Retirement and Legacy Blueprint Webinar – Episode #1

In this episode, we talked about Taxes in retirement, the sale of a rental property, whether an annuity is protected from long-term care costs when to consider getting an estate plan in place.  

Every Wednesday at 1 pm, Attorney and Advisor Christopher J. Berry, Esq., CELA will be answering questions and sharing wisdom on a legal, financial, or tax planning topic. Feel free to submit questions ahead of time by email to These are informal and educational.

In this episode, you’ll learn…

  • Chris’ positive focus for the week
  • Taxes (Roth already taking RMD’s)
  • Tax Cut and Jobs Act
  • Different types of money
  • Cost of Annuity and LTC (Long-term Care)
  • How you can qualify for Medicaid
  • Countable and non-countable assets for qualification
  • Advantages of moving to an asset protection plan
  • When you need to consider Estate Planning
  • Why you need to consider a Legacy estate plan
  • The effect of the Secure Act with taxes
  • How you can minimize the taxes throughout your lifetime
  • Utilizing tools for long term care
  • Asset-based long term care
  • Rental Sale

Episode Transcript:

All right. It’s 1:00. We’ll go ahead and get started. Hopefully, you can see me at this point. Trying some new technology today. We’re going to do this basically every Wednesday at 1:00 for the near future. We used to do a lot of workshops throughout the week, back when we could do things in person, but with the pandemic and all the craziness going on, obviously cramming 20 people into our conference room probably doesn’t make sense right now. And I’m a big believer in education, and our goal is always to make sure that our clients are well educated, we open all the doors, make sure they understand everything, and then from there, once we figure out what their goals are, figure out best strategies and tools.

I used to be an adjunct professor of law where I taught estate planning, elder law to second and third-year law students. My dad was a professor for 47 years I think. Teaching and education are in my blood. That’s the concept behind these. And idea is that if you do have questions, feel free to log into the chat or question and answer and put those questions in. I’ll cover topics that I want to cover, but then I want to make sure that I answer all your questions. I do have a good number of questions that were already sent in, so I’ll go ahead and start addressing those.

There’s not going to be any PowerPoints or anything like that. It’s really just me and potentially a whiteboard, which if I can get my technology working correctly, should be up and running shortly. But again, if you do have questions, feel free to type them into the chat, because this really is all about you, and I blocked off the next hour or so to be available, so this is free advice from a lawyer, which you don’t get that very often.

So, with that, I’m going to go ahead and share my screen. I’m going to try to. And open up my whiteboard where I typed out some of the questions that a couple of individuals already emailed in. Let’s see if we can get this going. Give me just a second here. Screen mirroring. Should be seeing my screen. All right. So, a couple of questions we already had. The first one is from Dave and we’re not going to talk anymore about Dave, because of attorney-client privilege and all of that.

But he had a question about whether Roth conversions make sense, especially if you’re already taking out RMDs. So, the issue here, and the question I want you to ask yourself if you’re listening to this, is do you think taxes are going up or down in the future? So, first, we’re going to really talk about taxes. And so most people if I were to ask them, they think taxes have to go up, and I’ll give you some reasons why I think that’s the case. This is something we’re talking about before we even moved into 2020.

So, last year and the year before, we were talking about this opportunity with regard to taxes. So, what happened in 2017 and became effective in 2018 is we had the Tax Cuts and Jobs Act and basically what the Tax Cuts and Jobs Act, so the Tax Cuts and Jobs Act, it runs from 2018 to 2025. And what it’s saying is that taxes are basically on sale. Meaning, if you have IRA money, 401(k) money, 403(b) money, money that’s pretax, in five years taxes are going up.

If you were to pull that money out, whether it’s just pulling the money out, whether you’re forced to take the money out because of required minimum distributions, understand that in five years taxes are going up. Dave’s question was does looking at things like Roth conversions or that type of thing make sense now? Even if you’re taking out RMDs. The answer is a definitive yes. Now, understand everything I’m talking about today is just general advice and what I’d say is that let’s sit down, have a conversation about it, and if you do want to schedule a conversation to talk about anything that we talk about today, you can go to a website,, and we can schedule a 15-minute conversation and figure out what your goals are with that.

Anything we’re talking about right now, it’s just general advice and as an attorney and fiduciary, I always have to act in your best interest, so before you rush out and make any snap decisions, let’s have a conversation about it, okay? But that said, taxes are going up in 2025 if not before. Think about that money that you have sitting in pretax accounts. IRAs, 401(k)s, 403(b)s. When you pull any money out, whether it’s by choice or you’re forced, you’re going to have to pay tax on that.

And so the idea is that if we know that taxes are going up, maybe 3-4% in the future, so if you’re at the 22% tax bracket, it’s going to 25. If you’re at 24% tax bracket, it’s going to 28. Taxes are going up. If you’re at 12, it’s going up to 15. We know that we have this window of opportunity from 2018 to 2025, where we know taxes are at a lower amount. Now, understand that that window of opportunity could close sooner, right? Because what happens … Not to get political. What happens if the other party, what happens if the Democrats get into office?

Well, Biden’s plan is to repeal the Tax Cuts and Jobs Act, so we say that we have until 2025 with a lower tax environment, but in reality, it could be sooner. Really it’s pretty simple. If you’re taking out RMDs right now, let’s say you are over the age of 72, if you’re taking out RMDs right now, understand that they’re taxed at say a 22% tax bracket. So, what you would look at doing is thinking about it in terms of like a bucket, right? If this is our 22% tax bracket, and right now you’re a married couple, let’s say you have $100,000 worth of income, that puts you right here in terms of that 22% tax bracket.

What we could do, and really it’s a two-step conversation. Let’s first figure out how much do we want to move out of the tax-deferred bucket? And the second, where do we want to move it? Because the answer to that is it depends. We might want to do a Roth conversion. If you have an asset protection trust, we might want to move it into an asset protection trust. But the idea is that that money, you have all of this space to take out additional money before you get into the 24% tax bracket.

Because once you get to roughly I want to say 180,000, and I have a date issued on it, but once you get into a certain level, then you get into a 24% tax bracket. Then you have all this space before you get into a 32% tax bracket. Now, the interesting thing is you might actually want to fill up the 24% tax bracket as well because understand that in five years, your 22% tax bracket’s jumping up to 25. Again, 24% is less than 25%, so if we look at having pretax accounts, we can move money out of that account, pay the tax, right now at a lower tax bracket than it’ll be in five years if not sooner.

And so the 24% tax bracket taps out for a married couple at about $326,000. So, let’s say you have a $100,000 of income right now. We could pull out roughly $226,000, pay at a lower tax bracket, so that in the future if taxes do go up, which they will in the future, you’re going to be in a better position. Now, that said, some people say, “You know what? I don’t want to do that because it’s a bigger pretax amount.” They’re tied to this idea that, “I like this bigger pretax amount” and they think that, “Well, if the markets go up, I’m going to get more growth on that bigger pretax account.”

But what we have to understand, I’m going to walk you through a little idea here. Let’s say we have pretax $100,000, right? Let’s say that amount is sitting inside of our IRA or 401(k)s, right? And then we have post-tax, tax-free, meaning we’ve already paid the tax, let’s assume a 20% tax just to make the math easy. So if we’re to pay the tax, then understand we have $80,000 post-tax. Would you agree that that’s the same number? The amount pretax is the same as the amount post-tax, given a tax of 20%, right?

Some people think that “Well if I get growth on that $100,000, that’s better for me. I wouldn’t want to do the conversion, because I’d be losing money.” Well, let’s take a look at that. Let’s say that you invest in the same exact investment. We’ll call it XYZ Mutual Fund, and we’ll say that that amount goes up 10%, right? Pretax we have $110,000, right? Post-tax, we had $88,000. Again, the same exact investment, so XYZ Mutual Fund. One is pretax, one is post-tax. Now, we have growth in a bigger number. So, at the end of the day, does it equal the same amount post-tax?

Well, let’s take our tax, so we’ve still got to pay that 20% tax, which is going to equal $22,000, so if we subtract $22,000 from that 110, we’re still left with $88,000. So, I illustrate this so that you understand that the money you keep pretax, you’re growing a bigger tax bill, right? Because if you were to allow that money to stay, you’ve just paid $22,000 in tax, instead of $20,000, right?

So, at the end of the day the one question to ask yourself, with regards to these pretax accounts, IRAs, 401(k)s, 403(b)s, is do I think taxes are going to go up in the future? Most people say yes because we have the Tax Cuts and Jobs Act, we have a $23 trillion deficit that just added another $2.2 trillion to the deficit with the Cares Act, plus we’re adding another sequel to the Cares Act, so most people think taxes have to go up in the future. Then if that’s the case, then it probably makes sense to look at moving money out of those pretax accounts to somewhere else.

This is something we can help you with, to do in an intelligent manner, where we have some sophisticated software. We can look at the ideal amount to move to have a tax plan moving forward. Because the idea is to understand that really there are three types of money. Think of these as different buckets. We have taxable accounts, so this is like your checking accounts, savings accounts, money market brokerage accounts. You pay on the gains here. And then we have tax-deferred, which is like your IRAs, 401(k)s, 403(b)s, anything that’s pretax, and then you have your tax free.

This is like your Roth IRAs, Roth 401(k)s, cash value life insurance, 529s, health savings balance. So, if you’re one of those people that think taxes are going to go up in the future, I’m one of those people, then we need to move money out of these tax-deferred accounts to either tax-free or taxable. And doing it in an intelligent manner. This is probably one of the biggest opportunities right now for anyone.

Think about where you’re saving money. Are you saving into 401(k)s? 403(b)s? Tax-deferred IRAs? And then if you’re in retirement or moving into retirement, think about a strategy to pull money out of these tax-deferred accounts and move it to taxable or tax-free. That’s one of the biggest conversations we’ve been having with clients over the past couple of years, is looking at this tax planning opportunity. It is something we can help you with.

Dave, your question was, “I’m 72, I’m taking RMDs already. Should I look at moving money out of the tax-deferred accounts?” My answer to you in a general sense is yes. Because taxes are going up. And looking at those tax brackets and doing it in an intelligent manner, and that’s something that we can help you with. Hopefully, that was helpful. Again, if you have specific questions about your situation, and you want us to run some of those tax supports for you, just book a time at We can talk about what you’re trying to do and move forward from there.

So, hopefully, that’s helpful. I’m going to stop sharing my screen for just a question. See if any other questions have come in to make sure I capture those. Yep, we do have a question from … We’ll call him Gene, or G. And let me add that to my list of questions here. And then we’ll go ahead and answer that. At what point in a person’s life should they consider an estate plan? Okay, when to consider an estate plan. We’ll answer that, and I’ll answer that life in just a couple of minutes.

So, I’m going to make sure I have all the questions. Navigating technology. I’ve gotten really good at Zoom in the past couple of months. I have two young kids, they’re nine and … They’re actually 10 and 7, and they even have their school part of the time through Zoom, as well. All right. Let me get back to sharing my screen real quick. All right. You should be seeing my whiteboard again.

All right, so the second question was on the sale of a rental property. Number two, let’s just add another page here, so number two. So, rental property. I have a lot of clients that have rentals. From an asset protection standpoint, one of the things you need to understand is these are a hot asset. You could have a slip and fall, they could see you and come after your own assets. So, a lot of times we want to limit that liability, and typically what we do is we’ll do what’s called a limited liability company, like an LLC, where if you think of it as this hot asset, there could be a slip and fall, and we don’t want it to get access to your personal money, so we’ll put it inside of the box of an LLC or sometimes an asset protection trust.

Now, if there are a slip and fall and you lose that property, you can’t come after the rest of your assets, right? So, the question that individuals submitted is regarding what happens at the sale of that rental? Typically what’s going to happen is you’re going to have capital gains. I don’t have an elegant answer on how to minimize the taxes of the sale of that LLC. I was brainstorming and thinking about this today before I logged into the call. One of the things and this is a little bit outside the box thinking, and again, it depends on your situation, would be looking at who you have as the owners of it.

Let’s say it’s mom and dad, maybe we could add one of the kids or even the grandkids who are at a lower marginal tax bracket, and we could filter some of the gains to them. But yeah, I don’t have an elegant answer on how to minimize the taxes on the sale of a rental property. You’re not going to have that homestead exemption that you would have for a primary residence. The only thing I could think of would be if we were willing to bring in maybe a third party kid or a grandkid, we could minimize the taxes on that. Maybe that qualifies as a homestead for one of them. But yeah, in this situation with the sale of a rental, I don’t have a perfect solution. Just some things to think about there.

All right. So, we’ve talked about taxes, rental. Now, the third question I have submitted was with regards to long term care costs and specifically an annuity. Let me make sure that my screen is still sharing. Give me just a second. All right. So, should still see my whiteboard here. The question is if I were to need long term care, and think about long term care as a potential disaster, right? And today a nursing home costs about $8-$12,000 per month, right? So, the concern is that if you needed to long term care, would they come after your money and more specifically, annuity?

The answer is yes. So, if you were to need long term care, and again, long term care costs about $8-$12,000 a month, they’re going to come after your assets. Your retirement accounts, your 401(k), your IRA, your annuities, your life insurance. And then once you’ve spent down all of your money, then you can potentially qualify for Medicaid. So, Medicaid is a governmental program that covers nursing home costs. It’ll cover that $8-$12,000 a month nursing home bill, but to qualify for Medicaid, a single individual is only allowed $2000 worth of countable assets.

So, $2000 worth of countable assets. Everything is a countable asset, other than … So, these are the exempt or non-countable assets, everything is a countable asset other than your home, so your primary residence, life insurance, cash value of life insurance, up to $1500, and automobile, this is me drawing a car. I’m a much better attorney advisor than I am an artist, so don’t get your hopes up with any of this. Your home, life insurance, automobile, personal possessions, so personal items, so that’s your personal property, like your sofa and everything like that.

And then irrevocable funeral contract, or final expense contract. Everything else is a countable asset. So, things like annuities, retirement accounts, 401(k)s, all of those are going to have to be spent down, because you qualify for Medicaid. And also understand that Medicaid has a five-year lookback period, right? They’re going to look back five years to see if you moved any money around and if you have, they’re going to penalize you. One of the strategies we have is let’s say that you’re concerned about long term care costs, so you’re concerned about protecting this money. You want to protect your assets.

So, what you can do is you can put your assets, and this is just a big picture, put your assets into a castle trust or asset protection trust. Now your home and your money go into the trust. It has to be an asset protection trust. A revocable trust will not work. You can have things like annuities here, investment accounts, real estate, second pieces of property, rental properties, your primary residence. All of this can go into the castle’s trust. And then once we put the assets into the trust, think of it as waving a green flag, where we started a race, and then once we make it five years, we can wave that checkered flag, because now everything we’ve put into that trust is protected from that nursing home or Medicaid spend-down.

Now we can have Medicaid, pay that base level of care, and then everything inside of the trust is protected to pay for additional services or for a married couple, to ensure that if one spouse needs long term care, that healthy spouse isn’t completely impoverished. Again, that’s a long winded answer to the question, would an annuity be eaten up to pay for long term care? The answer’s yes, unless we put it into an asset protection trust like a castle trust. That’s where we have a lot of our clients moving assets into these trusts, A, to protect against long term care costs, but then also B, especially with the changes in auto insurance, to protect against lawsuits as well. Whatever’s inside of the trust will be protected from lawsuits and creditors.

So, hopefully that was helpful, talking about how long term care costs affect annuities and really any other type of investment. Retirement accounts, 401(k)s, et cetera, okay? Now, the fourth question we had was when should someone consider estate planning? When should someone consider estate planning? What I see is what I call the life cycle of estate planning. Typically, when you’re age 30 to 40, maybe now you have a child, right? You have children. You could have children beforehand, but I’m just stereotyping right now. 30s, 40s, that’s when you start having kids, maybe even earlier.

But really the first consideration, the first time you should think about an estate plan is when you have a child. Now, to be clear, and I was actually interviewed on the news recently for this, if you do have adult aged children, aged 18-25, they don’t need a full estate plan but you need to have a medical power of attorney for them. If they’re away at college, God forbid they’re injured, you need to be able to make medical decisions for them, you need to get access to their medical information.

You should have a financial and medical power of attorney for those adult aged children. Again, 18-25 year old, they don’t care, they’re not thinking about this. It’s you as a parent should have this in place. And again, we can help you with this. Just either give our office a call, phone number is 844-885-4200, or again, go to the website,, to just book a time to talk about it. Yeah, if you have 18-25 year old kids, adult aged children, understand once they turn 18, legally they’re an adult.

You don’t have any ability to make decisions for them. It needs to be in writing. You need to create your own [inaudible 00:24:57]. But that said, most people, once they have their first kid, they need to think about at least putting together a basic will that talks about guardianship, where if you were to pass away, who would take care of that child. A lot of times, because we have things like life insurance, you might want to look at a basic living trust. And then as we begin to age, now we get into our 50s or 60s, now our kids are adults, we’re seeing who they’re marrying, and we want to make sure that we want to avoid probate upon death and make sure everything goes where it’s supposed to, and maybe build in protection from the in laws.

So, whatever we leave to our kids, instead of it going outright to them in a pillow case of money, but because we’re concerned about what happens with the in laws, what happens if there’s a divorce, we don’t want to go, we don’t want that money lost. Instead, we might want to put together what we call a legacy estate plan, where whatever we leave to the kids are protected from divorces, lawsuits, creditors, bankruptcies, et cetera. Make sure that that money stays in the bloodline.

And then also on that same time, we might want to consider an asset protection trust to protect against long term care costs. Basically, what I talked about down here, where as we get older, we start to see that our parents need long term care and we want to make sure that everything that you’ve worked so hard for isn’t lost due to long term care costs, that type of thing. When should you consider an estate plan? Well, once you have that first kid, you need to have at least a basic plan in place. And then as you begin to age, as you accumulate more wealth, maybe the planning gets a little more sophisticated to ensure that what you leave the next generation isn’t lost through a divorce, lawsuit, creditor action, or bankruptcy. And then also build in protections against long term care.

So, we’ve been going for a good half hour now. Let me see if there’s any other questions. Otherwise, we’ll wrap up. I appreciated everyone that submitted questions, and I plan on doing this every week at the same time, where I’ll answer any questions that have been submitted throughout the week, and then I’ll talk about what clients have been talking to me about within the past week. But the biggest thing really right now is that first conversation, that conversation with regards to taxes.

Because again, going into this year, we were talking about taxes. We were talking about the Tax Cuts and Jobs Act, how we know taxes are going up in five years. Before this pandemic, we were doing a lot of workshops on the Secure Act, so the Secure Act passed in December 20 of last year. And what that Secure Act said is that if you’re leaving pretax accounts to the next generation, IRAs, 401(k)s, 403(b)s, instead of them being able to stretch out the taxes over the lifetime, all the taxes would have to be paid within 10 years.

That tells us the government is going after those pretax accounts for beneficiaries. And then on top of that, we have what we call the widow’s penalty, where when you’re a married couple, you have a married filing jointly tax bracket, but when one spouse passes away, now you have a single file. Those widows are taxed more heavily on those pretax accounts. Again, one of the biggest opportunities right now is looking at minimizing taxes, not in a specific year, but over your lifetime.

That’s one of the things that we focus on, is looking at taxes not through a micro lens of minimizing taxes in one year, but minimizing taxes in a macro lens, minimizing taxes for your retirement, and then what you’re leaving to the next generation. That’s again, something that we can help you with. We get your last tax return, we can help you file taxes moving forward, but we can show you or create a tax plan for a retirement legacy.

Now, I have a question regarding what do I think about long term care annuities? So, I view any type of financial tool or insurance tool as a tool. I think some tools are oversold by people that all they do is they try to sell people on this tool. Specifically, things like annuities. But that said, I am a fan of utilizing tools when it makes sense. I always focus on what is your goal? Let’s develop a strategy and then pick the right tool. From a long term care perspective, there’s really two ways that we can address long term care.

One is we can address it from a legal perspective. We can build a legal structure, move assets into that legal structure. Once we make it five years, everything is protected from that devastating nursing home cost. That’s one approach. The other approach is we can approach it from a financial and insurance base standpoint, and so I’ll tell you, one thing I’m not a fan of is what’s called traditional or pure long term care insurance. These are the old style traditional pure long term care insurance products, where you pay money annually, maybe $3-$4000 a year. That money that you put into that product, if you were to pass away without using it, is lost.

And then also I’ve seen a lot of people that had these old policies, and I’ve never sold one, had these policies where the premiums increased. You could pay on this for $4000 a year for 10 years, and all of a sudden they could increase the premiums on you. I’ve seen clients have the premiums increased to $10,000 a year, and then you’re left with three choices. Pay the higher premium, let the policy lapse, or take a reduction in benefits. I’m not a fan of the traditional long term care.

What we do quite a bit is we look at what’s called asset base long term care, where … Let me share my screen. I think this will be a good explanation of how this might work. Again, if you do have any other questions, please put them into either the chat or the question and answer and I’ll make sure that they get answered. But let me share my screen one more time. Just give me a moment. All right. So, we’re going to talk about asset base long term care. All right, give me a second here.

All right. So, asset base long term care. Again, I apologize for my horrible handwriting. Here’s an example of how it might work. Let’s say we have inside of our IRA, so this is pretax money, and this isn’t the only way to do it but we do this this way a lot of times. Let’s say we have a million dollars. A lot of that’s pretax. So, what we’d do is we would carve out let’s say $400,000. Still pretax, meaning we haven’t paid any income tax or anything on it, right?

But now that 400,000 might buy us a bucket of money to pay $10,000 a month for long term care. So, it will pay an unlimited long term care benefit of $10,000 a month. This could be for a married couple. We could use one spouse’s IRA, just move money from one pocket to the other pocket, and now that could be a $10,000 a month long term care benefit. Or, if you were to pass away without needing long term care, might be a $600,000 death benefit, okay? What we’ve done is we’ve leveraged $400,000 into a $10,000 a month long term care benefit for the rest of your life, to cover home care, assisted living, or nursing home care.

And then if you never need this and you pass away peacefully in your sleep, this could be a potentially $600,000 tax free death benefit to your children or beneficiaries. That’s something I’m a fan of. It’s something that I even have for my parents. We put together something very similar to this. It doesn’t have to be pretax money, but it is a way that we can approach that long term care piece from a financial perspective, versus a legal perspective.

Now, there’s also fixed index annuities that have home healthcare doublers, or income doublers. Typically, we use those if we can’t qualify for something else, where if you have a loved one who’s already diagnosed with Alzheimer’s or dementia or had a stroke or Parkinson’s, we could use a fixed index annuity that has an income doubler where if that person, once we make it two years, so two years from the time we move into the product, then the income that we draw on this could be doubled.

Let’s say there’s an income benefit of $2000 a month, and now we’ve made it two years and we need help at home or something like that, then that home healthcare doubler could kick in, and now instead of getting $2000 a month, we could get $4000 a month to help pay for home care. Long term care, it’s a big concern. It’s probably one of the three biggest risks right now that I see for people, especially as they move into retirement. Number one is market risk, and we received that punch in the gut recently from the pandemic in March, and we’re going to have a lot more volatility I think moving forward because of unemployment and everything going along with it.

Second big risk is tax risk. We understand that if taxes go up, and you have pretax accounts like IRAs, 401(k)s, and they do raise taxes, let’s say they raise taxes 10%, well guess what? The value in those pretax accounts just dropped 10%. And then the third big risk is long term care costs. We’re living longer than ever, long term care costs are skyrocketing. Where now if you need a nursing home, it’s going to cost $8-$12,000 a month, if not more, and that’s just going up.

And so those are the three big risks that I see for most people as they’re moving into retirement right now. Those are all things that we can help you address. Because our firm at the end of the day, we focus on five key areas. One, creating an income plan in retirement. Two, investing in such a way that you’re comfortable with. Three, managing taxes and having a tax plan moving forward. Four, healthcare planning, not just Medicare but also long term care costs. And then fifth, legacy planning. If there is anything left over, how do we leave it to the next generation in such a way that we’re comfortable, so that whatever they receive from us avoids probate, we avoid estate taxes, and it’s as easy as possible?

With that, I’ve answered everyone’s questions. If you do have any last questions, feel free to type them in. If you want to see how some of this information applies to your situation, I’m going to put into the chat, again, that website where you can schedule a free call with me, to see how what we’ve talked about applies to your situation. You just have to go to We’ll schedule a short conversation, figure out how this applies to you. With that, I thank everyone for attending. I’m looking at the attendees, thank you Beverly, Caroline, Dan, David, and everyone else. I do appreciate … Deborah, Robert, I appreciate everyone for attending.

We’re going to do this every Wednesday at 1:00. If you do have questions, feel free to email me anytime and I’ll take these questions live. Email me at chris@castlewealthgroup, and I’m typing it into the chat right now, and the same webinar invite you used to attend today, it’s going to be the same one to log in next week. I’ll answer any questions. If I don’t have a lot of questions that week, I’m going to talk on a specific topic as it relates to retirement and legacy planning.

Thank you for joining me the last 40 minutes. Hopefully you found it informational, educational. Make it a great week, I look forward to seeing you … Oh, there’s one more question here. “Are my post tax accounts still earning interest? If so, do I need to pay interest just on the interest?” So, Beverly, yeah, the idea is that we move money out of that tax deferred account, pay the taxes, and then we either move it into a tax free account where now your interest will grow tax free, which that’s a great opportunity. Or, it’ll be a taxable account where you would pay taxes on just the growth potentially.

Because now you would have to worry about capital gains, so as you move money out of the IRA, you pay ordinary income tax rates, which could max out at most rates now, 37%. If you move to into a taxable account, now if you were to sell while you’re alive, you could pay up to 15 or 20% in capital gains. If you keep it until you pass away, it actually passes to the next generation tax free. You get what’s called a [inaudible 00:38:59] basis.

Even if it’s in a taxable account, it still could be tax free. If you’re to keep that upon death. But yeah, the idea is that you move it out of the tax deferred account, like an IRA, 401(k), and you invest it somewhere else where you still get growth. And at worst, it’s in a taxable account where maybe you have to pay capital gains, but chances are if you keep it until death, or you move it into a tax free account, then it’s going to be … The growth will be tax free on that.

That’s where we can help you with that, because there’s two steps. One is to figure out how much should I pull out of the IRA or 401(k) or 403(b)? How much should I pull out of the tax [inaudible 00:39:40] account? And then the second question is where do I put it? That’s something that we can help you with. But yeah, at the end of the day, the idea is that you still invest it and you get the potentially tax free growth.

All right. Let me see if there’s any other last questions. Okay. Looks like there isn’t. With that, everyone, make sure it’s a great week and I completely forgot, and I’m going to do this moving forward, but I always like to start anything with a positive focus, just something positive that happened within the last week, and for me my kids are 10 and 7. We’re doing this remote schooling thing and in person schooling, but my kids are just happy to get back to it and it’s great to see the joy they have in learning.

I couldn’t be more proud of my kids, so next week we’ll make sure to start with a positive focus. If you want to put a positive focus into the chat next week as we get started, feel free to do that, because I think we all need some positivity in these crazy times that we’re living in.

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