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Safe Money Radio with Brad Pistole
Safe Money Radio host Brad Pistole is a nationally recognized Financial Professional who specializes in planning that protects principal from stock market volatility and creates guaranteed lifetime income. Listen here to receive insights from Brad and hear what he has to say regarding retirement income planning.
Safe Money Radio with Brad Pistole
How To Use QCDs, Plan RMDs, And Win The Roth Game with Sarah Brenner from Ed Slott & Co.
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Taxes don’t retire when you do, which is why smart planning now can save you stress and money later. We sit down with attorney and retirement expert Sarah Brenner to unpack the most powerful moves you can make before year-end and the major rule shifts arriving in 2026. From using qualified charitable distributions to cut adjusted gross income to timing your first RMD and designing “many mini” Roth conversions, we show you how to keep more of what you’ve earned and reduce the surprise bills that can hit Medicare and Social Security.
We break down QCD eligibility at 70½, why the check must go directly to the charity, and how this simple step can lower IRMAA surcharges and the taxation of Social Security benefits. Then we demystify RMDs: the current start ages, the April 1 first-year option, and the costly trap of ending up with two RMDs in one year. You’ll hear why an RMD can’t be converted to Roth and the right sequence for taking required dollars before converting additional funds.
Looking ahead, we highlight what’s slated for 2026: the proposed “Trump accounts” with government seeding for children born 2025–2028, and mandatory Roth treatment for 401k catch-up contributions for high earners. If you’re switching jobs, we make the case for choosing a Roth 401k to stack tax-free growth. We also cover a real-life inheritance dilemma: when a younger widow should keep an inherited Roth rather than roll it over to avoid early withdrawal penalties on earnings.
If you’re charitably inclined, approaching RMD age, or considering conversions while tax rates are still favorable, this conversation gives you a clear, practical playbook. Take control of your timeline, trim future taxes, and build flexibility into your retirement income plan.
If the episode helps you, follow the show, share it with a friend who’s planning for retirement, and leave a quick review with your top question—we’ll tackle it in a future show.
To learn more about Brad Pistole and the Ozark Retirement Group, please visit www.ozarksretirement.com
Welcome And Milestone Announced
SPEAKER_02Where's the pocket go? Where's the pocket go?
SPEAKER_00Welcome to State Money Radio with your host, Brad Pistol. Brad is a retirement income and tax planning certified professional, primarily serving clients in the Midwest, but he's sought after nationally for his expertise in helping people secure their retirement. Mr. Pistol is a licensed life insurance professional in approximately 20 different states, and he specializes in working with people who are near retirement and those who have already retired with wealth management, income planning, and asset protection strategies using life, health, long-term care, and annuity insurance products. And now, here to talk with you about securing your retirement, it's your host, Brad Pistol.
Meet Guest Sarah Brenner
SPEAKER_01Well, hello everyone. Thank you so much for joining us again today on Safe Money Radio. You know, it's pretty crazy. I was talking to our guest just before the show started, and we'll make a formal announcement about this coming soon. But you know, we're nearing our 800th episode of Safe Money Radio. So it's pretty unbelievable. We've been on the air every single week, five times a week since 2010. You might be listening on the radio, you might be listening to the podcast, whether it's Apple or YouTube or Spotify, but we're grateful that you're joining us today. And here's the thing we're nearing the end of 2025. By the time this airs, people are going to be staring the holidays right in the face, and we're going to be thinking about 2026. And so we're going to be talking about 2026 and some tax impacts, but we also want to talk about what you might want to be thinking about before this year ends, year-end tax moves that could really help you. And that's why I brought on my good friend, someone I've known for years. She is a very special person, has bailed me out of a lot of situations. She answers questions I don't know the answer to. So, Sarah Brenner, thank you so much for joining us today.
SPEAKER_03Thanks for having me on, Brad. Um, a little bit about me. I'm an attorney. I've been working with retirement accounts for over 20 years. Um, currently I am the director of retirement education with Ed Slot and Company. It's my job to help advisors and their clients navigate the complicated tax rules for retirement accounts. There are so many complex rules and regulations. In the past few years, we had the Secure Act, Secure 2.0, IRS RMD regulations, and now we have the one big beautiful bill act, or ABBA, as we like to call it.
SPEAKER_01Yes.
SPEAKER_03It's crazy, and it's a lot to keep on top of, and that's what I do.
SPEAKER_01Well, tell everyone this, because you know, people are always hearing me talking about Ed Slot all the time. I talk about him constantly, and rightly so. I've been in the group since 2010, and I believe it's the world's elite IRA advisor training group for advisors. There's about 500 of us, and how long have you been working with the group uh as an IRA technical consultant and also the director of education?
SPEAKER_03I've been with Ed Slot and company helping out uh elite advisors just like you for about 10 years now. And I've been the director of retirement education for about five.
SPEAKER_01Wow. Well, I tell everyone this, you know, because our next training is coming up here just in a couple of weeks. And I'm I'm keeping my fingers crossed, Sarah, they know this. But my son Hunter, who's on our staff and his wife Faith, they're due with my fourth grandchild any day now. Now, the the due date is the date of my flight out to the conference. And so I I've told I've told Matt and Ed and other, I'm like, hey, I I may be there, I may not, I may only be there for one day. It's gonna depend on when she comes. But I'm a very, very involved papa, and so we've got our plan worked out for what happens when Faith goes into labor and Hunter, you know, going with her to the hospital and me keeping my you know granddaughter Georgia Grace and all that fun stuff. So, and that's part of life. That's all of this retirement planning and and uh estate planning and family and all this. That's what it's all about. Why why do all the planning and have all the money there if you're not gonna use it with people that you love? So we've got this training that's coming up in Austin, Texas, and we're gonna be there for two days, just really pouring into our brains. Like Ed will often say, it's it's like drinking water from a fire hydrant, and it really is. And so I know during that day you're gonna present several times, correct? That's correct, yes.
Why Ongoing Advisor Training Matters
SPEAKER_03I was just looking at the manual um that we will be using for the meeting. You know, at every meeting, as you know, you get a big, thick manual full of information. Um, so I was just yesterday previewing some of the topics that we are gonna be talking about, and it is gonna be jam-packed. Um, we have um all of um the new changes with the One Big Beautiful Bill Act. Um, we're gonna be talking about um retirement account portability, a lot of retirement money on the move out there, um, and there's lots of ways that people go wrong. Um we're gonna have um an attorney, um Shannon Evans. Um she's from out in um Las Vegas. She's gonna do a deep dive on some IRA-related trust issues. So it it's it's gonna be um a fantastic meeting. And if if you can't make it to this one um with the upcoming um birth of your grandchild, we we we understand. And the good thing about our meetings, we do it twice a year. So we'll catch you at the next one, and you can bring your your baby pictures.
QCD Basics And Eligibility
SPEAKER_01That's right. And the beauty to, you know, having being a member and being a part of the group is knowing that we're gonna record the sessions and the manual's gonna be online. And here's the thing, folks, for those of you who are listening, imagine how difficult it might be for advisors who, if they're doing a good job and they're successful, they've got a lot of clients. They have they may be on radio, they may be on, they may be doing dinner seminars, they may be hosting television shows, and then doing all their client meetings. It's kind of hard to keep up with all this stuff. There's constant change because of Congress and all the rulings, the things that take place, like one big, beautiful bill. And so it's good when we can disconnect for a couple of days and all come together and have, in my opinion, the world's brightest minds there to say, Hey, what do you think about this? And I love it, Sarah, when you guys pass the mic around in between sessions. We don't have a lot of time for it, but it's a lot of times when other advisors from all across the country think of something or have been face to face with something that maybe no one else has ever dealt with, and they bring it up, and then we're like, oh wow, I've never thought about that. And we have to think through how to solve these client issues because of the things that are going on with their IRAs and 401ks and distributions and all these great things. So it's just such a blessing, you know. Like Sarah said, she's been there working as a technical consultant for a decade, and so she's one of the people at the at the famous table up front that when we have questions and it's over, we're dealing with these client issues from callers like you who are listening right now. I get to walk up there and say, Hey Sarah, how do I deal with this situation? And she's always got the answer. So if you're listening right now, we want to give you a phone number. We'll give it to you several times throughout the show so that if you have any question about anything regarding your IRAs, 401ks, 403Bs, TSPs, you can call us anytime. We are experts who deal with this. Our number is 866-780 SAFE. Uh-huh. That's 866-780-7233, and you can call anytime. There's always someone standing by to take your call. Okay, now Sarah, before we jump into what's new for 2026, we're going to cover that later in the show. Let's talk about some year-in tax moves that people could be doing right now in 2025, even though it's the end of the year, some things they could do that could really help benefit them. So let's start with one of my favorite topics. I pound this drum a lot because I I feel like it got overlooked in in early years, and now it's on people's radar. But let's talk about QCDs. Not to be confused with RMDs, that's the next segment. But QCDs, tell us what a QCD is and how it works.
SPEAKER_03Yeah, Brad, I have to say I totally agree with you about QCDs. What a valuable tool. And unfortunately, QCDs are often overlooked. What is a QCD? Well, it is a qualified charitable distribution. Um, and basically, what it comes down to, um, it's a way to move pre-tax IRA funds to your favorite charity, tax-free. The current limit, the most you can move for 2025 is$108,000. Um, and the way it works, the rules are very strict. Um, the funds have to go directly from the IRA to the charity. So the custodian, um, the custodian in charge of the IRA is gonna have to move the funds right from the IRA right to the charity. Um, unfortunately, this break is not available um for everyone. You have to be age 70 and a half or older. Um, and and and the IRS is very strict about this. You actually have to be six months past your 70th birthday to do a QCD. So that's an important rule um to know about. This special break, it's for IRAs only. Um, you cannot do a QCD from your 401. And the deadline for doing a QCD for 2025, it is rapidly approaching, December 31st, 2025. So um the clock is ticking.
SPEAKER_01You know, and I think a lot of people get things confused, and it's easy to do so. I mean, I did a a short on YouTube here recently, just about all of the definitions and all actually all the acronyms that are involved. So IRA, Roth IRA.
SPEAKER_03It's Alphabet Soup, Brad. Alphabet Soup.
QCD Tax Benefits And Pitfalls
SPEAKER_01They're everywhere, and and then just and it's not as simple as it sounds because then just take IRAs. There are traditional IRAs and Roth IRAs and simple IRAs, which aren't simple, and SCP IRAs and rollover IRAs and spousal IRAs, if you just keep going and going. So it's easy to get confused. But I think about this with a QCD, I understand you have to be 70 and a half, and for so many years, people associated age 70 and a half with RMDs, not QCDs. Now the RMD age has changed, and we'll talk about that in the next segment. But QCDs remained at 70 and a half, so there is something that you can start doing that will benefit you. And so let's talk about how it benefits someone to use a qualified charitable distribution uh regarding their taxes and what they may owe Uncle Sam.
SPEAKER_03Well, if you're charitably inclined and you're eligible, you should consider a QCD. Why? Well, a huge benefit of doing a QCD is that the funds that go to the charity are not going to be included in your adjusted gross income, your your AGI. That can help you avoid stealth taxes like taxable Social Security and Medicare surcharges, IRMA. Everybody hates IRMA. Another nice benefit to QCDs, um you can get a QCD to get a tax break for a charitable contribution, even if you're using the standard deduction for 2025. You do not need to itemize like you do to get a charitable deduction. Lots of seniors don't itemize. So a QCD could work well to get that tax break for a contribution to a charity.
SPEAKER_01And I think that's what confuses people when I talk to them, they'll say, Oh no, I'm I'm good. I mean, I'm charitably inclined, I give to my church, but I just have them, you know, I have my earned income, I write a check from my my checking account and I send it to them, and then I just deduct it. Well, we're in a different world now. Uh most people regarding itemized deductions, like you talk about, it works very differently when you use a QCD. It's not coming to your hands and being placed into your funds that you didn't write a check out. It's going directly from the custodian to the charity. And I would say the only way you can be involved in that, and it still works, is some custodians will require that check be made payable to the charity, but they mail it to you. And it's okay if you put your hands on it to carry that check over to the charity as long as it's made payable to them, but you don't want a check made payable to you that you deposit and then write a check out because it won't work the same way, correct? That that's correct.
SPEAKER_03If the check is made payable to you, that will blow up the QCD. Yes. Um on the other hand, if the check is made payable to the charity, but it's it's sent to you, you can hand deliver the check to the charity. That that's okay that's okay. That will work.
SPEAKER_01Yes. And now let's talk about one thing. I know in the next segment we're going to be talking about required minimum distributions. But if someone is charitably inclined and they plan to use QCDs, talk about why it's important to use the QCD first before you take your RMD. I know there's a special rule with that.
RMD Rules, Ages, And Deadlines
SPEAKER_03Yeah, and it's it's super confusing for people. The way the RMD rules work, the first money that comes out of your IRA in any year is considered to be your RMD. So if you're thinking about satisfying your RMD by doing a QCD, you want to get that done. You want to do the QCD before you take any distributions from your IRA. What sometimes happens is you hear of people who they take their RMD early in the year and then they think, oh, I'd like to do a QCD and have that satisfy my RMD. And maybe I could just put that other money back into my IRA. Unfortunately, the rules don't work that way. Um you absolutely can do a QCD to satisfy an RMD, but but but you got to think about it. You want the first money that comes out of your IRA to be the QCD, to be that um transfer that the custodian's gonna do from your IRA to the charity of your choice.
SPEAKER_01Yes, I always try to remind people don't think that you can you get this RMD letter for a lot of people from their custodian early in the year, January. Yeah. And they'll see what they're gonna have to take out. And then they think, okay, I'll take that out and get that done. I want to mark that off. And then later in the year, they think, oh, I want to do one of these QCD things. I've heard Brad and Sarah talking about, and I'll use that to offset that RMD I took out earlier. And that's not the way it works. The first dollars out of the RMD. So, friends, if you're listening, the rules are tricky. It it's tricky. If you're listening right now and and your head spin a little bit, trust me on this, every single conference we go to, we have to re-go over and re-go over and re-go over these ideas and concepts because it confuses us. It's tricky. And we are probably gonna share an example or two even in this show about how tricky things can be. So if you want to make sure that you're working with an expert, friends, I've been working with the Ed Slot group for 15 years now. This is my 16th year. This is what we do every single day, and I love knowing that if anything changes with Congress or anything changes in the tax code, I'm gonna get an email about that within an hour, and Ed's gonna tell us about it, and we're gonna stay on top of it. Whereas a lot of people don't find out for three or four weeks. And so we're grateful to keep our education up to date so that we can help you and educate you. That's what we've been doing for over 800 shows now since 2010. So call us anytime. Our number is 866-780 SAFE. That's 866-780-7233. We're licensed in more than 20 states, so no matter where you're listening from, just give us a call if you want a free review. If you'd like to read a copy of my best-selling book that Ed Slott wrote the forward to, Bulletproof, the Safe and Secure Retirement Income Plan. I'll give you a copy absolutely free. Our number is 866-780-7233, and there's always someone standing by to take your call. Okay, friends, those of you who are watching, I have Sarah Brenner joining us on the show today. She is the director of education with the Ed Slott group. She's been a technical consultant or what we call a genius, helping us figure out things that we can't figure out. And she has the best stories. We I love it when she speaks and gets up because she's always gonna have a story about what's going on in the real world that relates to some of these messes we find ourselves in, like situations that go before between or before the Supreme Court when someone gets caught in a mess with their IRA or the 401k. And so in the last segment, we were talking about QCDs, qualified charitable distributions. Now we're gonna talk about RMDs, required minimum distributions. Similar but different. So, Sarah, what is an RMD? Or as a lot of my people, my listeners, they say, my RDM. When do I need to take that RDM?
First-Year RMD Timing Tradeoffs
SPEAKER_03An RMD is a required minimum distribution. And to be honest, it is the deal you make with the devil when you fund a pre-tax retirement account. Eventually, Uncle Sam is going to want his tax money. And the way it works, once you reach the age that the government considers to be retirement age, you are going to need to start taking money out of your retirement account. There's a minimum amount that you're gonna have to take to avoid trouble, to avoid penalties. And that's your RMD. The retirement age, um, when RMDs um are required to start, it used to be age 70 and a half. Then we had the Secure Act, which bumped it back to 72, then we had the Secure 2.0 Act that bumped it back to age 73. So the way it works, once you reach the year that you turn 73, you're gonna need to start taking certain calculated required amounts out of your IRA each year. Your deadline for taking your first RMD is gonna be April 1st of the year following the year that you turn 73. Every year thereafter, the deadline for getting that RMD out, it's gonna be December 31st. Here's the kicker RMDs are taxable income. They are gonna increase your tax bill. They can also trigger stealth taxes like Irmer charges and taxation of Social Security benefits. Again, the deadline for most people to get that RMD out is December 31st. So the deadline for 2025, it's right around the corner.
SPEAKER_01It is, and so let's talk about a scenario you just brought up because it makes me think about how often I get asked this from callers. Someone can could call in and say, Hey, I heard your show, it said I have to take it by December 31st. But if they were listening to what you also said, if it's let's say, Sarah, this is the year in which they turn 73, that means they don't necessarily have to take their first RMD this year, only in this first year with the supply. They could wait until you said April 1st of the following year.
SPEAKER_03Yes.
SPEAKER_01And so here's the thing, and only in that first year, the year in which you turn 73 when RMDs begin, you could defer and wait until next year, but what happens if they wait until next year?
SPEAKER_03Well, it's nice, you have a little bit of extra time, right? Everybody likes an extended deadline, but there is a downside to waiting until next year. If you wait to take your RMD for 2025 until, you know, sometime in spring of 2026, sometime before that April 1st deadline, you are gonna be stuck taking two RMDs in 2026 because you'll have the one for 2025 that you put off until April 1st of 2026, and then you're gonna have the 2026 RMD, which has to come out by December 31st, 2026. So that that's the downside to pushing your first RMD off until um the following year. You got two. You're gonna have to take two RMDs in year two.
SPEAKER_01Yeah, so don't get confused in thinking, oh, I waited till April 1st of next year, I took that option, so now I get to wait till April 1st every year. No, it only applies in the first year.
SPEAKER_03And so you would Yeah, you only get that break once for your first RMD. That's exactly right, Brad.
Why You Can’t Convert An RMD
SPEAKER_01Yeah. So maybe uh here's a scenario where that may work out from a tax perspective. And as tax professionals, that's what we want to always do is to give you the best tax advice because as Ed says, it's not what you make, it's what you keep after taxes that count. So when would it maybe benefit you to wait till April 1st of your first year? Well, maybe you had a really high income earning year. Maybe you're about to retire and you know in 2026 you're not gonna have any earned income if you were still working, and so you're like, okay, and I had an IR IRA, so I have to take an RMD. But if I'm my income's gonna stop at the end of December next year, I could take two RMDs and it wouldn't affect me. My earned income would have been more than that anyway. Then it would apply. But you might want to look at it if you're still working or if your income is fairly stable and you choose to take two RMDs in 2026, that could really come back to bite you, as Sarah was saying. Uh Aunt Irma could come in and say, nope, you cross the threshold by one dollar, you got to pay me. And then it could also affect Social Security and federal and state taxes. So it's definitely something that uh everyone wants to pay attention to. Now, here's a question that comes up all the time, Sarah, and I know we talk about this all the time in our meetings. Let's say someone does not need their required minimum distribution, they don't like it, Uncle Sam's forcing them to take it out. Maybe they forgot when they started that 401k back years ago that, oh yeah, at some point I'm gonna have to give that back to Uncle Sam. And so they take their RMD and they deposit it and they think, oh, well, I'll just um I'll just convert that RMD whenever I get it. I'll get the the RMD out and I'll convert it. Can you convert an RMD?
SPEAKER_03Nope, unfortunately, the rules do not work that way. A lot of people think that they should be able to convert their RMD. It certainly sounds like it would make sense. Um you're paying taxes on it, right? So why shouldn't you be able to put that money into a Roth IRA? It's just not that easy. Um, your RMD can't be rolled over, it can't be put into another retirement account. And the IRS considers a conversion to be a type of a rollover. So you are not allowed to convert your RMD. If you are um at RMD age and you want to convert, um what you're gonna have to do is take your RMD first and then you can go ahead and convert. But that RMD has to come out and it's gotta stay out. It can't go into a Roth IRA.
Strategy: Many Mini Roth Conversions
SPEAKER_01Sarah, this reminds me of a situation that I dealt with um years ago, and I'll never forget it. I met someone who contacted me and he had multiple IRAs and had been working with another advisor, but he heard me on the radio and he came to me and he said, Hey, um, I I want to open an account. So we did, and he said, I have more than one IRA, but when I get my RMD every year, it's I don't ever have to worry about the tax because I take that deposit from that that one IRA and I roll it over into my other IRA. And of course the red flags start going, I'm like, but you can't do that. He said, Oh no, I can do it. I've been doing it for about eight years. And I thought, well, you're lucky you haven't been caught doing it because you cannot do that. And where was the advisor that was supposed to be telling you, you cannot do that? You cannot take your RMD and roll it over into another tax-deferred account. So um, Sarah, thank you for this information. We're gonna take a quick break and then we're gonna jump back into some more things you can do to help get rid of these RMDs. If people don't like RMDs and they know that date's coming, then uh what can they do to get rid of it? So we're gonna be talking about that next. If you want more information regarding your tax-deferred accounts, how to deal with Uncle Sam, maybe how to deal with required minimum distributions, or how to take a qualified charitable distribution, call us. I was one of the very first tax planning re uh certified professionals here in the United States through the American College this year. That program started in 2025. 477 topics, three exams later, I see received the tax planning certified professional designation. Tax planning is very, very important to us here. Our number is 866-780 SAFE. That's 866-780-7233. You can call anytime. There's always someone standing by to take your call. Now, Sarah, let's talk about one of the powerful ways to get rid of RMDs. People don't like RMDs, and I I do want to start with this. I know on the last segment we were talking about how confusing RMDs can be because there was age 70 and a half, and then there was age 72 because of Secure Act, and then Secure Act 2.0 created age 73, but there's actually even one more that's coming on down the road. Talk about that real quick.
No RMDs On Roth And IRMAA Relief
SPEAKER_03Yeah, yeah. Uh uh eventually um the RMD age um is gonna go up um even even higher. We're we're gonna go up to um age 75 um in in just a couple years. So the the age when you need to start taking RMDs out, um, they they are um pushing it back. Um I would say, you know, that that's a good thing because no one likes being forced um to take taxable distributions from their retirement account. Um, but I would also argue um that we need to be thinking uh beyond um required minimum distributions. Um we need to be thinking more about um proactive planning because the longer you put off taking RMDs, the more that pre-tax IRA is gonna grow and grow and grow, and the bigger the RMDs are gonna be. So it's sort of a mixed thing. Um it's nice not to be forced to take IR to take money out of your pre-tax IRA um with RMDs. So everyone likes the delayed RMD start age. But I I think we need to be thinking, uh we need to be smarter than that. We need to be thinking about the big picture and getting that pre-tax money out on our schedule, not the government's.
SPEAKER_01Absolutely. That's why I mentioned that age 75 group that's coming up. For any of you listening, if your birthday is January 1st of 1960 or later, you're gonna fall into that last group of age 75. But here's the reason why this is a good thing. It's not because you get to defer taxes like Sarah was saying, you're just making Uncle Sam's portion bigger if you wait. It's because you know a date's coming, and now we can proactively plan to get rid of Uncle Sam before that date gets here. Because, Sarah, remind everyone who is their joint, the joint owner of their account, the joint partner?
SPEAKER_03It's Uncle Sam. It's not your IRA. You are sharing it with the government that they they own part of that IRA, part of that pre-tax IRA belongs to Uncle Sam.
SPEAKER_01I will always use this example. If you don't think Uncle Sam is one of your primary beneficiaries, go cash out your tax-deferred account and you'll find out. Because when you cash it out, you're gonna get a 1099. And that portion's not going to your children and grandchildren, it's going to Uncle Sam. So let's do this. Let's talk about how to get rid of him. Let's talk about doing Roth conversions. Now, there are two big C words when it comes to Roths that's conversion and contribution. They're different. Let's talk about this. What's the difference in a conversion and a contribution?
SPEAKER_03Yeah, yeah, Brad, you're right. There's a big difference between a Roth IRA contribution and a Roth IRA conversion. Let's talk contribution first. Um, a Roth contribution is a taxier contribution. Um, the limit for 2025 is gonna be$7,000 if you're under age 50. If you're age 50 or over in 2025, the limit is going to be$8,000. So you get to put away an extra$1,000. To make a Roth IRA contribution, you have to have taxable compensation. So basically, um that means that you or your spouse, um, you got to be working because you got to base your Roth IRA contribution on your taxable compensation. Conversions are different. With conversions, um, what you're doing is you are moving pre-tax retirement funds into a Roth IRA. So you're converting your traditional IRA or your pre-tax 401k plan. It's gonna be a taxable event when you move those pre-tax dollars into a Roth account. So anybody with a pre-taxed retirement account is eligible to convert.
What’s New In 2026: Trump Accounts
SPEAKER_01So I know that a lot of people may hear that and go, okay, well, I'm above the age of 50 and I feel the the wick on the candle getting shorter. I know my retirement's coming and I need to be doing Roth contributions, but 8,000 doesn't seem like a lot of money. You can't retire on that. So I I do have this. Big 401k that I contributed to for several years, and maybe it's got two hundred and fifty thousand dollars into it. How do I get that money over into a Roth? Well, just as Sarah talked about, we talk about doing conversions, and maybe you don't do it all at once. Maybe we do, I say the word many and many, and that's M-A-N-Y-M-I-N-I, many, many Roth conversions, do several Roth conversions and move that money over a little bit at a time to keep you in the right tax bracket. But Sarah, why would someone, maybe in their upper 50s, pre-retirement years, why would they consider and think about moving money from a tax deferred account over into a Roth now and paying the tax now because it's painful paying taxes, but why would they do that? How would it benefit on them on down the road to be getting rid of uh Uncle Sam by doing Roth conversions now?
SPEAKER_03Yeah, Brad, no one likes to pay a tax bill. But doing a Roth conversion is a great trade-off. By paying taxes now, you are gaining completely tax-free distributions on years of earnings in that Roth IRA later. That's a pretty good bargain. You're eliminating worry about taxes in retirement. Um, rates were made low by the recently passed one big beautiful bill legislation, but but who knows um what the future will bring? Rates could very well go up again. We like to say that tax law is made in pencil, is is um written in pencil. It can be erased just like that. Nothing's permanent in the tax code. So you you want to use the low tax rates while we have them because we don't know what the future will bring.
SPEAKER_01That's so good. And here's the other key thing. We just talked about RMDs throughout the last segment. Are there required minimum distributions on a Roth account?
SPEAKER_03No, that is the beauty of the Roth IRA. While you're alive, you are not required to take distributions from your Roth IRA. If you want to tap the account, you can, but it's completely discretionary. While you're living, you don't have to take anything out of your Roth IRA Roth IRA. No RMDs on a Roth ever while you're alive.
Mandatory Roth Catch-Ups For High Earners
SPEAKER_01And that's such a big deal because if you're proactively working with a professional right now, you're strategically getting rid of the taxes inside your tax-deferred account and trying to pay it at the lowest tax rate possible, then you've positioned yourself for several great things in the future. You're going to be on Social Security in retirement, and a Roth distribution won't affect that tax rate. You're going to be paying Medicare premiums and Roth distributions won't affect won't affect Irma surcharges. And then, of course, your taxable income and no required minimum distributions. That alone may be reason enough to do it. So I would say if you're listening right now, and you're like the majority of people, the majority of people have their money saved in tax-deferred accounts. Traditional 401ks, IRAs, 403Bs, TSPs. You've got a tax problem. Uncle Sam's the joint owner of the account. He's going to come ring the bell when you turn 73 or 75 and say, I want my money. And he's going to tell you what the tax rate's going to be at that time, which we don't know. So if you want to strategically get rid of Uncle Sam, we can help you do that as painlessly as possible. Call us anytime at 866-780 SAFE. That's 866-780-7233. In the next segment, we're going to be talking about some things that are new for 2026. So you want to stay with us, but call us, request a free consultation. I'll give you a copy of my book with a Ford written by America's IRA expert Ed Slott. Just call us 866-780-7233. There's always someone standing by to help you. Okay, now let's talk about what's just around the corner. 2026. It's almost holiday time. Everyone's going to start thinking about New Year's and what's going to happen in 2026. And when the clock turns January 1, there are going to be some things that are going to be new. So what are some of the things that are new tax-wise and financial planning wise for 2026?
SPEAKER_03Yeah, I can't believe that the holidays are just around the corner. Time really does fly. Two um big changes that we are going to see in 2026. The one big beautiful Bill Act has really made an impact here. We have the arrival of Trump accounts. These accounts are supposed to be available July 4th, 2026. We're still waiting for details from the government on exactly how these accounts are going to work. But here's what we know right now. Contributions of up to$5,000 annually are allowed. These contributions, they are not deductible. And the earnings will be taxable. So it's not like a Roth. You are going to have to pay taxes on the Trump account earnings. Also, the government is going to give$1,000 to each child born between 2025 and 2028. Who doesn't like free money from the government?
SPEAKER_01That's right. So you think about that. Yeah, that have we ever seen that before in the past? I can't think of a time.
SPEAKER_03I mean, the government's going to give me neither.
SPEAKER_01$1,000 to every child born between 2025 and 2028. So that's that's Yeah, and it's a pilot program.
SPEAKER_03They may expand it. You know, we'll have to see.
SPEAKER_01Sure. And that begins July the 4th, 2026.
SPEAKER_03Yeah, yeah. These accounts are supposed to be up and running um 4th of July next year. So we'll see. Um we're still waiting for details. Um, but but that this is something new.
SPEAKER_01And then also let's talk about something that I'm still reading about and trying to wrap my mind around, but mandatory Roth catch up contributions for high income earners. I know that's a mouthful, but talk about what this is and what this means.
Choosing Roth 401k At A New Job
SPEAKER_03Yeah, that this is um a big deal. Um for the first time, Roth contributions are going to be mandatory. For high earners looking to do catch up contributions to their 401k plans, those catch-up contributions are going to need to be done on a Roth basis. Um, this is huge. This is the first time that we've seen the government require Roth contributions. Um, this was part of the Secure 2.0 Act. Um, it got pushed back a couple of years due to some confusion over exactly how this would work, but it's now scheduled to go into effect for 2026.
SPEAKER_01So for you high income earners out there who are listening and you're above the age of 50 and you're used to doing catch-up contributions, and probably you're putting them into your tax-deferred account because you need that tax break, you're not going to be able to do that in 2026. It's got to go to the Roth side. So that that is a big deal.
SPEAKER_03Yeah, yeah, it's a big deal for a lot of people for planning purposes.
SPEAKER_01Let's talk about this for a minute as we wrap up this segment on what's new for 2026. Maybe someone's about to start a new job. There's a lot of transitions right now. I have I always try to keep my thumb on the pulse of what's going on in this country. And I know both my daughter and son-in-law both lost jobs this year at 11 years for one of them, eight years for the other. Their funding for their grants got eliminated, so they're looking for new work. That means new jobs, new 401ks. Why might it benefit someone, Sarah, to choose to start contributing to a Roth 401 instead of the traditional 401k? What are the benefits?
Spousal Roth Inheritance Trap Before 59½
SPEAKER_03Well, the the the future is Roth. Um the there is no going back. Um, and really, um I I I I I don't think that um we're we're we're gonna be moving away from Roth um at any point in the future because Congress loves the immediate revenue that they bring in. The the future losses with everyone um getting tax-free earnings, that's someone else's problem. Um but but this is an opportunity, um, especially for for younger people um uh like your son and his wife, the longer the the time frame, the better the Roth looks. More years for earnings to grow tax-free. Um I I would say that everyone out there um who is concerned about retirement savings should make a New Year's resolution for 2026 um to consider going Roth. Um, if you have um a pre-tax retirement account, you know, and think about doing a Roth conversion. Um you you mentioned um doing smaller conversions, smaller partial conversions um over a number of years are a great way to enter the Roth arena.
SPEAKER_01That's such great advice. Uh, friends, if you're listening right now, and so many times people will call in and say, well, what is the one thing? If I could only do one thing, what would you tell me to do? And I would say max fund any Roth account that you can. Switch the traditional 401 to the Roth 401. And if you have the opportunity to open a Roth IRA, max fund it every year. And if you have the opportunity to do that for children and grandchildren, as long as they have earned income, they need to be contributing to Roth accounts. It's the best thing you can teach them to do. So stay with us. We've got one more segment. We're gonna put a wrap on all this. Our number is 866-780 SAFE. That's 866-780-7233. You can call us anytime. She works with guys like me. There's so many guys and girls in the group who need someone that when we know, you know, I think I know the answer to the situation I'm in, but I'm not sure. So what do we need? We need to phone a friend, and it's Sarah or Andy or Ian, and that's who we call. And so, Sarah, thank you so much for joining us on the show today. Um, I want to do this. I want to throw out a situation that happened to me yesterday so that our listeners can hear this is real life and how we have to think through these things. We had someone call in who unfortunately they lost a spouse very early in life. He was in his mid-50s, and so he had a Roth account. And whenever, and which so he did a great job of building tax-free dollars. He'd already gone Roth. But when he passed away, she chose to roll that over into her own Roth IRA. And now, a few years later, she finds herself in the midst of j of some changes and she's gonna get married again. And so you have a situation where you go, okay, now I want to access those Roth dollars, but she's not yet 59 and a half. Here's the question: can she access the Roth dollars? And if so, what ramifications might there be if she does because she's under 59 and a half?
Action Steps And Closing Resources
SPEAKER_03Yeah, it's um a really um interesting story, Brad, and it's a good example um of how um not knowing these complicated rules can really cause problems for people. Um when you see these situations where you have um a married couple and um one passes away young before 59 and a half, um quite often um the widow or or the widower um they they do a spousal rollover, they they put all the money into their own account. And and and this can cause problems if they are also young. If they're not yet 59 and a half, when they try and access that money, you know, they would be stuck paying the 10% early distribution penalty because all the money's in their own account. This can be avoided by keeping the account as an inherited account. Um, in this situation, if the money would have stayed in an inherited account instead of being rolled over to her own Roth IRA, then she could have accessed all that money in that Roth IRA tax and penalty free. By rolling the money over to her own Roth IRA because she's only um she's she's under 59 and a half, um, she can't access the earnings without paying taxes and a penalty on them. Um, so this is you know a really good example of why it's important um to know the rules because not knowing the rules, not working um with an educated, knowledgeable advisor like you, Brad, can really get people into trouble. Um this poor woman is going to end up paying um taxes and penalties that could have been avoided.
SPEAKER_01And here's the flip side to that is there is no limit on when a spouse can do a rollover to their own name. So had it remained in her own name or in his name, the name of the decedent, then she could have waited till age 59 and a half uh and then rolled it over later into her own name when she had passed that period of time where she could have accessed it tax and penalty-free. So it's not like you have to do it right off the bat. You there's no time limit. You can roll it over whenever it benefits you most. And so, friends, there are so many different scenarios where when a spouse passes, their first question is, well, what do I do? Do I leave it in their name? Do I roll it over into my name? And the answer always is it depends. How old was your spouse that deceased? Was it tax-deferred, tax-free? Are you needing distributions? What's your age? Are you under 59 and a half or over 59 and a half? Had they reached their required beginning date? Had they already started taking RMDs? And if so, it might benefit you to roll it over into your own because you're above 59 and a half, but younger than them, and you could avoid RMDs. So there are just so many things like this that are so important. And I know that's a lot of information, but I'm so grateful to have Sarah on the show with us today to share her knowledge regarding these things. And so, Sarah, as we were heading into 2026, real quick, what advice do you have for our listeners today?
SPEAKER_03My advice is to get started now. Um don't wait for these end-of-the-year deadlines. Consider a QCD now if you're charitably inclined. Um, start her off for this year by contributing or converting. Get your RMD out if you're at RMDH. Um, don't wait. You'll you'll run out of time. It gets crazy when the holidays approach. Um, if you miss your RMD, you're gonna be looking at a penalty. If you don't get your QCD done or your conversion done, it's a lost opportunity. Um, looking ahead to 2026, um, the future is Roth. I feel like I can't say that enough. So um make that um resolution to contribute to a Roth or convert an existing pre-tax account to a Roth.
SPEAKER_01Such great information, Sarah. We're so grateful for you being on the show. I want to just do a shout out and a thank you to my good friend Ed Slot. He's been with me through all the years that I've been hosting radio. I started with his group right about the time I was starting Safe Money Radio, so 800 episodes ago, he's been here, and so have you. I'm so thankful for Sarah, Andy, Ian, all the group that's there, the technical consultants and those who uh who I just think help support the greatest group there is, the Ed Slide Elite IRA Advisor Group. So grateful for you. Thank you for joining us on the show today.
SPEAKER_03Oh, thank you for having me, Brad. It's been a pleasure.
SPEAKER_01If you need our help, call us anytime. Go to ozarksretirement.com. You can call us at 866-780 SAFE. That's 866-780-7233. There's always someone standing by to take your call. Well, I'm about out of time, and I would like to thank you for listening to Safe Money Radio. If you're serious about your financial future, give me a call, and together we'll get your retirement savings on the fast track to accumulation while reducing exposure to market losses. Thanks for listening, and until next time at the same time, I'm Brad Pistol, reminding you to stay safe so you can step into a secure future.
SPEAKER_00You've been listening to Safe Money Radio with your host, Brad Pistol. Find out how to contractually guarantee that your hard-earned money is safe while avoiding market loss so you can have the retirement that you deserve. Call Brad Pistol now for your complimentary Safe Money book and Safe Money Information Kit at 866. 780 Safe. That's 866. 7807233. The proceeding information does not represent tax, legal, or investment advice. Surrender charges apply to base contracts. Optional lifetime income benefit writers are used to calculate lifetime payments only and are not available for cash surrender or in a death benefit unless specified in the annuity contract. Fees may apply. Guarantees are based on the financial strength and claims paying ability of the insurance company. No information presented today should be acted upon without meeting with a qualified and licensed professional. Obviously, by calling us now, you are just taking the first step towards protecting your retirement. It's important that you read all insurance contract disclosures carefully before making a purchase decision. Rates and returns mentioned on this program are subject to change without notice.
