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The Final Months of 2024, What that Means for RMDs · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: And our phone lines are open for you this morning
• 0:02
  Speaker 1: here at thirteen ten wiv A if you have questions
• 0:05
  Speaker 1: for our retirement planning professionals from Class Financial join this
• 0:08
  Speaker 1: morning by C. J. Closs and Malia E. Quavis. You
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  Speaker 1: can learn more about Class Financial at their website class
• 0:14
  Speaker 1: financial dot com. That's Closs, k l AA S Financial
• 0:18
  Speaker 1: dot com and their telephone number six oh eight four
• 0:21
  Speaker 1: four two five six three seven. No charge for that
• 0:24
  Speaker 1: initial get to know you appointment tech Laws Financial, It
• 0:26
  Speaker 1: will be complimentary to you again their telephone number six
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  Speaker 1: oh eight four four two five six three seven. To
• 0:31
  Speaker 1: get on the show this morning with a question, I
• 0:33
  Speaker 1: gotta here is dial in six oh eight three two
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  Speaker 1: one thirteen ten. That's six soh eight three two one
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  Speaker 1: thirteen ten. As mentioned, we are joined this morning by c. J.
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  Speaker 1: Closs Malia Quavis.
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  Speaker 2: C J.
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  Speaker 1: How you doing this week?
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  Speaker 2: H I am doing great.
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  Speaker 3: Sean, how are you?
• 0:45
  Speaker 1: I'm doing really good? Great to talk with you, Malia, how.
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  Speaker 2: Have you been very good?
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  Speaker 4: Thanks for having us.
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  Speaker 1: It's great to have you both along and we've got
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  Speaker 1: an exciting show. We're going to talk about three letters
• 0:54
  Speaker 1: that mean an awful lot. Our MDS required minimum distributions.
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  Speaker 1: We're gonna get to that in just a moment, but
• 1:00
  Speaker 1: before we get to this week's conversation, one of the
• 1:02
  Speaker 1: really cool features of the show do each and every
• 1:04
  Speaker 1: week is the cost quiz question a week, and our
• 1:06
  Speaker 1: friends from Class Financial have again provided a fantastic prize
• 1:09
  Speaker 1: this week, a twenty five dollars gift car to Red Robin.
• 1:12
  Speaker 1: Tell you a bit later on the program how you
• 1:14
  Speaker 1: can win that with the class quiz question leak. Just
• 1:16
  Speaker 1: a little tip though, it pays for a number of
• 1:18
  Speaker 1: reasons to pay close attention to the program, get some
• 1:20
  Speaker 1: great information, and you get kind of a lig up
• 1:22
  Speaker 1: on everybody else when it comes to the class quiz
• 1:24
  Speaker 1: question the leak Butch again, we'll be doing a little
• 1:26
  Speaker 1: bit later on in the program, and before we get
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  Speaker 1: rolling on this week's topic on required minimum distributions, Malia,
• 1:32
  Speaker 1: let's take a look back at last week's show and
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  Speaker 1: get the question and answer there as well.
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  Speaker 4: Yeah, so last week we had a great conversation about mistakes,
• 1:41
  Speaker 4: actually ten mistakes people should avoid with their retirement planning.
• 1:45
  Speaker 4: So we know we only have perfect listeners out there,
• 1:48
  Speaker 4: so maybe it doesn't apply to you. But if not
• 1:51
  Speaker 4: listen listen to last week's show and see what you
• 1:53
  Speaker 4: shouldn't be doing in your own retirement planning. Our question
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  Speaker 4: was true or false once you reach your or let
• 2:01
  Speaker 4: me back up here one second, I'm giving the wrong one.
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  Speaker 4: Last week's question. If you are over fifty years old
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  Speaker 4: in twenty twenty four, what is the maximum you can
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  Speaker 4: contribute into your employer retirement plan? Was it twenty five
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  Speaker 4: thousand or thirty thousand, five hundred? Correct answer came from
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  Speaker 4: Sam of Portage, Wisconsin. Correctly answered thirty thousand, five hundred.
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  Speaker 4: So listen carefully for today's question.
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  Speaker 1: Fantastic and don't forget. We'll do another question later on
• 2:29
  Speaker 1: the program. And as Malia mentioned as well, you can
• 2:32
  Speaker 1: always listen back to this in previous shows. Podcasts up
• 2:34
  Speaker 1: at klassfinancial dot com. That's Closs Klaas financial dot com.
• 2:38
  Speaker 1: The telephone number six so eight four four two five
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  Speaker 1: six three seven No charge for the financial get to
• 2:43
  Speaker 1: know you appointment tech Loss Financial. It will be complimentary
• 2:46
  Speaker 1: to you. So with only wow, only six weeks left
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  Speaker 1: in twenty twenty four, what should we know about required
• 2:52
  Speaker 1: minimum distribution CJ.
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  Speaker 3: It's kind of crazy.
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  Speaker 2: Yes, the year is already winding down. So yeah, as
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  Speaker 2: we get down to the wire at the end of
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  Speaker 2: the year, as that's quickly approaching, you need to take
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  Speaker 2: care to make sure that you have met your required
• 3:09
  Speaker 2: minimum distribution. So these required minimum distributions are short for rmds.
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  Speaker 2: You'll even sometimes hear it being referred to MrDs. But
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  Speaker 2: these are the minimum amounts of money that must be
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  Speaker 2: withdrawn annually from retirement accounts if you meet certain age requirements.
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  Speaker 2: So the IRS requires rmds for traditional irays, sep iras,
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  Speaker 2: simple irays, and qualified employer sponsored retirement plans known as qrps.
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  Speaker 2: And this is such as four one ks four oh
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  Speaker 2: or b's four to fifty seven, so on and so forth. Now,
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  Speaker 2: remember that the purpose of rmds is designed to ensure
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  Speaker 2: that investments in retirement accounts do not grow tax deferred forever.
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  Speaker 2: The IRS wants to begin receiving the associated tax that
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  Speaker 2: have been deferred on these accounts at some point. Now
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  Speaker 2: we'll get into this a little bit later, but if
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  Speaker 2: you're still working at an employer and have money in
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  Speaker 2: an employer sponsored retirement planning plan, you may not be
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  Speaker 2: required to make a minimum distribution. But again, think of
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  Speaker 2: this as I'm retired and I have money in an
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  Speaker 2: iraset IRA simple IRA four one K four O three B,
• 4:16
  Speaker 2: and it is pre tax money. If that's you, and
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  Speaker 2: you meet these age requirements that we're going to talk
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  Speaker 2: about here in a moment, then you would have a
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  Speaker 2: minimum distribution. Now, interestingly enough, the history of rmds from
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  Speaker 2: qualified retirement accounts started with the passage of the Tax
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  Speaker 2: Reform Act of nineteen eighty six.
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  Speaker 3: So we don't.
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  Speaker 2: Realize this, but this notion of rmds is not that
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  Speaker 2: old of a concept, believe it or not. That law
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  Speaker 2: back in nineteen eighty six established the date when rmds
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  Speaker 2: were required to begin as the year in which an
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  Speaker 2: individual reached age seventy and a half, Yes, seventy and
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  Speaker 2: a half, and that has now been adjusted over recent
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  Speaker 2: years due to the passage of the Secure Act. So
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  Speaker 2: now we have potentially multiple ages that could apply to people. Surprise, surprise,
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  Speaker 2: IRS Congress make things really really complicated. So again I
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  Speaker 2: began back in nineteen eighty six. Concept was very simple,
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  Speaker 2: Let's make sure that people start pulling, you know, minimum
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  Speaker 2: distributions out to pay the tax. And as of nineteen
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  Speaker 2: eighty six, at age was seventy and a half. Well, now,
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  Speaker 2: due to the passage of the Secure Act, if you
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  Speaker 2: were born in nineteen sixty or later, so again think
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  Speaker 2: about that nineteen sixty or later, then your RMD age.
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  Speaker 2: The age at which you must start minimum distributions is
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  Speaker 2: age seventy five, so think of it as the calendar
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  Speaker 2: year in which you turned seventy five. Now, in a
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  Speaker 2: moment here, I'm going to talk about your required beginning date.
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  Speaker 2: But just think of I have to have a minimum
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  Speaker 2: distribution for the calendar year in which I turned seventy five.
• 5:50
  Speaker 2: If I was born in nineteen sixty or later. If
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  Speaker 2: I was born in nineteen fifty one to nineteen fifty eight,
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  Speaker 2: anywhere in that timeframe, then my required minimum distributions must
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  Speaker 2: begin at age seventy three. If I was born nineteen
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  Speaker 2: fifty If I was born in nineteen fifty or born
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  Speaker 2: on or after July first of nineteen forty nine, rmds
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  Speaker 2: must begin at age seventy two. And then finally, if
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  Speaker 2: I was born before July first of nineteen forty nine's
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  Speaker 2: for nineteen forty nine, my rmds must begin at age
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  Speaker 2: seventy and a half. So you can see, depending upon
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  Speaker 2: when I was born, I have a different age at
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  Speaker 2: which minimum distributions must begin. But here's where it gets
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  Speaker 2: a little tricky, because what's weird is the age at
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  Speaker 2: which you have that first RMD begin or think of
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  Speaker 2: it as the calendar year in which you turn that age.
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  Speaker 2: Believe it or not, that is not the calendar year
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  Speaker 2: in which you must take your first distribution because the
• 6:52
  Speaker 2: first year they give you a pass. So this is
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  Speaker 2: known as your required beginning date.
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  Speaker 3: They say, hey, if you.
• 6:58
  Speaker 2: Turn seventy five in the year, or we'll just say
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  Speaker 2: twenty twenty four, even if it's thirty first of twenty
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  Speaker 2: twenty four, if you turn that age, that's when minimum
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  Speaker 2: distributions must begin. But you can pull it out by
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  Speaker 2: April first of the following year, which is just It's like,
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  Speaker 2: if it's not confusing enough, let's add confusion on top
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  Speaker 2: of confusion. Now there's reasons that they did this. I'm
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  Speaker 2: not going to bore you with those reasons, but just
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  Speaker 2: remember the calendar year in which you turn RMD age,
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  Speaker 2: you actually have a required beginning date, which is April
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  Speaker 2: first to the following year. Now here's the key. If
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  Speaker 2: you take advantage of that pushing of your first RMD
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  Speaker 2: to the following year. Well, the problem is now you'll
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  Speaker 2: have two of them because every subsequent year your minimum
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  Speaker 2: distribution has to be out by December thirty first. So gosh,
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  Speaker 2: I already feel the tension of how confusion confusing this is.
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  Speaker 3: But hopefully that that helps.
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  Speaker 1: Talking this morning with the retirement planning professional CJ. Closs
• 7:57
  Speaker 1: and Malia Quavis. You can learn more about them online.
• 7:59
  Speaker 1: Great website class financial dot com that's class klaas Financial
• 8:04
  Speaker 1: dot com and their telephone number six O eight four
• 8:06
  Speaker 1: four two five six three seven. No charge for that
• 8:09
  Speaker 1: initial get to know your appointment at Claus Financial. It
• 8:11
  Speaker 1: will be complementary to you again the telephone number six
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  Speaker 1: so eight four four two five six three seven. So, CJ,
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  Speaker 1: what if you don't meet that minimum? What if you
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  Speaker 1: don't withdraw less than your RMD? What happens?
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  Speaker 2: Yeah, Well, gosh, we've done the show for so long.
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  Speaker 2: We've actually done it long enough to where when we
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  Speaker 2: began this show fifteen years ago, it was seventy and
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  Speaker 2: a half was the RMD age, and the penalties were
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  Speaker 2: steep and there wasn't much leniency. Well more recently, due
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  Speaker 2: to the passage of the Secure Act. This also has changed,
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  Speaker 2: so now if you were withdraw less than your RMD,
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  Speaker 2: you may owe a penalty. This has been reduced from
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  Speaker 2: what used to be like fifty percent. Now it's down
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  Speaker 2: to twenty five percent of the missed RMD amount. And
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  Speaker 2: in some slash many circumstances, even if if the taxpayer
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  Speaker 2: hasn't pulled out all of that distribution, they can work
• 9:02
  Speaker 2: with them with the IRS too to get a waiver
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  Speaker 2: of that. So what they were recognizing is the number
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  Speaker 2: of times this applied was pretty limited anyways, because most
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  Speaker 2: of the time when a minimum distribution was a missed,
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  Speaker 2: it was unintentional. And so the IRS has said, hey,
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  Speaker 2: we're going to work with you, but you need to
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  Speaker 2: do this in a timely manner. I think I can't
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  Speaker 2: verify this, but I think that what would happen is
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  Speaker 2: if two three years go by and you're a healthy,
• 9:24
  Speaker 2: you know, seventy four year old, and you go, oh,
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  Speaker 2: I just forgot, they're gonna go Sorry.
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  Speaker 3: The penalty applies to you.
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  Speaker 2: But if it's I had a sick mother, I was
• 9:30
  Speaker 2: taking care of them. You know, it's February of the
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  Speaker 2: following year, and you right, size this, they're going to
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  Speaker 2: work with you to avoid that penalty. Now, a couple
• 9:38
  Speaker 2: things to know. You required minimum distribution is the minimum
• 9:42
  Speaker 2: amount you must withdraw from your account each year. It
• 9:45
  Speaker 2: is not the maximum. So some people think, oh, so
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  Speaker 2: I can't pull money out until I reach RMD. Ah, No,
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  Speaker 2: you can pull it out anytime after fifty nine and
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  Speaker 2: a half. And then they get to rmdas and they go, oh,
• 9:57
  Speaker 2: so I can't pull up more than the amount. No,
• 10:00
  Speaker 2: you can pull out as much as you want to
• 10:02
  Speaker 2: once you're over fifty nine and a half.
• 10:03
  Speaker 3: You just have to pull at least the minimum.
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  Speaker 2: Another thing to know is you can always withdraw more
• 10:09
  Speaker 2: than the amount at any time after fifty nine and
• 10:13
  Speaker 2: a half.
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  Speaker 3: So this is the key.
• 10:15
  Speaker 2: Once you're fifty nine and a half, regardless of the
• 10:17
  Speaker 2: retirement account, almost under almost all circumstances, you can pull
• 10:21
  Speaker 2: that out any amount. There is an exception. It's called
• 10:25
  Speaker 2: separation from service after the age of fifty five. We've
• 10:29
  Speaker 2: actually talked about that for employer sponsored retirement plans, but
• 10:33
  Speaker 2: I'm not going to dig into that too deeply today
• 10:35
  Speaker 2: because we've done it on prior shows. If you have
• 10:37
  Speaker 2: questions about that, certainly you can reach out and ask them.
• 10:41
  Speaker 1: It's timely conversation as well as we talk with CJ
• 10:43
  Speaker 1: and Malia and CJ what kind of there's a reason
• 10:47
  Speaker 1: why this is so important? We're talking about this now, isn't.
• 10:49
  Speaker 3: There there is? Yes?
• 10:51
  Speaker 2: So what Sewan is getting at is if you pull
• 10:54
  Speaker 2: it out near the end of the year, what's going
• 10:56
  Speaker 2: to happen is it will be included in your taxable income.
• 10:59
  Speaker 2: That's actually the whole point of this minimum distribution. Everybody is, hey,
• 11:03
  Speaker 2: I pull out this amount, Okay, great, I did it.
• 11:06
  Speaker 2: What Now, Well, in a couple of months you're going
• 11:09
  Speaker 2: to get a ten ninety nine for that with your
• 11:11
  Speaker 2: all amounts. So as you pull money out of that account,
• 11:14
  Speaker 2: if you're these minimum distribution ages, you need to make
• 11:17
  Speaker 2: sure you either withhold taxes on that distribution or set
• 11:22
  Speaker 2: money aside to pay it.
• 11:24
  Speaker 3: During text time.
• 11:25
  Speaker 1: Talking this morning with our retirement planning professional CJ. Coloss
• 11:28
  Speaker 1: and Malia Quavis. You can learn more about Cjmalia and
• 11:31
  Speaker 1: the whole team at COSS Financial. Just head on over
• 11:33
  Speaker 1: to class financial dot com. Under the about tab, you
• 11:35
  Speaker 1: can learn about the team at COSS Financial. You can
• 11:37
  Speaker 1: also learn about the separate divisions at Cost Financial. Listen
• 11:40
  Speaker 1: back to the podcast, Subscribe to me weekly Market Pulse newsletter.
• 11:44
  Speaker 1: All of that available to you at Cossfinancial dot com.
• 11:47
  Speaker 1: That's Coss k l aas Financial dot com. Delphone up
• 11:50
  Speaker 1: for the office right here in Madison six so eight
• 11:52
  Speaker 1: four four two five six three seven. No charge for
• 11:55
  Speaker 1: the tonation. You'll get to know your appointment at Loss Financial.
• 11:57
  Speaker 1: It will be complementary to you again. They're number six
• 12:00
  Speaker 1: x eight four four two five six three seven. You
• 12:03
  Speaker 1: may be wondering how are r mds calculated. We'll get
• 12:06
  Speaker 1: the details next as Money in Motion with Coss Financial
• 12:09
  Speaker 1: continues right here on thirteen ten, WIBI talking with our
• 12:13
  Speaker 1: retirement planning professionals from Class Financial, CJ. Coss and Malia Quavis.
• 12:17
  Speaker 1: You can learn more about Class Financial their website cossfinancial
• 12:21
  Speaker 1: dot com. That's Coss k l a as Financial dot Com.
• 12:24
  Speaker 1: Telphone number six O eight four four two five six
• 12:27
  Speaker 1: three seven. No charge for that initial gets to know
• 12:30
  Speaker 1: you appointment tech Loss Financial. It will be complimentary to
• 12:32
  Speaker 1: you again. Their number six oh eight four four two
• 12:35
  Speaker 1: five six three seven. Talking this week about required minimum
• 12:38
  Speaker 1: distributions and Malia when we UH talk about that RMD.
• 12:42
  Speaker 1: How exactly is that that number calculated?
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  Speaker 4: Yeah, these are the mysteries we like to unravel for everyone.
• 12:50
  Speaker 4: So really, you know, we're gonna try to simplify it
• 12:53
  Speaker 4: a little bit for you, so excuse me. The calculation
• 12:56
  Speaker 4: of your RMD for any any year is taken from
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  Speaker 4: the account balances of one of those deferred accounts at
• 13:03
  Speaker 4: the end of the immediately preceding calendar year. So in
• 13:07
  Speaker 4: other words, if you have these deferred accounts the iras
• 13:11
  Speaker 4: or for one k's of employers, you're not currently working
• 13:14
  Speaker 4: at four h three B accounts, et cetera. What the
• 13:18
  Speaker 4: IRS is looking at is a summary a total of
• 13:22
  Speaker 4: all of those accounts text deferred accounts, looking at that
• 13:27
  Speaker 4: and then looking at your life expectancy. So the figures
• 13:31
  Speaker 4: come in at the end of the previous previous year.
• 13:35
  Speaker 4: So let's say in twenty twenty three December thirty, first,
• 13:39
  Speaker 4: those account balances for yourself accounted to maybe five hundred
• 13:44
  Speaker 4: thousand dollars. If you were turning in seventy three and
• 13:48
  Speaker 4: twenty twenty four, the distribution would be based on your
• 13:52
  Speaker 4: life expectancy, which is about twenty six and a half years,
• 13:56
  Speaker 4: so they would take the five hundred thousand, divide that
• 13:59
  Speaker 4: by life expectancy twenty six point five because that's the
• 14:04
  Speaker 4: distribution period based on that life expectancy, and that would
• 14:08
  Speaker 4: amount to about eighteen thousand, eight hundred and some So
• 14:12
  Speaker 4: you would be required in twenty twenty four to take
• 14:15
  Speaker 4: that amount out. As CJ mentioned, make sure you're withholding
• 14:18
  Speaker 4: tax on that and get that distributed before the end
• 14:23
  Speaker 4: of the calendar year. So again back to we only
• 14:26
  Speaker 4: have six weeks left. We're pretty sure most people listen carefully,
• 14:29
  Speaker 4: but we want to make sure that if you have
• 14:31
  Speaker 4: any distributions you've not made for the year, make sure
• 14:34
  Speaker 4: you do that. So I'm referring to the IRS uniform
• 14:38
  Speaker 4: lifetime table. So that's what gives us the life expectancy. Now,
• 14:42
  Speaker 4: there is a separate table used if the sole beneficiary
• 14:46
  Speaker 4: is the owner's spouse who's ten years or more younger
• 14:50
  Speaker 4: than the owner. Oftentimes we'll want to lean on those
• 14:53
  Speaker 4: life expectancy tables because there won't be as much required
• 14:58
  Speaker 4: to come out and so that that can be tax
• 15:00
  Speaker 4: deferred a little longer. So make sure you're looking at
• 15:05
  Speaker 4: the correct tables. If you go to investor dot gov,
• 15:08
  Speaker 4: that's a website UH safe websites hosted by the SEC,
• 15:12
  Speaker 4: you can actually calculate what your rm ds may look like,
• 15:16
  Speaker 4: or go to ir sur I rs dot gov as well.
• 15:20
  Speaker 4: There's an r m D worksheet there. This is really
• 15:23
  Speaker 4: important as you you know, if you have a spouse
• 15:26
  Speaker 4: in the house, you may want to be looking ahead
• 15:29
  Speaker 4: how you're going to handle the taxation on you know,
• 15:33
  Speaker 4: multiple rm ds coming into your household in the future,
• 15:37
  Speaker 4: so make sure you look at that. And the other
• 15:40
  Speaker 4: idem we want to mention is people are like they
• 15:43
  Speaker 4: say to us, why am I being forced to take
• 15:46
  Speaker 4: this money out? And as CJ mentioned, because you know,
• 15:50
  Speaker 4: ultimately the government wants you to pay taxes on that money.
• 15:54
  Speaker 4: But you can certainly reinvest that money. And what that
• 15:58
  Speaker 4: means is you're not you're not require tired to spend it.
• 16:00
  Speaker 4: If you have no need to spend it, great, but
• 16:03
  Speaker 4: you can certainly reinvest that distribution into an after tax
• 16:07
  Speaker 4: account once you've Once you've paid tax on that distribution,
• 16:11
  Speaker 4: now you're going to say, well what happens when that grows. Yes,
• 16:14
  Speaker 4: there will be some additional taxation which is known as
• 16:17
  Speaker 4: capital gains. But important to understand that you're not being
• 16:21
  Speaker 4: forced to spend, but you're just being forced to at
• 16:25
  Speaker 4: some point, depending on your life expectancy, to start paying
• 16:28
  Speaker 4: taxes on that money that you've put aside.
• 16:30
  Speaker 1: Really important distinction there. As we talked this morning with
• 16:33
  Speaker 1: Malia Quavis and CJ. Closs, they are our retirement planning
• 16:36
  Speaker 1: professionals from COSS Financial. You can learn more online the
• 16:39
  Speaker 1: website Colss financial dot com. That's Coss k l a
• 16:43
  Speaker 1: as Financial dot com. Tell phone number for the office
• 16:45
  Speaker 1: right here in Madison six so eight four four two
• 16:48
  Speaker 1: five six three seven. No charge for the tonationial. Get
• 16:51
  Speaker 1: to know your appointment at Loss Financial. It will indeed
• 16:53
  Speaker 1: be complementary to you. Again, they're number six so eight
• 16:56
  Speaker 1: four four two five six three seven. As mentioned, we're
• 16:59
  Speaker 1: just a few weeks away from the new year. A
• 17:01
  Speaker 1: lot of folks get start to feel a little generous
• 17:03
  Speaker 1: this time of year. There are some great options when
• 17:06
  Speaker 1: it comes to r mds if you are in a
• 17:07
  Speaker 1: position to help others out. We'll talk with Cjmalia about that.
• 17:11
  Speaker 1: Next has Money in Motion with Coss Financial continues right
• 17:14
  Speaker 1: here on thirteen ten. WIBA talking this week with Malia
• 17:17
  Speaker 1: Quavis and CJ. Closs, our retirement planning professionals from COSS Financial.
• 17:21
  Speaker 1: You can learn more about Cjmalia and the whole team
• 17:24
  Speaker 1: at COSS Financial on their website Coss Financial dot com.
• 17:27
  Speaker 1: That's Coss k l a A s Financial dot com. Also,
• 17:31
  Speaker 1: you know, a lot of us mornings we step out,
• 17:33
  Speaker 1: grab a coffee, do some other things, maybe a mispart
• 17:36
  Speaker 1: of today's program. You can always listen back on the
• 17:38
  Speaker 1: website colassfinancial dot com or share the podcast as well.
• 17:42
  Speaker 1: Listen to previous shows.
• 17:43
  Speaker 3: Again.
• 17:43
  Speaker 1: That all available to you at Cossfinancial dot com. Telephone
• 17:46
  Speaker 1: number for the office here in Madison six oh eight
• 17:48
  Speaker 1: four four two five six three seven. No charge for
• 17:51
  Speaker 1: the initial gets to know your appointment at Loss Financial.
• 17:53
  Speaker 1: It will be complimentary to you. Again the office number
• 17:56
  Speaker 1: right here in Madison six oh eight four four two
• 17:58
  Speaker 1: five six three seven. And as we're talking about r
• 18:01
  Speaker 1: m ds this week, charitable giving, there is a there
• 18:04
  Speaker 1: is part of this, there's a connection there and for
• 18:07
  Speaker 1: some of our listeners, they may want to consider this
• 18:09
  Speaker 1: for the future, shouldn't they.
• 18:10
  Speaker 4: Maaliah, Yeah, this is something you may want to get
• 18:14
  Speaker 4: started right away or pony up for it in the future. Certainly,
• 18:18
  Speaker 4: we'd we'd say, you probably should sit down with your
• 18:21
  Speaker 4: financial advisor and likely your accountant to see if this
• 18:25
  Speaker 4: might make sense for you. This could be a play.
• 18:28
  Speaker 4: But one thing you just heard us talk about is
• 18:30
  Speaker 4: as you take out those required minimum distributions, you do
• 18:33
  Speaker 4: have to pay taxes. But there are there is this
• 18:37
  Speaker 4: alternative idea and it's a legal one, and it's known
• 18:41
  Speaker 4: as qcds or qualify Charitable distributions. So there's there's a
• 18:46
  Speaker 4: ton of people still very unaware of this opportunity. But
• 18:50
  Speaker 4: the ones that have come and looked at it, if
• 18:53
  Speaker 4: it makes sense for themselves, they most people understand that
• 18:57
  Speaker 4: we have these higher standard deductions that have continued to
• 19:01
  Speaker 4: be increased since twenty eighteen. So right now a standard
• 19:05
  Speaker 4: deduction for married file filing jointly is about twenty nine thousand,
• 19:11
  Speaker 4: two hundred. Next year it rises to thirty thousand. So
• 19:15
  Speaker 4: given the fact this continues to rise that standard deduction,
• 19:20
  Speaker 4: that means that only about twenty two percent of taxpayers
• 19:23
  Speaker 4: out there have been itemizing taxes. So if you're not itemizing,
• 19:28
  Speaker 4: what can you do? You've got this additional income coming
• 19:31
  Speaker 4: into your home from the rmds, Well, what you can
• 19:35
  Speaker 4: do is use the QCD rule and that could lower
• 19:39
  Speaker 4: your tax liability. So again, what are qcds. These were
• 19:44
  Speaker 4: actually made permanent back in twenty fifteen, that was with
• 19:47
  Speaker 4: the Path Act protecting Americans from tax hikes. And so
• 19:52
  Speaker 4: the description of a QCD is is it provides you
• 19:55
  Speaker 4: the opportunity to transfer up to and this is twenty
• 19:59
  Speaker 4: twenty four numbers up to one hundred and five thousand
• 20:02
  Speaker 4: dollars per year per taxpayer. And this would go directly
• 20:07
  Speaker 4: from your IRA, from that that IRA custodian to a
• 20:11
  Speaker 4: qualified charity. So I'm just giving you the top amount
• 20:14
  Speaker 4: the total you can certainly do you know, one thousand,
• 20:18
  Speaker 4: two thousand, one hundred dollars whatever it might be. But
• 20:21
  Speaker 4: to understand that if it goes from that that custodian
• 20:25
  Speaker 4: directly to the charity, you will not pay taxes on
• 20:29
  Speaker 4: that money. So these rm ds, for example, you will
• 20:32
  Speaker 4: not pay taxes, nor will the receiving organization. Now it
• 20:35
  Speaker 4: does have to be a five oh one C three organization.
• 20:40
  Speaker 4: Houses of worship. Your children are not a charity, so
• 20:43
  Speaker 4: that doesn't work. But you want to make sure that
• 20:46
  Speaker 4: you know, you look at hey, if I'm giving let's
• 20:49
  Speaker 4: just say five thousand dollars a year, and I'm writing
• 20:52
  Speaker 4: a check for it right now, and that's going directly
• 20:56
  Speaker 4: to you know, my my church for example. What's going
• 21:00
  Speaker 4: to happen to that five thousand dollars. Well, this is
• 21:03
  Speaker 4: when you're writing out of your checkbook that you are
• 21:06
  Speaker 4: not being able to quote write off because you're taking
• 21:09
  Speaker 4: that larger standard deduction if you are at least seventy
• 21:14
  Speaker 4: and a half, So forget the RMD age for a second.
• 21:16
  Speaker 4: If you're at least seventy and a half, you can
• 21:19
  Speaker 4: start taking advantage of this and direct dollars being distributed
• 21:25
  Speaker 4: directly from that IRA, for example, to the charity, and
• 21:29
  Speaker 4: nobody has to pay taxes, which people love. I mean,
• 21:33
  Speaker 4: I can't tell you exact percentages of the number of
• 21:36
  Speaker 4: clients we have taken advantage of this, but it is very,
• 21:40
  Speaker 4: very large. So this is available only for iras and individuals,
• 21:45
  Speaker 4: as I said, who've reached age seventy and a half.
• 21:49
  Speaker 4: So you know we're talking about RMD age, but if
• 21:52
  Speaker 4: you're seventy and a half, you can start lowering those
• 21:56
  Speaker 4: those potential those future rmds by taking advantage of this now.
• 22:03
  Speaker 4: So one thing we want you to understand is let's
• 22:05
  Speaker 4: say your rm D is ten thousand dollars you have
• 22:08
  Speaker 4: to take out this year. You could you could do
• 22:11
  Speaker 4: it up to ten thousand to cover that RMD, but
• 22:15
  Speaker 4: the total amount that's allowed is the one hundred and
• 22:18
  Speaker 4: five thousand per taxpayer this year.
• 22:20
  Speaker 1: And anything as far as taxes. Did I see something
• 22:24
  Speaker 1: about a little note on on some changes and filing.
• 22:27
  Speaker 4: Yeah, so special note. So if you make a QCD
• 22:32
  Speaker 4: and the given a given tax year, you have to
• 22:35
  Speaker 4: understand that you are going to get a ten ninety
• 22:37
  Speaker 4: nine r on this. But you're going to have to
• 22:41
  Speaker 4: take this to your accountant because there's no it'll show
• 22:45
  Speaker 4: up as a distribution. But unless unless there's a delineation
• 22:49
  Speaker 4: made as far as yes, this was treated as a QCD,
• 22:53
  Speaker 4: it's going to be your up to you to make
• 22:55
  Speaker 4: sure that that gets communicated. You're going to want to
• 23:00
  Speaker 4: keep records of these qcds and make sure that by
• 23:04
  Speaker 4: December thirty first every year wherever those qcds went, that
• 23:09
  Speaker 4: they've actually been deposited and so that they've cleared for
• 23:12
  Speaker 4: that year. So there is a little more track tracking
• 23:15
  Speaker 4: on this, but very very important for you to you know,
• 23:18
  Speaker 4: look at opportunities to again not pay as much as
• 23:21
  Speaker 4: you may have to in taxes.
• 23:24
  Speaker 1: It's a great opportunity, really fantastic opportunity, that is for sure.
• 23:27
  Speaker 1: Malia Quavis and CJ. Coss, they are retirement planning professionals
• 23:30
  Speaker 1: from Class Financial online, Class Financial dot Com. That's Closs
• 23:33
  Speaker 1: k L A A S Financial dot Com telephone number
• 23:36
  Speaker 1: six so eight four four two five six three seven
• 23:39
  Speaker 1: and CJ. I've got to guess there are some other
• 23:41
  Speaker 1: other nuances here that we probably want to be want
• 23:44
  Speaker 1: to be made aware of when it comes to rmds,
• 23:46
  Speaker 1: aren't there.
• 23:47
  Speaker 2: Yeah, you know, as I was speaking earlier, and as
• 23:50
  Speaker 2: I was just listening to Malea go through all of this,
• 23:53
  Speaker 2: it's common that your eyes should be rolling in the
• 23:56
  Speaker 2: back of your head because it has taken me a career.
• 23:59
  Speaker 2: I've been doing this for about twenty years now as
• 24:02
  Speaker 2: a financial advisor, and I can say I am still
• 24:05
  Speaker 2: constantly having to go back to the code to say, wait,
• 24:09
  Speaker 2: am I thinking of the old rules or the new rules?
• 24:12
  Speaker 2: What exactly does it say on the new rules? And
• 24:15
  Speaker 2: when do things start? And so listen, I've been doing
• 24:18
  Speaker 2: this for twenty years. It's all I do every day.
• 24:21
  Speaker 2: And I still have to remind myself of these rules.
• 24:25
  Speaker 2: So why am I telling you this? Well, maybe it
• 24:27
  Speaker 2: means I have a bad memory, but probably what's more
• 24:31
  Speaker 2: likely is that this is complex stuff, and it's the
• 24:34
  Speaker 2: reason why people like us have jobs is to help you,
• 24:37
  Speaker 2: the public, actually work through the complexity of required distributions
• 24:42
  Speaker 2: and everything else complicated regarding your retirement plans. So a
• 24:47
  Speaker 2: few things other things to know. Sometimes people have multiple
• 24:51
  Speaker 2: iras and they've reached these required minimum distribution ages. So
• 24:56
  Speaker 2: one of the complexities that pops up is, Hey, my
• 25:00
  Speaker 2: Schwab account, my Fidelity account, and my e Trade account
• 25:03
  Speaker 2: that are all iras, and I'm now, say seventy six
• 25:06
  Speaker 2: years old, I have an RMD. They each calculated a
• 25:10
  Speaker 2: minimum distribution for me. Does that mean I need to
• 25:13
  Speaker 2: pull the minimum distribution from each account or from one?
• 25:17
  Speaker 2: That's a great question, and the answer is from one.
• 25:20
  Speaker 2: You can aggregate all of those amounts up and pull
• 25:23
  Speaker 2: it from one. However, we always like to have exceptions
• 25:28
  Speaker 2: in the IRS, and so one of those exceptions would
• 25:30
  Speaker 2: be that aggregation of your required distributions does not include
• 25:36
  Speaker 2: employ your sponsored retirement plans, which would be sep iras
• 25:40
  Speaker 2: simple iras four to one, k's four h three b's
• 25:42
  Speaker 2: four fifty sevens. Those you have to pull from each
• 25:46
  Speaker 2: of those separate accounts. So again, rollover iras or traditional iras,
• 25:52
  Speaker 2: you can aggregate them all together. But if it's a
• 25:54
  Speaker 2: separate employer sponsor plan, whether it be current or old,
• 25:57
  Speaker 2: if you have a minimum distribution associated with one of them,
• 26:00
  Speaker 2: that has to come separately from that account. Now, one
• 26:05
  Speaker 2: question that people will ask with this is, well, then
• 26:07
  Speaker 2: should I take that minimum distribution as a lump sum
• 26:10
  Speaker 2: or as an installment payment? And our response is that's
• 26:14
  Speaker 2: a financial planning question that has to do with cash
• 26:16
  Speaker 2: flow and whether or not you need that money to
• 26:18
  Speaker 2: live off of. It has to do with your gifting
• 26:21
  Speaker 2: that money on a monthly basis or if you just
• 26:23
  Speaker 2: want to receive it all at one time. Some people
• 26:25
  Speaker 2: get this, say December first, right before the holidays. So
• 26:28
  Speaker 2: what we would say is whether you pull it out
• 26:30
  Speaker 2: as a lump sum or in monthly installments, you just
• 26:33
  Speaker 2: have to make sure that by the end of the
• 26:34
  Speaker 2: year the total amount of the aggregation is pulled out.
• 26:39
  Speaker 1: And then what about Social Security CJ.
• 26:42
  Speaker 2: Yeah, So another question you might have is if rmds
• 26:45
  Speaker 2: required minimum distribution distributions affect social Security. So if you're
• 26:50
  Speaker 2: taking rmds and collecting soci security benefits, the RMD will
• 26:54
  Speaker 2: not impact the amount of your benefits, but it could
• 26:58
  Speaker 2: impact how much of your social cauit already benefit is taxable. Okay, everybody,
• 27:03
  Speaker 2: hold onto your hats. Another layer of complexity social security.
• 27:08
  Speaker 2: The income you receive from social Security in the state
• 27:11
  Speaker 2: of Wisconsin is not income taxable. Again, it's not state
• 27:15
  Speaker 2: of Wisconsin income taxable. Ever, regardless of how much income
• 27:18
  Speaker 2: you have, it can be federally income taxable depending upon
• 27:25
  Speaker 2: your total income. There's actually things called provisional income and
• 27:30
  Speaker 2: modified adjust to gross incomes where there's a calculation of
• 27:33
  Speaker 2: your provisional income to figure out whether or not social
• 27:36
  Speaker 2: Security is taxable.
• 27:38
  Speaker 3: So, if social.
• 27:40
  Speaker 2: Security is your only source of income, more than likely
• 27:42
  Speaker 2: you will pay no federal income tax on that social
• 27:45
  Speaker 2: Security in retirement. However, if you have other sources of
• 27:48
  Speaker 2: income like retirement account distributions or rmds, or pension distributions,
• 27:53
  Speaker 2: or even just a lot of dividends and interest on
• 27:56
  Speaker 2: taxable investments, then your social Security can and start to
• 28:00
  Speaker 2: become federally income taxable. But it's a progression. So you
• 28:05
  Speaker 2: could end up with ten percent, fifteen percent, twenty percent,
• 28:08
  Speaker 2: all the way up to eighty five percent of your
• 28:11
  Speaker 2: social Security could become income taxable. Now, if you're really
• 28:16
  Speaker 2: sharp on how these numbers work, it gets really odd
• 28:19
  Speaker 2: because what happens is when you add a dollar of
• 28:22
  Speaker 2: taxable income, and this could be the this could be
• 28:24
  Speaker 2: because of a minimum distribution. When you add a dollar
• 28:27
  Speaker 2: of taxable income, you could also be adding another dollar
• 28:32
  Speaker 2: of Social Security that had been previously tax free that
• 28:35
  Speaker 2: has now become taxable. So they call this in the
• 28:38
  Speaker 2: tax world the Social Security tax torpedo. Doesn't that sound lovely?
• 28:45
  Speaker 2: And it's this whole notion of like, wait, wait, wait,
• 28:47
  Speaker 2: wait wait, I just added one thousand dollars of an
• 28:50
  Speaker 2: extra RMD, but I paid like twenty four percent on that,
• 28:55
  Speaker 2: even though I'm in the twelve percent marginal income tax bracket.
• 28:57
  Speaker 1: What the heck is going on?
• 28:59
  Speaker 2: Well, what's going on is you're adding in another thousand
• 29:02
  Speaker 2: dollars of Social Security that have been previously tax free
• 29:05
  Speaker 2: that is now taxable. So do your rmds affect social Security?
• 29:10
  Speaker 4: Uh?
• 29:10
  Speaker 3: Kind of?
• 29:11
  Speaker 2: I mean it doesn't reduce your benefit amount, but it
• 29:13
  Speaker 2: could make more of it taxable, and final note would
• 29:18
  Speaker 2: be around inherited retirement accounts. For those who've been paying attention,
• 29:21
  Speaker 2: the Secure Act that was passed at the end of
• 29:23
  Speaker 2: twenty nineteen into twenty twenty actually changed how minimum distributions
• 29:28
  Speaker 2: are handled for people who die in twenty twenty or
• 29:31
  Speaker 2: later for certain non spouse beneficiaries, and it's subjecting many
• 29:36
  Speaker 2: of them to a ten year distribution rule.
• 29:39
  Speaker 3: For those who have an old.
• 29:41
  Speaker 2: Inherited beneficiary retirement account from somebody who died before twenty twenty,
• 29:46
  Speaker 2: you're probably stretching out the deferral of that account over
• 29:49
  Speaker 2: your life expectancy, which means your minimum distribution could be
• 29:53
  Speaker 2: very small as an inheritor of that account. But if
• 29:56
  Speaker 2: you had a family member or friend pass away after
• 30:00
  Speaker 2: on t twenty, you are in many circumstances. If you're
• 30:03
  Speaker 2: a non spouse, you're subject to a new ten year rule,
• 30:06
  Speaker 2: which means the money has to be out within ten years.
• 30:09
  Speaker 2: So here's what I'd say to everybody the culmination of
• 30:11
  Speaker 2: the show. Unfortunately, unless you're just really really really good
• 30:16
  Speaker 2: and smart with this stuff, you're gonna probably need to
• 30:18
  Speaker 2: talk to an accountant or a financial advisor to make
• 30:21
  Speaker 2: sure you don't run a foul of the rules.
• 30:23
  Speaker 3: So hopefully this was helpful today.
• 30:25
  Speaker 1: And I know when you run a foul of the irs,
• 30:27
  Speaker 1: it can be never a fun thing, So you definitely
• 30:30
  Speaker 1: want to have that conversations. We talked this week with CJ.
• 30:32
  Speaker 1: Closs and Malia E. Quavis. They are our retirement planning
• 30:35
  Speaker 1: professionals from Class Financial. The website Cossfinancial dot com. That's
• 30:38
  Speaker 1: Coss k l aas Financial dot com and they're telephone
• 30:41
  Speaker 1: number six oh eight four four two five, six three seven.
• 30:44
  Speaker 1: Want to hold on to that telephon number. Now it's
• 30:46
  Speaker 1: time for the Class Quiz question of the week. It
• 30:48
  Speaker 1: works like this, just a moment, I'll ask you the
• 30:49
  Speaker 1: class Quiz question week. You'll then have thirty minutes for
• 30:52
  Speaker 1: you on today's program. But call the Class Financial office
• 30:54
  Speaker 1: right here in Madison at six oh eight four four
• 30:56
  Speaker 1: two five six three seven. If you are the first
• 30:59
  Speaker 1: call correct answer, win this week's prize, which is a
• 31:01
  Speaker 1: twenty five dollars gift card to red Robin. This week's
• 31:04
  Speaker 1: Closs Quiz question the week is this true or false
• 31:08
  Speaker 1: if you were born in nineteen sixty or after your
• 31:11
  Speaker 1: RMD age is currently set for age seventy five. True
• 31:16
  Speaker 1: or false telephone number six oh eight four four two, five,
• 31:19
  Speaker 1: six three seven. First call with correct answer when the
• 31:21
  Speaker 1: twenty five dollars gift card to Red Robin and don't
• 31:23
  Speaker 1: forget that's COSS Financial's office right here in Madison. No
• 31:26
  Speaker 1: charge for the initial gets to know you appoyment at
• 31:28
  Speaker 1: Coss Financial. It will be complimentary to you again the
• 31:31
  Speaker 1: number six oh eight four four two five six three seven. C. J. Malee.
• 31:34
  Speaker 1: It's always great chatting with you guys. Have a great day. Thanks.
• 31:38
  Speaker 1: This is Money in Motion with COSS Financial Asset Advisors, LLC,
• 31:42
  Speaker 1: a registered investment advisor registered with the SEC. The contents
• 31:46
  Speaker 1: of this show are for informational purposes only and should
• 31:49
  Speaker 1: not be considered individual investment advicess Financial does not offer
• 31:53
  Speaker 1: tax or legal advice. Any opinion offered during the course
• 31:57
  Speaker 1: of this show is the opinion of that particular invents.
• 32:00
  Speaker 1: That's an advisor representative and not necessarily the opinion of
• 32:03
  Speaker 1: class Financial News comes your way next right here on
• 32:07
  Speaker 1: thirteen ten, Wiba