Retirement Year End Planning: Withdrawing from Assets

11/20/24 • 43 min

1 Listener

Join us in this insightful episode as we continue our series on year-end action items, focusing on optimizing your retirement planning. Today, we delve into the intricacies of withdrawing assets, discussing everything from flexible spending accounts to inherited IRAs. We also explore the concept of "gear, not stuff" with insights from Michael Easter, and how making thoughtful purchasing decisions can impact your financial health and the environment. Don't miss our deep dive into tax strategies and the importance of building a resilient retirement plan. Plus, we answer listener questions about decumulation, working with financial advisors, and more. Tune in to take actionable steps toward a secure and fulfilling retirement!

PRACTICAL PLANNING SEGMENT

(00:00) This week we continue to discuss year end action items to optimize your retirement planning

(00:50) We are gearing up for a retirement plan live case study for January. This time we will be focusing on someone who is single with no children.

(02:10) Roger shares an anecdote about having his kitchen cabinets painted and discusses gear versus stuff.

(05:00) Roger discusses the importance of buying high quality items that last.

(07:25) Today we're going to talk about accounts we should consider withdrawing money from before the end of the year. First up are FSA accounts.

(08:14) The next accounts we are going to talk about are inherited pre-tax accounts.

(09:30) If you inherited an IRA prior to January 1, 2020, your required minimum distribution is required to be taken out by the end of this year.

(10:48) What happens if you inherited an IRA after 2020?

(12:25) Since the Secure Act 2.0 started in 2023, the penalty for not taking the required minimum distribution is 25% of what you should have taken.

(13:35) The next type of required minimum distributions we are going to talk about are those that are age related for original IRA owners.

(15:03) Proactively taking qualified distributions can lower your overall tax rate in retirement.

LISTENER QUESTIONS

(20:44) Next Month, we'll focus on answering some of your questions on AskRoger.

(21:12) The first question comes from Scott about principal versus interest and decumulation.

(28:59) Next, Joy says she needs help with retirement planning and decumulation of assets.

(32:45) Mike asks about decumulation and resilience. How should pre-retirees position retirement assets as they reach the last five years or so before retirement?

(39:11) Tom asks about the five year rule for Roth 401k conversions.

SMART SPRINT

(41:08) Take a look at the items that we talked about in terms of withdrawing assets.

BONUS

(41:45) Roger reads another excerpt from his grandfather's war journal.

REFERENCES

Ask Roger

https://www.rogerwhitney.com/askroger

Michael Easter
https://twopct.com

Dinkytown Calculators- specifically the 1040 tax estimator
https://dinkytown.net

Schwab Required Minimum Distribution Calculator
https://www.schwab.com/ira/ira-calculators/inherited-ira-distribution-calculator

Six Shot Saturday
https://6shotsaturday.com

Show notes created by https://headliner.app

PRACTICAL PLANNING SEGMENT

(00:00) This week we continue to discuss year end action items to optimize your retirement planning

(00:50) We are gearing up for a retirement plan live case study for January. This time we will be focusing on someone who is single with no children.

(02:10) Roger shares an anecdote about having his kitchen cabinets painted and discusses gear versus stuff.

(05:00) Roger discusses the importance of buying high quality items that last.

(07:25) Today we're going to talk about accounts we should consider withdrawing money from before the end of the year. First up are FSA accounts.

(08:14) The next accounts we are going to talk about are inherited pre-tax accounts.

(09:30) If you inherited an IRA prior to January 1, 2020, your required minimum distribution is required to be taken out by the end of this year.

(10:48) What happens if you inherited an IRA after 2020?

(12:25) Since the Secure Act 2.0 started in 2023, the penalty for not taking the required minimum distribution is 25% of what you should have taken.

(13:35) The next type of required minimum distributions we are going to talk about are those that are age related for original IRA owners.

(15:03) Proactively taking qualified distributions can lower your overall tax rate in retirement.

LISTENER QUESTIONS

(20:44) Next Month, we'll focus on answering some of your questions on AskRoger.

(21:12) The first question comes from Scott about principal versus interest and decumulation.

(28:59) Next, Joy says she needs help with retirement planning and decumulation of assets.

(32:45) Mike asks about decumulation and resilience. How should pre-retirees position retirement assets as they reach the last five years or so before retirement?

(39:11) Tom asks about the five year rule for Roth 401k conversions.

SMART SPRINT

(41:08) Take a look at the items that we talked about in terms of withdrawing assets.

BONUS

(41:45) Roger reads another excerpt from his grandfather's war journal.

REFERENCES

Ask Roger

https://www.rogerwhitney.com/askroger

Michael Easter
https://twopct.com

Dinkytown Calculators- specifically the 1040 tax estimator
https://dinkytown.net

Schwab Required Minimum Distribution Calculator
https://www.schwab.com/ira/ira-calculators/inherited-ira-distribution-calculator

Six Shot Saturday
https://6shotsaturday.com

Show notes created by https://headliner.app

Previous Episode

Retirement Year End Planning: Contributing to Assets

Join us as we dive into year-end financial planning strategies to optimize your retirement plan. This episode unpacks the essentials of contributing to various accounts like 401(k)s, IRAs, Roth IRAs, HSAs, and donor-advised funds before the year ends. We also discuss Roth conversions and answer listener questions about IRMAA brackets and required minimum distributions. Plus, hear a special tribute to veterans, featuring the first mission of Roger’s grandfather, a WWII bomber pilot. Don’t miss this comprehensive guide to maximizing your retirement savings and honoring those who served!

SMART PLANNING SEGMENT

(01:01) Rock Retirement Club is having its last open enrollment for the year.

(02:26) This month the theme has been to look at year end planning items in order to optimize your plan of record.

(03:40) This week we focus on contributing to assets between now and the end of the year. We will start off by discussing contributing to your 401K account.

(05:30) The second thing we want to look at is contributing to an IRA or Roth IRA.

(08:37) The next account you might consider contributing to is your health savings account.

(10:07) Another thing you might consider contributing to is a donor advised fund or any type of charity.

(15:03) The next one I’ll talk about today is 529 education plans.

(17:00) Another account you might want to contribute to is your after tax investment account.

LISTENER QUESTIONS

(20:00) Roger talks about 51 missions that his grandfather flew during World War II in honor of Veterans Day.

(21:10) Reid is concerned about IRMAA in 2026 regarding Roth conversions.

(24:35) David asks a question about projected required minimum distributions for Roth conversions.

(28:30) Joe asks about tax brackets and Roth conversions.

(31:13) Denise says the more she reads about Roth conversions, the more confused she gets.

SMART SPRINT

(35:00) If you want to try to do some optimization, grab the worksheets from Six Shot Saturday and go through the lists.

IN HONOR OF VETERANS DAY

(35:54) In honor of Veterans Day, I'm going to share some missions from my grandfather to thank all of our veterans.

REFERENCES

Six Shot Saturday

Rock Retirement Club

Retirement Answer Man- FREE Resource Center

Show notes created by https://headliner.app

Next Episode

Year-End Planning: Charitable and Family Giving

Welcome to another episode dedicated to enhancing your retirement journey! Today, we wrap up our series on year-end action items with a focus on charitable and family giving. Discover how strategic charitable contributions can optimize your tax plan and learn about family giving opportunities that can make a difference. We also address your questions and share essential updates, including a correction on HSA contribution limits and an exciting upcoming live case study. Plus, get ready for a December packed with insightful guests like Christine Benz and Michael Easter. Dive in and explore ways to rock your retirement with confidence!

PRACTICAL PLANNING SEGMENT

(00:30) Today we are going to talk about charitable and family giving.

(00:53) I misquoted the HSA contribution limits in episode 565

(02:40) In January we are doing another Retirement Plan Live series.

03:50 In December we will have several great guests on the podcast including Christine Benz, Daniel Crosby, Michael Easter, and Tanya Nichols.

(04:21) Today we're going to talk about charitable and family giving

(05:30) There's no real impact from a tax perspective on charitable giving unless you itemize your tax return.

(07:41)What are ways of giving to a charitable organization?

(12:00) You can batch your charitable contributions into one year in order to have a significant impact on the tax you pay in reduction.

(14:42) Let’s talk about family giving. You can give up to $18,000 a year in family giving.

(16:44) You can pay family educational expenses and medical expenses without limit as long as you are paying directly to the institution.

LISTENER QUESTIONS

(18:00) I had a discussion with a member of the Rock Retirement Club yesterday about moving to a warmer state in retirement and helped analyze the feasibility of their plan in the different states.

(25:14) One question related to the upside portfolio, do I have to build a whole asset allocation?

(28:45) Our next question is an audio question related to rebalancing. “Hi, Roger. I have a question about the process of rebalancing your pie cake... what process should I use to refill layer two of my pie cake to continually fund the next five years of my life?”

SMART SPRINT

(37:55) In the next seven days review your charitable and family giving.

BONUS

(38:15) Roger shares another excerpt from his grandfather's WWII journal.

REFERENCES

Simon Sinek- Originator of Humble Pie Quote
https://simonsinek.com/

Red Cross
https://www.redcross.org/

Schwab Donor-Advised Fund
https://www.schwabcharitable.org/

Fidelity Donor-Advised Fund
https://www.fidelitycharitable.org/

Upcoming Podcast Guests:

Christine Benz
https://www.morningstar.com/people/christine-benz

Michael Easter
https://eastermichael.com/