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15. Tax Planning for Investors in Their 40s and 50s · Dime After Dime

• 0:00
  SPEAKER_01: The issue with a Roth is I, in my opinion, you need two things.
• 0:06
  SPEAKER_01: You need return.
• 0:08
  SPEAKER_01: Obviously, look to look for growth, but you need time.
• 0:13
  SPEAKER_00: You're listening to Dime After Dime, a Moran wealth management podcast.
• 0:17
  SPEAKER_00: Every episode, your host, Tony Steak, brings in financial professionals to discuss strategies and insights for investors who want to grow and protect their wealth.
• 0:26
  SPEAKER_00: With that, here's Tony.
• 0:39
  SPEAKER_02: All right, folks, I have Mike here today on Dime After Dime.
• 0:43
  SPEAKER_02: I'm excited about this episode for a variety of reasons, but you know, the spirit of the show is to try and help people, especially those Gen X, that Gen X population, 40s, 50 years old, that are like looking at retirement in the next 10 to 20 years.
• 0:57
  SPEAKER_02: And we're not trying to cover the basics here, right?
• 0:59
  SPEAKER_02: Because they've they've achieved that.
• 1:02
  SPEAKER_02: But this is where you hit the speed bumps.
• 1:05
  SPEAKER_02: And I think taxes is really one of those speed bumps where you need to be educated well on the ramifications of the decisions you make now, but especially as you go towards your uh retirement.
• 1:19
  SPEAKER_02: So no better person than Mike to join the show today to talk about tax efficient strategies.
• 1:25
  SPEAKER_02: Mike, thanks for coming.
• 1:26
  SPEAKER_01: My pleasure.
• 1:27
  SPEAKER_01: Thanks for having me again.
• 1:28
  SPEAKER_02: So when you well it just, I mean, it's a dirty word, right?
• 1:31
  SPEAKER_02: The taxes are a dirty word, right?
• 1:32
  SPEAKER_02: And we all kind of almost gristle and kind of jump back when we hear the word taxes.
• 1:38
  SPEAKER_02: Um there has been some recent changes, of course, though, with the with the Tax Cut and Jobs Act becoming permanent and also the one big beautiful bill act, which just came into law not too long ago.
• 1:50
  SPEAKER_02: Tell us about that, just in a just in generally speaking, the ramifications that those two policies have on the average investor.
• 1:59
  SPEAKER_01: Well, for the average investor, um, probably the biggest item from the Tax Cuts and Job Act that they made permanent with um the OBBBA is uh the deduction, uh 20% deduction uh top line for small businesses on their income.
• 2:17
  SPEAKER_01: Getting that 20% deduction right off the top is a huge tax saver for closely held business owners who are passing through the income to themselves.
• 2:26
  SPEAKER_01: Um on the estate side, obviously the uh increase of what is the estate and tax uh personal exemption, which has grown to just under$14 million in 2024, is now made permanent starting in at$15 million in 2026 and will grow with inflation.
• 2:45
  SPEAKER_01: Um that is a big tax savings in terms of the wealth transfer um uh for the ultra-high net worth.
• 2:53
  SPEAKER_01: So um the the tax rates have been reduced, you know, in the under the first set of the of the law and have been maintained in the new one.
• 3:03
  SPEAKER_01: So and we obviously have low capital gains tax rates at a maximum of 20%.
• 3:08
  SPEAKER_01: So understanding these basic principles can help anybody who's investing to make sure they're tax managing their investments in come you know in coordination with their own personal income taxes for other earnings that they're making from their jobs in other places.
• 3:24
  SPEAKER_02: That's very helpful.
• 3:25
  SPEAKER_02: And it really sets the the tone for my next question, which is really April 15th, right?
• 3:31
  SPEAKER_02: Everyone starts thinking about taxes in February, March, and April of the year, but but we shouldn't be doing that.
• 3:37
  SPEAKER_02: We should be thinking about taxes all year round.
• 3:40
  SPEAKER_01: Probably the the biggest hang up in my career and working in a family office, I was doing tax returns for 20, 25 years.
• 3:47
  SPEAKER_01: And luckily I was doing mostly for clients I was meeting with on a regular basis, so I didn't get surprised.
• 3:54
  SPEAKER_01: But most CPAs don't meet with their clients regularly.
• 3:57
  SPEAKER_01: And so they end up getting big surprises when they're doing returns in the first half of the year going up to April 15th, about activities that their client took in the year before that they didn't know about and weren't able to plan for and ended up with some significant tax costs to their clients.
• 4:15
  SPEAKER_02: Which raises the obvious question, then, right?
• 4:18
  SPEAKER_02: So whenever you think there's a uh an impact on taxes due to any kind of spending behavior, investment strategy, whatever, you go to your advisor first.
• 4:27
  SPEAKER_01: Absolutely.
• 4:28
  SPEAKER_01: You should there's all kinds of strategies that you can take when it comes to managing your money and managing your investments.
• 4:35
  SPEAKER_01: They ultimately have some kind of ripple effect down the line to some other aspect of your financial plan.
• 4:41
  SPEAKER_01: Most often it's taxes.
• 4:42
  SPEAKER_01: So getting ahead of that beforehand, oftentimes clients come in and say, I want to do this, I want to do that, and do the other thing.
• 4:48
  SPEAKER_01: We end up doing two of the three of those things because the third thing ended up being a major tax hit that they didn't want to take this year.
• 4:55
  SPEAKER_01: So we're able being putting that into the context of tax planning for them in the year allowed them to come up with those three ideas and defer the next one for something to do next year.
• 5:07
  SPEAKER_02: So I let's take a step back, right?
• 5:09
  SPEAKER_02: You you've described a few nice examples, family loss example, of course.
• 5:14
  SPEAKER_02: I've had experiences where I've actually called my advisor before making a charitable contribution to say, hey, do I do it this year or do I do it next year?
• 5:22
  SPEAKER_02: Like um, because obviously those there there are actually changes there uh in the in the bill.
• 5:27
  SPEAKER_02: Um but step back.
• 5:29
  SPEAKER_02: What are like the common mistakes the average investor makes as it relates to taxes if they're managing their own portfolio?
• 5:38
  SPEAKER_01: Well, in my career, I've tried to break taxes down for clients into simple digestible bites.
• 5:44
  SPEAKER_01: And the three things I've always mentioned to clients about managing their taxes are one, defer income if you can.
• 5:53
  SPEAKER_01: Two, is to manage your capital gains and losses.
• 5:57
  SPEAKER_01: Make sure you're minimizing how much you're paying taxes on capital gains by using the losses that are available to you.
• 6:04
  SPEAKER_01: And thirdly, understand and leverage the deductions that you're able to take and deductions in expenses that you are trying to make that you don't necessarily have to make and figure out where's the best place to put them.
• 6:15
  SPEAKER_01: Is it this year or next year?
• 6:17
  SPEAKER_01: Should you be punching them, things of that nature?
• 6:19
  SPEAKER_01: The Tax Cuts and Job Act, the permanence of the OBBBA, um that has now made it um simpler for our taxpayers, but still those fundamental tax planning techniques of those three things still apply.
• 6:39
  SPEAKER_01: Sure.
• 6:39
  SPEAKER_02: That makes perfect sense.
• 6:40
  SPEAKER_02: And I think it's by the way, it's really funny.
• 6:43
  SPEAKER_02: No one wants to call it the one big beautiful bill act, right?
• 6:46
  SPEAKER_02: But then it's also hard to say OBBBA because you have to count it in your head.
• 6:51
  SPEAKER_02: Um, but I I was thinking about this because you know, you make these decisions, you're trying to manage your own portfolio.
• 6:58
  SPEAKER_02: There are ramifications.
• 7:00
  SPEAKER_02: Um when it comes to like tax loss harvesting, which you've suggested, right?
• 7:05
  SPEAKER_02: Capital trying to offset your gains with losses.
• 7:08
  SPEAKER_02: How would an average investor even do that?
• 7:10
  SPEAKER_01: Well, it depends on what you're investing in.
• 7:12
  SPEAKER_01: If you're investing in ETFs or mutual funds, you have no control.
• 7:16
  SPEAKER_01: Now, ETFs have much more tax efficient management of those portfolios.
• 7:22
  SPEAKER_01: You can get into the details of why that happens.
• 7:25
  SPEAKER_01: But uh mutual funds that are actively managed, they will realize gains.
• 7:30
  SPEAKER_01: They will also realize losses.
• 7:32
  SPEAKER_01: But if they have realized more losses than gains at the end of the year, they're not sending you a 1099 with a loss.
• 7:37
  SPEAKER_01: They're booking it and they're going to apply it to gains next year in managing that same fund.
• 7:41
  SPEAKER_01: Same thing with ETF.
• 7:43
  SPEAKER_01: But when you have individual securities, for example, at our firm, we manage stocks for clients as effectively separately managed accounts for individual securities.
• 7:53
  SPEAKER_01: We're able to cherry pick the stocks that may have carrying a loss to offset gains that our management team has realized in their discretionary management of our various strategies.
• 8:07
  SPEAKER_02: I love that.
• 8:08
  SPEAKER_02: It's a different approach, but it really I guess it dresses down the topic just a bit.
• 8:12
  SPEAKER_02: Before we move on, I I want to bring up one more thing.
• 8:15
  SPEAKER_02: You'd mentioned deductions in general.
• 8:18
  SPEAKER_02: I think what I've found is you know, the average, the average investor, the average, you know, family always just goes to standardized.
• 8:27
  SPEAKER_02: Right?
• 8:28
  SPEAKER_02: Because they're really do along, yeah.
• 8:29
  SPEAKER_02: They do, right?
• 8:30
  SPEAKER_02: But but if you and I remember I used to do that.
• 8:33
  SPEAKER_02: And then my tax professional is like Tony is like, you can do better than that.
• 8:38
  SPEAKER_02: And he began to explain to me all the things you could deduct and keeping track of all that, and it became quickly apparent that wow, like everyone just defaults naturally to standard deduction, right?
• 8:48
  SPEAKER_02: It's just easier to do.
• 8:49
  SPEAKER_02: Check a box.
• 8:51
  SPEAKER_02: What should the average investor think through when comparing standardized versus doing the work?
• 8:57
  SPEAKER_02: Yeah.
• 8:57
  SPEAKER_02: And actually itemizing your deductions.
• 9:00
  SPEAKER_01: Well, the the Tax Cuts and Job Act uh was a was a watershed moment on that with regard to standard deductions and itemized deductions.
• 9:08
  SPEAKER_01: The standard deduction was effectively doubled.
• 9:11
  SPEAKER_01: And so all of a sudden, people who had itemized deductions that were in excess of their standard deduction by a little bit, all of a sudden are now taking the standard deduction because it's just doubled and it's much better than their itemized deductions.
• 9:24
  SPEAKER_01: So it's really clients who have um expenses, and the primary expenses that are deductible are your medical expenses in excess of a certain threshold of your AGI, uh, taxes, state income taxes, uh real estate taxes, um, and um charitable deductions.
• 9:45
  SPEAKER_01: That's really the three major ones.
• 9:47
  SPEAKER_01: Um the SALT state and local tax deduction was limited under the Tax Cuts and Job Act.
• 9:55
  SPEAKER_01: So, you know,$10,000 was pretty much the threshold.
• 9:58
  SPEAKER_01: That's been increased for the next couple of years to$40,000 through$28,000.
• 10:02
  SPEAKER_01: Um, but the uh and when it comes to medical deductions, you don't get to deduct a medical deduction until all of them have exceeded 7.5% of your taxable adjusted gross income.
• 10:14
  SPEAKER_01: When it comes to charity, that is where it gets a little uh interesting if you are an itemized uh itemizing your deductions because with itemization, um, you make charitable deductions.
• 10:29
  SPEAKER_01: And if your total deductions are greater than your standard deduction, you're gonna get a a dollar offset on your income for every more dollar you elect to put to charity.
• 10:39
  SPEAKER_01: So uh those are the three major things that I deal with most clients, and then you deal into other things when it gets more complex.
• 10:45
  SPEAKER_02: Which goes back to that first point, or maybe not the first, but we'd said, you know, don't focus on just April, focus on all year.
• 10:51
  SPEAKER_02: Oh along.
• 10:52
  SPEAKER_02: I remember um talking to my tax uh professional, and at the end of the year I said, you know, should I should I make a gift?
• 10:59
  SPEAKER_02: And and he said, Yeah, and this is the amount you should give because this is the the best you can give to your church at this time to max and of again, most people prov give charity for the reasons of charity, sure, but you should still do the math and say, if I get an extra X amount of dollars, what does that really mean to me financially?
• 11:16
  SPEAKER_02: So uh it's I mean that's so we've we've kind of covered all the basics as it relates to just you know the taxes and implications.
• 11:23
  SPEAKER_02: Let's move on to like strategic concepts as it relates to asset allocation, right?
• 11:28
  SPEAKER_02: Again, average investor, you know, doing well, you know, they've they've checked all the boxes.
• 11:34
  SPEAKER_02: How do you consider asset allocation as it relates to tax implications?
• 11:40
  SPEAKER_01: So there's asset allocation and there's also asset location.
• 11:43
  SPEAKER_02: Okay.
• 11:44
  SPEAKER_01: So depending on the type of investment you have, if it's going to be generating a lot of immediate taxable events, income, dividends, capital gain, a lot of activity, you're going to want to locate that asset in a tax-deferred account so that your the taxation from the annual management of those investments aren't hitting your taxes every single year.
• 12:09
  SPEAKER_01: Generally speaking, I'm not saying exclusively, but for the most part, slide things that are more active into your tax-deferred accounts.
• 12:17
  SPEAKER_01: Um, your tax more tax-efficient investing, and we talk about uh SMAs, separately managed accounts, and the ability to cherry pick losses to offset gains and individual securities.
• 12:29
  SPEAKER_01: That you can use utilize a lot in your non-taxable accounts.
• 12:34
  SPEAKER_01: Excuse me, excuse me, your taxable accounts.
• 12:36
  SPEAKER_01: And so location is big.
• 12:39
  SPEAKER_01: Uh I would say, you know, uh active mutual funds, REITs, taxable bonds, slide those, look to start them in your non-taxable accounts, your IRAs.
• 12:53
  SPEAKER_01: Um, your munis, obviously not taxable, keep those in your taxable accounts.
• 12:57
  SPEAKER_01: Your accounts where you can manage the taxation of the gains and losses, keep those in your taxable accounts.
• 13:04
  SPEAKER_01: Um, then when it comes to asset allocation, it's just a matter of you know, asset classes and what generally generates more income, you know, than others that would have to be reported during the course of the year, you're gonna generate it and you receive it.
• 13:18
  SPEAKER_01: Um and so that's the uh kind of the threshold that I kind of look at in terms of uh you know where it goes between um uh taxable and non-taxable.
• 13:29
  SPEAKER_01: Sure.
• 13:29
  SPEAKER_02: I like that asset location.
• 13:30
  SPEAKER_02: I I've not heard of that, I probably should have heard of that, but I've not heard of that.
• 13:33
  SPEAKER_02: Um that actually raises a point which is a bit divergent from the topic, but I think when you talk about making sure the right investment vehicles or products or equities or whatever are in the right account types, that that really makes the case that you know I've met clients before who like to have a couple of different advisors charging their money, right?
• 13:57
  SPEAKER_02: And I understand the concept as to why, but that's where you get into tax implications, right?
• 14:04
  SPEAKER_02: Because if you're not if you, the advisor, are not managing the entire book, it makes it that much harder to make sure the taxes over in this book with this other advisor, right?
• 14:14
  SPEAKER_02: And that that could be really actually punitive.
• 14:16
  SPEAKER_01: Yeah, unless they come into the meeting saying they know exactly where they are in their tax situation with their other accounts, there's no way you have no context and they'll figure out what they can and should realize or not realize in terms of uh taxable income from their investments.
• 14:32
  SPEAKER_01: Um I think that goes to investing too.
• 14:35
  SPEAKER_01: I think when you have multiple investors, um, unless you know what that other account is doing, you could have the best portfolio allocation for a client on the platform that you have, but without knowing what's going on in the other place, you could your total portfolio can be way off from what their risk profile actually says.
• 14:54
  SPEAKER_02: Well, another strategic move I want to cover, um, and this is something I know a bit about, but but just talk about more about Roth conversions and and how you play how that plays into tax considerations.
• 15:06
  SPEAKER_01: Well, Roth IRAs are a great tool, obviously, tax-free growth, um the ability to um invest in taxable growth type investments over a long period of time.
• 15:20
  SPEAKER_01: What a great opportunity to take advantage of our markets here in the United States for years.
• 15:26
  SPEAKER_01: But the the issue with a Roth is I, in my opinion, you need two things.
• 15:33
  SPEAKER_01: You need return, obviously, look for growth, but you need time.
• 15:39
  SPEAKER_01: And the problem when you do this earlier or or when you do this later versus earlier, is that you end up converting a taxable account like an IRA to a Roth and you incur a tax cost.
• 15:53
  SPEAKER_01: Those dollars are gone forever.
• 15:55
  SPEAKER_01: They're not gonna earn going forward.
• 15:59
  SPEAKER_01: It's an opportunity cost for those dollars.
• 16:01
  SPEAKER_01: Sure.
• 16:01
  SPEAKER_01: Which is if it stayed in the tax-deferred account, those dollars keep earning.
• 16:05
  SPEAKER_01: So every dollar it earns, uh worst case, you're getting 60 extra cents on those dollars because they're gonna be taxed in the future, but they're still working for you.
• 16:12
  SPEAKER_01: When those dollars go out, they're not working for you at all.
• 16:15
  SPEAKER_01: They're not working in the Roth, they're not working in the IRA.
• 16:17
  SPEAKER_01: So you're paying taxes now.
• 16:19
  SPEAKER_01: Paying taxes, I've always been a tax deferred is a tax safe.
• 16:23
  SPEAKER_01: I think Ben Franklin said that.
• 16:24
  SPEAKER_01: Perhaps.
• 16:25
  SPEAKER_01: Not sure.
• 16:26
  SPEAKER_01: But it really is the power of compounding, and that really is why I really analyze the hole that a client is digging for themselves by doing a conversion late in life, only to have an account that has no taxes in the back end.
• 16:43
  SPEAKER_01: It may not be as advantageous for you unless you have time to get return to dig yourself out of that hole and that opportunity cost of the taxes that went out.
• 16:52
  SPEAKER_02: Okay.
• 16:53
  SPEAKER_02: You st you you brought up time.
• 16:55
  SPEAKER_02: You brought up conversions.
• 16:56
  SPEAKER_02: Now let's think through capital gains, right?
• 17:01
  SPEAKER_02: And where like sorry if I'm framing this incorrectly, but when you think about capital gains and when you take advantage of capital gains and where you are t at the taxable income level, how does that play a role, like when you think about converting something, taking capital gains on it, and where you are in the income tax spectrum?
• 17:20
  SPEAKER_01: So uh there's that question made sense, right?
• 17:22
  SPEAKER_02: It does.
• 17:23
  SPEAKER_01: It does.
• 17:23
  SPEAKER_01: And I I know where you're going because it it what it does is it takes three items that are unusually siloed and you're trying to integrate them all together, right?
• 17:32
  SPEAKER_01: And you're taking and making an investment decision, but you're gonna have a tax consequence that's just negative.
• 17:39
  SPEAKER_01: So you make an investment decision that's at that's positive for your portfolio, but it's a negative for your tax situation.
• 17:45
  SPEAKER_01: And how do you reconcile that?
• 17:47
  SPEAKER_01: Um, usually it gets reconciled when you have to take the distribution.
• 17:51
  SPEAKER_01: Like you're older, you need income, your IRAs are expended, and you're now drawing into your account.
• 17:57
  SPEAKER_01: You got to sell the stock.
• 17:58
  SPEAKER_01: I have plenty of clients that are going through that.
• 18:00
  SPEAKER_01: So the tax consequences are what they are, but luckily we're just selling and it's all long-term capital gains.
• 18:06
  SPEAKER_01: So we're capping how much that tax is going to be.
• 18:08
  SPEAKER_01: Um, for someone else, it's really along the lines of um are they gonna be better off in the long haul by saving those taxes and being more concentrated or not in a position, not in an investment that necessarily they want to be in for the time being to avoid the tax, or they'd be better off selling, diversifying, getting the investment they want, and paying a limited 20% long-term capital gains tax on it.
• 18:37
  SPEAKER_01: Sometimes that's just a personal values decision.
• 18:40
  SPEAKER_01: And I'll tell you, nine out of nine times out of 10, clients are going to avoid the taxes and they're going to keep holding the position that's going up.
• 18:48
  SPEAKER_01: So that's where the advisor comes in and says, well, if you're holding Enron or you're holding some other concentrated position that turned out to be a bad deal for investors years ago, that's the risk you're taking by avoiding that tax and possibly the long-term performance of your portfolio.
• 19:04
  SPEAKER_02: Got it.
• 19:04
  SPEAKER_02: Makes perfect sense, I mean it makes perfect sense now, even though the question was a bit fumbling.
• 19:10
  SPEAKER_02: Okay, so fast forward now.
• 19:11
  SPEAKER_02: Now we're at retirement, right?
• 19:13
  SPEAKER_02: And we have RMDs.
• 19:15
  SPEAKER_02: Okay.
• 19:15
  SPEAKER_02: Um, when you think about RMDs, again, what are the tax implications there?
• 19:20
  SPEAKER_02: And obviously they're required.
• 19:21
  SPEAKER_02: So it's not like we can't do it, but how do we consider that again in the the makeup of your retirement portfolio, maybe before retirement, and then obviously during and after?
• 19:31
  SPEAKER_02: Yeah.
• 19:32
  SPEAKER_01: So most people with IRAs who reach the age now at 73 where they have to take that required minimum distribution, are taking that distribution from their portfolio, not only because they have to, but because it's going in their bank account to support their lifestyle.
• 19:46
  SPEAKER_01: That's the whole idea behind it in the first place.
• 19:48
  SPEAKER_01: Um But anything that comes in IRA, whether it's an RMD or you're taking out beforehand just because you wanted to take a distribution, those dollars are generally going to be taxes ordinary income.
• 20:02
  SPEAKER_01: And so the only thing you can do with that is to accept the fact that your RMD coming out is going to be ordinary income.
• 20:09
  SPEAKER_01: It's going to be put on top of any other income you have that you've earned during the year, and you're going to be paying ordinary income tax on it, whatever your marginal bracket is.
• 20:19
  SPEAKER_01: When it comes to taxes, I kind of look at RMDs as a tax payment opportunity for certain clients who may not necessarily need the RMD for their cash flow.
• 20:32
  SPEAKER_01: They have other sources, and this is being paid out, they got to pay tax on it.
• 20:36
  SPEAKER_01: When you withhold your taxes from your RMD, it allows the income or that withholding to be applied evenly throughout the year, even though you may have taken it on the last day of the year as opposed to estimated payments.
• 20:50
  SPEAKER_01: So that's a payment strategy for some clients who would basically withhold their entire RMD to cover all the taxes for the rest of the year if they're living on their investments in other places.
• 21:00
  SPEAKER_01: Um and then um I wasn't one of the I forgot the third point of the RMD.
• 21:06
  SPEAKER_01: It'll probably come back.
• 21:07
  SPEAKER_02: It's probably the best point there was.
• 21:09
  SPEAKER_02: That's perfect timing.
• 21:10
  SPEAKER_02: Well, it's um in reality though, like when you think about these are all strategies.
• 21:14
  SPEAKER_02: I mean, back to this question.
• 21:15
  SPEAKER_02: The reason why I asked the RMD question was because if there's other income flows, can you slow those down?
• 21:21
  SPEAKER_02: Can you turn those off?
• 21:22
  SPEAKER_02: Or do you just you know it I I suppose it depends on the income itself, though.
• 21:26
  SPEAKER_01: I remember the third point.
• 21:27
  SPEAKER_02: All right.
• 21:28
  SPEAKER_02: I knew it.
• 21:28
  SPEAKER_02: If I just kind of gave you enough time and babble.
• 21:31
  SPEAKER_02: It goes right to your question, too.
• 21:32
  SPEAKER_01: Oh, look at that.
• 21:33
  SPEAKER_01: It's like it was planned.
• 21:34
  SPEAKER_01: So the the the third point is if you're over age 70 and a half, you have the ability to make qualified charitable distributions from your R R excuse me, from your IRA, and those qualified charitable distributions, what they call QCDs, also qualify for your RMD.
• 21:53
  SPEAKER_01: So the point is that if you make a distribution from your IRA directly to a charity, that income doesn't get reported.
• 22:00
  SPEAKER_01: To doesn't end up on your return.
• 22:01
  SPEAKER_01: And it'll qualify for your RMD.
• 22:04
  SPEAKER_01: So, in other words, you will have made your required minimum distribution from the account.
• 22:09
  SPEAKER_01: Um, so in terms of intellect integrating it into your portfolio, um, if you are trying to minimize your taxes, uh, you sell your long-term capital gain and live off those proceeds and diversify your portfolio that way and your RMD, if you're philanthropically inclined, you send it out as a qualified charitable distribution up to a maximum of$100,000.
• 22:32
  SPEAKER_02: I love it.
• 22:33
  SPEAKER_02: That was that was very helpful.
• 22:34
  SPEAKER_02: I mean, it just goes to show that you know taxes, it is a scary word, right?
• 22:41
  SPEAKER_02: Um, but if you know if if you can navigate it, or if you work with experts that can navigate it, um, they can be very beneficial.
• 22:48
  SPEAKER_02: Sure.
• 22:48
  SPEAKER_02: You know, in as much as taxes can be, right?
• 22:51
  SPEAKER_02: Right.
• 22:51
  SPEAKER_02: Um, but they it can be if you just do all the right things at the right time.
• 22:55
  SPEAKER_02: And quite frankly, even if you make mistakes along the way, there's ways to solve those issues, right?
• 23:01
  SPEAKER_02: Um we do have one more thing, we have one more segment on the show, um, Back to the Future.
• 23:05
  SPEAKER_02: Obviously, this is a bit of an 80s vibe to the show with Gen X.
• 23:09
  SPEAKER_02: I'm gonna put you on the spot here, Mike, and I know this is gonna be tough for you because we have to relate it to taxes, don't we?
• 23:14
  SPEAKER_02: Sure, right.
• 23:15
  SPEAKER_02: Do you have can you go back in time to your younger self and think of a situation, maybe it was taxes, maybe not, because that's that might be very specific.
• 23:23
  SPEAKER_02: That you'd go back and say to yourself, hey, do it this way instead of that way.
• 23:28
  SPEAKER_01: Yes.
• 23:29
  SPEAKER_01: All right, let's hear it.
• 23:31
  SPEAKER_01: Always been advised since I first got in the business 35 years ago to max out my 401k tax deferral.
• 23:39
  SPEAKER_01: When I wasn't making as much money, I should have been cutting that in half.
• 23:44
  SPEAKER_02: Really?
• 23:44
  SPEAKER_01: And putting it into either a Roth converted backdoor converted Roth IRA or in my own separate savings account.
• 23:52
  SPEAKER_01: You can end up in a position where you've got a ton of tax deferred money sent in a 401k long before you're eligible to take it out without a penalty.
• 24:01
  SPEAKER_01: And so uh in my case, four children, three in through college, one entering the fourth one, I actually have leveraged those accounts for education funding uh so as to pay taxes on them, but not a penalty by accessing a little earlier than 59 and a half.
• 24:19
  SPEAKER_01: So that is probably my biggest, I wouldn't call it regret, but what I've learned in terms of I would if I had subjected some of that income to taxes and put it into a Roth and and also built a non-taxable portfolio a little bigger than I had, um, I probably wouldn't have had to tap into the IRA to fund some college expenses along the way.
• 24:42
  SPEAKER_02: I mean, that's a good one.
• 24:43
  SPEAKER_02: We should have led with that in the show.
• 24:45
  SPEAKER_02: That's a very that's something that I mean most people probably don't even think about.
• 24:49
  SPEAKER_02: So thank you for that, Mike.
• 24:50
  SPEAKER_02: Thanks for joining us today on the show, Dime After Dime.
• 24:53
  SPEAKER_02: Everyone knows where to find you now.
• 24:55
  SPEAKER_02: LinkedIn, obviously our website, our corporate website.
• 24:57
  SPEAKER_02: We really appreciate all of your insight on taxes.
• 25:00
  SPEAKER_02: If you did like this episode, make sure you hit the like button, smash the subscribe button.
• 25:05
  SPEAKER_02: I've always wanted to say that.
• 25:06
  SPEAKER_02: And then make sure to share with your family and friends and help them navigate their way through, in this case, taxes.
• 25:14
  SPEAKER_02: Until next time.
• 25:15
  SPEAKER_02: Thank you.
• 25:17
  SPEAKER_00: Thanks for listening to Dime After Dime.
• 25:19
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• 25:34
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• 25:59
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