Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior, he is president and CEO of Empower Wealth and Tax, and today is a very special episode folks at home. This is number 150. Wow, Phil, can you believe?
I cannot know, it’s 150, you know, four years ago, and we started the show, I thought, you know, people will be interested in it. But you know, maybe I don’t know, maybe if we last a year, you know, great, wonderful, because we started this, you know, little prior pandemic, and we’ve gotten so much response from it. Yes. And we’ve had so much fun doing these shows, they just don’t, I just don’t get tired of doing them. And, and, and, and, and a lot of folks are calling I’m here, folks, I’ve been watching you for three and a half years, we finally decided to give you a call and come in, or it wasn’t ready to talk with you then. And I think, primarily folks want to make sure that you know, you’re just not an infomercial, you’re gonna you know, you’re here, you’re here to help. And you’re really, you know, you say what you do, and you do what you say so service.
So, 150 shows 50 Oh, my gosh, that’s taking us way back in time. And obviously, it’s been such a pleasure to just watch the growth for your entire company, Phil, just the past few years that we’ve been doing these I know, I’ve run into people, and they’re like, oh my gosh, we love watching Phil, we record it every week if we can’t be by the TV. So, you have a lot of loyal viewers as well.
The funny thing is now I’m even training advisors from across the country. Now I did that when I was younger years and years ago. But that’s even that’s that even brings another degree of fun into the equation, but it’s been a pleasure working with you. And and what can I say every single day we get an opportunity to do another show is just another masterpiece, I’m going to say it’s you know, it is what it is it’s a masterpiece, you never know what we’re going to say, you get started on the topic, and it can go from one thing to another. So
it’s true, it’s true. And sometimes we sing. So that’s where we’ve had songs just come into mind. Just always have fun while talking about fun. This is a fun topic today. A lot of people have questions about this, Phil, we’re going to do a deep dive into Roth conversions. why people should be considering a Roth conversion, what this strategy looks like to have a Roth conversion. So, let’s talk about all things Roth,
You know, it’s, it’s funny, we never get tired. We never, we never get tired of talking about Roth contributions and Roth conversions. And I never get tired of answering questions from folks on why, why should I do this? My other adviser said, absolutely do not do Roth conversions with the earnings you’re going to miss on the taxes that you pay on the Roth will, will more than exceed the expectation of the tax efficiency of the Roth. And I’d say Have you lost your mind? Well, well, I’ve actually had a couple I actually had an advisor from Florida tell a client from Johnson City this and, and I know they had a long relationship, but I’m thinking to myself, do they not understand the tax efficiency, once you pay the taxes once, and that Roth continues to grow, and you never have to pay $1 in taxes for five years, 10 years 1520, the kids the spouse, you’re not doing the math. So it made me realize just how uninformed and how tax illiterate this particular advisor was, then come to find out a lot of advisors, say the same thing and do the same thing. So, I guess they just shy away from taxes. And then many advisors also believe that taxes I actually had one advisor say in all probability taxes will come down. We’re not guaranteed that they’ll go up. And I’m thinking What planet are you living on? Are you kidding? We have a $35 trillion debt that we’re paying 1.1 trillion in taxes. Are you kidding? And spend, spend, spend in our elected officials, many of them, They’re, they love spending our tax dollars. They’re very good at that. So, I disagree with all of you advisors that espouse to that particular strategy, because I really believe that you’re doing a disservice to each and every one of your clients that you give that one-sided advice, too. So, let’s go ahead and talk about all of the benefits and the disadvantages. So, first of all, when you do a Roth contribution or a Roth conversion, yes, you have to pay the taxes. But finish that sentence, yes, you must pay the taxes once Yes, in your lifetime, once. So that’s really, as far as I’m concerned. That’s the bowl of chili right there. I’m paying taxes once one time, okay. Now, when you start, so with Roth contributions, many folks will say, but I don’t want that big tax bill at the end of the year. And I’ll tell them, Look, you’re still working, okay, you’re going to work for another five years, let’s just take that example. Simply increase your withholding, and do the Roth contribution, let it grow tax free until you retire and for decades to follow. Ask your employer to make your match tax free. What’s going to happen, folks is not only will you thank me and our whole team, after you reach a tax free or tax efficient retirement plan, but so, so will your children. Okay, and but because you’ll teach them the strategy as well. So, the key here is I do not want to have to take an RMD. So, with a Roth, I don’t have to take required minimum distributions, I pay the taxes once. Now I have triple compounding, I never pay taxes, again, I get to take it out tax free. It doesn’t affect the taxation of my social security. It doesn’t affect my arm of Part B and Part D premiums from increasing, okay, I can literally move money from my government taxable retirement account into my own personal tax-free retirement account. And I literally can live off of the earnings from that Roth, maybe with some dividends and interest mixed in, and Social Security, and totally structure a 0% tax bracket in retirement. Wow, I’m just going to say one thing, just real quick. It doesn’t really matter how much you make in the market. I mean, it matters. But you have to look at the other variables. Because if you’re not looking at if I made 10% in the market, but I have to give 3% to the government, my net tax was seven. If I’m making 10% annually in the market, and my net to the government is zero. I’m earning 10% app. So, we need to start to develop this mindset. And if you’ve been watching our program through the last 149 shows, yes, you’ll know that, you know, I’m a very, very big fan. And it’s just simple. And it’s really common sense. Let’s pay the government once. I feel as though we’ve paid enough through the last 4050 years. We raise our children to be taxpayers and AI everyone. We want to pay the fair share. But Uncle Sam has given us this window. Each and every one of them are using the Roth option. I’m sure of it. So why shouldn’t we?
That’s true. That’s true. Well, Phil, this is the perfect time for us to take our first commercial break special message you have for our viewers at home, what would that be today?
That would be give us a call dial 888-818-6557. Please take advantage of one of our first five complimentary interviews. Number one, let’s talk about tax planning. Let’s talk about the benefits of Roth conversions and Roth contributions. Most of all, let’s get that portfolio review. We want to do a Morningstar report along with a portfolio observations. In summary, our Morningstar reports and analysis are done by certified financial planners and certified financial analyst and let’s talk taxes and let’s see what your appetite for increased taxes in the future is.
Phil, thank you so much to our viewers at home that number to call 888-818-6557 Don’t miss the opportunity to take advantage of one of these five spots that Phil has opened this week for your very own complimentary interview. If you don’t have a pen that’s okay, just grab Your smartphone click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page. We’re gonna take a very short commercial break here on retire smart Austin don’t go anywhere on this very special 100 and 50th episode, we’re talking about all things Roth, stay tuned.
My personal feeling is that no one who has worked in this country and paid taxes for 50 years, or 55 years should ever have to pay taxes in retirement if you put a plan together, that is tax efficient, so that when you retire, receiving money from Social Security should be tax free. receiving money from your pension should be tax free and receiving money for maybe life insurance policies are tax free. If you put together the right combination. What you can find is you can structure a tax-free retirement plan for just about anyone to accomplish any retirement income goal. I now currently have clients that want $120,000 A year 10,000 a month. And I have clients that we’ve worked with for the last 10 years that pay zero taxes on that income.
Welcome back to retire smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti, senior urban power, wealth and tax on this very special 100 and 50th episode. Phil let’s talk a little bit about some of the benefits of having a Roth if you will, number one, tax free withdrawals. That sounds awesome. Let’s talk about tax free withdrawals. Well
look it let’s, let’s face it in retirement or really any time but especially in retirement, I want to have an account that I can reach in and take a tax-free withdrawal. For instance, I want to buy a new car, I want to purchase anything, I want to make sure that I have all the accounts all of the above what we’ve done, really simply amazing over the last 12 Well, since we really started heavy on doing Roth conversions and Roth contributions, because there were income limits on it previously, in 2010. So, this is our 14th year running, preaching the benefits of tax efficient tax-free retirement income planning. The biggest excuse that I hear is I make too much money. I make too much money to do a Roth IRA I make to 225 300,000 a year wonderful. That’s a good problem to have. But now what our lovely government has done and I’m not being sarcastic, they’ve eliminated the income limits for Roth 401 K contributions. I have, and, and sit and really just about every single employer offers the Roth option. Unfortunately, they don’t sell the Roth option, okay, they don’t really make the employees know, in fact, we’re getting ready to start counseling businesses, because they’re really, they need to be counseling their employees about the foreign way of 1k benefits and features, and, and really how they should save. And very few employers are not doing that. So, we’re in the process of starting off for that. But there are no income limits. So, if you’re making over 250 and 220,000, married filing joint, you can’t contribute to a Roth IRA. Because you’ve exceeded the limit. You can do a backdoor Roth, but I don’t want to get into that topic today. But if you have a 401 K, you can max that out. And this year, you can contribute over $34,500, including to catch up into a Roth 401 k. The second thing if you don’t already have a Roth is you start the five-year time clock ticking. Okay, so many folks say I don’t want to do a Roth fill because I have to wait five years to get my money. No, this is not what the way it works. Okay, education, you simply cannot take the earnings out for five years. Yes, you have to be 59 and a half, but you must be 59 and a half to take a distribution from any qualified account. You can put money into a Roth, I actually have clients now they’re pulling 50,000 55,000 in Social Security. They’ll take maybe 10,000 or so from their IRA. They’ll take 15 20,000 from their Roth. None of their Social Security is taxed. Wow. None of it. Wow. And not only that, when we’re finished, we’re doing a Roth contribution or conversion for another 40 50,000 in the lowest tax bracket. Get the 10 to 12% tax bracket. So, when you have a when you’re in retirement and you’re in a 0% tax bracket, we can take distributions from the Roth, and then make contributions at either a zero or an extremely tax efficient manner. And to miss this, if your advisors are not discussing this with you, either they do not have the knowledge, or the competency. And if not, it’s really time to, you know, slip out the back Jack,
yeah, making a plan to set yourself free.
So, it’s extremely important, then, as you gain wisdom and get older, and especially at the death of the first spouse, you do not have to worry about these pesky RMDs that cause your Part B premium to go up your Part D premium to go up and close, in my opinion in excess of taxation on your Social Security benefits. You can take these things tax free. So, it’s extremely important. If you’re not contributing to a Roth 401 K, while you’re still working, please give us a call dial the 888818 number. Let us explain to you all of the benefits and features, and how important it is for you and your family to achieve tax efficiency in retirement, when you’re in that retirement red zone that last five years, where you’re going to work two years, three years, four or five years, and then you’re going to be retiring. This is the best time to construct the plan if you haven’t already done it. If you’ve been watching us for years, and were apprehensive about calling, pick up the phone, give us a call. Come on in introduce yourself. Let us help you. If you’re new to the area, if you just moved here from outer space or out of town, please give us a call. Come on in and let’s talk everything taxes and everything Roth perfect.
And what about no age limit filling? Oh, we’re gonna take a commercial break in about a minute but no age limit. Wow. That’s pretty cool to check this out.
So, I had a gentleman come in, and his mom with his mom, his mom’s 88 years old. And her, her, his dad, her husband passed away about a year and a half ago. Great saver, he was an attorney. He was very, very brilliant, actually even managed his own money. And he did a very fine job. He just didn’t manage the taxes. So, they had all of the money sitting in the, the IRA. Now he had to take RMDs but at the time they were married filing joint. It didn’t really it didn’t affect their Irma. So, he passes away. His mom, his wife, okay, and this gentleman adds mom has to take the first RMD Well, she has to take an $80,000 RMD because of her age, and because of an account, seven-digit account. So that RMD made her IRMA Her Part B premium jump up to over $600 a month from 160 $170 a month. So, what we did with no age I said, look, we have 3.2 million sitting into this trust, okay, the trust files and income tax, you’re paying plenty of taxes, why don’t we do this? Are you using any of it in retirement? She said, No. We’re just letting it accumulate. What do you want to do with it? I want to give it to my kids. I said, okay, why don’t we do this? How about this? Do you want to eliminate RMDs? And she said, yes, I want to get rid of the how do I do that? I said you have to take the RMD this year, let’s convert the entire 1.1 million will write the check for the government for 400,000. Okay, after two years, all of your money will now be in a Roth will average that seven 8% a year when at 1.1. You’ll never have to take an RMD. If you want to take extra money, take the earnings from the and now you can pass it to your children tax free. Wow. So, she said let’s do it. How do I do I didn’t know I could do that I thought I was too old that’s been passed no age requirement, you simply can’t convert the RMD you must take the RMD pay taxes on it. But you can take them out above the RMD regardless of your age. We did one a couple years ago on an individual 94 years old when she had four daughters. And this is all part of tax planning. And again, don’t worry about the 400 or the 40,000 you’re paying to the IRS because the fact of the matter is you’ll never pay taxes again on that growth for years decades to come.
Wow. That’s incredible. Well, Phil, we’re going to take our very second commercial break here in the show, but you have a very special message for those viewers at home.
Folks call in for a portfolio review. What we’re noticing is many of these advisors not only are executing Roth conversions are reaching out Been there clients reached tax efficiency and retirement. But their portfolios really haven’t changed. They’re not really exercising tactical management. Call us come in, we’ll do a, an, an initial consultation bring your portfolio in. I will structure a Morningstar report and portfolio observation and recommendation free of charge. They’re done by certified financial planners, and our home office and certified financial analyst. Understand number one, not wholly how tax efficient your retirement plan is, but what type of return or what type of risk are you taking? Because that’s another big no, no, watching a market correction in retirement and seeing your portfolio lose 2020 by 30%. And worse, not realizing you had that much risk in it.
Phil, thank you so very much. To our viewers at home, that number to call is 888-818-6557. Or if you don’t have a pen, grab your smartphone, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page. As Phil mentioned, are you taking too much risk? And if so, when you want to know that today before it’s too late, this is a complimentary portfolio analysis that Phil is offering to the first five callers today. Again, 888-818-6557 we’re going to take a very short commercial break on this very special 100 and 50th episode of Retire Smart Austin, but we have so much more about the Roth when we return.
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years, people’s 401 K’s took a major hit.
My investments are tanking retirement isn’t going as planned. I can’t believe I let my kid talk me into buying crypto. I mean, what is that? Anyway?
This was the fourth worst contraction in history.
So how are you two doing? Your financial future doesn’t have to be uncertain. I’m Philip Capriatti, CEO of Empower Wealth and Tax if you amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now’s the time to take advantage of this tax discount while we can we specialize in retirement income planning, tax mitigation, estate planning, and so much more. So, plan your retirement right Call now for your own complimentary portfolio review and tax analysis.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti, senior founder and president of Empower Wealth and Tax and we’re talking about all things Roth. Great question, Phil. I know a lot of people are wondering in the viewing audience, do I have to pay taxes when I do a Roth conversion? Should we talk about that?
Yes. Yes. And one of the other questions I get is when do I have to pay the taxes? So, here’s Yes, you have to pay the taxes, you’re not going to get around the tax man, we have to work within the letter of the law. So yes, you have to pay taxes, do you have to pay taxes out of the IRA? In other words, do they have to withhold 20%? No. If we have other income, we can use that. I’ve actually may I’ve actually done Roth conversions where I’ve took some of the interest earned from the Roth to pay the taxes to convert more to Roth. So, we’re not using taxable money and raising the tax, tax bracket even higher. Yes, you have to pay the taxes once though the key is only once, and then you never have to pay taxes again on any of the earnings. The other thing that I hear is, what if I do a Roth conversion and the market drops? I just got done paying the taxes. What happens if the market drops, and I lose? 20 30%? Can I undo it if it’s in that same tax chair? answer is no, you cannot that was called a re characterization. Back when the secure act 1.0 came out, they eliminated that. So, this is why it’s extremely important that when you do a Roth conversion, the portfolio is managed tactically, we want to make sure that we limit the amount of drawdown for the amount of return we’re getting. Okay, I like to look at a seven 8% A year return with no more than 10% market volatility or in that 812 in that range. Should I So the other question that we get is, Should I do a Roth conversion? And honestly, not everyone needs to do a Roth conversion. Okay. When I look at folks that have a very modest retirement income plan, and they have a modest asset, okay. In many cases, they’re already in the lowest tax bracket they’re going to be in okay. I especially like it when I see folks that have worked until 68 6970 and delayed Social Security. So, they’ve maximized their social security. But they may only have a couple 100,000 in an IRA, and they’re only going to maybe pull 510 15,000 a year out is part of their distribution. Their IRA is already relatively tax efficient. But if you’re looking at an IRA, 401 k of a half a million dollars or more, especially when we get into the seven digits, you’re doing yourself and your family, in my professional opinion, a disservice by not entertaining, the Roth conversion option. Many times, I get also get a question. When’s the best time to do Roth conversion? I mean, we get a lot of really good questions to come in. Okay, so I take a look, it all depends on your income plan. So, this is where the questions come up. How much do you plan to take out of your IRA? How much income Are you still working? What do you plan to earn? Oh, you retired. So many times, when we have an idea of how much the client is pulling from their retirement income, and what accounts they’re coming from, we can do a mock tax return in the beginning of the year. And I can say, okay, we can do 60,000 now. And then let’s wait to the end of the year, make sure you didn’t have to replace a roof or something unexpected came up. Okay. Well, you had to pull additional funds. So normally, I like to look at the Roth conversion in the beginning of the year and absolutely at the end of the year, we like to do it twice a year for our clients. I do not want to miss $1 of Roth opportunity at the lowest tax bracket. Okay. So that would become come under partial Roth. Am I allowed to do two Roth conversions in a year? I understand there are rollover rules. No folks have the role of a rule applies to when you’re taking a distribution from an IRA or a distribution from a Roth at it’s not a custodial transfer trustee to trustee transfer. If you’re taking position at a possession of your IRA, or your Roth IRA, you only have 60 days to do the rollover. But when we’re doing conversions from administrator to Administrator, we can do as many as we want.
I love that. Well, Phil, I can’t believe we’re to the end of another amazing episode this week. Thank you so much. To our viewers at home that number to call is 888-818-6557. As Phil mentioned, he is offering you the complimentary portfolio analysis. Find out today if you’re taking too much risk this is available to the first five callers only have your smartphone handy. Go ahead grab it, click on that QR code at the bottom corner of your screen. Be safe, be happy and be blessed. We’ll see you back next week for episode 151 of retire smart Austin. Take care.
Thank you, Cynthia.
Thank you, Phil.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Investment advisory services offered through Donato Wealth Management, PLLC, dba Empower Wealth Management (“Empower Wealth Management” or “EWM”),
an SEC registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional adviser before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned, or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Personal investment advice can only be rendered after the engagement of EWM, execution of required documentation, and receipt of required disclosures. All investment and insurance strategies have the potential for profit or loss. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. Past performance is no guarantee of future results. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #305031.
Insurance products and tax services are offered through Senior Tax and Insurance Advisors, PLLC, dba Empower Wealth Group (“Empower Wealth Group” or “EWG”). Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products offered through EWM. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. EWG is not affiliated with or endorsed by the U.S. Government, Social Security Administration, nor the federal Medicare program. You may be contacted by a licensed insurance agent. Calling the number above will direct you to a licensed insurance agent. EWG may not offer every plan available in your area. Any information provided is limited to plans available in your area. Please contact Medicare.gov or 1-800-MEDICARE.
EWM and EWG are both affiliated companies of Empower Wealth, LLC (“Empower”). Investment adviser representatives of EWM may have a financial incentive to recommend tax and insurance products and/or services offered through EWG which presents a conflict of interest. This conflict is addressed by EWM’s adoption of its Code of Ethics, which requires that all EWM’s Associated Persons place the interest of clients ahead of their own. Clients of EWM are also free to choose their own tax and/or insurance professionals and are under no obligation to utilize the services offered through any related entities or persons associated with Empower.
Strategic Partners listed on this page are not employees of EWM and are not affiliated through common ownership.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
© Empower Wealth Management All Rights Reserved.
