75 done reach 5% until age 81 6% at age 85 and then 8% at age 90 and at 100 so person is that 100. There required minimum distribution under these new tables is 15.63%.
So it is still isn't like he got emptied all thing out of your lucky enough to make 100 so what I would propose that you would if you're younger than or even if you're at this age that we would start taking more than even if we pay the taxes on a larger amount than the minimum and then we just save the difference in some type of the tax-free or tax-deferred account so that when you ultimately if you need money later in retirement.
You don't have to tack This whole taxable account first thing work. You don't need the money later in retirement that you're going to leave to children in account where they can actually receive the money without a tax liability. You can't mix 401(k)s that have not been rollover IRA so numbers if you have a 401(k) sit there and then you also have an IRA you're going to have to take your minimum distribution appropriately out of each one. To cover the other. Now Roth IRAs, which is a tax-free account that you set up by paying the taxes on the front end which many people think is not a very good deal and it is painful when you write a check, but if you have a raw or you're interested in creating a Roth account. I can help you do that, then there are no minimum once monies in a raw, there is no requirement that you have any amount of it out of your lifetime so it is is a great account to leave to the next generation is also a great account to draw on late in retirement where, especially if you're going to do it all at once to buy something were to buy something and give it away just because it doesn't have attached.
I got my 23-year-old son on all just started his new job as an engineer and I got him making all of his contributions to the raw side and the people that work with him told me was not just okay.
And I'm not sly, but that real time to start raw is when you're a young person because you got all those years of tax-free accumulation and then you can enjoy your retirement. Tax-free. Most of my money and IRAs is in raw so I'm not can have to deal with these minimum distributions for the tax bill that comes along with now what what I think the best for last, as we want to talk about using two CDs of the qualified charitable distribution. This is the part that is really in line with God.
The kingdom is you can give money to the church, like giving God's own money back because he's is in charge of the fact that you have a big balance in your IRA and you can donate your minimum distribution to any charity any qualified charity.
Now there's a bunch conditions not just walk away from the show here and start donating your IRA money because you needed check all the boxes right, you need to have somebody that knows how to do this correctly. When done correctly, you can give up $200,000 a year out of your IRA money for them. Very wealthy people that And they give it directly to the charity or to the church and you you avoid all taxation and it qualifies your so my advice is if you can afford to start using your PCD or start using your IRA through Q CDs as a way to give away your IRA to the church and the mission of God is a classic triple threat is what disturbs right against you. You're able to take it out without incurring any tax write which means that your gift goes that much further. As well, right.and I think of a lot of hurt really good stewardship leader of the church.
How many older people that have that have sizable IRA belt are not using the plan to leave the kids, which is fine on the time take money away from the kids here yet.
They did their charitable giving and giving you the IRA leave the other money we the money Artie pay taxes on the land of the real estate that kind of money or the life insurance money to kids and leave the IRA and life and death to the charity of metal for the taxes on it.
And it will give a lot of money in the charity and this is the time of your it absolutely is laugh you've already made a distribution from your from your IRA. You did distributions earlier and then you come along in November and December calendar PCD now unfortunately that will work because CDs need to be the first money coming out of the IRA to qualify for is the minimum distribution.
But if we start talking about this year and find out you can't do it with you to do this for you are with you in January so that that that's what I like to do PCD get a lot of away in the church love like no other money in January.
My advice for a lot of my clients, as do all your giving in January and do it through the IRA and that if you want to throw something in the plane every week. Go for, but the substantial part of the need for commodity IRA and once people understand this beloved, meaning that this is the time here because for Topamax levels for 2022, which is next to yourselves. The first thing you do is is you going to January is this figure to CDM and away you go. Probably figured money in your mission there and welcome the money and will help anybody do it. You just give me a call will help you through it are all back. Check your bank or stockbroker or walk them through it, just to make sure it's done properly right and it's also available for any 501(c)(3), I'm so soon.
Election talks about those Christmas boxes. Try to think what it is. Operation Christmas child) 510 rates and also to other things that you might want to take part in fits of 501(c)(3) no one got me. We can we can admire the lady room data going to January 6 different beneficiaries. Acute CDs were were were not sure exactly how much what I can get the same amount each week and do multiple Q CDs one IRA. They just need to be the first in succession before she takes any money out RMD requirement is something to take seriously. We know the rules, we can help you stay compliant but my suggestion overall strategy were were going to get this money moved out of the pretax account and either given away or into some after-tax account of tax-free account like a raw so that it is going to be better available for you later in retirement, tax-free, or it's going to be a nice gift to give to your children, Roth really don't have a mortgage attached to your IRA government here absolutely amazing, wonderful opportunities for us to be stored since what what is just a whole lot of big balance is out there and IRAs.
It's amazing how God is blessed in these times, and the opportunities you know that it provides times. We thank you so much again.
You can find out more about the 2022 levels, enhances video in YouTube which is under Cardinal advisors the course. All the other good stuff complete Cardinal guide to planning for living in retirement as well as conscious personal email address. No way to contact them is through Cardinal guide.com so it's the guide.
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In the course.
If you have a topic for the shower something you would like to share with us. We'd love to hear from you and yeah a lot of people are emailing these days.
Cardinal guide.com were there going on the website and are just sending me a message and the messenger thing is on our email@example.com lead people to reach out to us that way. So anyway, do it will be glad to help you.
Thank you again great shallow. I'm looking forward to next week. Thank you. Finishing well is a general discussion and education of the issues facing retirees Cardinal guide.com Cardinal advisors upon child 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.com for free downloads of the show previous shows on topics such as Social Security, Medicare and 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 to get Hahn's book go to Cardinal guy.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