Retire With Ryan

As you enter retirement, tax planning is something that must be prioritized. A Qualified Charitable Distribution (QCD) can be a great tool in your arsenal to help you minimize the taxes you have to pay. So what is a Qualified Charitable Distribution (QCD)? How can it actually help you lower your taxes? In this episode, I'm going to cover what a QCD is, how you make one, and how it can help lower your taxes. I'll also share a few examples of what a QCD might look like.

• What is a Qualified Charitable Distribution? [1:34]
• How do you make a Qualified Charitable Distribution? [5:07]
• How to note a QCD on your tax return [8:02]
• How we process Qualified Charitable Distributions [9:19]
• How can this help you lower your taxes? [10:48]

Let's back up for a minute and talk about what a Required Minimum Distribution (RMD) is. When you turn 73 years old, the IRS requires you to distribute a portion of your retirement accounts and pay taxes on the money. That's an RMD.

The Tax Cuts and Jobs Act in 2017 made a big change to standard deductions. It allowed many people to pay less in taxes—but it limited the amount of charitable donations you could deduct on your taxes. Because of this, charities saw a large decline in the amount of donations they received.

One way to increase charitable giving in a tax-friendly way is a Qualified Charitable Distribution. A QCD allows you to donate a portion of your RMD o a charity and not pay tax on the amount you donate.

For the last few years, you could donate up to $100,000 from your IRA and not have to pay taxes on it. Thanks to the SECURE Act 2.0, starting in 2024, the annual QCD limit has increased to $105,000 per year per individual.

When you've given to charities, you've likely given them cash or a check. You let your accountant know what you gave and they note it on your taxes. When you make a QCD, you need to contact your IRA custodian and they send money directly from your IRA directly to the charity of your choosing. I cannot emphasize enough: You cannot take receipt of the money first or it will be a taxable distribution.

Each custodian has a different process, but generally, you complete a form with the charity's information (you'll need the charity's address and Tax ID number) and submit it. Secondly, most 501C3 charities can accept a QCD but you'll want to confirm with them first.

People often improperly report a QCD on their taxes and end up paying taxes on them when they shouldn't have to. Listen to learn how you can avoid making mistakes on your taxes.

If your income is over a certain threshold, you'll have to pay an additional amount of money on your Medicare Part B premiums. In 2024—for a married couple filing jointly—if your income goes over $258,000, you'll have to pay double for your premium.

The standard premium per person is $174.70. You'd have to pay $349.90 per month per person. This IRMA charge kicks in if you're just $1 over the limit. But if you make a QCD to a charity to keep you from going over the limit, it can save you premium costs.

I share some other need-to-know details—and get into the nitty-gritty details of how to note a QCD when you file your tax return—in this episode. Listen to learn more!

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The SEC recently and historically approved 11 Bitcoin spot ETFs on January 10th. This is big news because now you can invest in Bitcoin through a brokerage account. On this episode, I'm discussing what this means for you, how you can invest in Bitcoin ETFs, and what to look out for if you're going to take that plunge.

• What is Bitcoin? [1:42]
• Unpacking Bitcoin ETFs and three things to look for when buying [5:39]
• Should you buy a Bitcoin ETF? [8:59]

In a nutshell, Bitcoin is a digital currency born in January 2009, untethered to any government or traditional financial institution. With an estimated market value of $8.2 billion, it pales in comparison to the colossal $40 trillion market cap of the S&P 500. There are 19 million Bitcoin coins in existence, with a cap of 21 million expected to be mined by the year 2140. Its appeal lies in being decentralized and ostensibly untraceable by governments, making it a preferred mode of transaction for some.

Originally intended for small online transactions, Bitcoin's unique blockchain technology was poised to revolutionize banking, but its high costs and complex payment process have hindered widespread adoption. To invest, one typically turns to a crypto broker, distinct from a stockbroker, and must safeguard private keys to validate ownership. Despite concerns about fraud and lost keys, the recent approval of Bitcoin spot ETFs has opened new doors, changing the landscape of Bitcoin accessibility for investors.

If you're considering diving into the world of Spot Bitcoin ETFs, here's a quick guide to help you navigate the options. The SEC recently greenlit 11 Bitcoin ETFs, and you might be wondering why so many. Well, it's all about competition. Unlike traditional mutual funds, ETFs, or exchange-traded funds, trade in real-time when the markets are open. This means you can buy or sell them while the markets are open, and the price is determined at the time of your transaction.

When choosing a Bitcoin ETF, focus on three key factors. First, check the trade volume – opt for an ETF with high trading activity for easy transactions. Second, consider the spread, which is the difference between the bid and ask prices. A narrow spread minimizes the extra cost you pay when trading. Lastly, look at the annual expense ratio – aim for the lowest possible without compromising on trade volume and spread. Notable players in the Bitcoin ETF arena include BlackRock's IB and Fidelity's FBTC, both boasting low expense ratios. Remember, thorough research is key with 11 options available, each with its unique features and costs. Listen to this episode for more on Bitcoin ETFs!

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With every new year comes a list of resolutions to make this one the best yet. However, a lack of planning leaves most of these goals unfinished. On this episode, I'm sharing five financial resolutions to help you grow your money in 2024 and the follow-through steps to help make them possible.

• Opening a high-yield savings account [1:28]
• Investing the money in your HSA [7:16]
• Putting your money in a Roth account [10:09]
• Getting a better handle on your finances [12:47]
• Making charitable donations [14:10]

Looking to grow your money in 2024? One of the best options is opening a high-yield savings account or a money market fund that offers between 4 and 5% interest annually. Begin by deciding between the two and, if you already have accounts with major brokerage firms like Charles Schwab, Fidelity, or Vanguard, opt for their money market funds for seamless integration.

Setting up a taxable brokerage account online takes less than 10 minutes, and linking it to your bank account enables easy transfers. Within two to three days, your funds should be in the default money market fund, earning the desired interest. If using Schwab, there's an extra step of purchasing a higher-yielding fund, such as Schwab's value advantage fund. However, if you prefer a simpler route, websites like bankrate.com list high-yield savings accounts with similar interest rates. Open an account, connect your bank, and enjoy increased returns on your savings without the need for additional investment steps.

Another great resolution for financial success in 2024 is a Roth account. With the current tax plan set to expire in 2026 and uncertainties surrounding the 2024 election, taking advantage of potential tax-free growth in a Roth account is a strategic move. The options available include a Roth IRA, allowing contributions up to $6,500 if you're under 50 or $7,500 if you're over 50. Remember, the deadline for contributions for the previous year is April 15, and there are income limits to consider. If you find yourself exceeding those limits, a Roth 401(k) could be a viable alternative, especially if you're self-employed or your employer offers one. Contributions to a Roth 401(k) are not restricted by income, and for 2024, the limits are $23,000 for those under 50 and $30,500 for those over 50.

An additional option worth exploring is a Roth conversion, where you pay taxes at your current rates on the converted amount. This move could be advantageous if you anticipate higher tax rates in the future. Consulting with your financial advisor or CPA is crucial in determining the right strategy for your specific circumstances. Assess your current tax bracket, and if you're in a 22% bracket or lower, a Roth conversion may make sense, providing potential tax savings over the long term. Whether it's opening a Roth IRA, adjusting your 401(k) election, or scheduling a meeting with your financial advisor for a Roth conversion, taking action now can position you for financial success in the face of changing tax landscapes. Listen to this episode for more on growing your money in 2024!

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Now that 2023 is officially in the history books, let's review my 2023 market predictions to see how close I got! On this episode, we'll be reviewing last year's market predictions as well as making new ones for the year ahead.

• Reviewing Ryan's 2023 market predictions [2:38]
• Looking ahead to 2024 [11:43]

In 2023, I made a set of market predictions that turned out to be a mix of spot-on calls and a couple of surprises. The S&P 500, despite a shaky start, rallied close to 25% by year-end, proving my forecast of a 28% increase nearly accurate. Growth stocks once again outperformed value stocks, showcasing a long standing trend. The Russell 1000 Growth Index, led by tech giants like NVIDIA, Microsoft, and Amazon, soared by 43%, while its value counterpart only managed an 11.42% return, emphasizing the significance of growth stocks in the market.

However, not all my predictions hit the mark perfectly. Small-cap stocks were anticipated to outshine large-cap ones, but while the S&P 500 surged, the Russell 2000's late-year rally still fell short of my expectations. On the other hand, Bitcoin's unprecedented surge, earning a staggering 154% compared to gold's 13% gain, validated my projection of Bitcoin outperforming gold. Finally, foreseeing the Federal Reserve's rates finishing around 5.25% by the end of 2023 proved accurate, aligning with the prevailing economic climate. Nonetheless, amidst these forecasts, the underlying advice remained clear: diversification is key in navigating the unpredictability of the market.

Listen to this episode for my 2024 predictions!

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• 6 Market Predictions for 2023, #132
• 7 Best Short-Term Investments To Grow Your Money, #116

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Are you a small business owner struggling to choose a retirement plan? Then this episode is for you! Join me as we look at the specifics of SEP IRAs and Solo 401(k)s, the pros and cons of each, and the easiest way to get your small business or self-employed retirement plan set up today.

• What are SEP IRAs and Solo 401(k)s? [1:43]
• The pros and cons of each retirement plan [8:16]
• Setting up a Solo 401(k) or SEP IRA [12:27]

As a small business owner, navigating the realm of retirement plans is crucial for securing your financial future. Whether your business is your full-time pursuit, a part-time venture, or garners intermittent 1099 income, your choice of retirement plan can significantly impact your tax savings and nest egg. Two primary options stand out: the SEP IRA and the Solo 401(k), each with nuances and advantages. If you aim to save $7,500 or less annually and lack other retirement plans, a traditional IRA could offer simplicity. However, for those seeking higher contributions and potential borrowing capabilities, delving into the specifics of SEP IRAs and Solo 401(k)s is vital.

A Simplified Employee Pension (SEP) IRA permits contributions of up to 25% of net business income, capped at $66,000 in 2023 (increasing to $69,000 in 2024). Notably, this plan only allows employer contributions, making it ideal for self-employed individuals—sole proprietors, partnerships, or certain LLC structures. Self-employed individuals are limited to contributing 20% of their net profit. On the other hand, a Solo 401(k), often referred to as a Uni-K, caters to sole proprietors or business owners with a spouse involved in the enterprise. This plan mirrors the contribution limits of the SEP IRA but distinguishes itself by enabling both employee and employer contributions. In 2023, employees can contribute up to $22,500, with a $7,500 catch-up if over 50, summing up to $30,000. By 2024, these limits increase to $23,000 and $30,500, respectively. Furthermore, the Solo 401(k) allows for a profit-sharing or employer contribution of up to 25% of net business profit or 20% for self-employed individuals, reaching the same contribution caps mentioned earlier.

As a small business owner seeking the right retirement plan, the choice between a SEP IRA and a Solo 401(k) demands careful consideration. SEP IRAs offer simplicity and ease of administration; you can allocate up to 20% of your net business income. However, their inflexibility concerning employee contributions and limited options for loans might pose challenges, especially if you plan to expand your workforce. Moreover, the absence of a Roth option and complexities around backdoor Roth IRA contributions are important factors to note.

Solo 401(k)s present an attractive alternative. They allow for both employer and employee contributions, offering more flexibility with a higher contribution limit, including catch-up provisions for individuals aged 50 and older. The Solo 401(k) permits a Roth version, facilitating tax diversification, and provides the option for loans up to a certain limit, enhancing financial flexibility. Nevertheless, this plan becomes less advantageous when hiring non-spouse employees, triggering a shift to a traditional 401(k) and incurring higher administrative burdens and costs. While both retirement plans are good options, the right decision depends on individual circumstances, financial goals, and future business plans. Listen to this episode for more insight!

• Retirement Readiness Review
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• Self-Employed Individuals – Calculating Your Own Retirement-Plan Contribution and Deduction
• SEP IRA Calculator

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Have you ever accidentally put post-tax money in with pre-tax when rolling over a traditional IRA? On this episode, I'm answering a listener's question about fixing this easy-to-make but frustrating mistake. We'll look at the definition of a rollover, why you should separate pre-tax and post-tax money, and how to correct this situation if it occurs.

• What is a rollover? [1:42]
• Why you should separate pre-tax and post-tax money [4:42]
• How to separate post-tax money from a traditional IRA [7:02]

When transitioning jobs, your accumulated retirement benefits don't necessarily stay behind. You've got options: transferring to another retirement plan, cashing it in (with tax implications), or rolling it over to an IRA, commonly known as an individual retirement account. The allure of an IRA rollover lies in enhanced investment choices and potential fee reductions, particularly with brokerage firms like Charles Schwab, Fidelity, or Vanguard.

The process? Fairly straightforward. Establish your new traditional or rollover IRA with your fresh employer. If you lack one, reach out to your former employer's retirement plan provider and inquire about their rollover process, often doable via phone verification or a mailed PIN. Important tip: bolster security with two-factor authentication, utilizing your cell number for added protection. When specifying the rollover amount and payee for the check, remember, always make it payable to your new investment company for your benefit to keep it non-taxable. Veer off this path, and the money turns taxable, with a limited 60-day window for the rollover. This process can also uncover after-tax contributions, which need to be kept separate from pre-tax monies.

It's crucial to keep pre-tax and post-tax money separate in your retirement accounts, and here's why: segregating these funds ensures you can leverage the benefits effectively. After-tax money, eligible for a Roth IRA rollover, offers tax-free growth for you and your beneficiaries upon withdrawal, provided you meet specific criteria. Failure to segregate these funds can result in several complications.

First, without separation, tracking after-tax withdrawals becomes complex, risking double taxation. IRA distributions with a mix of pre and after-tax money lead to prorated taxable amounts, complicating tax calculations. Moreover, beneficiaries might overlook the after-tax funds, leading to potential double taxation for them. Lastly, gains on after-tax money in a traditional IRA don't enjoy tax-free growth, unlike if transferred to a Roth IRA. Thus, separating these funds safeguards against taxation pitfalls and ensures optimal tax benefits for you and your heirs in retirement planning. If you've made the mistake of lumping all of your retirement contributions together, listen to this episode for a solution!

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Did you inherit an IRA from a non-spouse on January 1, 2020 or later? Well a big change happened this summer that you should be aware of that could impact your 2023 tax season. On this episode, I'm unpacking the passing of and subsequent changes to the SECURE Act, how to best manage an inherited IRA in light of these changes, and how you can leave a legacy with a Roth account.

• Unpacking the history of the SECURE Act [2:20]
• Managing an inherited IRA [9:48]
• Leaving a legacy with a Roth account [14:47]

The passing of the SECURE Act in January 2020 brought a significant shift in the landscape of inherited retirement accounts. This act, an abbreviation for "Setting Every Community Up for Retirement Enhancement," altered the rules for beneficiaries inheriting retirement accounts after the set date, restructuring the required minimum distribution (RMD) criteria. Previously, non-spousal living beneficiaries had three distribution options: taking a lump sum, emptying the account within five years of the owner's death, or taking annual lifetime distributions based on their age. However, the SECURE Act introduced changes for beneficiaries post-January 1, 2020. It classified beneficiaries into designated and non-designated categories, further distinguishing between eligible and non-eligible designated beneficiaries.

Eligible designated beneficiaries, including surviving spouses, disabled individuals, chronically ill persons, those within a 10-year age range of the deceased, and minor children, retained the option of lifetime distributions. Conversely, non-eligible designated beneficiaries inheriting traditional IRAs after January 1, 2020, lost the lifetime distribution choice. Instead, they must empty the account within 10 years of the original owner's death or face taxation. The complexity amplified with IRS proposed regulations in February 2021, creating subdivisions among non-eligible designated beneficiaries based on the original account owner's required minimum distribution age. Those inheriting from owners before this age had the liberty to wait until the 10th year to begin withdrawals, while those after the age were required yearly distributions from year one of the 10-year window.

Managing an inherited IRA can be a complex yet crucial aspect of financial planning. If you've inherited a retirement account after the original owner reached the required minimum distribution age, understanding the process becomes essential. For instance, if you inherit a $300,000 IRA at 55 years old, determining your RMD involves dividing the previous year's balance by your factor from the life expectancy chart. This calculation mandates annual withdrawals, recalculated based on the prior year's balance and adjusted life expectancy factor.

However, strategic planning becomes pivotal in optimizing taxes on these withdrawals. Consulting a financial advisor or accountant becomes crucial to align these IRA distributions with your overall financial landscape, considering potential income sources, Social Security, pensions, capital gains, and future required minimum distributions from personal accounts.

Navigating an inherited IRA involves more than mere withdrawals; it's a balancing act between meeting RMDs and minimizing tax impact. Careful planning and leveraging available resources can optimize your inherited IRA management for long-term financial stability. Listen to this episode for more on new beneficiary IRA distribution requirements!

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• Publication 590-B
• Inherited IRA RMD Calculator

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We talk so much about the financial aspects of retirement that it's important to address the mental and emotional shift this season can bring. On this episode, I sit down with life coach Craig Colvett to discuss getting ready for the retirement transition. We talk about the benefits of life coaching for retirees as well as the importance of maintaining a diverse social network.

• What is a life coach? [1:15]
• How life coaching can help you in retirement [4:47]
• Building a social network and finding renewed purpose in retirement [9:07]
• Practical steps to prepare for retirement [18:33]

Every successful team needs a quality coach to achieve their goals. So why is life any different? Life coaching can help provide much-needed perspective for anyone, but especially those approaching or already enjoying retirement. Craig mentioned that around 95% of our thoughts are subconscious. That is a TON to unpack by yourself. A life coach can help you gain clarity on the things you actually want so you can create a meaningful and effective plan for your retirement.

There's no shortage of resources to plan for the financial aspects of retirement. However, too many retirees underestimate the mental and emotional shift that happens when you finally retire. It can feel like your purpose disappeared overnight after leaving a position you've held for the last 20-50 years. A life coach can help you focus on your identity to carve out a renewed purpose for the next chapter of your life.

An often overlooked retirement resource is the building of a social network. So many retirees built their social circles through their jobs. If you don't plan how that gap will be filled once you retire, you could leave yourself exposed to loneliness and isolation. Building a robust social circle with a variety of friendships is one of the keys to a long and successful retirement. But you don't have to wait until you're retired to start working on it. Start filling the social gaps now!

There's no right or wrong way to be retired. Everyone is going to make the best decisions based on their needs and values. Life coaching is just a way to identify your specific needs and values so you can have the best retirement experience possible. And it's never too early to contemplate what your goals in retirement should be. Understanding your goals and challenges is the first step toward planning for a successful retirement!

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• Coach 360

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Are you approaching retirement with tons of questions about Social Security? Then don't miss this episode! I'm going over the seven most frequently asked questions about Social Security benefits from clients and listeners alike. Hit play for the tips and tricks you have to know before you start collecting.

• When am I eligible to collect Social Security benefits? [2:30]
• How much will I earn from Social Security? [5:12]
• What are spousal benefits and how do they work? [7:34]
• What are divorced spousal benefits? [8:36]
• Can I work and collect Social Security benefits? [9:29]
• Are Social Security benefits taxable? [12:10]
• How do I apply for Social Security benefits? [14:49]

There are four different pathways to gain eligibility for Social Security benefits. First, Social Security disability offers access to full retirement benefits earlier contingent on meeting specific disability criteria. If ineligible for disability benefits, there are three alternative methods for accessing Social Security benefits. Full retirement age typically spans between 66 and 67, varying with birth year. However, benefits can commence as early as age 62 with a reduction of about five-ninths of a percent per month until full retirement age, resulting in 70-75% of the total benefit.

Alternatively, delaying collection past full retirement age yields an 8% annual increase, maximizing at a 24% boost if waiting until age 70. Additionally, annual cost-of-living adjustments, averaging around 2.8%, might impact benefits, offering further considerations for individuals planning their Social Security benefits. These pathways offer flexibility, allowing individuals to strategize based on their unique circumstances and financial objectives.

Figuring out how much you'll earn from Social Security isn't straightforward. It's a blend of your work history, timing of collection, and a formula that considers your highest 35 years of earnings. If you've got fewer than 35 years in the workforce, those years without earnings factor in. But here's the trick: working longer can swap those zeros for higher-earning years, beefing up your benefits. If your income has varied, working more years can replace low-earning ones with better ones, boosting what you receive.

Cost-of-living adjustments matter too. Your Social Security statement holds the key to what you're eligible for. Once you start collecting, there's no turning back, except for a one-time do-over within a year, but that means repaying what you've received. Many folks jump in early but armed with this knowledge, you're better equipped to make a wise decision. Listen to this episode for more of the most-asked Social Security questions!

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• SSA.gov

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After a lifetime of service to the growing minds of America, teachers deserve a quality retirement. Educators looking to save money beyond their pension plan are being taken advantage of by predatory retirement plans, and I want to put a stop to it. On this episode, I’m breaking down how to avoid bad 403(b) and 457 retirement plans and steps you can take toward better retirement solutions.

• The teacher retirement problem [1:33]
• What are 403(b) and 457 retirement plans? [3:41]
• Avoiding high costs and variable annuity retirement plans [5:58]
• Taking steps towards better retirement solutions [9:24]

Teachers hold a special place in my heart, thanks to my mom's decades-long dedication to kindergarten education. They often go unrecognized for their hard work, especially in terms of retirement savings. In Connecticut and beyond, teachers have pension plans, but they're often taken advantage of by certain financial institutions pushing additional investment through high-fee retirement accounts. I recently spoke with a client whose daughter, a new teacher, was pitched a retirement plan at her school by an insurance company. These plans seem beneficial, but hide exorbitant fees in fine print that siphon away teachers' hard-earned money without their awareness.

403(b) and 457 retirement plans are not inherently bad of course. A 403(b) plan is a retirement savings option tailored for non-profit organizations, much like the 401(k) for other sectors. With a $23,000 contribution limit pre-tax (and the option for after-tax contributions), it's a way to save for retirement while potentially reducing taxable income. There's also a $7,500 catch-up provision for individuals over 50. The problem lies in the predatory fees charged by some of the institutions that offer them.

One of the biggest issues is that cities and school districts are not negotiating better retirement plan options for their teachers. Teachers across several states, including Connecticut, are facing a concerning trend in their retirement savings due to the proliferation of high-cost variable annuity retirement plans. These plans, often offered by companies like AXA, Ameriprise, and others, impose hefty fees, sometimes as high as 3% annually, eating into teachers' hard-earned savings before any growth. 

The problem is exacerbated by additional charges like surrender fees, lasting up to 10 years, unique to these plans. What's alarming is that while other retirement plans have evolved to lower costs, these variable annuity plans haven't kept pace. These fees erode the potential for robust retirement savings and need urgent attention to protect teachers' financial futures. Listen to this episode for steps you can take toward better retirement solutions!

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• 403bwise

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