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Key Changes to Watch in 2025 · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: At our phone lines. They are open to you right
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  Speaker 1: now at six oh eight three two one thirteen ten.
• 0:04
  Speaker 1: That's six oh eight three two one thirteen ten. Love
• 0:06
  Speaker 1: do to have you join us this morning. Of course
• 0:09
  Speaker 1: we've got our retirement planning professionals from Coss Financial along
• 0:14
  Speaker 1: this morning. We got CJ. Closs and Eric Schwartz. Got
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  Speaker 1: our telephone number six oh eight three two one thirteen ten.
• 0:19
  Speaker 1: That's three two one thirteen ten. The website for class
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  Speaker 1: Financial coss Financial dot com. That's k l aas Financial
• 0:25
  Speaker 1: dot com. And of course their telephone number at the
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  Speaker 1: office six oh eight four four two five six three seven.
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  Speaker 1: Don't forget no charge for that initial gets to know
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  Speaker 1: you appointment at Coss Financial. It will be complimentary to
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  Speaker 1: you again. They're number six oh eight four four two
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  Speaker 1: five six three seven.
• 0:39
  Speaker 2: C J.
• 0:40
  Speaker 1: How you doing this morning?
• 0:41
  Speaker 3: I'm doing great, Sean, how are you?
• 0:43
  Speaker 1: I'm doing really well. We were talking about Rockford earlier
• 0:45
  Speaker 1: this morning as a matter of fact, and.
• 0:47
  Speaker 3: Oh interesting, Yeah, you've got good things. I suppose.
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  Speaker 2: Yeah.
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  Speaker 1: I think Rockford's a great, great little town right on
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  Speaker 1: the river. I use it when I want to avoid
• 0:55
  Speaker 1: paying tolls, you know, right.
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  Speaker 3: I forgot you all the time down the side roads.
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  Speaker 3: I forgot about it.
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  Speaker 1: Yes, and it is Cyril. They sent you through ways.
• 1:04
  Speaker 1: My mapping tool sends me down some strange but I
• 1:06
  Speaker 1: always love driving by the office down there, and typically
• 1:10
  Speaker 1: it's still very early in the morning, not open yet.
• 1:12
  Speaker 1: But if you don't know this, folks, Class Financial of
• 1:14
  Speaker 1: course two locations, the location right here in Madison as
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  Speaker 1: well as a location in Rockford as well. Speaking of two,
• 1:21
  Speaker 1: the number two are good buddy. Eric Schwartz joins us
• 1:23
  Speaker 1: as well from Class Financial. Eric, how you doing this week?
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  Speaker 2: I am doing great, Sean. I'm a little worried about
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  Speaker 2: you giving away your secrets to avoid told that quiet.
• 1:32
  Speaker 1: Yes I am. I although they're better now, it used
• 1:36
  Speaker 1: to be back in the day when you'd have to
• 1:38
  Speaker 1: go through and throw money in the buckets. Oh, it's
• 1:40
  Speaker 1: just such a so anyway, I digress. Well, we've got
• 1:45
  Speaker 1: important stuff speaking of money, taxes. We're going to talk
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  Speaker 1: this week about tax shifts and things folks need to
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  Speaker 1: be aware of when it comes to planning and looking
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  Speaker 1: forward to or I guess we're in twenty twenty five,
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  Speaker 1: so we're really looking forward to the next The next
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  Speaker 1: time we have to do access but getting ready to
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  Speaker 1: uh to do that and deal with that. So we'll
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  Speaker 1: talk with CJ and Eric about just that this morning.
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  Speaker 1: Mention the website class financial dot com. That's class k
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  Speaker 1: l aas Financial dot com telph number six So eight
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  Speaker 1: four four two five six three seven. I want to
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  Speaker 1: hold on to that telphonover a little later on the program.
• 2:16
  Speaker 1: You have a chance to win with our class Quiz
• 2:18
  Speaker 1: Question the week the folks from Class Financial that provided
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  Speaker 1: a fantastic prize for you a twenty five dollars gift
• 2:23
  Speaker 1: card two Sephora. Little tip. Listen closely to the program
• 2:26
  Speaker 1: because oftentimes both the question and answer to the Class
• 2:28
  Speaker 1: Quiz Question Week comes up during the program. And speaking
• 2:31
  Speaker 1: of the Class Quiz Question Week, before we get rolling
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  Speaker 1: on this week's conversation, let's actually take a look back
• 2:36
  Speaker 1: at last week's show and get the question and answer
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  Speaker 1: there as well.
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  Speaker 3: Yeah, So, first off, thanks everyone for listening to our show,
• 2:43
  Speaker 3: and we hope you have a little bit of fun
• 2:45
  Speaker 3: with our with our closs Quiz question of the Week
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  Speaker 3: that comes at the end of every show. The last week,
• 2:50
  Speaker 3: we were talking about social security and we actually got
• 2:53
  Speaker 3: into some details on social security that we normally don't
• 2:56
  Speaker 3: and so it's kind of a fun show. If you
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  Speaker 3: missed it, go back and listen to the podcast. It's
• 3:00
  Speaker 3: on our website. But our COLSS Quiz question of the
• 3:04
  Speaker 3: Week last week was a true or false question, and
• 3:07
  Speaker 3: the question was true or for false. Your full retirement
• 3:11
  Speaker 3: age also known as FRA, is the age at which
• 3:14
  Speaker 3: you become eligible to receive your full unreduced Social Security
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  Speaker 3: retirement benefit. And our winner from last week was Maria
• 3:23
  Speaker 3: from Stoughton, who entered that question as true. So Sean said,
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  Speaker 3: listen closely to the question at the end of our
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  Speaker 3: show today and you could be the winner.
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  Speaker 1: It's going to be an exciting program, definitely worth paying
• 3:36
  Speaker 1: attention to. Don't forget those sometimes we know in the
• 3:38
  Speaker 1: morning you step out, maybe you're grabbing some coffee, picking up,
• 3:41
  Speaker 1: dropping off the grand kiddos or kiddos. Of course with
• 3:44
  Speaker 1: school and other things, you might miss part of the show.
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  Speaker 1: Don't fore, you can always listen back to the podcast
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  Speaker 1: subscribe as well at Clossfinancial dot com. That's COLSS k
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  Speaker 1: l a a S Financial dot com. So today the
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  Speaker 1: topic it's quite timely and we're gonna do some updates
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  Speaker 1: on some tex shifts that folks should be aware of
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  Speaker 1: us we begin twenty twenty five and consider when it
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  Speaker 1: comes to planning, Is that correct, Eric.
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  Speaker 2: Yeah, that's that's correc Sean. You know. The IRS is
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  Speaker 2: they are always coming forward with updates every year. Sometimes
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  Speaker 2: it's you know, just inflationary adjustments. Sometimes we're talking about
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  Speaker 2: changes in the tax code. But we're going to talk
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  Speaker 2: today about planning for our taxes for twenty twenty five.
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  Speaker 2: We're going to look at some changes for twenty twenty
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  Speaker 2: five and some of them that have been put in
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  Speaker 2: place here in the last couple of years because they're
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  Speaker 2: they're pretty important. But as an aside, we're really excited
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  Speaker 2: to announce that just this year, we have brought tax
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  Speaker 2: services in house at COSS Financial. So for our clients,
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  Speaker 2: this is a nice little add on service that we
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  Speaker 2: can we can offer and kind of bring their whole
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  Speaker 2: financial situation together under under one roof. So we're pretty
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  Speaker 2: excited about that. But you know, getting kind of getting
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  Speaker 2: back here to our topic today, we know that a
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  Speaker 2: lot of people are still thinking about their tax situation
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  Speaker 2: for twenty twenty four. You know, we haven't been able
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  Speaker 2: to file those yet. The IRS is going to be
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  Speaker 2: accepting twenty twenty four tax returns starting January twenty seventh
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  Speaker 2: for our early birds, with the tax deadline of April fifteenth,
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  Speaker 2: and then the extension for filers who elect that that's
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  Speaker 2: going to be October fifteenth, twenty twenty five. But you know,
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  Speaker 2: we're planners here, so we want to get ahead and
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  Speaker 2: talk about tax planning for twenty twenty five. Often, you know,
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  Speaker 2: people will go see their tax professional at tax time,
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  Speaker 2: and unfortunately, at that point it's often really too late
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  Speaker 2: to take advantage of some of the strategies you might
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  Speaker 2: use to reduce your tax burdens. So we want to
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  Speaker 2: get ahead of that and start talking about twenty twenty
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  Speaker 2: five right now. So the first change that I wanted
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  Speaker 2: to address here is the standard deduction change in twenty
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  Speaker 2: twenty five. So, because the standard deduction was increased with
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  Speaker 2: the tax cuts in Jobs Act, it's become much more
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  Speaker 2: common for folks to use the standard deduction rather than
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  Speaker 2: to itemize their deductions. And the standard deduction, which this is,
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  Speaker 2: you know, the specific dollar amount that the IRS provides
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  Speaker 2: each year that reduces the amount of income without having
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  Speaker 2: to come up with a whole bunch of other itemized deductions.
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  Speaker 2: For married couples who are filing jointly for twenty twenty five,
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  Speaker 2: it is rising up to thirty thousand dollars, so that's
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  Speaker 2: about an eight hundred dollars increase from last year. And
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  Speaker 2: for single taxpayers and married individuals who file separately, the
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  Speaker 2: standard deduction is rising to fifteen thousand dollars for twenty
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  Speaker 2: twenty five, so that's an increase of about four hundred
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  Speaker 2: dollars over last year. And then for folks who are
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  Speaker 2: filing head of household, standard deduction will be twenty two thousand,
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  Speaker 2: five hundred for twenty twenty five, and that's about a
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  Speaker 2: six hundred dollars increase from last year.
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  Speaker 1: Talk of this morning with Eric Schwartz and CJ. Closs.
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  Speaker 1: They are are retirement planning professionals from Coss Financial. You
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  Speaker 1: can learn more online about them class financial dot com,
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  Speaker 1: fantastic website, telph number six so eight four four to
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  Speaker 1: two five six three seven. So, Eric, what about tax rates?
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  Speaker 1: What are we seeing as far as the bracket's there?
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  Speaker 2: Yeah, the marginal tax rates for twenty twenty five, we're
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  Speaker 2: not seeing any major changes there. The top rate remains
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  Speaker 2: thirty seven percent for individual single tax payers whose income
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  Speaker 2: is greater than six hundred and twenty six thousand, three
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  Speaker 2: hundred and fifty dollars, so you got to make quite
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  Speaker 2: a bit of money to hit that top bracket. And
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  Speaker 2: for for married couples filing jointly, it's you know, about
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  Speaker 2: seven hundred and fifty one thousand, six hundred dollars that
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  Speaker 2: your income has to exceed before you see that thirty
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  Speaker 2: seven percent rate. From there though, no major changes to
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  Speaker 2: the marginal tax rates. You know, we have the thirty five,
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  Speaker 2: thirty two, twenty four, twenty two, twelve and ten percent
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  Speaker 2: income tax brackets. And just a reminder for folks, just
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  Speaker 2: because you are in let's say the twenty two percent
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  Speaker 2: income marginal income tax bracket, that doesn't mean that every
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  Speaker 2: dollar you earn is going to be taxed at twenty
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  Speaker 2: two percent. This is a really common misconception we see
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  Speaker 2: with clients. It is just the amount over and above
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  Speaker 2: where that limit begins. So, for example, let's say the
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  Speaker 2: twenty two percent tax bracket for married couples filing jointly,
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  Speaker 2: that starts at ninety six, nine and fifty dollars, But
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  Speaker 2: that does not mean that every every dollar is taxed
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  Speaker 2: at twenty two percent. Only the dollars that exceed that
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  Speaker 2: that ninety six, nine hundred and fifty dollars threshold. And
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  Speaker 2: know this is kind of really getting into the weeds,
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  Speaker 2: but we often hear from people that are really concerned.
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  Speaker 2: Oh no, I went into the twenty two percent bracket.
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  Speaker 2: Now I'm going to have to pay way more in tax.
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  Speaker 2: Keep in mind, it's not the end.
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  Speaker 3: Of the world.
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  Speaker 2: It is just those dollars over and above the threshold.
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  Speaker 1: What about earn income tax credits?
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  Speaker 2: Eric, Yeah, so so that amount is going to be
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  Speaker 2: eight thousand, forty six dollars really specific number there for
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  Speaker 2: qualifying taxpayers who have three or more qualifying children. That's
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  Speaker 2: a small increase of about two hundred and sixteen dollars
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  Speaker 2: from twenty twenty four. Moving on to R and D adjustments,
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  Speaker 2: This one is really really near and dear to us
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  Speaker 2: here at class because we talked about rm ds in
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  Speaker 2: our day to day and on the show a lot
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  Speaker 2: as well, so required minimum distributions from your retirement accounts.
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  Speaker 2: One change that took effect it's now been two years,
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  Speaker 2: was the increase of the RMD age to seventy three.
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  Speaker 2: So remember it was originally seventy and a half, then
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  Speaker 2: it went to seventy two, then it was pushed back
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  Speaker 2: to seventy three, but for people who were born in
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  Speaker 2: nineteen sixty or later, that age is actually up to
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  Speaker 2: seventy five now. So keep in mind you can distribute
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  Speaker 2: funds from your retirement accounts anytime after age fifty nine
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  Speaker 2: and a half without penalty. And in many cases, these
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  Speaker 2: funds were invested pre tax so they were they reduced
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  Speaker 2: your taxable income when you put them into the account,
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  Speaker 2: which means that you will have to pay taxes once
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  Speaker 2: the funds are distributed, either as regular income or in
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  Speaker 2: the case of an rm D. So in the case
• 10:09
  Speaker 2: of an r and D that keep in mind here,
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  Speaker 2: you may already be taking enough to satisfy the r
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  Speaker 2: and D if you're drawing money out as part of
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  Speaker 2: your retirement income. So for some folks, rmds don't actually
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  Speaker 2: impact them directly because they're already satisfying it through normal distributions.
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  Speaker 2: But the penalty for missing rm ds, so this is
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  Speaker 2: something that we've talked about before. If you forget to
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  Speaker 2: take that required minimum amount before well in the year
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  Speaker 2: that you are required to, the rs used to issue
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  Speaker 2: a penalty of fifty percent of the shortfall. Okay, so
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  Speaker 2: that's a huge penalty, fifty percent of the amount that
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  Speaker 2: you did not take out that you were supposed to.
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  Speaker 2: But back in twenty twenty three they drop that down
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  Speaker 2: to twenty five percent of the shortfall. And if you
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  Speaker 2: actually correct that in with they deem a timely manner,
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  Speaker 2: which you know is I suppose up to interpretation. But
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  Speaker 2: if you do that in a timely manner, they're going
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  Speaker 2: to reduce that penalty to ten percent of the shortfall.
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  Speaker 2: Last one here on rm DS that I wanted to
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  Speaker 2: talk about, and this one is is something that we
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  Speaker 2: never really understood why it was the way it was
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  Speaker 2: before to begin with. But that's the elimination of required
• 11:25
  Speaker 2: minimum distributions for the WROTH portion of your retirement accounts.
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  Speaker 2: So think of your you know, your four oh one
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  Speaker 2: K or your four h three B that you've put
• 11:34
  Speaker 2: WROTH dollars into. This change actually took effect for twenty
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  Speaker 2: twenty four, but we want to highlight it because it's
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  Speaker 2: a pretty big change, and like I said, it was
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  Speaker 2: something that never really made sense to us because like
• 11:46
  Speaker 2: a roth IRA that that doesn't have a required minimum distribution,
• 11:50
  Speaker 2: but a WROTH four oh one K, a WROTH four
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  Speaker 2: old three b ROTH war fifty seven, and you know
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  Speaker 2: the WROTH portion of the thrift savings plan for some
• 11:59
  Speaker 2: of our federal ployees, those were all subject to required
• 12:02
  Speaker 2: minimum distributions. The beginning last year, rm ds are no
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  Speaker 2: longer required on any type of WROTH retirement savings account.
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  Speaker 2: So this allows individuals to keep their WROTH accounts really
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  Speaker 2: wherever they want. They're not forced to roll it over
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  Speaker 2: to a ROTH IRA to avoid r and ds. And
• 12:20
  Speaker 2: not that these r and ds were taxable coming from
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  Speaker 2: from the Roth portion, but if you think about it,
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  Speaker 2: those WROTH dollars are some of your most powerful dollars
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  Speaker 2: and if you if you don't have to take them
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  Speaker 2: out of the ROTH portion and you don't have to
• 12:33
  Speaker 2: give up that tax free growth, that's definitely going to
• 12:36
  Speaker 2: be preferable. So this is a good change in our.
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  Speaker 1: Minds starting to make it makes a little more sense
• 12:41
  Speaker 1: to Yeah, as we talked this morning with Eric Schwartz
• 12:45
  Speaker 1: and CJ. Colss, they are our retirement planning professionals from
• 12:48
  Speaker 1: Costs Financial. You can learn more online. They've got a
• 12:50
  Speaker 1: great website, Costs Financial Dot com. That's cost k l
• 12:53
  Speaker 1: a a Sfinancial dot com. If you haven't been there recently,
• 12:57
  Speaker 1: head on over. You can learn more about the team
• 12:58
  Speaker 1: at costs Financial. There's separate divisions. Also, you can sign
• 13:01
  Speaker 1: up for the weekly Market Pulse newsletter. It's a weekly
• 13:04
  Speaker 1: email that comes in your inbox. It's got a little
• 13:06
  Speaker 1: snapshot of what's been going on in the markets. Also,
• 13:08
  Speaker 1: we'll link to the most recent podcast that available at
• 13:11
  Speaker 1: cossfinancial dot com. There are teleph number six oh eight
• 13:13
  Speaker 1: four four two five six three seven. No charge for
• 13:16
  Speaker 1: that initial gets know you appointment at Coss Financial. It
• 13:18
  Speaker 1: will be complementary to you again their number six o
• 13:21
  Speaker 1: eight four four two five six three seven. What about
• 13:23
  Speaker 1: contribution limits? We'll get the details on that and so
• 13:26
  Speaker 1: much more as Money in Motion with Coss Financial continues
• 13:29
  Speaker 1: right here on thirteen ten, Wiva talking with our retirement
• 13:32
  Speaker 1: planning professional CJ. Coloss and Eric Schwartz. They come to
• 13:35
  Speaker 1: us from Class financial website Coss Financial dot com. That's
• 13:38
  Speaker 1: Class k l aa S Financial dot com. The are
• 13:41
  Speaker 1: telephe number six oh eight four four two five six
• 13:44
  Speaker 1: three seven. No charge for that initial gets to know
• 13:46
  Speaker 1: your appointment at Loss Financial. It will be complementary to
• 13:49
  Speaker 1: you again their number six oh eight four four two five,
• 13:52
  Speaker 1: six three seven looking through the year twenty twenty five
• 13:55
  Speaker 1: when it comes to changes to tax law and some
• 13:58
  Speaker 1: things to keep in mind as we move through the
• 14:00
  Speaker 1: year this morning, and and CJ bringing you in on
• 14:04
  Speaker 1: the on the conversation, what about limits when it comes
• 14:06
  Speaker 1: to contributions in our in our twenty twenty five retirement accounts.
• 14:11
  Speaker 3: Yeah, this is really important as you kind of adjust
• 14:14
  Speaker 3: your expectations for twenty twenty five as it relates to
• 14:17
  Speaker 3: saving for the future. So, so some additional limits for
• 14:20
  Speaker 3: you to be aware of as we head into the
• 14:23
  Speaker 3: twenty twenty five calendar year. Here, So contribution levels to
• 14:27
  Speaker 3: employer sponsored retirement plans have increased, So here we're talking
• 14:32
  Speaker 3: about like four to one k's, four h three b's,
• 14:34
  Speaker 3: forty sevens and federal thrust savings plans. In twenty twenty five,
• 14:38
  Speaker 3: these maximum elective deferral contributions as we call them, have
• 14:43
  Speaker 3: increased to twenty three thousand, five hundred dollars if you're
• 14:47
  Speaker 3: under the age of fifty, with an additional seven five
• 14:50
  Speaker 3: hundred dollars catchup if you're over the age of fifty.
• 14:53
  Speaker 3: So twenty three thousand, five hundred for basically everybody, plus
• 14:57
  Speaker 3: seventy five hundred dollars extra known as catchup contribution if
• 15:01
  Speaker 3: you're over the age of fifty. So we often will
• 15:03
  Speaker 3: just talk about these as two big different numbers, like,
• 15:06
  Speaker 3: if you're under fifty, it's twenty three five. If you're
• 15:08
  Speaker 3: over fifty, it's thirty one thousand dollars. But interestingly, if
• 15:12
  Speaker 3: you log in online, they're going to ask you to
• 15:15
  Speaker 3: make contributions to those two buckets separately, which is kind
• 15:19
  Speaker 3: of weird. You go, oh, wait, what, I've got a
• 15:22
  Speaker 3: max out the elective deferral and then I've got also
• 15:25
  Speaker 3: max out the ketchup contribution. It's just a little bit wonky.
• 15:29
  Speaker 3: But IRA contribution levels have remained the same from last
• 15:33
  Speaker 3: year to this year. So if you're under the age
• 15:35
  Speaker 3: of fifty, the max you can put into an IRA,
• 15:37
  Speaker 3: assuming you're eligible, is seven thousand, and then if you're
• 15:40
  Speaker 3: over fifty, there's one thousand dollars catchup for an additional thousand,
• 15:43
  Speaker 3: totally eight thousand dollars for the year. Now, interestingly enough,
• 15:49
  Speaker 3: we talked about this actually last week a little bit,
• 15:51
  Speaker 3: but under a change made in Secure Act two point zero.
• 15:55
  Speaker 3: There is a higher catchup contribution limit on employer sponsor
• 16:00
  Speaker 3: retirement plans for individuals who are specifically age sixty, sixty one,
• 16:06
  Speaker 3: sixty two, and sixty three and who participate in one
• 16:09
  Speaker 3: of the employers sponsored retirement plans. So again just those
• 16:12
  Speaker 3: four years, there's actually a higher catchup contribution mount not
• 16:16
  Speaker 3: the seventy five hundred I was talking about, but actually
• 16:18
  Speaker 3: it goes up to eleven thousand, two hundred and fifty
• 16:22
  Speaker 3: dollars in the catchup for a total of thirty four thousand,
• 16:25
  Speaker 3: seven hundred and fifty dollars. So interestingly enough, Eric and
• 16:29
  Speaker 3: I and Mark firm view this as a very good thing,
• 16:33
  Speaker 3: just kind of wonky. Wait a minute, there's a there's
• 16:37
  Speaker 3: a third level of complexity here now. So now it's
• 16:40
  Speaker 3: like if you're under fifty, it's twenty three to five,
• 16:42
  Speaker 3: if you're over fifty, it's seventy five an additional seventy
• 16:45
  Speaker 3: five hundred, But if you're specifically sixty, sixty one, sixty two,
• 16:49
  Speaker 3: and sixty three, it's actually eleven two hundred and fifty.
• 16:52
  Speaker 3: So I hope you're laughing with me. As great as
• 16:54
  Speaker 3: it is, it just adds another layer of.
• 16:56
  Speaker 1: Complex Dougan's warning with CJ Class and Eric Schwartz, our
• 16:59
  Speaker 1: retirement fighting professionals from Class Financial go over. You can
• 17:02
  Speaker 1: find them online Class Financial dot com. That's Closs k
• 17:05
  Speaker 1: l A A S Financial dot Com and CJ. As
• 17:09
  Speaker 1: we as we work through this stuff, what about qcds,
• 17:12
  Speaker 1: we haven't touched on those yet.
• 17:14
  Speaker 3: Yeah, so before I move on to that, you know,
• 17:16
  Speaker 3: I'd like to kind of poke at and make fun
• 17:18
  Speaker 3: of occasionally complexity, but I do want to circle back.
• 17:20
  Speaker 3: This is a good thing. If you are going to
• 17:22
  Speaker 3: be sixty sixty one, sixty two, or sixty three this
• 17:26
  Speaker 3: year and you are still working, eligible to contribute to
• 17:29
  Speaker 3: an employer sponsored retirement plan, do speak with your employer,
• 17:32
  Speaker 3: your four one K provider, even your financial advisor to
• 17:35
  Speaker 3: see if you should be trying to max that out.
• 17:38
  Speaker 3: But yes, QCD so goodness, you all know our industry
• 17:41
  Speaker 3: loves our acronyms. So qcds. This state is short for
• 17:45
  Speaker 3: qualified charitable distributions. We discussed this area quite frequently, and
• 17:50
  Speaker 3: the two the qcds kind of interact with your rmds.
• 17:55
  Speaker 3: So let me say that differently qualified charitable distributions have
• 17:59
  Speaker 3: some level of interaction with your required minimum distributions. So
• 18:04
  Speaker 3: let me explain what I mean here. If you contribute
• 18:07
  Speaker 3: to a charity under normal circumstances, assuming you're not over
• 18:12
  Speaker 3: seventy and a half, your only way to benefit by
• 18:15
  Speaker 3: those contributions to the charity on your taxes would be
• 18:18
  Speaker 3: for your itemized deductions, which includes charitable and a bunch
• 18:22
  Speaker 3: of other things. Would be if your itemized deductions to
• 18:24
  Speaker 3: exceed the standard deduction, which, as Eric just talked about,
• 18:27
  Speaker 3: is less common given how high the standard deduction is now.
• 18:31
  Speaker 3: Well one we'll call it. Get out of jail Free
• 18:34
  Speaker 3: card is the way that qcds interact with rmds. So
• 18:38
  Speaker 3: when you become required to pull money out of your
• 18:41
  Speaker 3: pre tax retirement account through this thing called the required
• 18:44
  Speaker 3: minimum distribution for most Americans, that's now seventy three or
• 18:48
  Speaker 3: seventy five, when that happens, if you don't need that income,
• 18:52
  Speaker 3: or furthermore, you don't want it because it's going to
• 18:54
  Speaker 3: push you up in the higher tax brackets or cause
• 18:56
  Speaker 3: other tax issues for you, you get out of jail
• 18:59
  Speaker 3: free card. It is just to take that money and
• 19:01
  Speaker 3: do what are called qualified charitable distributions. This is not
• 19:06
  Speaker 3: giving to the charities out of your checking account anymore,
• 19:08
  Speaker 3: you'd have to work with your advisor to say I
• 19:10
  Speaker 3: don't want to I don't want to give out of
• 19:11
  Speaker 3: my checking account. I want to give directly from my
• 19:14
  Speaker 3: IRA to the charity. And in so doing, two things
• 19:17
  Speaker 3: are happening. Number One, you're meeting your required minimum distribution
• 19:22
  Speaker 3: by doing this, so set another way. Those qcds count
• 19:25
  Speaker 3: towards meeting your minimum. And then secondarily, you're not paying
• 19:29
  Speaker 3: income taxes on that money. It's counted right, it shows
• 19:33
  Speaker 3: up as a distribution, but there's just no tax withholding
• 19:37
  Speaker 3: off of it. So you get the idea. It's like, WHOA.
• 19:40
  Speaker 3: So what you're saying CD is there's no itemization. I don't. Basically,
• 19:45
  Speaker 3: set another way, my first dollar that comes out as
• 19:48
  Speaker 3: a QCD has a tax reductive value to it, whereas
• 19:53
  Speaker 3: if I get up give out of my checking account,
• 19:55
  Speaker 3: I might need to do you know, twenty some thousand
• 19:57
  Speaker 3: dollars worth of gifts before it has any tax benefits.
• 20:00
  Speaker 3: So where do the wise You don't need to know
• 20:03
  Speaker 3: all the logistics of this. What you do need to
• 20:05
  Speaker 3: know is that if you are old enough to have
• 20:07
  Speaker 3: required minimum distributions, and you are giving to charities of
• 20:12
  Speaker 3: a substantial amount and you are not doing it out
• 20:15
  Speaker 3: of your IRA, you're missing out. You should probably go
• 20:19
  Speaker 3: talk to your accountant or your financial advisor to change
• 20:22
  Speaker 3: the way in which you are giving to charities. Now,
• 20:25
  Speaker 3: as it relates to this, there used to be a
• 20:27
  Speaker 3: maximum annual QCD amount that you could do that was
• 20:31
  Speaker 3: established like seventeen years ago. But now these maximum kind
• 20:34
  Speaker 3: of qualified charitable distributions are linked to inflation. So the
• 20:38
  Speaker 3: max you can do in any calendar or sorry as
• 20:42
  Speaker 3: of twenty twenty five is one hundred and eight thousand dollars.
• 20:45
  Speaker 3: That's the max you can do in qcds.
• 20:47
  Speaker 1: Talking partner to CJ Class and of course Eric Schwartz
• 20:50
  Speaker 1: of COSS Financial and this money emotion with Class financial
• 20:53
  Speaker 1: website colssfinancial dot com. That's Coss Klaas Financial dot com.
• 20:57
  Speaker 1: CEJ any other notes when it comes to when it
• 21:00
  Speaker 1: comes to rmds.
• 21:02
  Speaker 3: Yeah, so interestingly enough, again, i'd like to poke every
• 21:05
  Speaker 3: once in a while at things that we think are funny,
• 21:07
  Speaker 3: although Eric and I would both attest to actually think
• 21:09
  Speaker 3: secure Act one point zero and two point zero did
• 21:11
  Speaker 3: a wonderful job of cleaning up a lot of unnecessary complexity.
• 21:15
  Speaker 3: So truly, I think both Eric and I think a
• 21:18
  Speaker 3: really good, good piece of legislation overall. Now, one thing
• 21:23
  Speaker 3: they didn't clean up, which is still a little bit wonky,
• 21:25
  Speaker 3: is you're actually eligible to do qualified charitable distributions at
• 21:29
  Speaker 3: seventy and a half, which used to be the age
• 21:33
  Speaker 3: that your required minimum distributions would begin. It's not anymore
• 21:38
  Speaker 3: now it's seventy three or seventy five. So you can
• 21:42
  Speaker 3: actually do qualified charitable distributions as early as age seventy
• 21:47
  Speaker 3: and a half, but you're just not required to make
• 21:49
  Speaker 3: minimum distributions until seventy three or seventy five. Which the
• 21:53
  Speaker 3: reason this is wonky everybody is because the real benefit
• 21:56
  Speaker 3: here is not claiming the extra income. That's why one
• 22:00
  Speaker 3: of the biggest benefits, and so for us, having those
• 22:03
  Speaker 3: two linked by age makes more sense. But listen, it's
• 22:06
  Speaker 3: not a bad thing. I would just say to you,
• 22:08
  Speaker 3: you're actually eligible to do qualified charitable distributions before you're
• 22:12
  Speaker 3: required to perform minimum distributions. So again, if you're over
• 22:15
  Speaker 3: seventy and a half, you're not doing qualified charitable distributions
• 22:18
  Speaker 3: and you're giving a lot to charities. Go speak with
• 22:21
  Speaker 3: your accountant or advisor. Now another thing here, another kind
• 22:27
  Speaker 3: of change as we head into twenty twenty five is
• 22:29
  Speaker 3: that additional employer contributions are now eligible for WROTH treatment.
• 22:35
  Speaker 3: This is interesting. So remember the laws used to be, Hey,
• 22:40
  Speaker 3: when I contribute to a four ROH one K plan,
• 22:42
  Speaker 3: they might match my contributions. You've heard us over and
• 22:45
  Speaker 3: over say to you, don't leave free money on the table.
• 22:49
  Speaker 3: So if they're going to match you fifty cents on
• 22:51
  Speaker 3: the dollar up to six percent, make sure you're putting
• 22:53
  Speaker 3: in six to get there to get their three right,
• 22:57
  Speaker 3: always get the free money. Well, what we also used
• 23:01
  Speaker 3: to say to you is, regardless of the way that
• 23:03
  Speaker 3: you save into the plan, whether it was WROTH or
• 23:07
  Speaker 3: pre tax, all of the employer money so the money
• 23:11
  Speaker 3: coming from your employer as a match would always be pretax.
• 23:14
  Speaker 3: Didn't matter if you were contributing WROTH, they were going
• 23:16
  Speaker 3: to give you pre tax money. Well, amazingly this has
• 23:20
  Speaker 3: now changed as we head into twenty twenty five. And
• 23:22
  Speaker 3: this is assuming your plan allows for this, by the way,
• 23:24
  Speaker 3: so you would need to talk to your employer, but
• 23:27
  Speaker 3: now you could say, hey, my income is low enough
• 23:29
  Speaker 3: or I'm young enough that I want to do a
• 23:31
  Speaker 3: WROTH for oh one K contribution up to say six percent,
• 23:34
  Speaker 3: and the three percent that they're going to put in
• 23:36
  Speaker 3: for me, I want them to do that money as
• 23:38
  Speaker 3: wroth now word other wise, this means that that money
• 23:42
  Speaker 3: that they're putting into for you has to be taxed.
• 23:46
  Speaker 3: So actually, as great as that is that they can
• 23:49
  Speaker 3: put WROTH money in for you, that kind of dilutive
• 23:53
  Speaker 3: pattern of their money going in as WROTH is just
• 23:56
  Speaker 3: going to further reduce your net paycheck. Warning, warning, warning.
• 24:01
  Speaker 3: As much as we love this, I love choice, I
• 24:04
  Speaker 3: don't think a lot of people are going to pick
• 24:05
  Speaker 3: up on the consequences of their choice. So make sure
• 24:08
  Speaker 3: again talk to your advisor, your accountant, even your spouse
• 24:11
  Speaker 3: to make sure that the take home pay is enough
• 24:13
  Speaker 3: to kind of meet the bills.
• 24:15
  Speaker 1: See J might do that in reverse order.
• 24:16
  Speaker 3: I mean a good point, super talk to the spouse
• 24:20
  Speaker 3: first and then the accountant.
• 24:21
  Speaker 1: Advice, anything else as far as as far as iras
• 24:25
  Speaker 1: and things that we need to know for twenty twenty
• 24:27
  Speaker 1: five CJ.
• 24:28
  Speaker 3: Yeah, so the IRS is also phased out income ranges
• 24:31
  Speaker 3: for iras, So for single taxpayers covered by a workplace
• 24:35
  Speaker 3: retirement plan, the phase out range for a traditional IRAY
• 24:38
  Speaker 3: is between seventy nine and eighty nine thousand in twenty
• 24:41
  Speaker 3: twenty five. You know, similarly, the income limit for wroth
• 24:44
  Speaker 3: I rays is also higher in twenty twenty five. So
• 24:47
  Speaker 3: the maximum you can earn and still contribute to a
• 24:49
  Speaker 3: wroth IRA is one sixty five if you're a single
• 24:53
  Speaker 3: tax payer or single single file or head of household,
• 24:56
  Speaker 3: and that's up from one fifty three last year. And
• 24:59
  Speaker 3: if you're read filing jointly, this again is for Rotha
• 25:02
  Speaker 3: Ray contributions, your joint modified adjusted gross income must be
• 25:06
  Speaker 3: under two hundred and forty thousand. So listen, everybody, I've
• 25:10
  Speaker 3: been doing this for a long time. I know to
• 25:13
  Speaker 3: hear this and how to apply this. It actually took me,
• 25:17
  Speaker 3: and this is being in the industry, It actually took me,
• 25:21
  Speaker 3: maybe I'm slow, like five to seven years to understand
• 25:24
  Speaker 3: what the heck this meant. Like I kind of understood
• 25:27
  Speaker 3: the concept, like, okay, there's some limit. If I earned
• 25:30
  Speaker 3: too much, then I can't do the thing. But how
• 25:33
  Speaker 3: it got applied and then it was like I heard
• 25:35
  Speaker 3: this thing of well, you know, you can always contribute
• 25:36
  Speaker 3: to an irge as may or may not be deductible,
• 25:38
  Speaker 3: and I was like, what what, so what is the
• 25:42
  Speaker 3: what is the phase out for if I can still contribute?
• 25:44
  Speaker 3: All very confusing to me. What I'd say is, if
• 25:48
  Speaker 3: you understand this, great it means it means you're smarter
• 25:51
  Speaker 3: and faster than me. If you don't, you're in good company.
• 25:55
  Speaker 3: Even people who do this for a living, it takes
• 25:57
  Speaker 3: some while to warm up to all of it. So
• 25:59
  Speaker 3: this is why people like us have jobs. Feel free
• 26:02
  Speaker 3: to call us, talk to your accountant, talk to your advisor,
• 26:05
  Speaker 3: and make sure that you are avoiding problems. Many times
• 26:09
  Speaker 3: people just do the same behavior over and over and
• 26:12
  Speaker 3: over until they suddenly find out they weren't eligible for it,
• 26:15
  Speaker 3: and then we've got to go back and amend multiple years
• 26:17
  Speaker 3: of tax returns. So this is This is kind of
• 26:20
  Speaker 3: my sly way of saying, you may want to have
• 26:22
  Speaker 3: a financial advisor who at least you meet with occasionally,
• 26:25
  Speaker 3: just to make sure you're not running a foul of
• 26:27
  Speaker 3: any of the rooms you mentioned.
• 26:29
  Speaker 1: CJ giving you a call, of course, tell number for
• 26:30
  Speaker 1: COSS Financial six so eight four four two five six
• 26:33
  Speaker 1: three seven really cool thing. No charge for that initial
• 26:35
  Speaker 1: get to know your appointment at Coss Financial. It will
• 26:37
  Speaker 1: be complimentary to you again. They're number six oh eight
• 26:39
  Speaker 1: four four two five six three seven the website coss
• 26:42
  Speaker 1: financial dot com. That's coss financial dot Com. Remember watching
• 26:46
  Speaker 1: weekend programming, they'd always say, but wait, there's more, and
• 26:49
  Speaker 1: there is more, and we'll talk about that. Next has
• 26:51
  Speaker 1: Money in Motion with Class Financial continues right here on
• 26:54
  Speaker 1: thirteen ten. Dou Wuiba talk this morning with Eric Schwartz
• 26:57
  Speaker 1: and CJ Closs. They are our retirement planning for specials
• 27:00
  Speaker 1: from Class Financial website class financial dot com delv whatever
• 27:03
  Speaker 1: six So eight four four two five six three seven
• 27:06
  Speaker 1: just moments away from the class quiz question the week
• 27:08
  Speaker 1: will do that just a minute. But first, as mentioned,
• 27:10
  Speaker 1: there is more that we need to be aware of.
• 27:13
  Speaker 1: And Eric, what are some of those other changes that
• 27:15
  Speaker 1: folks need to be queuing in on this time of
• 27:17
  Speaker 1: year or this year?
• 27:18
  Speaker 2: Yeah, Sean, I just had two more really really important
• 27:21
  Speaker 2: topics to discuss here, both having to do with education funding.
• 27:27
  Speaker 2: And the first one is really exciting at starting this year,
• 27:30
  Speaker 2: and it's the student loan match benefit. So this is
• 27:35
  Speaker 2: an opportunity where employers are now able to match employee
• 27:39
  Speaker 2: student loan payments what with matching payments to their retirement account.
• 27:44
  Speaker 2: So basically, this gives an employer an opportunity to reward
• 27:48
  Speaker 2: the repayment of educational loans. So this means if your
• 27:52
  Speaker 2: employer offers it. Again, like CJ mentioned before, every plan
• 27:56
  Speaker 2: is different, but if your employer offers to match your
• 27:58
  Speaker 2: four oh one K contribution, and you could get matched
• 28:02
  Speaker 2: dollars into your four one K or four O three
• 28:05
  Speaker 2: B without ever having to deposit your own funds into
• 28:09
  Speaker 2: your retirement account. So we always say don't leave free
• 28:11
  Speaker 2: money on the table. Make sure you're getting the employer
• 28:14
  Speaker 2: match at least in your retirement savings plan. But especially
• 28:18
  Speaker 2: when people are just starting out, we realize that you know,
• 28:21
  Speaker 2: you have to make decisions about you know what, what
• 28:23
  Speaker 2: you can and can't do financially. But this is an
• 28:26
  Speaker 2: opportunity for people to you know, pay down their educational
• 28:30
  Speaker 2: debt and get a retirement contribution. So it gives the
• 28:35
  Speaker 2: opportunity to not have to to choose between paying down
• 28:37
  Speaker 2: debt and saving for retirement. So check to check with
• 28:41
  Speaker 2: your employer to see if this is available. If you
• 28:44
  Speaker 2: are if you are repaying student loans and hopefully can
• 28:48
  Speaker 2: get you a little bit more and put into your
• 28:50
  Speaker 2: retirement accounts. And the last, the last thing I want
• 28:54
  Speaker 2: to talk about here is the something that that took
• 28:58
  Speaker 2: that came about as a result of Secure Act two
• 29:02
  Speaker 2: point zero, and it has to do with five twenty
• 29:04
  Speaker 2: nine college savings plans. So what this provision does is
• 29:09
  Speaker 2: it allows unused funds from a five to twenty nine
• 29:12
  Speaker 2: educational savings plan to actually be rolled over to a
• 29:16
  Speaker 2: Rothie array. So now remember five twenty nine plans. They
• 29:21
  Speaker 2: are to be used for educational expenses. And if you
• 29:25
  Speaker 2: don't use them for an educational expense, there can be
• 29:28
  Speaker 2: some tax and penalty do on the distribution. And we
• 29:33
  Speaker 2: hear this from people all the time. You know, it's
• 29:35
  Speaker 2: great that you know, you get the tax free grow.
• 29:37
  Speaker 2: It's great that I can get a you know, a
• 29:39
  Speaker 2: state tax deduction. But I don't want to put money
• 29:43
  Speaker 2: into the five twenty nine because you know, if my
• 29:45
  Speaker 2: child decides not to go to college, or you know,
• 29:47
  Speaker 2: their college doesn't isn't like a traditional four year program.
• 29:51
  Speaker 2: It's shorter and it doesn't cost as much. I just
• 29:53
  Speaker 2: don't want to have my hands tied. Which makes a
• 29:56
  Speaker 2: ton of sense. But what we've seen in recent years
• 29:59
  Speaker 2: is the IRS has really been trying to quell some
• 30:02
  Speaker 2: of that fear by adding some flexibility to the allowable
• 30:08
  Speaker 2: distributions from A five to twenty nine. And this is probably,
• 30:11
  Speaker 2: I think one of the coolest ones. So what it
• 30:13
  Speaker 2: allows them to do them being the beneficiary, is they
• 30:18
  Speaker 2: can take up to thirty five thousand dollars okay, of
• 30:21
  Speaker 2: remaining balance in A five twenty nine. So maybe that's
• 30:24
  Speaker 2: you know, they didn't spend all the money on school,
• 30:26
  Speaker 2: Maybe they didn't go to school, and they can use
• 30:29
  Speaker 2: that thirty five thousand dollars to start saving for retirement, okay,
• 30:33
  Speaker 2: So they can use that thirty five thousand dollars to
• 30:35
  Speaker 2: make an annual roth IRA contribution up to the limit
• 30:39
  Speaker 2: which CJ mentioned this earlier. It's seven thousand dollars for
• 30:43
  Speaker 2: folks under fifty and eight thousand for people fifty and older,
• 30:48
  Speaker 2: and they can take you know, let's say they have
• 30:50
  Speaker 2: thirty five thousand dollars left in a college savings plan.
• 30:53
  Speaker 2: They can make five years of contributions to their roth
• 30:58
  Speaker 2: IRA using those five twenty nine dollar dollars without penalty.
• 31:02
  Speaker 2: And they're actually putting those dollars to good use for
• 31:04
  Speaker 2: for their future.
• 31:05
  Speaker 1: That's a really good tool made even better as we
• 31:07
  Speaker 1: talked this morning with Eric Schwartz and CJ. Closs. They
• 31:10
  Speaker 1: are our retirement finding professionals from Class Financial the website
• 31:13
  Speaker 1: class financial dot com. That's Closs klaas Financial dot com
• 31:17
  Speaker 1: are telephon number six oh eight four four two five,
• 31:20
  Speaker 1: six three seven. You want to hold on to that
• 31:21
  Speaker 1: teleful number because it's time now for the Class Quiz
• 31:24
  Speaker 1: Question of the week. It works like this. In just
• 31:25
  Speaker 1: a moment, I'll ask you the class Quiz question leak.
• 31:27
  Speaker 1: You'll then have thirty minutes from the en Today's program
• 31:29
  Speaker 1: to call the Class Financial office right here in Madison
• 31:31
  Speaker 1: at six oh eight four four two five six three seven.
• 31:34
  Speaker 1: If you are the first collet correct answer, win this
• 31:36
  Speaker 1: week's prize, which is a twenty five dollars gift card
• 31:38
  Speaker 1: to Sephora. This week's Closs Quiz question of the week
• 31:41
  Speaker 1: is this What is the new standard deduction for single
• 31:45
  Speaker 1: tax payers in twenty twenty five? Is it ten thousand
• 31:49
  Speaker 1: dollars or fifteen thousand dollars? Telephone number six oh eight
• 31:52
  Speaker 1: four four two five six three seven. First call with
• 31:55
  Speaker 1: correct answer when that twenty five dollars, gift cards, Sephora
• 31:57
  Speaker 1: and again that's Loss Financials Office right here in matt U.
• 32:00
  Speaker 1: No charge for that initial gets to know the appointment.
• 32:02
  Speaker 1: It is complimentary to you again their number six O
• 32:04
  Speaker 1: eight four four two five six three seven CJ.
• 32:07
  Speaker 3: Eric.
• 32:08
  Speaker 1: It's always fantastic chatting with you guys.
• 32:10
  Speaker 2: You have a great day, Thanks Sean, Thanks Sean.
• 32:13
  Speaker 1: Doctor Marty Greer comes your way next right here thirteen
• 32:15
  Speaker 1: ten WIV eight