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IRAs: The Three-Legged Race

Finishing Well / Hans Scheil
The Truth Network Radio
June 15, 2019 8:30 am

IRAs: The Three-Legged Race

Finishing Well / Hans Scheil

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June 15, 2019 8:30 am

This week Hans and Robby talk about IRAs with a special guest! Listen and learn about how Uncle Sam is  your silent partner in your IRA and more!  

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!


You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at


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Welcome to finishing well brought to you by Cardinal guy Certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well 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 today on finishing well we got a three legged race and actually were calling the show IRAs three like bricks because you know when you look at the whole thing harms you brought it up the and began our certified financial planner hunch island. Today we have a special guest as well sweetheart I have a three legged race working to get into what Amos 33 is here in a minute.

But before we say that Hans share with us about our silent partners when it comes direct your partner will soak up folks don't really realize Uncle Sam or the IRS US federal government and state income tax people are partners in your IRA and they have been since you started first put money in your 401(k) or your IRA and they can continue to be until you get that money out of the IRA and every dollar, there he got me what we do is profession is try to help people minimize that action as much money out of there as we can with the least amount I sent you picture with me that you got this Uncle Sam character with his finger out and he wants you he wants you to be his partner because he knows that you can make an income for him as well as for yourself and so that there is definitely a partnership there and and there's a study before we can endorse our mystery guest here, but there's a study in Amos 33 it's a fascinating thing to me that Amos 33 is what Amos 33 is and what Amos 33 is is kin to walk together except they be agreed. And if you've ever been in the three legged race but they tied the two legs together and then you know the team that can obviously get in sync with one another as far as running it in. In the other legs and on the outside of that of the teams it's gonna win. And so how do you get in agreement with Uncle Sam and were going to talk about the strategies but I watched think through the spiritual aspect of what were talking about here because clearly it's it's kinda fascinating as we ask God into our hearts and God into our lives, and it is Jesus said apart from me you can do what nothing, absolutely nothing, and so life, to an extent with God is a three legged race in a course. It's just like Robbie to take off running does want me to sit still and so it's kind of a cool topic.

So is Hans and our mystery guest go into this today I want to think about the spiritual aspect of what may be going on in our lives when we don't figure out you know when we don't spend time thinking about what's going on with the other person are three-legged race so that Hans I think it's time to introduce her mystery guest. Fix Tom certified financial planner, CFP, who I'm really proud 26 years old.

27 as a 27 years old. The correctly one of such a respectful young guy, was an Eagle Scout, or is an Eagle Scout is my assignment in the work with Cardinal and with me six years ago, between his junior and senior year of college at UNC and I just got around ever since start working on it CFP about three years ago four years ago you cheated two years where he took the exam and all the experience that remarkable 25 years old. He was a certified financial planner. One of the youngest in the country and to add all that Tom is a wonderful time. Love the Lord very strong Christian and working here with us and he also talked to a lot of our clients as you did it become clients. Many of you there listeners show you know Tom well and he does all the work around one energy stop next meet everyone and were excited to hear from Tom and you know when we're thinking about this Tom you you had a lady you're working with, that illustrates a couple points one that I wanted to mention is you talk about this as I I've talked to friends, you know, I never talked about things like IRAs of this in my entire life had I not met Hans but now that I do this so people come up to me is not infrequently that they start asked mixed notes up and I say well this is a good time that you need to reach out to Cardinal which is the sponsor the show consider you Hans Tom those people with the will help you. Great deal to me.

You know I'll say well when it comes to IRAs and now look at me and I go, Robbie. I don't have an IRA.

All I have is is a 401(k) and I'm thinking well I think you have a little bit of a misunderstanding, but because a lot of the regulations are the same right regulations are the same with the 401(k) you got a plan document or you actually have the plan administrator and make some extra rules that can be good or bad for you. You also have the option if you have a 401(k) to rollover into to get it into an IRA which sometimes you have to do right and that's where you come in. Tom we have a client who is coming to us. She still working and she had a 401(k) from old employers.

She is no longer working with and she's turning 70 1/2 to company have last year and she got a letter from her old 401(k) saying you need to do something with it, you run into a little. I need to do here and unbeknownst to her if she did nothing she could left alone there were going to send her a check for the full balance of that 401(k) with taxes withheld by essentially all that money was going to show up as taxable income in that year is based off the plan document.

They essentially didn't want have to deal with required distributions and so they were to send it to her so luckily she brought it to us in time are effectively ended up opening an IRA rolling into an IRA so she didn't have to take it all in one year to show that I mean you know a lot of people to leave the money in the 401(k). That's where things done well and they don't want to mess with it and he could be good. It could be reason to do that but is also think that they might not know or think about the consequences of doing so absolutely and you know this a good time to pause and say your listing to finishing well, a certified financial planner homicidal and Tom.

We are always talk about this book, the complete Cardinal guide to planning for living in retirement, which is there a Cardinal and you can get the chapter that we talk about today IRA specifically with three-legged race of IRA but is just called IRAs. As far as the 70 worries tab and if you go to seven race tab, you can just click on that and get a free PDF or Hans they can just email you right, you can go on the website that is a method of an email or give us a call will be glad to send the book out the whole thing.

No charge mentioned that you were losing the show.

You can also get in Philadelphia are a lot like an anonymous looks like a good nonanswer.

You can even find it on Amazon through our website. Lots of ways to get to the book you can get them like I panel, think of the word of the lecture. The digital one for what the dollar 95 or some dollar 99 get on the Kindle version if you that's what they can handle Amazon the book. We can also email you yesterday. It is not about the revenue from the sale of books is really about getting the information find it enjoyable and we we thank you for listening and we would love to get a copy of the locality and also we want to make you aware of if you go to Cardinal he got iTunes where are you going to get us to get Apple iPhone, you can say Seery you nominalist finishing well podcasts and it'll come right up on your phone and subscribe there and you get these podcast every week.

You can hear the rest of the show that maybe can hear on the radio today or listen that previous shows we've done IRAs or others subject when it comes to finishing well, you know, getting back to our partner there with his finger held out Hans, you know, this whole idea of minimum distribution. Some people listening may be gone. What the world is regulation says that when you turn 70 1/2. He can't make things easy and 70 and you have to start taking money out of your IRA at this or 401(k) same way you have start taking out money and the amount that you have to take out his complicated formula, but to say when you're right at that age is about approaching 4% balance as of last year the prior year and you gotta take money out every year and that got take out the percentage rose 88. Based on your life. Expect and so that has a lot of ramifications and one of them is that people think this is the silent partner Uncle Sam John well take out the minimum. This is how much you gotta take out when in reality that's not going to reduce your balance by that much taken out 4% back many years. You can throw the thing by more than you have brought right back, and the ramifications of that is we see a lot of people work out like your father did with a pretty substantial balance when they pass away and they leave it on the you had a really good analogy verifies money using hundred thousand dollars right Tom yeah I mean a lot of people. They will just feign order takers. Early and we can 52 and wanted leave the IRA alone and we hit Cunningham 13 out well you know micro say it a growth in other contacts become an issue either for your for your children and wanted things that could make sense and I don't necessarily want people doing this without a conduit further but could make sense is living off the IRA in the early years of retirement early strong that out while you don't have to pay much taxes on it.

Even if you don't spend that you can put in a Roth IRA are not taxable brokerage account or something like that to live off of it and then delay your Social Security could get you much higher mountain then like we discussed in previous shows you not having that not be higher.

Would be good if one of the stuff that I think it higher technical reason for the lamp, but it could make a lot of sense to draw the IRA down before starting it from the right and Hans. You had said earlier that when you look at it is is flat money that a Roth IRA compared to a regular IRA what's what's the difference using 100,000 thousand dollars in a traditional IRA without partner, the IRS you could have $60,000 in a Roth IRA.

It would basically be the same thing to get a partner so they can grow tax-free to make withdrawals tax-free and pass it on your kids that. So when you look at that huge balance in an IRA. If he were a Roth IRA really is a phenomenally huge balance but regular irate there's there's tax ramifications, and we come back for him here. More about this three-legged race in the three-legged strategy range 33 when it comes to IRAs as they to again.

In the meantime, go to Cardinal kind Hans and I would love to take our show on the road to your church and Sunday school Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security data care and long-term care. Just go to Cardinal and contact to schedule a live recording of finishing well at your church Christian or civic group. Contact time to Cardinal that's Cardinal welcome back to finishing well, a certified financial planner Hans Schild today show were talking about IRAs, three legged race Based on the book of Amos 33 which is interesting that that I did find it fascinating that God maybe was think about Robbie that that would really tickle me that Amos 33 says can two walk together except they be agreed.

And if you listen to the first-half dish only hope you are if you hadn't even go back and listen to podcasts. If your list and I'm sure you caught on that there's a whole Lotta rules when it comes to IRAs and 401(k)s and and sometimes are done by the plan and sometimes are done by the government. But the idea you got partners and in order to make progress in this race right you got it be an agreement like Amos 33 says will fascinatingly enough. God gave us the Bible so that the more we study his word. The more we understand how to run our race with God. It's it's kind of a cool thing that that that by listening to the show. You really are showing your own discipleship on how to finish well in your life and by learning from people like Hans and Tom in a strategies to do that. But what a cool thing that God gave us the Bible when you think about it, so that we can run our lives.

Understanding you know really how to run with God and and be able to reach the destination that he had in mind. So with that in being said, Hans, you know there's there's a few more details that are really helpful as far as how to finish well when it comes to IRAs yet so your partner becomes un-silent when you distribute money out of your IRA that you put the money in there and you've accumulated. And now you have a balance due is significant about saving you put it in there to distribute unity you or somebody that's what you put money in an account for us ultimately taken out and be able to use it so what were talking about today is really just getting you to acknowledge and be aware of your partner are and you know we finished the last segment will be talked about. If you had $60,000 or $70,000. If you have a good strategy Roth IRA is really about the same as $100,000 in a traditional IRA because in the Rocky got an apartment in some EU listeners may not know what a Roth IRA is simply an IRA regarding pay the tax on the money going in. So when you distribute it and have their tax-free habit that we were talking during the break that you can even do that in your 50s or 40s or even earlier than that you're participating in a 401(k) right I would strongly suggest contractor 401(k) provider find out whether there's a law and most likely there is so you can begin accumulating money in your 401(k) under a rock for one downside of doing this is government snack in the tax deduction but after-tax money that well.

This would get rid of your silent partner right in the beginning we just had a client that came in as a result of this show. You listen to the podcast is up in Pennsylvania and you can call us about this particular topic called us about long-term care treatment listening to all the shows all the episode you told us about long-term care we start talking to them about all his money and we found out that he has a pretty substantial balance in traditional 401(k) and why and I just suggested they look into the Roth option. What I thought they did that between phone calls and he had already switch to always contributions over and he was just that because you now know I am planning for his retirement. He can have a tax-free income. Your experience Tom share some of what you seem of that strategy.

Having different account a different way different counterattacks in different way, is extremely useful in retirement.

A lot of people all their savings are in IRAs or 401(k)s or what. Sometimes referred to as qualified account and especially when they need money to get it at the take out and attack you have account after-tax or in the tax will burp you, things like that that total balance coming. The taxable income to give you a lot more flexibility and freedom and how you spend your money or an emergency comes up you able to tap into that money not have to worry about the tax ramifications of having different counterattacks in different ways, extremely helpful, but also can reduce your taxes so security in the week we've got modeling that Tom is much more of an expert in that they where we sit down with people in their 60s typically in the retiree ready to retire and now were shown in the tax bill on the Social Security and that tax bill on this post.

Check is driven by the other taxable income. So if you're a person at a very high income level or you know Say you're at 70 $500,000 year in retirement and part of that could be Social Security then you really don't have a lot of flexibility to try to reduce you in contact. But if you're a person at like $50,000 of income in retirement, including your Social Security for $60,000 now, you're right on the threshold of well even if a tax on yourself. You're not in, so we have software to model really for people of all income to try to figure out how much do we pull out of the IRA. Getting that how much tax that create on the Social Security then there's this thing called her mom on your Medicare is that students don't attack sober down here income level paying taxes on income in retirement has a lot around.

This reduces your your income and looking at it from the positive.

If you got money in Iraq just evident regular savings account that is again the tax coming out you just gain a lot of flexibility in your arm or intact have more money spent. Another point that I would make it even if you don't have. You don't need that money to live on an IRA, you can just live off your Social Security.

Not all the money you really need to live a long time to make it till still take money out of the IRA just for the fact that a lot of times you can take a certain amount out with the standard deduction. Everything pay very little tax on that money and not pay any act of the security felt even people with just modest amount of money there's a lot of claimant can be done in that efficient way. I was to sit near reflecting that.

I mean how cool is it that these people have this money via an IRA or whatever. I mean it's it's really awesome that they've been set. That set money aside and now they've got it, but another one of the strategies. I think that that we would be remiss if we didn't mention is the idea of the Q CD right on. Yeah me once you turn 70 and you are now able to give or donate your minimum distribution. Remember distribution and more directly to your church know don't try this at home without help you go to Dr. Isaac Rush properly you do it the right order. It doesn't show up on your taxable income.

So this comes as a surprise to many retirees there giving faithfully to their church that they're doing it out of the regular money thereafter tax money. There are over 70 1/2 and they're able to do that through their IRA or 401(k) by doing a direct contribution and call the Q CD. A qualified charitable distribution would have to be the church. It could be to any qualified shared any 501(c)(3) like I might shamelessly say the Jesus labor. Love you know you could make a qualified journal lesion to that and away you go. Now you're actually being of the leverage that money without paying tax on it, so this is a good time to mention you know why these guys know this because they are certified financial planners with cardinal guide which is cardinal don't forget the guy that the end of cardinal and there you can find all the resources from the book which, in all our shows are based on the complete cardinal guide to planning for and living in retirement, which is there cardinal the seven worries tablet. We always talk about today show the IRA you can download the PDF from that whole chapter absently free or just email Hansson and order the book, but this whole idea of the silent partner.

I think it's in in in a lot of ways.

This partner has not been all bad for us because you know it seems like there's more money in retirement. Now Hansson the river has been.

It is not tied to your employer mean that the other nice thing is tight Uncle Sam but your employer sleep you have is bankrupt and they route the people of the pensions or estimated only worked long enough in place that they qualify for a pension. So this whole business of accumulating money and 401(k) or later in IRA and still having that money at retirement. Create your income along Social Security is a wonderful and all were simply saying is a lot of people word IRA money they they sit on it and they build up and they just take the minimum and they got a big balance and they leave these big balances to their kids and then their kids end up paying all taxes because her kids usually want stretch it out over a number of years they want right now with a player.

40% of the disappears immediately after the there is another place where really it would be helpful if you are one of those children getting a large IRA balance to call you guys absolutely meant that where the planning comes in is is to sit down and just look at your whole situation.

We spouted a lot of things out. That may or may not be appropriate for people and others as investment advice, financial planning advice that were given general note, please don't apply this without professional and get in my book.

You're gonna learn that and you give us a call will be glad we don't charge for initial consultation and will will Satan we'll discuss your your difficulty or your problem and answer your questions and knows we might be able to show you something that can increase your income or increase the amount you're able to give you know about now it's cardinal the course certified financial planners Hans and Tom today.

Thank you guys was really fun. Thank you and you and we will be back next week. Thank you for listen. We hope you enjoyed finishing well brought you by cardinal visit cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs long-term care life insurance and 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 when you get Hans book go to cardinal 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 cardinal

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