Retire Smart Austin | Episode 96

Cynthia de Fazio  00:29

And welcome to retire smart Austin. My name is Cynthia De Fazio and I’m joined today by Philip Donato Capriotti, senior of Empower Wealth LLC. Phillip, how are you today?

Philip Capriotti  00:39

I’m extremely well, Cynthia. And yourself?

Cynthia de Fazio  00:42

I am doing fantastic. Thank you so much for asking. I’m always excited when we have time together in the studio. It’s so I know how busy you are. So, you always make the time to come in and do the show.

Philip Capriotti  00:52

It’s so good to be back with you. Yeah, it really is. And we’ve kind of had a little sabbatical there, you know? I can’t believe it. But this is our 96th show.

Cynthia de Fazio  01:03

I can’t really either. I have to go back and find our first one.

Philip Capriotti  01:07

I think it’s a great idea. 96 shows. So, we’re coming up on a three-year anniversary and I thought for sure people would probably get tired of watching it after a while but they don’t. It’s wonderful. Everything keeps changing.

Cynthia de Fazio  01:26

And the viewership keeps growing and growing. We know that because your viewer questions have been more and more involved in intercut, and they’re really, really very well thought out. So, people are paying attention. They’re taking notes, and they’re calling in and they’re asking things that they’re curious about.

Philip Capriotti  01:41

Which I love. Yep, God bless us. It’s amazing.

Cynthia de Fazio  01:44

It is okay, so 96 Wow, Episode 96 .Episode one we had a different company name let’s talk about the new one, right? Let’s go (indistinct) just a little bit.

Philip Capriotti  01:53

Yeah, when it was it was still Retire Smart Austin. All right. We came up with that name because I thought everyone in Austin really across the country but especially Austin should retire smart. And part of retiring smart is all encompassing. It means have a tax plan and retirement, have an estate plan and retirement. Have your proper will and updated and retirement. Make sure that your Rorem Ds are properly distributed retirement, there are so many different intricate pieces in planning for a smart retirement. We said Well, why don’t we make the show retire smart? Yeah, we’re in Austin, so retire smart eyes. And so there we are. Yeah. Along with that, because of our blessed success. Our company is expanding horizontally. I know I mentioned this in previous shows. But we’re hiring and putting on a training experienced advisors from across the entire city. Now for years, I haven’t been training advisors with Magellan financial and some other companies, teaching them how to do tax planning and how to do retirement planning, social security planning, it’s been a lot of fun. I didn’t do it for profit, Id I did it to give back to the community. And I’m talking about advisors from Philadelphia, New York, to Los Angeles, San Jose, California. So, my thought was, why not recruit and train advisors here. So many folks see our show, they want to come into the office. But we’re all the way in cedar park, we have an office out there in Marble Falls. But it’s too far for someone to come from, say Killeen or sand or San Marcos, or many of the other areas. So, what we decided to do as a service and also to help grow and build the company horizontally was hire experienced advisors who really had no formal training. When I say no formal training, they’ve never worked with a tax sec, they’ve never worked with a recovering CPA or a firm. They never worked with somebody to do retirement income planning. It was all just about what I call paint by number portfolios. You buy a group of mutual funds managed outside, but you’re not really taking, you’re not really exercising tactical asset management. Our tactical asset management was so important this year. And it’s going to be extremely important in the years to come. Because you never know what’s going to get thrown at us next, which is going to cause the market to get shaky, very, very shaky. So, with all that being said, empower your retirement within Power wealth.

Cynthia de Fazio  04:45

I love it, Philip, I think it’s perfect. I really do. And I want to ask you a very important question actually about the topic of today’s show. Some of the biggest changes in the last two years that will have a huge impact on retirement savers. That’s a big statement right there. What are some of the changes, because we’re going to empower our viewers with knowledge. Let’s talk about it.

Philip Capriotti  05:07

So, first of all, one of the most important changes that were made that got slipped right under the covers right before COVID Was the secure Act and the Cares Act. And again, no one talked much about it, then they talk even less about it now. But it really is a huge tax trap. It wasn’t looked at it was sold as this is what we’re going to do for you. And basically, with the secure act, what happened was and what the way it was built was, they changed the RMD. The first required minimum distribution age from 70 and a half to 72. Okay, okay. That was the icing on the cake. That wasn’t the body of the cake. That was the icing, okay, the bottom part of it, the body of the cake was they eliminated the stretch IRA. And for those of you who are unsure what a stretch IRA is, we’ve been allowed to save in our retirement programs for the last 40 plus years. Many of us have not only saved for our retirements, but we also saved in our retirements to help our children and our grandchildren, potentially, this stretch IRA specifically addresses what we can leave to our children and grandchildren. So, when prior to the secure Act, the stretch Ira allowed our children and grandchildren to be able to take required minimum distributions or RMDs, over their life expectancy, thereby stretching our retirement over and making it multi-generational. That current administration said, no, no, no, no, no, you can’t say for your children, that’s well, in a form of speaking, you can’t allow that stretch IRA, when you pass away, we have a tax that to pay, that now turns into what they call the 10-year rule. Now, stretching 1,000,002 million or above retirement account, that’s a qualified account that’s required to take distributions, according to the uniform life expectancy code was great, because that allowed our retirement plans to literally go three generations, me, my spouse, my spouse, and I, or as my spouse would say, my spouse and me, okay, our five children, and our eight grandchildren. So, we could go over three generations, and over their life expectancies, say goodbye. So one of the big changes, okay, that kind of got swept under the covers, you know, the really important changes, they get very little media, they get very little, unless you’re coming into an office, or someone who’s an ad slot, Master related advisor, or someone that really understands taxes, and the new tax code changes, you’re not getting this. So, all of your retirement plans, beneficiary forms, wills, and trusts, they all need to be changed. They all need to be changed to coordinate with the new laws, while advisors aren’t talking about it, we will, but nanny aren’t. Now when they eliminated the stretch, our children can still inherit, you know, it’s not like we live in a communist country, so to speak, where the government takes control of all of your, you know, your wealth. What they’re saying is, if it’s in an IRA or a Roth IRA, your children have to take the distributions, all of them by the end of the 10th. Year. Okay, now, there was some argument with that, originally, they wanted to take it and use the five-year rule. And if your trust is not set up properly, they still have to take it over the five-year rule. So, for those of you who are unsure about the implications of the secure Act, and the Cares Act, on your retirement accounts, or if you’re unclear on the new estate tax and gifts to attacks, rule changes, please call our office do your family and yourself a favor, call 888-818-6557. We have five open appointment slots for you. We can talk about taxes. We could talk about retirement inflation in retirement, we could talk about tactical portfolio management, but make the call. You’ll thank yourself in the end.

Cynthia de Fazio  09:45

Phil, thank you so very much to our viewers at home. That number to call is on your screen and that number is 888-818-6557. We know that you have a lot of questions for Philip about how to plan your perfect retirement. He has the answers for you If you have your smartphone handy, go ahead and click on the QR code in the bottom corner of your screen. That’ll take you right to Phillips landing page again, that number is 888-818-6557. We’re going to take a very short commercial break, don’t go anywhere. I have so much more with Philip when we return.

Philip Capriotti  10:18

Hello, folks, this is Phil Capriotti, senior president and CEO of de nada, Wealth Management, and senior tax and insurance advisors. You know, I’m often asked what’s more important in retirement, having a great plan or working with a great financial advisor? And the answer is obviously both are vitally important to you and your family. To ensure your retirement success, it is imperative that you work with a competent financial advisor, one who is a licensed fiduciary, and who will adjust your plan yearly. One who has your best interests at heart. Retirement Planning is not just a one and done. Even the best plans will need to be adjusted. And that’s exactly why you need an experienced partner to guide you through your journey. How confident are you? Call us today for a second opinion. We look forward to visiting with you in our office.

Cynthia de Fazio  11:11

And welcome back to retire smart Austin. My name is Cynthia De Fazio. I’m joined today by Philip Donato. Capriotti, senior of Empower Wealth, LLC Filipo very important show we’re having today talking about these topics, which are the biggest changes in the last two years that will have a large impact on retirement savers. Let’s jump right into the next one. Let’s talk a little bit about how the Roth conversions were affected.

Philip Capriotti  11:35

So, the Roth conversions before prior to this change, we could basically do what we call a redo, or it was the formal name is a Roth re characterization. Okay? Okay. What that means in English, is if perfect year this year, if I did a Roth in January, I have to pay the taxes based on what the Roth was worth in January, if by ox, and if by October 15. The market has significant losses, I could re characterize it, I could take it out of my Roth, put it back into my IRA and not suffer the market volatility beating that we’ve seen this year for some folks in these portfolios. Now it’s permanent. And what that means in English is once you do a Roth conversion, you’re stuck with the consequences of not just the decision paying the taxes but house investment. What amazes me, Cynthia is when folks do Roth conversions, they don’t manage that Roth money differently than they manage any other money. They don’t look at drawdown, many advisors, they’re like, we don’t get it. That’s the accountants, part of you know, that’s their, you know, check with your CPA. So, the fact of the matter is now since they eliminated that Roth, they’ve changed it to once you do a Roth, you can no longer re characterize it over a 15-month period, you had 15 months that you could switch back. Okay, they eliminated that. Now, once it’s done, it’s one and done. Wow. So how does that affect an individual, that means that Roth money needs to be managed differently, you need to come in and do a portfolio review. Because I can tell you as sure as I’m standing here, well actually, sitting here. If you haven’t, if you have seen your portfolio, dropped significantly, and seen no major changes in the way they’ve been invested. Especially if you’ve been in Iraq, this change had serious negative financial consequences. So, it’s not only the reason that’s important is not only is it one and done, but now you need to manage the money differently, to protect against market volatility, extremely important. The third change, I would say, and this is even equally importantly, by the way, call come into the office, we’ll check it we’ll run a Morningstar report be one of the first five callers and I mean that from the bottom of my heart. It costs us 1000s of dollars for these analysts to run these professional Morningstar report, and then portfolio observation and recommendations because that’s what we do. We recommend changes whether you work with this or not. It’s extremely important to get a second opinion from a licensed fiduciary someone you know, and trust. Sure. So, the third is naming a trust as an IRA beneficiary. Okay. So, prior to this new secure act, many trusts were named as an IRA beneficiary, if you had 1,000,002 million 3,500,000 5 million irrelevant. If you named your trust as an IRA beneficiary these trust in all probability needed be rewarded. Folks don’t understand this, if they’re not worded properly, you may lose the 10-year rule, and may have to distribute all of the proceeds of the trust over either one year or potentially Max five years. So, we have to go through these beneficiary forms. This is one of the one of the services that we excel at. Since we have an independent legal staff that specializes in trust Ira trusts, and wills. You can call us up, who else does this, call us up, set up an appointment, we’ll set up a consultation with our trust a legal trust specialist to get a second opinion. We want to earn your business, if your current advisor is not staying up to date on all of these changes that come in a moment’s notice, aren’t really advertised on fortunately, over the media or even social media work with an IRA advisor and Ed slot mastery, lead Ira advisor, come in and make sure that these changes don’t affect you and your family, you know, when they see these changes, you know, when they become devastated, they become devastated when the first spouse or second spouse dies. And they go into this trust. And they say, well, well, the IRS was the major beneficiary of this because the language wasn’t changed. Wow, don’t you know these trusts should be reviewed? I normally like to review them at least once every three years. Absolutely. once every five years. Okay, so folks, if your trust has not been reviewed over the last one to five, if it hasn’t been reviewed, since the secure and Cares Act, do yourself and your family a service, take advantage of our expertise, and take advantage of our offer and call our 800 number. 888-818- You know the number 6557 We want to help you with these things. They’re extremely important.

Cynthia de Fazio  17:05

They are so important, Phil, because like you mentioned you don’t want to be surprised at that moment. When it’s like you think you know what’s going to happen. But then boom, it’s something totally different.

Philip Capriotti  17:14

Because the law changed. So, here’s the whole cold, hard facts 90% of Americans retirement wealth, or in IRAs. 90%. Yeah. So, when you talk about the market is taking 11 trillion and 401 K’s this year. All right. So far, as of the taping of the show, maybe it’s maybe it’s 12, maybe it’s 10. With a T trillion. It’s extremely important to again, I always say protect yourself against market volatility, protect yourself against excess taxation. Folks, we pay taxes for the last 40-50 years. Give me a break. Yeah, give us a break these new tax code changes are extremely important. And they come in the form of the secure Act, the Cares Act? Well, if you really want to be care, and you’re real, if you really want to be caring, and you really want to be secure, you need to have these IRAs and trust beneficiary forms checked on a regular basis.

Cynthia de Fazio  18:14

Philip, I know you have a very special offer to present to our viewers at home today. Why don’t we spend some time talking about what that is before we reopen the phone lines?

Philip Capriotti  18:21

Okay, great idea. So, if you call our office, excuse me, when you call our office, call 888-818-6557. We’ll set up a consultation. Once we set up the consultation by staff tomorrow on Monday morning, we’ll call to verify to make sure that the that disappointment is good for everyone. Whether it’s a retirement income plan, whether it’s a review of your will and trust, because it hasn’t been reviewed, whether you moved in from another state and their trust laws and their rules are totally different than here in Texas. If you have not had a Morningstar report done on your portfolio over the last five years, and you’re not calling our office to take advantage of our expertise with through our analyst, I don’t know what else, you know that my dad used to say you can lead the worst of water, can’t make them drink. Please do yourself and your family a favor. Call up come in visit with me meet my staff. We have over 15 folks in our office that we’re all specialists will treat you like family. But more importantly, you’ll leave better than you found us. We want to make sure that you’re empowered with knowledge to protect you and your family against these changes that come into effect and get against excessive Mark belts about excessive market volatility as well.

Cynthia de Fazio  19:49

Phil, thank you so very much. To our viewers at home. That number to call is on your screen and that number is 888-818-6557. We know that you have a lot of questions for Phil regarding today’s topic specifically, he’s offering the first five callers a complimentary consultation. If you have your smartphone handy, go ahead grab that click the QR code in the corner of the screen that will take you right to Philips landing page. We’re going to take a very short commercial break but when we come back, I have a couple of viewer questions that I’m hoping to get to with Philips. So, stay tuned, it could be one of your very own.

Philip Capriotti  20:23

Hello folks. My name is Philip Capriotti senior. I’m the president and CEO of Donato wealth management and senior tax and insurance advisors. For over a decade now we’ve been helping retirees formulate tax efficient retirement income plans. Many consumers and clients are extremely concerned with the ever-increasing federal debt and the potential for taxes to go up significantly. We have specific tools, the expertise and the staff to help you develop your own tax efficient retirement income plan. So, call today for your no obligation complimentary review. We’ll see you in the office.

Cynthia de Fazio  21:02

And welcome back to retire smart Austin. My name is Cynthia De Fazio I’m joined today by Philip Donato Capriotti senior of Empower Wealth LLC felt we have time for a few viewer questions would it be okay, if I just threw a couple at you?

Philip Capriotti  21:15

I missed them. And over the last couple of so weeks, we haven’t been doing viewer questions because all of these changes. So yeah. Let’s get into some viewer questions.

Cynthia de Fazio  21:25

That sounds fantastic. Okay, this first one is actually from Christopher in Waterville. And he has a question, Philip, how does a Roth IRA grow over time?

Philip Capriotti  21:35

How does the Roth… Well, depends on how it’s managed, Christopher. So, when we take a look at the growth of the Roth IRA, what’s extremely important is the fifth, you have to take a look at the basics. We simply are paying the taxes once on the contribution or on the conversion. If I’m working and under the income limits, and I have a Roth IRA contribution, I pay the taxes going in, I don’t take a tax deduction, and it gets to grow tax free for my lifetime, my spouse’s lifetime. And again, up to 10 years of my children and grandchildren’s, with this new secure act. For those of you who have a 401 K option at work, and may be of modest means or higher income, to 200, 250 to 500,000. In that range, you have a 401 K Roth option. It’s not talked about, we do a lot of counseling with 401k plans, we manage some 401k plans as well put the money in the Roth 401 K. Number one, you don’t have the $6,500 a year limit plus that $1,000 Extra catch up, you have a 20 If you’re over 50, you have a $27,000 a year limit with no limit on income, wow, you’re allowed to contribute up to $27,000 into Roth 401. K, even if you make it 300,000, where the Roth IRA won’t allow you to wow asked me how they came up with that idea. I have no clue. But again, then it’s an IRS. I mean, it’s a rule and regulation. Okay. So, but many advisors are just not explaining it. All right, so start putting in pay taxes on the seed, not on the crop. Now you can take the other benefit of this Roth option is you no longer have to take an RMD I don’t have to take a required minimum distribution based on a uniform life expectancy code. I could take that money out anytime I want. When we structure client’s comprehensive tax efficient retirement income plans, we school you we educate you on put X amount of dollars in this account, x in this account, X and C account. Now I can take money from my Social Security and pull retirement savings from multiple accounts to make sure that my Social Security doesn’t get dinged with 85% of being considered taxable income. A tax efficient retirement income plan and a Roth are extremely important. They are to hand in hand with each other. For those who think they have a tax efficient retirement income plan because they bought muni bonds. Not so true. You need to take a look at what are the ramifications on my plan B erm attacks and what additional tax am I going to be forced to pay it on social security because I didn’t put money into a Roth. So, they’re really sweeping. They truly are and as far as I’m concerned, the Roth is one of the biggest favors our elected officials had done with respect to helping us have some sort of a handle on increases in taxes in retirement. Hope I answered your question.

Cynthia de Fazio  25:17

That was a great response. We have time for I think one more. This is Greg in Windham. He says in retrospect, I probably made a mistake by not electing to have a spousal benefit for my wife on my military pension. But I can’t go back and change it now. How do I make sure that she has enough remaining assets to live on assuming that I die first? And Philip, I love your show.

Philip Capriotti  25:39

Oh, that’s very nice. Well, thank you. That was Greg?

Cynthia de Fazio  25:42

This is actually Greg in Windham. Greg,

Philip Capriotti  25:45

Thank you Windham. Keep watching. Tell your friends and family to watch as well. We really appreciate it. And you can also log on to our website to look at some previous shows. Normally, when you do not allow a spouse spousal benefit option, they allow for a larger payout. Okay, I’ll give you an example. Greg, let’s say your military pension is $3,000 a month. Single life, only protecting your life. If you would have taken a joint life with either a 50% survivor benefit, or 75%, meaning they’ll give 50% of the pension 75. I normally recommend, by the way, viewers 100% to your spouse, if you’re not looking after your spouse after you’re gone, I think it’s one of the major shortcomings in any type of retirement income plan. Because when we lose a spouse, we also lose not only a lifelong partner but we lose a tax bracket, you go from married filing joint to found single what I would recommend, if you have the health to qualify, your pension was increased by about would have been reduced by about 75%. I would take that other 25% I would put it into a tax-free life insurance plan so that at your death, the life insurance plan will create tax free revenue for your spouse because remember, Greg, she’s not going to be able to marry file joint when you’re going the way the current tax code is set up. You’re now filing single and your tax your tax rate has doubled. Wow. Unbelievable hope that answered. I hope that answered your question.

Cynthia de Fazio  27:32

That was fantastic. Thank you so much for another amazing episode. To our viewers at home, we’d like to specifically thank you for spending time with us today. That number to call is 888-818-6557 We know you have a lot of questions for Philippi as the answers for you grab your smartphone click on that QR code they’ll take you right to his landing page. Be safe be happy blessed. We’ll see you back one week from today on retire smart Austin.