Winning in Retirement

3 Mistakes in Estate Planning

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This episode of Winning in Retirement with Brian Akers and Alex Monk explains how to legally reduce lifetime taxes using Roth IRAs, Roth 401(k)s, and Roth conversions so you can “pay tax now and never again” on that money. You contrast traditional pre-tax 401(k)/IRA strategies with Roth strategies, showing how over-reliance on pre-tax accounts can lead to higher future tax brackets, bigger RMDs, and more taxes for surviving spouses and children. You then walk through how smart, staged Roth conversions—timed around tax brackets, IRMAA thresholds, and market volatility—can lower future required distributions, reduce Medicare surcharges, and create tax-free legacy dollars. Throughout, you emphasize that this is best done with professional planning rather than DIY trial and error, so listeners can keep more of their money and build flexible, tax-free retirement income.



Unknown:

The following is a pre-recorded show. Welcome to Winning in Retirement with your host BRIAN AKERS, certified financial planner professional and founder of AKERS Financial Group. Now helping you win in your retirement. Here's BRIAN AKERS.

BRIAN AKERS:

Welcome to Winning in Retirement. I'm BRIAN AKERS, president and founder of AKERS Financial Group, and we welcome you to our radio show podcast. Here with me today is Alex Monk, certified financial planner practitioner. Good morning, Alex. Brian, it's good to be here. It's good to be here. It's good to have you. Um, as of recently, you've been 14 years at AKERS Financial Group. You've come a long a long way, man.

Alex Monk:

The time flies. Like they don't tell you how fast it goes.

BRIAN AKERS:

I would love to say that it slows down, but I believe when you hit 50, it jumps every year. Seems every five years seems like one year. It's a blur. Flies life flies.

Alex Monk:

I had an 80-year-old the other day tell me he goes,"Well, every day as you age is a smaller percentage of your life, so it goes that much faster.

BRIAN AKERS:

So it's a mathematical

Alex Monk:

math thing. I

BRIAN AKERS:

like the math thing. All right. So I know you're listening for winning in retirement. You want the tips that can help you win in your retirement years. We want you to keep more of your money so you can use it for what you want to do rather than sharing with somebody else. Wait

Alex Monk:

a wait a wait a second.

BRIAN AKERS:

What keep more

Alex Monk:

of your money?

BRIAN AKERS:

Wow, it's a new concept we're going to try. I like

Alex Monk:

this.

BRIAN AKERS:

So we, you and I, have been talking about a show. We did a show a bunch of years ago, and it's it's it's basically we're going to improve the show. We're going to get a better effort. We're going to do the great thing on the show. We're going to do a show called"Never Pay Taxes Again. Never pay taxes again. We're going to walk through where we are now with our money, how we invest money, what your choices are at work, why something like a Roth IRA, a Roth 401k, a Roth account makes sense or not, and then we're going to talk about why not pay tax now and never again, and how this applies to most people that we communicate with.

Alex Monk:

Absolutely, and and this is a big concern for people when they come through our door and they're getting ready to retire. There are a lot of things going on, but taxes are always-you know-no one comes in and like, hey, can I spend more money on taxes?

BRIAN AKERS:

Oh my! Think about retirement. The two biggest pieces that come out is your health care and your taxes. If we can reduce that section, you get to keep more money.

Alex Monk:

Yeah, and when we're talking about more money, there can be differences of not just 2% 4% We're talking 10, eight. That's a big difference.

BRIAN AKERS:

Yeah, eight, eight or 10% on taxes is basically what you're paying on that money, and based on wise decisions. And so we got to make sure we do a good job of this. Now, Alex, I believe because we want to pay low taxes, we got to do the show with a lower voice and bring it low. How low can you go on the microphone? Hello. That's pretty good. Pretty good. All right. So I know you're listening, you're driving around, and you don't want to hear us fool around too much. But what we want to do is start with the basics about a Roth IRA. Alex, teach us what a Roth IRA is, and then I will give my interpretation and version also.

Alex Monk:

Okay, so David Lee Roth in no, it's a no. I knew you were gonna catch you on that one, but a Roth is a type of IRA that is classified because it is funded with after-tax money, meaning the money that you put into your Roth, you've already paid taxes on. There's a couple caveats in there. Got to have it open for five years, 59 and a half to get your earnings out, some things like that. But your money grows tax-free, just like other retirement accounts. The kicker is, at the end, it's all yours.

BRIAN AKERS:

Yes, and so when you think about Roth IRA, it actually started in 1998. I was named after Alan Roth, a senator from Delaware, and so this was when Bill Clinton was president and Newt Gingrich was running Congress, and they actually compromised and they came up with a way to balance the budget, and so the concept of pay tax now was, hey, let's get some money in now and never again. Now, in 1998, you had a four way, a four year, you could spread your taxes out. There's a bunch of things. There was limits, all kinds of different stuff going on with the rules. Rules have changed a lot over that almost 30 years now,

Alex Monk:

yeah.

BRIAN AKERS:

But the Roth IRA is now become the Roth 401k, the Roth 403b. It becomes a talk of are you Rothifying? Have you provided Rothification to your money?

Alex Monk:

Now, you said something there. You said Roth 401k. So I have people come in and they say, "Hey, Alex, well, how are those Roths doing?

BRIAN AKERS:

Yep.

Alex Monk:

Meaning, is a Roth a type of investment? And no, we're talking about a tax qualification here. The type of investment that's up to how it fits you.

BRIAN AKERS:

Well, over the years, some people say, "Oh, I'm going to go buy an IRA, so that meant they drove to the bank, put their money in a C. To buy an IRA, and so the idea was that's the only way to do an IRA. But the reality is, when we think about an IRA, it's an individual retirement arrangement where you are using tax qualified rules. IRA, you take a deduction now normally, and the money grows tax deferred with the goal of pulling that money out later in life when you're at a lower tax bracket and you pay less tax on all the growth, and it's a win-win, but I believe that the the concept is a loss. It's a it's a loss in the fact that you're at a bracket now. If I tell you you're going to be in a lower bracket, what does that mean to you, Alex?

Alex Monk:

Either really good tax planning or way less money,

BRIAN AKERS:

way less money, right? Now, great tax plan be nice to get it down to zero, and there's concepts out there of that. But generally, the idea is this: if we're going to be in a lower bracket in the future, that would work to pre-tax and go. The problem is, the more you save, the more successful you are, the more you grow, the more you become a 401k millionaire, which you need to be to be able to retire because no one else is providing retirement pensions and money for you in the future. You have to have millions of dollars saved. That's going to all be taxable if you go pre-tax. If you pay, if you let take a deduction now on the small amount and pay tax later. So the concept of being a lower bracket, I disagree with that concept, and I like the idea of Roth, where hey, I have the cash money, I have the money to do it. Hey, let's pay tax now and never again on that money.

Alex Monk:

So you don't plan to live your life one way and then retire and spend dramatically less. I mean, that just I could I could argue

BRIAN AKERS:

that I want to spend more money in retirement. Absolutely,

Alex Monk:

you have the time to do

BRIAN AKERS:

it. If I have time to do it, what would I do? That's a neat thing. Now, my version of retirement is a slow retire, take a little more time off. I love what I do. Yes, I'm retirement planner, and it's funny. My sister was retired at 53, and I'm a retirement planner, and I'm still working. I'm older than her, older than her, and and I think it's okay because I love my job. I want to do this, and that's that's really a great thing to do. That's what it's

Alex Monk:

about, right?

BRIAN AKERS:

Financial independence is the ability to work because you want to, rather than work because you have to. How we get ourselves that way is by lining up your money in a way that it can provide for you whenever you're ready, and provide for you the most efficient way possible. So today's show is never pay taxes again. We want to cover the ideas of how can we do that. So Roth IRA simply you're allowed to put money into it.

Alex Monk:

Correct. If you meet certain qualifications, income, etc. So you

BRIAN AKERS:

have to make money.

Alex Monk:

You have to have earned income,

BRIAN AKERS:

right?

Alex Monk:

Meaning w2 self employed. I mean yes w2 typically the easiest way.

BRIAN AKERS:

That's the easiest way. So w2 so and there's no age limit for Roth contributions.

Alex Monk:

Correct.

BRIAN AKERS:

So we have retirees that are working at the golf course making 10,000 a year. They come in. They can put in 25. They can put $8,000 into theirs and 2000 into their spouse, or they could split it five and five. They could only contribute what they made up to the limit of for the year. Okay,

Alex Monk:

so contribution, right? That's what you are saying. So that's new money, like that has come

BRIAN AKERS:

out earnings. Okay,

Alex Monk:

so you have to earn it, and then it goes in the Roth, and then the other way is conversion.

BRIAN AKERS:

Yeah, conversion is going to be a major top major topic, and that's where you choose to pay tax. Now, an old tax law that used to be an income limit for this, so it was like a forget about Roth conversion, didn't make any sense. Then they took the upper limit away, so no matter what income you have, you can choose to pay tax now, never again on IRA money, and in some some special cases you can do it through work

Alex Monk:

right at your plan

BRIAN AKERS:

you can

Alex Monk:

yep

BRIAN AKERS:

more difficult and you better have the money outside the account to pay the tax

Alex Monk:

so essentially when you do this Roth conversion like the way that we like to do it is Brian said have the the tax money outside so what that means is, after you do the conversion, all of that money is now in your Roth, and whatever the tax liability, let's just say 25% you pay with other money. So in reality, you added 25% to your retirement account, and you made it tax free.

BRIAN AKERS:

Absolutely. So it has a cash commitment. Some people have no cash. They'll say, "Oh, just take it out of the IRA, the taxes, and I that really mathematically doesn't really work well.

Alex Monk:

It's the same.

BRIAN AKERS:

Yeah, there's no win, right? Now, if you already had the cash built up, it works out well. If you have another tax plan where we can offset the income and work it out, it's fine. Because

Alex Monk:

if you have a lot of money that's not in retirement accounts, if you could trade that money for tax-free forever dollars, that's what our ultimate goal is. And then figuring out how that fits into your life: where's your spend plan? What do you want to do? What do you need to do?

BRIAN AKERS:

Absolutely. So Roth conversion means that you have money in a pocket. So everybody consider your left pocket being an IRA or. A tax deferred where you got a deduction and now it's growing tax deferred, and to switch it to the the other pocket, to your right pocket, to the Roth IRA, Roth 401k, you have to pay tax on the transfer. Got to pay tax. They'll give you a 1099 R, and you'll say Roth conversion. There won't be any penalty, no matter what age you are, and there's no age limit. There's other rules, of course, but generally, when it moves over you 1099 that year, you got to pay taxes. Those taxes you you do owe them.

Alex Monk:

You have to pay them, and there's no. So it used to be a whoopsie daisy. You could go back and say, I didn't, I didn't mean, I didn't mean that. Recharacterization that's gone. That's gone.

BRIAN AKERS:

Yeah. So so the idea is this: when we when we pay that tax, now that's very important to know your tax brackets. For years, we talked about the sunsetting of brackets and how they'd go up in 2026. In 2025, July 4th, the one big beautiful bill set the tax brackets and actually made them permanent on the personal basis, which gives us brackets to work with. We know what taxation we do, and sometimes I like the concept of, hey, I know what the taxes are today. I'm just going to pay them because I don't know what the taxes might be in the future. Right.

Alex Monk:

Well, in worst case scenario, you paid your taxes,

BRIAN AKERS:

and it's done.

Alex Monk:

It's done.

BRIAN AKERS:

It's like paying off your debts. If I know I have a debt, I wipe it out. It's not a future bill, not a burden. All the money's my money. Right.

Alex Monk:

And if you want to go back and rack up some more debt, you

BRIAN AKERS:

can. Yeah. If you you can do that, you

Alex Monk:

can do that. But

BRIAN AKERS:

it's fun for a while until bills come, so you have to pay it. Yeah,

Alex Monk:

but the what you said about current tax rates, like right now, is a tax holiday.

BRIAN AKERS:

It's good.

Alex Monk:

Rates are really good. You got your federal

BRIAN AKERS:

rates, and every state has their own situation, and so Maryland has their situation based on the income you show there's actually higher brackets now that you could hit you got to watch out for the information there so there's a lot going on in this show today we're talking about never pay taxes again yes we're talking about Roth Roth contribution Roth conversion a lot of it going on now at AKERS Financial Group we're local we're independent we don't report to a big company on Wall Street, we report to you. We do have offices in Lutherville and Farstel. We have clients all around the Mid-Atlantic region, all around the country, and even a few around the world. It's so easy to begin winning in retirement. Just give us a call and schedule your free meeting with one of our team of advisors by calling 833 win retire. That's 833 W I N R E T I R E. We'll give you a call on Monday to schedule your free in-person meeting. Go to akersfinancialgroup.com or call us at 833-946-7384 to start planning for your retirement now. Tell Uncle Sam never again. We will explain in a moment,

Unknown:

you're listening to a pre-recorded show. Welcome back to Winning in Retirement. Call 833 Win Retire now to schedule a visit with Brian and his team and begin Winning in Retirement. Once again, here's BRIAN AKERS.

BRIAN AKERS:

Welcome back to Winning in Retirement. I'm BRIAN AKERS. Here with me today is Alex Monk. We're both certified financial planner practitioners from AKERS Financial Group, and CFP is something that I've been since 1991. The

Alex Monk:

youngest in the country at the time, I believe, is what you've. I don't

BRIAN AKERS:

have it officially written down, but the math back then, with all the years' experience and combined with taking all the tests, and I took them pretty quickly after my finance degree at Virginia Tech. So one of the youngest is what I like to say. Who knows how exactly

Alex Monk:

CFP? Like, let's go back to that. What does that even mean?

BRIAN AKERS:

Certified financial planner. So you go on their website. You got to take so many C credits a year. About 30, right? Ethics classes and what else you have to do.

Alex Monk:

You have to. It's a fiduciary agreement, right? Like we have to agree to the code of ethics that we're always going to do. Yeah,

BRIAN AKERS:

the financial planning process, and you're going to run through that process and do what's right for the client. And this, I call it being a fiduciary before fiduciary was cool, and so we don't wave a fiduciary flag because it's not new to us.

Alex Monk:

No, it's a. You should always do the right thing for your clients. That's my job,

BRIAN AKERS:

right? And so there's there's conflicts of interest in financial planning, and that comes down to financial advisors do get paid. And so I believe that when you have an independent financial firm like we do, what you got to look at

is this:

what does that client need? And our firm must be designed to take the client from where they are to where they want to be, and we need to do it in a way where we are adding value. We're not the issue. We're not the cost pulling them back from reaching their goal, and so the cost factor can't be the cheapest person out there. Also, can't be the most expensive. But people have to pay for us to be around to deliver a value, though. And it's like a professional coach. How much would you pay a professional coach? And that's why we are a combination of fee and/or commission, because there are some cases where the commission is the right way of going, and so we have a broker dealer named Arcadius Capital that we go through off for commission basis, buy once and hold, or a commissionable. It might be insurance, or a fixed long-term care life, or wealth transfer life insurance, or some type of a fixed annuity type thing.

Alex Monk:

I've always loved that we're flexible enough to do what's right for the client where they are. Not let's go out there and find people that fit our mouse trap. It's not about that. It's about the people.

BRIAN AKERS:

Yeah, there's not one product that we're going to sell you. We're going to figure out what's best. We can take over any any investment you have and hold that. We can change it. We can hold it for fee or no fee, depending on what active trading we're doing. We believe strongly that the fee should only be applied to active management. Now, why does this all matter? Because if you think about it, and you're thinking about advisors and planners, and you hear them say, "Never pay taxes again. And you're like,"Why? Why would I want to waste my money right now? Give the government my money. I'll keep my money and I'll pay later, or I'll make my kids pay the tax. I mean, there is this counter concept of why pay tax now? Let's just put it all off, and that might be what your CPA does when you do your tax return, you go in there and they they'll say, "Oh, you can do a deductible IRA and get your tax your tax down a little bit, and I think that's a short sighted way of looking at life, saying,"Oh, my tax bill this month is lower, but my tax bill for life is higher.

Alex Monk:

And it's weird too, because like people get the long term planning part of it, but then when you go to write the check for the government, it's always

BRIAN AKERS:

it's painful. Yeah, I mean, when we say, "Oh, we did a Roth conversion second quarter, we need to pay a second quarter estimate, and here's your bill for 12,000 bucks federal, and you need to pay about 8000 the state. You're

Alex Monk:

coming to see me,

BRIAN AKERS:

and here's the envelopes. We paid the stamp for you, but the idea would be is you got to pay your estimate, and you pay that taxes. The concept that we're talking about when somebody moves their deferred retirement to an IRA and then out to a Roth convert and convert to a Roth, that value on the day it transfers is convertible. That's converted converted to a Roth is taxable, and then you owe tax, and that tax is technically owed in the quarter that you receive the income.

Alex Monk:

Right, and then with a good tax plan, we're going to know what that is. How much are your other withholdings? So, with things changing, having active, active stuff happening, right? Like this isn't a taxes are scary. Let's go back home and ignore them forever. This is taxes are a thing. Let's go ahead and deal with them on our time.

BRIAN AKERS:

All right, I got a little game for you. Oh gosh. All right, so we're gonna play a game where I say Roths are good, and you're gonna give me a reason. Then I'll give a reason. Then you give a reason. We're gonna go back and forth until we run out. We run out. All right. So Roth IRAs are a very good good thing for clients. Now you say the first reason why. What's the number one reason? Tax free growth. Very good job there, Alex. One. The second one I would say is that the Roth IRA is also tax free for your beneficiary. They'll have 10 years to take the money out over their life over 10 years, not over a lifetime. So that tax free can go beyond your life by 10 more years.

Alex Monk:

I like that you can pull your contributions out if you need to get the money back.

BRIAN AKERS:

So being younger, like 59 and a half, right?

Alex Monk:

Right. So like, let's say I I meet somebody that's young. Hey, I want to get started. They can save. Well, if you don't have a house yet, like that might be a big part of your life. So to hedge that bet, let's do a Roth. We keep the growth in there, but if you have to come back and get the money three years later to buy your house, it's there.

BRIAN AKERS:

Yep,

Alex Monk:

flexibility.

BRIAN AKERS:

Just the other day, a client called in, and we're we're at the top of their tax bracket, and they're I'm in their 70s, and like, hey, I want to move in with my my daughter and their son in law, and I I need money to to start the building. I need 20,000, and I said, "Well, the Roth's tax free. I can send you a check tomorrow. And they're like,"What? Wow! So the availability and flexibility to pull money out to meet needs-I'm stretching my my answer, but I think that's a good good one.

Alex Monk:

But it also it gives you options, right? Like in your case, there you've already taken all the money you can that year out of pre-tax, like. But life happens, so we got to have places where we can go to meet these needs that aren't going to blow up the whole plan. My

BRIAN AKERS:

choices was IRA, 100% taxable. Oh, the stocks are all got up. We've doubled your money. We got to pay capital gains tax on like 10,000 of income on 20, or zero. And I said, let's go zero right now. And so that's that's all right. Your turn. You got to pick one.

Alex Monk:

Oh man, you can invest them in however you like.

BRIAN AKERS:

No, that was weak. What do you mean by that?

Alex Monk:

I mean like earlier we were talking about you go to the bank, you buy an IRA, and people come to me. Hey Alex, how this Roth's doing? Yeah, and I say, well, we can invest in Roth however you want. Like, if you want to go out and buy one stock in your Roth, you can. If you want to come up with a way to buy some type of gold, whatever you can. It's all about the titling and the taxation.

BRIAN AKERS:

All right, so I'm going to get technical because I like to get technical. So Roth IRA. When we become 73 or 75, do not have an RMD, a required minimum distribution. So a Roth IRA, money in there, it gets to grow. I don't have to start taking money out unless I want to. So there is no forced out on my RMD while I'm alive. If I pass away, it goes to my spouse for as long as they're alive. There's no RMD. So that that would be my next Roth advantage.

Alex Monk:

Now, how about the advantage of when your kids get it? You said they get it tax free, but

BRIAN AKERS:

yeah.

Alex Monk:

What other details? Like, can they defer it

BRIAN AKERS:

for 10 years? 10 years. That was my my one of my top ones.

Alex Monk:

So that means it can double to your beneficiary at

BRIAN AKERS:

7% Your money can double. So the kids have it invested for growth, which I love. Investing Roth for growth, that money can double at 7% every 10 years. At 10% doubles every seven years.

Alex Monk:

I I don't want to be the guy that can't answer the next good thing about the Roth.

BRIAN AKERS:

You can't. So then I got to come up. I got to bring my next one. The the win.

Alex Monk:

Hell, Brian. I go for the win. All right.

BRIAN AKERS:

I'm going for the win, and it all has to do by Roth converting during our lifetime. What happens is this: we've lowered our IRA values, and now we're able to sneak under the Irma limit and pay less Medicare tax, and our means testing's lower because we already paid the tax. So when we're 7375, and the IRAs and 401ks are all coming at us saying you got to take all this money out, need it or not, and you're being pushed to higher and higher brackets and something called Irma, Income Related Monthly Adjustment Amount, which is a which is a piece that's tied to Medicare, which your Medicare premium can be as high as 600 bucks a month per person because you made too much money, the Roth IRA by converting no longer counts. Doesn't is not income. It helps us come underneath the bar. So planning and levelizing your tax plan, getting money to Roth, paying a lifetime of taxes at a level rate, and then ultimately figuring out a way to stay under the the 26 level, roughly 220 on the on a married filing jointly, we can avoid Irma extra Medicare premiums, and ultimately, I think they're going to mean Social Security. Absolutely, so it matters for that someday by by 2034. I think

Alex Monk:

I agree 100% They're definitely coming after people have done a good job saving eventually. Like that's the the way to correct these issues.

BRIAN AKERS:

Oh, you got you got millions in your 401k. I want some of that.

Alex Monk:

And the government already knows, like they automatically send them a notice of what's in there.

BRIAN AKERS:

Yep.

Alex Monk:

So that would scare me.

BRIAN AKERS:

That's a form required every year. The

Alex Monk:

other thing that worries me is when there's two people alive. That's when I want to pay the tax. That's when I want to do my raw thing.

BRIAN AKERS:

Absolutely, that's very very true. All right, so you I did okay. I I might you

Alex Monk:

stopped me there. You win. I was

BRIAN AKERS:

thinking about some more. And I Roth IRAs just general advice. I don't give them to charities. Roth IRA is a great legacy thing for your family. It's a great legacy thing for kids and grandkids. It's a great way to give money to them. It's that tax free. Just like life insurance is tax free to them. Life insurance to nieces and nephews is better in the state of Maryland because there's no estate tax, the 10% or higher. And in Maryland, if you have a Roth, you do have to pay that.

Alex Monk:

Yeah, I mean you can always leave Maryland, do your conversions, come back,

BRIAN AKERS:

leave, become a resident of another state, legally living there more than six months, driver's license, vote, all the 21 categories of coming resident, then come back to Maryland after you've done your conversion. Absolutely, I got myself all confused on on tax laws of all these different states and trying to figure out when is it best to Roth convert.

So the idea is this:

we've been telling you the advantage of things. This talk this quarter was going to be about Uncle Sam and never again Uncle Sam. And what we want to say to Uncle Sam

is this:

Hey, I paid my tax. I don't have to pay anymore. Yeah,

Alex Monk:

we're all good.

BRIAN AKERS:

We're all good. We're good. And Uncle Sam goes, Yeah, you're right, and we're good. I had a situation where I made zero tax for life because of the situation. I did a one-time Roth conversion. They never had RMD. They never had taxes. So that

Alex Monk:

security never shows up. It's taxable. It's beautiful.

BRIAN AKERS:

It's a real simple thing that I did. We paid a little bit of tax one time, never again. Big deal. What we've been talking today is planning, planning, Roth planning, paying tax now and never again. This is what we do for a living. We help clients work through their situation. It's not just a chart. It's a situation that's your numbers, your information. We put it together, so you don't have to figure all this out. We help you. We love doing this, planning for this, planning for the taxes, planning for the future taxes is one of our favorite things to do. We we know what we're trying to do for you. We know the ideas. We also know the concepts that we're trying to accomplish for you, we really need you to understand what's best when it comes to paying taxes, paying as little as possible over a lifetime. So at AKERS Financial Group, we plan for this. You're going to be okay because we planned for it. We paid our tax before. We're good to go. At AKERS Financial Group, we want to have a plan that's as unique as your fingerprint. And that fingerprint determines what we do for you. So go ahead and give us a call at 833 win retire and schedule in person with one of our team of advisors. That's 833 W I N R E T I R E, or you can call us at 833-946-7384, or visit our website at akersfinancialgroup.com. Scroll down to the bottom of our homepage and schedule a meeting right there. If you're married or single, it makes a difference. We'll explain in the second half of Winning in Retirement.

Unknown:

You're listening to a pre-recorded show. Welcome back to Winning in Retirement. Call 833 Win Retire now to schedule a visit with Brian and his team, and begin winning in retirement. Once again, here's BRIAN AKERS.

BRIAN AKERS:

Welcome back to Winning in Retirement. I'm BRIAN AKERS. I'm a certified financial planner practitioner, president founder of AKERS Financial Group, and today brought in Alex Monk, accounting degree from Towson University. Yes, CFP, financial planner practitioner, license for securities, registered an investment advisor representative, life and health license. Got all the tools, all the things we need for you to be an advisor, and you've been an advisor for a number of years for our clients, and you enjoy being an advisor with the clients, right?

Alex Monk:

I absolutely love it. I wouldn't do anything else. So, like earlier, you were talking about retiring, and you're not going to retire. But like, if you love your job, right? I mean, I don't know what else I would do. This is like these are the people I talk to. Like,

BRIAN AKERS:

well, it's one of those things where when you help people reach their goals and dreams, how is that a bad day?

Alex Monk:

I mean, I have great time. You're on the same side as it. Like we don't sit on the same side of the table, but no, you shouldn't do that. The goals meaning we're both trying to accomplish the same thing. So I like to be when they're successful.

BRIAN AKERS:

Air companies does well. We're gonna be fine. Now the thing is, is that we always have to plan for the good things and the bad things. Oh yeah. And some of the hardest things is we got to realize future issues and we got to realize current issues. One of them might be market volatility, Roth conversions, and market volatility. What we'd recommend is you need to watch the volatility. Now

Alex Monk:

it's going to happen when

BRIAN AKERS:

things are going bad. What do people usually do? They just lean back and they close their eyes. They don't open their envelopes. They say,"Oh, you'll get better later. Right?

Alex Monk:

Right. Well, they they either head in the sand or they you know oh

BRIAN AKERS:

they react in a wrong way too they back up they less they market drops 10 15% they oh they sell right um and they get out it they get out the bottom instead of something else um one of the thoughts I want people to have is this if if we think Roth conversion is a good idea for this year why not think about when is Roth conversion the best? Now, if if you can, let's say you got a great stock and it drops down 10% 15, and you go, hey, I like that. I can pay tax on that, and then when it bounces back, that 15% and 15% is in my Roth, all tax free growth because

Alex Monk:

you know one, it's something you want to hold, right? You still like it. So if if the investment meets all your requirements for keeping, why not pay tax on it when it's on sale,

BRIAN AKERS:

right? So reaction is to do counter proactive is to say, hey, there's opportunity in volatility this year, opportunity to Roth convert. The

Alex Monk:

volatility brings up a lot of weird things too, because people like they get scared, but then they sit down and they're like, "Oh, well, we're already planning for this, and then they almost feel guilty that they're going to profit while everything else

BRIAN AKERS:

is. Yeah, I've never felt guilty. I don't buy when things are low. Now I believe every time there's a stock and you buy it, someone's selling that day.

Alex Monk:

It's always there's two sides to every market goes

BRIAN AKERS:

down and you're buying, someone's selling. Emotional trading, we do not want to be selling on the down. We want to be buying. Roth conversion is basically saying, hey, it's low. I'll pay tax at that level. You want to discount it down? I can pay tax at that. I know that stock's coming back, and then and it rises back up in the Roth. All of a sudden, that's all tax free. You're even better than you were.

Alex Monk:

And realistically, like if it's a 1015, 20 year hold, like the timing is important in the first year or two.

BRIAN AKERS:

Yeah,

Alex Monk:

and it makes it a more efficient transaction. Yeah, it's fun, but but it's going. You know,

BRIAN AKERS:

you're saying it doesn't matter long term.

Alex Monk:

I'm saying long term, it's going to go up most likely. It's like

BRIAN AKERS:

it's winning. You win in the first quarter, you feel like you're winning the whole game. If you get a lead in the first quarter, you win the whole game. I like that.

Alex Monk:

No, I agree because for me mentally, it's hard to pay tax and then see it go down. Yeah, like I don't like that. Like that's not the scenario I want to create. So

BRIAN AKERS:

yeah. So what we do at AKERS Financial Group is we'll have the IRA hold the money in the IRA. We'll have the Roth. We can Roth convert overnight. So if we in the afternoon say hey let's go, we turn it in the next day it's converted right and it's taxable on the on the that night we do something called a journal Roth conversion. Journal means if I own Microsoft stock in one, it the actual shares of stock trade over. Value on that night is the taxable 1099, and that's how that's a way of doing it for

Alex Monk:

us. And it it creates way less fees stuff like that. Like you're not trading, churning. Like this is a stock that we want to hold for a long time.

BRIAN AKERS:

All right, so we handpick what we convert. We we handpick what we put in the Roth. We're more aggressive generally in Roth IRAs because it's long term investing. It's usually for them or the family. I think Roth. I think Roths are incredible. If you might not need all the money,

Alex Monk:

especially if you don't need it.

BRIAN AKERS:

If you don't need the money, it's like yeah, do it because someone's going to pay the tax,

Alex Monk:

right? Like you you don't want to have. Let's say you have non-qualified mutual funds, and they're kicking out tax every year, and you didn't do anything. Like, let's clean some stuff up. Like, let's get things to a point where we're the ones in charge of your taxes, not whatever your investment decides to send you.

BRIAN AKERS:

Sure,

Alex Monk:

I can't stand things that are unpredictable like that.

BRIAN AKERS:

My newest concept is for you to is for you to tell your client. Let's say your client's some in their 70s, and you're doing a Roth conversion, and you say, "Hey, this is going to save your kids a lot of taxes. Won't you tell them they owe you? Let's see how that works. I saved you 20,000 in tax down the road. Won't you write me a small check?

Alex Monk:

I don't think that's. No,

BRIAN AKERS:

they should buy dinner at least, right?

Alex Monk:

Well, at least you know a lot of people don't even know the planning that their parents or you know family members. Parents sometimes

BRIAN AKERS:

don't want to tell them,

Alex Monk:

right?

BRIAN AKERS:

Because they don't want to hear their opinion of things. Because a lot of kids will say, "Oh, it's your money. You spend the money, and they're like, "We're trying to spend the money. We just don't know what else to do with it. Right.

Alex Monk:

And at a certain point, like when you've done so well, you've also created those habits that have allowed you to do that. It's really hard to break that.

BRIAN AKERS:

And some of your kids learn from you, not all of them. I mean, some kids learn, some kids don't, and the ones that learn will be successful. And they might say, "Hey, we don't need your money. That's a wonderful thing, and they might do something else with it. But a Roth, the Roth conversion, the idea here. The worst case scenario of volatility. The other worst case scenario is this: when there's a husband and wife, and we have tax returns that married filing jointly, we can make more income and be at a low bracket. But when there's a sudden death, someone passes away. That year is the last year that they have married filing jointly. After that, they're single. All of a sudden, the income levels are cut in half, and the taxation actually usually increases brackets.

Alex Monk:

Absolutely, because your income doesn't. Well, at least in most plans, one person passes income usually stays roughly the same.

BRIAN AKERS:

Right, it's not too far off, depending on what what pensions they have and everything. But the IRAs stay whole. IRAs get merged all into the one surviving spouse, so it's not unusual after one spouse passes away for us to do a Roth conversion post first person to die, trying to maximize the married filing joint leak bracket one final year before we get to a higher taxation the single year. It's also if someone says I'm real sick, I might be two, three years, and we say, "Well, Roth conversions is best best for the family. You have medical deductions. We can take more income now. I know you don't want to think about things like this, but it's a way of family paying less tax.

Alex Monk:

Well, and I was I was at a nursing home this week, and it's tough to see because there's not a lot of great things towards the very very end. But if you can use your money to deliver value to your family and do things proactively, it could at least have that legacy, that purpose.

BRIAN AKERS:

Yeah, in the end, the end for people over is hard, and depends on how you face your eternity. And I believe there is great hope. I I like that as a pointing way through the final years of life. Financially, there's there's situations where you need money, but then there's a point where medical covers a lot of it, unless it's a full extended stay and you're not improving. Then you need to pay your own bills, and that's when long-term care and other pieces slide in, but that situation of tax planning is more of a family decision. At that point in time, it seems morbid to talk about. I feel I used to feel real gun shy about it, but then I feel almost regretting, like I should have done the planning a little bit even harder. I need to bring the ideas to them. I need to say this. What I like to do. Sometimes they're in a fog and they don't understand, and so I got to make sure kids are involved and make sure we have the right decision made.

Alex Monk:

The best planning I've ever had around this is involving the kids, because I I said, well, I don't know, like if their income's lower. So we had all the kids there. Figured out what their tax brackets were. Figured out what moms was. Yep. All right, let's be efficient, folks. And it it's worked out really nicely.

BRIAN AKERS:

Absolutely. So successful people that have deferred money in their four 1k's forever and it's all 100% taxable have to look at the concept of oh or what how am I going to. Use that money. How am I gonna get the money out of there?

Alex Monk:

Well, it goes quicker too because if you're like,"Well, I just need 100, it's 10% of my million.

BRIAN AKERS:

Yeah,

Alex Monk:

but it's actually 15 or whatever the math is based on you holding the taxes on top of the 100.

BRIAN AKERS:

Yeah,

Alex Monk:

so that is a bigger withdrawal, and you just got to make sure your math makes sense because taxes are not going away

BRIAN AKERS:

now. In the beginning of the show, Alex teased about saving eight to 10% and that's really this difference in brackets. So imagine that if a married filing jointly are paying 12% money, usually about 126, 130,000 of income, take some deductions, maybe a little bit more, and then in the 12% bracket. Now single, basically that bracket is only at 50 plus standard deductions. You're sitting at maybe 65,000 total income before you jump to a 22% bracket. That's 10% higher on that extra money and

Alex Monk:

40,000 less of income. Yeah. So, are you ready to take a huge haircut in your income and not have a spouse, like it's a lot of bad things are happening.

BRIAN AKERS:

And that RMD required minimum distribution age, some money's coming out, needed or not, and you pay the tax. So the addressing of Roth conversions is someone that's already had a lot of deferral, and that's why you have to to Roth convert. The concept that we like is when you're putting money in your four 1k, hey, put in Roth now. Pay tax now. Never again. Forget about tax. Make tax not a future debt. Check the box. Make it Roth. Go on your website, your 401k website. Do Roth contribution. Yes, you'll take home less for a little while. You won't notice it long term, but you will notice a tax bill later if you don't.

Alex Monk:

Absolutely, and that means that more of that money is yours. Like a lot of people get that wealth effect. They see a giant 401k like ballooning up.

BRIAN AKERS:

Yep. No

Alex Monk:

one takes 30% off that number when they're looking at it. They

BRIAN AKERS:

got 3 million in there. Up 2 million. That was going quick.

Alex Monk:

Wait, what?

BRIAN AKERS:

Yeah. So what we've been talking about this quarter is about married versus single, the volatility of the market, what brings ideas and things that you need to do when you do in your planning, never pay taxes again is a great concept that you need to think about. Are you applying it to your situation? Did you check Roth at work? Are you putting money in a Roth IRA now? Can you? If you can't, have you thought of other ideas? And that's what we're going to be talking about as we continue through the show. We do all this so that we can win in retirement. And winning, we all know it. The best part of retirement, winning is when you get your time back, where you decide how to use it. Before retirement, your time is tied up with other commitments. You know, mainly your job. A lot of that goes away in retirement. Your time is now consumed by things that you want to do. It's so easy to begin winning in retirement, go see about things you want to do. Clients are always like, "What should I do? I got to watch the grandkids. I got a job. I'm I threw myself off. Hey, just go to our website, akersfinancialgroup.com. Scroll to schedule a meeting section and let us know you'd like to schedule a free consultation with one of our team of advisors right there. That's AKERS, AKERS financialgroup.com, or you can call us at 833 when retire. That's 833 W I N R E T I R E. We'll give you a call on Monday to schedule your free in person meeting. Go to our website, check that out, or call us at 833-946-7384 to start planning for your retirement now.

Warning:

When it comes to a Roth conversion, don't try this at home. We'll talk about that in the fourth quarter.

Unknown:

You're listening to a pre-recorded show. Welcome back to Winning in Retirement. Call 833 Win Retire now to schedule a visit with Brian and his team and begin Winning in Retirement. Once again, here's BRIAN AKERS.

BRIAN AKERS:

Indeed, welcome back to Winning in Retirement. I'm BRIAN AKERS. Here with me today is Alex Monk. We both are financial advisors at AKERS Financial Group, and we welcome you to the fourth quarter of our show. Fourth quarter is a lot of fun watching on sports. I love the fourth quarter. Sometimes I only want to watch a fourth quarter because that's when you get to see everybody ramp it up more, it's a lot of fun.

Alex Monk:

Well, that's the one that keeps you up all night too, because you're like, well, I gotta watch now.

BRIAN AKERS:

I gotta watch the final pitch, the final shot, the final timeout, the final kick. I got that's where

Alex Monk:

greatness happens-is the

Unknown:

the

Alex Monk:

end, right? Like when it's all in the line.

BRIAN AKERS:

I do like I do like the concept of TiVo, where you save it, right? Or you can go back three days, and I just don't look at social media. I wake up and I watch the ending because I had to sleep. All right, back back to things that really matter, and that is your finances. Winning in retirement is what we want our clients to achieve. That doesn't mean tomorrow is going to start winning retirement unless you're retired. If you want to win and retire, because you see people doing that, and you say, "How can I be like that? It takes the hard work, takes some discipline, takes some knowledge, takes some coaching through financial advice, and that's what the show is all about. Today's show is called"Never Pay Taxes Again. The concept is by using Roth, Roth IRA, Roth 401k. Like that, we're then able to pay tax now and let it grow tax free, and it'll come out tax free for our use down the road.

Alex Monk:

Now, Roth is such a powerful vehicle. Like I love it. I love the way it fits for most people, but it's not everything.

BRIAN AKERS:

Oh, it's just part of it. It's just

Alex Monk:

part, right? It's

BRIAN AKERS:

one of the buckets.

Alex Monk:

It's a bucket, right? And Brian, what makes me so upset is when I see somebody come in, and they're like, "Hey, I've done a good job. I have a Roth, I have an IRA, I have a non-qualified account, perfect. But the investments inside there don't match, or they're all the same. And I'm like, "What?

BRIAN AKERS:

Yeah, there are there are some investment firms that every every portfolio is exactly the same model as computer generated, traded every month, causing taxation in the personal accounts. It's hard to hard to watch. It

Alex Monk:

is, and if that's the goal is to be just cheap and automated, that's what you're going to get. They're not going to get the tax planning because it's going to take somebody that knows you, your family, how it all works together, so that we can tell you what's right for you.

BRIAN AKERS:

Yes, imagine that we have to start with where you are. We call that your unique financial fingerprint. That's where you start. Then we build from there. Taxes are part of

Alex Monk:

it.

BRIAN AKERS:

Now we're affiliated with Daniel Allen Tax, does tax prep here, helps us with tax calculations, and helps our clients some with situations that we need to deal with, it's just tax prep, nothing too fancy. But then we have AKERS Financial Group applying the planning, planning and tax planning is a big deal. But that's all part of financial planning. We need estate planning, financial planning, insurance planning. We got to plan your cash flow, plan what's going on for college, plan what's going on for paying your mortgage off, all kinds of things that we've really got to get into.

Alex Monk:

I love seeing when people just first retire and they're finally like just baffled by all the stuff that they had

BRIAN AKERS:

to do. Yeah, and luckily we were able to get them to just do it once and take some of that unknown because we do it all the time for people. But I always see them, and they're like, "Oh, what is all this stuff happening? This last week, I had this very successful couple, right? They're so busy, too busy for me, right? And then they finally got them in front of me. I've done little zooms and stuff, kept asking for information, and then and then in a meeting, a two-hour meeting, we went through all the needed things, and they're like, yes, yes, yes, yes, yes, yes. I mean, all the stuff we need to do was wills, life insurance, in portfolios, design them together, bring four different styles of accounts out, fund, fund five two nines, make sure the investments are changed, four 1k, change investments inside because they check the box, beneficiary, make sure they're all lined up. That was just, and so we wrote this big list, and I'm like, you have to give me one one time a month for a while as we get through this, and my team of planners will help you follow through, and then a year from now, all the fundamentals of planning will be done, and you can keep going at 100 miles an hour, like you guys are doing, by letting us handle the rest. And it was a, it's a great long term relationship as long as we can get them started. And that's been a a battle for almost a year. I'm getting to a point where they finally got me the right information, so we can then start saying yes, do this, yes, do that.

Alex Monk:

And it's like the the whole elephant theory, right? Like everything that you just said. I'm sure in that first meeting, they're like, "What? And that's why we give them something to take with them so they can remember. Hey, remember all that stuff we just said? Well, we wrote it down.

BRIAN AKERS:

Yeah, and you do this, we'll do the rest.

Alex Monk:

Yes.

BRIAN AKERS:

How about this one, Alex? When it comes to Roth conversion, have you seen someone do it on their own?

Alex Monk:

Yeah.

BRIAN AKERS:

What?

Unknown:

Yeah.

BRIAN AKERS:

And tell me good or bad story. What kind of stories you have?

Alex Monk:

So last year, I had a client that was supposed to do a Roth contribution.

BRIAN AKERS:

Yeah,

Alex Monk:

and instead did a Roth conversion.

BRIAN AKERS:

How they did that?

Alex Monk:

I don't.

BRIAN AKERS:

They they just on the on

Alex Monk:

the yeah. They took a

BRIAN AKERS:

they're online like clicked their account or something? Yeah,

Alex Monk:

they did it at Fidelity.

BRIAN AKERS:

Okay,

Alex Monk:

and he says contribution. I thought, and he meant conversion. So it was like the two words are so very similar that it blew up our tax plan because I didn't think there was that much more taxable income, and it escalated, and we hit an Irma level. So,

BRIAN AKERS:

yeah, I have a couple situations where the other advisors they're in law, like it's one of their relatives, so they can't leave it there. And so I had to say, okay, this is what I want you to do this year: convert 10,000 or 12 or 20, whatever the number is. Then they got to go over there, make sure they convert, and then that advisor saying,"Oh, we don't want to do that. You need to do 25. But they never told him about the investments I have. They haven't told him the real tax plan. So I don't know where the person is grabbing this number from. It's it's sort of just a thing happening. But sometimes people will convert and say, "I'll just convert the whole thing, and we really mean just convert 30 to 4000. 1000. If you convert over, you start triggering other things. Now, Irma-that's when your Medicare is means tested. If you go $1 over a limit, you pay higher Medicare two years from now for a year. So $1 over.

Alex Monk:

Do you do your tax planning based on bracket or Irma level?

BRIAN AKERS:

Well, there's two great answers to that. One is

this:

Is do we care? Does the does the Medicare premium change our life at a 220 level and above a 300, 400, $500,000 level for clients? That is a one time one year thing. If I do a Roth conversion of 600, $700,000 and bring my RMD down where I'm under Irma for life. I'll pay Irma for a year and get us under, or Irma for three years, because I know they're going to be at this high bracket forever.

Alex Monk:

Yeah, and if we do go to above the Irma level, I tell people to just make an appointment, see if they'll waive it.

BRIAN AKERS:

Well, there's eight reasons they can waive it with the SSA 44 form. A lot of them all tied to that last year of work and the sudden situations. Usually, if a spouse dies, you might be able to get it to a waive. Some doesn't hurt to try.

Alex Monk:

Yeah, and I don't want to say anything bad about Social Security, but the answers sometimes vary based on who picks up the phone or who you sit in front of.

BRIAN AKERS:

No means no is easier than saying yes. Yes means they got to do things about it, but generally, this idea of converting on your own, we would really recommend having someone that's looking at the investments, picking the investment to use for conversion. Second thing would be taxes when you're going to, and then when when you're going to do it during the year, planning that all out. We do a lot of conversion in the fall, so we know what your income is, so we make sure we can do it with the new rules. We can't undo it. Roth conversions have to be done in the in the calendar year. That's where you take money out of an IRA or four 1k and then convert it to your Roth IRA. Now it's

Alex Monk:

important that you make that Maryland state estimated tax payment in the calendar year, yeah, so that you can get deduction. Yeah,

BRIAN AKERS:

deduction works nice. So, um, the warning that we're giving people is it's like doing things at home. It's almost like a work project. Um, you ever done work projects, home, Alex?

Alex Monk:

Yes,

BRIAN AKERS:

and a lot of them are good at right. Uh,

Alex Monk:

not at first,

BRIAN AKERS:

but but is it done quickly? Is it done efficiently? Could it been done better? Maybe if you had someone that was an expert at

Alex Monk:

it, yeah,

BRIAN AKERS:

and but it costs more, costs money, right?

Alex Monk:

Right,

BRIAN AKERS:

yeah, and so is it worth the money is a question. I think Roth conversion is worth the money to have an advisor guide you.

Alex Monk:

It's a big deal, like that.

BRIAN AKERS:

Yeah,

Alex Monk:

you wouldn't go get surgery without talking to a second doctor. I mean, typically not right.

BRIAN AKERS:

If I read the brochure, I'm good. I saw it on YouTube. I'm good. No, but it's worth watching. That's a joke I have my family all the time. Hey, it's on YouTube. We can do the surgery. No,

Alex Monk:

I mean, my house is a little bit different because I do those home projects, and my wife is medical.

BRIAN AKERS:

Yeah.

Alex Monk:

So sometimes I'm like, Hey, can you stitch this up, she's like,

BRIAN AKERS:

"All right. So the idea is, we have a warning about the Roth conversions on your own. We want you to be working with an advisor to help you do these things over time. We don't want to do all of them in one time and make you in one year jump brackets up where you pay higher and higher taxes because that really doesn't win mathematically. Correct. So if you're already in a high, high bracket, it might make sense. But if you're in a 12 or 22 percent bracket, maximizing your bracket would be air thought. And it doesn't always make sense. So you have to know, like, well, why would that help me? Because if you're always going to be in that bracket, and your money's, you know, you're given to charity, this or that, like then you might be in a good spot, or you might be too late, right? So if you're giving to charity, having deferred money and giving up to 105,000 a year during RMD, and you send that to charity, you don't use the money anyway. Why Roth convert? If you have no beneficiaries to give money to, it's going to go to charity. Why Roth convert?

Alex Monk:

Correct, and then you can cut the taxes out completely, but the goal is still the same, right? The net amount of taxes over a lifetime for the family, and that is my favorite thing to figure out.

BRIAN AKERS:

And and that is that is just working with advisor and guiding yourself through it. So today we try to explain the basics of Roth. That was the first quarter. If you ever want to go on our website at akersfinancialgroup.com and check out these these past shows, and you can find out on there and listen that first quarter about what a Roth is. Then we talk more and more about the Roth IRA and the importance of why why we got to make big decisions while we're married before someone might pass away. 62% of us will retire single, and that's going to be at a higher tax bracket. So we got to make sure we make long-term wise decisions. A lifetime of taxes, let's pay less. Yeah,

Alex Monk:

I mean that's a great goal. That's and if that's like value, right? Yeah, like we we have to deliver a value for our clients. And if I can cut your taxes by 10% see that's pretty valuable.

BRIAN AKERS:

I love. The value being the fact that they're retired, they're winning. They walk in, they're they're enjoying retirement. They know they're okay. They're not taking extraordinary risk where they're worried about their money. They know they're okay no matter what comes out of them. That's very important to me. Yes. Now that sometimes that means we might not be the highest rate of return last week, but we're going to build a portfolio design to make this last a lifetime.

Alex Monk:

Yeah, I mean, I want to see you every year. So,

BRIAN AKERS:

absolutely, we covered all these things. Never pay taxes again is a topic for today. Make sure you have considered this. The younger you are, get some money into a Roth. As we as we get older, we need to see how to make this most makes the most sense for you. We got to make sure we do the best. We do look forward to meeting with you. We want you to win in your retirement by taking advantage opportunity to be planning with us at AKERS Financial Group. Schedule a free meeting with one of our team of advisors. Go to our website at akersfinancialgroup.com and just go ahead and sign up right there, or you can call us at 833 win retire. That's 833 W I N R E T I R E. We'll give you a call on Monday to schedule your free in-person meeting with one of our team of advisors. Start planning for your retirement now. Go to akersfinancialgroup.com or call us at 833-946-7384. Thank you for listening. I'm BRIAN AKERS from AKERS Financial Group, and we want you to be winning in retirement.

Unknown:

You've been listening to Winning in Retirement with your host BRIAN AKERS of AKERS Financial Group. AKERS Financial Group offers securities through Arcadius Capital, an SIPC and FINRA member firm. Advisory services are provided through Arcadius Wealth. AKERS Financial Group and Arcadios do not share any common ownership. Neither Arcadius nor AKERS Financial Group provides tax or legal advice. Advice given on winning in retirement is general in nature, and one should seek further advice from their financial advisor, broker, attorney, and/or tax accountant before investing. Be sure to read each prospectus carefully to understand all the risks associated with each investment. Examples and scenarios shared are meant to be for illustrative purposes only. Past performance is not indicative of future results.