*A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies. All rights reserved.
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Video Transcript
Rebecca Powers 00:20
Welcome to this week’s edition of On the Money with Secure Money with Brian Quaranta and his amazing team at Secure Money Advisors. I’m Rebecca Powers, it is my honor to be with you each week. I was in news for almost 30 years. Hard to believe, as a producer, a news reporter, ended up becoming an anchor and an investigative reporter. Now I’m considered a consumer advocate, and doing the show with you each week gives me time with my children, and I have learned more than I ever thought I would by reading this amazing book that you give to everyone for free, free, free, free, no shipping and handling. You even do that.
Brian Quaranta 01:03
Yeah, yeah, right, right. Usually, you have to pay for the shipping. No, we pay for the shipping and handling. We send it out in this beautiful gold envelope. It’s like what you and I talk about all the time. It’s like getting the golden ticket in the Willy Wonka Chocolate Bar.
Rebecca Powers 01:16
For a lot of people, it is a golden ticket. He specifically made it very short, easy to read. You grew up in a very middle-class family. You saw your parents struggle. You worked for the big box the first few years of your career, and you said, I want to do it a better way. Wall Street confuses us. We were never taught financial wellness growing up, and that’s the remedy, I believe, of what you’ve done with this book.
Brian Quaranta 01:40
Yeah. And if you really think about the history of Wall Street, you go back to the 80s, yeah. I mean, I remember my grandfather, my dad, my uncles, they all had stockbrokers where, you know, they would call their stockbroker, would call with the stock tip, and they would, they would, you know, say yes to this stock tip, and they would buy it. But there was real no financial planners. There were insurance agents. I remember insurance agents coming to my house to talk to my dad, but not financial planners. Yeah. I mean, you didn’t really see, start really seeing financial planning until somewhere around later 90s, 2000 and then it’s really progressed now to where people are getting real financial advice, not just stock tips or investments to buy. They’re getting real advice around. How do you take 30, 40 years’ worth of work and actually start to get it to work for you when you retire? Because all of us, including myself, every dollar we make we have to save so that in the future, those dollars start to work for us, so that the day that we stop working, we stop trading our time for money, we are able to replace the paycheck that was once coming in and so you’re seeing financial planning around five key areas, income taxes, investments, health care and estate planning.
Rebecca Powers 03:12
And that’s why it’s so important to understand the big picture and to understand a holistic plan. In the 1978, 79 era, they got rid of the 401- Excuse me, rid of pensions, created the 401(k) Do you feel like that’s why people started needing financial planners so much, because their own personal pension, it didn’t exist anymore?
Brian Quaranta 03:34
Yeah, look. I mean, I think the really scary part about the fact that you saw less and less companies offering pensions and replacing them with the defined contribution plan, which is just a fancy way of saying the 401(k) plan.
Rebecca Powers 03:50
And do it yourself, really.
Brian Quaranta 03:52
Yeah, it really is. And the scary part about it is usually your 401 K usually comes with maybe an hour seminar or an hour class on Here’s your investments, here’s how you pick them. And that’s the only bit of training that people get on actually, how to position and allocate their money in their 401(k)s. And then there’s zero training, or zero understanding of how to actually take that sum of money when you retire and turn it into a stream of income for yourself, because that’s the key here. And the income piece in retirement is a puzzle. If you think about all the different puzzle pieces that you have, you have Social Security, you have possibly a little bit of pension income for some people, right? They haven’t completely disappeared.
Rebecca Powers 04:43
Sure, teachers and state workers.
Brian Quaranta 04:44
That’s right, and then you have investments. Some people might have real estate. Some people might have dividend paying stocks. How do you take all these pieces of the puzzle and put it together? And then you have the puzzle of, where do I withdraw from? For. First, in which sequence, which sequence, where do I take from? First, how do I take it? And then you’ve got the puzzle of taxes, the big one, because now, depending on what accounts you pull from, depends on how much you’re going to pay in taxes and how much you might have to pay in penalties, because you’ve got these pitfalls of penalties to deal with. You’ve got penalties at 59 and a half. You’ve got penalties at 73 for the required minimum distribution. You could potentially have to pay more for your Medicare. So, there’s all these, all the puzzles after puzzle after puzzle, pitfalls, after pitfalls, after pitfalls. And that’s why we say, folks, if you haven’t done so yet, get a copy of my book Right Track Your Retirement because, like Rebecca has said, it really is a simple guy. It’s a road map to help you understand how to piece together your retirement plan and understand the basic fundamentals behind those five key areas of your income taxes, investments, your health care and your estate planning. And once you understand these fundamentals and you get some clarity around them, you start to have peace of mind and confidence, and that’s what we all want going into retirement.
Rebecca Powers 06:12
And besides, when you have that job in your 20s and they say, Okay, how risky do you want to be, you kind of set it and forget it. Another thing they don’t ever mention, because I was with the big box for probably 20 to 23 years, is tax liability. So, we do need to take a break in a minute, but it’s a very exciting formula that you’ve come up with that we’re going to tell people about, that you can actually look for the rest of your life what your tax liability will be. Why do you say tax liability?
Brian Quaranta 06:43
Well, because, whether you like it or not, you owe the IRS some money. As a matter of fact, for all of you that are watching right now, if you just think about the amount of money you have in your IRA accounts, well that’s not all yours. Matter of fact, your biggest partner is the IRS. You get to see the total balance. But if you were to take all of that money out of there, you’re going to see about 40% of that go to the IRS in the form of taxes. And when we come back, I’m going to share with you how you can get what we’ve created a tax calculator so you can see how much money you would owe to the IRS if you do no tax planning. And when we come back, I’m gonna show you how to get ahold of that calculator. But before we do that, I want you to go to OntheMoneyOffer.com, get a copy of my book. Again, it’s Right Track Your Retirement right down at the bottom of the screen there OntheMoneyOffer.com you can scan the QR code or call 1-888-382-1298, the team standing by to take your call, get you scheduled, get you a copy of the book, and when you come into our office, I want you to come in and sit down with us, because one thing you’re going to find that’s different at Secure Money Advisors is we’re here to work with you as a partner, as a teammate, to roll up our sleeves and help you put together a customized strategy to give your retirement the security and the peace of mind that you want.
Rebecca Powers 08:07
Absolutely, Brian’s right. Not only ask for the book, but ask for a time that you can sit down with Secure Money Advisors, because you may be on the right track, and they’ll be happy to tell you that, but you can’t get a second opinion from the person who gave you the first so remember that this is also absolutely complimentary. We want to meet you, Pittsburgh, stay with us. We’ll be right back.
Brian Quaranta 08:28
Everybody can tell you how to invest your money. There’s not a lot of people out there and a lot of firms that can teach you how to use your money. Most people also tell you that they’re scared, and the reason they’re scared is because they’re afraid of running out of money.
Neil Major 08:41
The last thing you want to do is have a really good job in your 60s, retire, be looking for work again in your late 70s.
Brian Quaranta 08:49
The average person might say, well, a good portfolio would be a good mix of stocks, bonds and mutual funds. None of them. A good portfolio is all designed around the five key areas, income taxes, investments, healthcare and legacy planning.
Neil Major 09:05
We’re not just product pickers here. What we do best here is we build retirement plans.
Brian Quaranta 09:09
Nine out of 10 people, when they walk through the door, we ask us, we just want to know if we’re on the right track, and I always say, if you’re not on the right track, when would be a good time to know it? Probably now.
Neil Major 09:20
People, you know, can actually see a vision once we start to really build out their plan.
Brian Quaranta 09:25
This is about you, if you’re not getting what you need, and you feel that when you walk out of the advisor’s office, it’s time to get a second opinion. And you can’t get a second opinion from the person that gave you the first opinion. The difference at Secure Money Advisors, as a fiduciary firm, we help you manage the risk, build the income and give you the retirement you dream of.
Rebecca Powers 09:54
Welcome back. Securing your money means protecting your money, hard earned money. Money. Why should you be risking? I mean, I’m 56, I don’t want to risk my money, and there are ways you can do that. One of the ways you can save money today is figuring out what your tax liability is. And I love what you’ve created. You spent a lot of time and money on this.
Brian Quaranta 10:16
We sure did.
Rebecca Powers 10:16
And it is complimentary as well. You want everyone to understand what their taxes
Brian Quaranta 10:20
And I’m going to talk about what it is. But before we do that, I want you to want to tell you where you can go to get this tax evaluation. You can go to RightTrackMyTaxBill.com. Again, that’s RightTrackMyTaxBill.com. And here’s what it’s going to do. First off, I want to tell you a story about the Masters of the Sky. Okay, oh, because-
Rebecca Powers 10:41
The Masters of Sky?
Brian Quaranta 10:42
The Masters of the Sky. So, imagine you’re a pilot for 30-40, years, okay, and pilots have a hard out at 65 they’ve got to go, can’t fly the next day, all right, so, but imagine you spend your entire life navigating the skies, understanding weather patterns, understanding turbulence, understanding how to navigate all the roadways up in the sky. And the day that you retire, they say, Hey, great job. But now we need you to be the masters of the sea, and now we want you to be the masters of this ship and the pilot of this ship, and now you got to learn to read the seas, and they’re putting you in charge of this big ship, and they’re putting in charge of it tomorrow. Not- no training. They’re just going to put you in charge of it tomorrow. How scary would that be? And not wise, and not wise, and not wise at all. That’s what we’re asking people to do when it comes to their retirement planning, they’re the Masters of the Sky in their own type of work, whatever it is that they’re doing right, whether they’re a chiropractor, a local business owner, an administrative person at a Corporation, a payroll individual plumber, plumber, whatever it is, but the next day, we do something else. You now need to become the master of investments, the master of tax planning. What is the possibility that you’re going to know exactly what to do? And this is why it’s so scary, because this is what we call the YOYO retirement plan. You’re on your own. You’ve got to figure out how to do it. And part of the reason why I wrote the book Right Track Your Retirement and now created this tax calculator, again, RightTrackMyTaxBill.com is so that you can understand the tax liability that you’re going to be dealing with for most of us and for most of you watching right now, the largest account that you have is probably your retirement account, which means your 401(k), your IRA, your 403 B account. That money is tax deferred money, which means that every dollar that comes out is going to be taxable, and if you don’t do any type of tax planning, that tax bill is going to become larger and larger and larger, and a larger share is going to have to go to the IRS. But we can get rid of the IRS and buy them out right now so that as those accounts get larger, you can turn that money from having to pay taxes to turn it in to be tax free to you, but you first must understand how much you’re going to owe in taxes. So, if you go to RightTrackMyTaxBill.com you’re going to get a customized, personalized report of your personal situation. When you go there, you put in the amount that you have in your retirement accounts. You’re going to put in your estimated tax bracket, your estimated growth rate, and then it’s going to show you the difference of how much you’re going to pay in taxes if you do know tax planning versus if you do tax planning. And let me tell you, you’re going to be amazed when you see the difference between tax planning and no tax planning, but you’ve got to go there right now. It’s RightTrackMyTaxBill.com.
Rebecca Powers 14:08
And I know you have so many personal stories of people you’ve sat with, and when you do this tax planning forward, they almost fall off their chair. Give me an example of someone who you said, Okay, do it this way, you’re going to pay 150,000 less, and a penny saved is a penny earned. In other words, if you save them that 100,000 or whatever it is, you just earn them that money.
Brian Quaranta 14:32
That’s right.
Rebecca Powers 14:32
And they’re not risking.
Brian Quaranta 14:33
That’s right
Rebecca Powers 14:34
Just understanding tax code, taking advantage of it to their benefit.
Brian Quaranta 14:37
And there’s many ways that you get caught in these traps of taxes. Okay, I’ll give you a great story that was written about in Money Magazine many years ago, story about a son by the name of John, inherited money from his father in a retirement account, not knowing how to inherit a retirement account. He. He took the money out as a lump sum. Well, when you take money out as a lump sum from a retirement account, it’s 100% taxable. So, he takes $500,000 out of his dad’s retirement account. By the way, this was not his fault, because when his dad died, he called the company that his dad had the money with, and they said, We need a copy of the death certificate. So, he sends it in, and they send him paperwork. And so, they send the paperwork, he signs everything, they send him a check. He didn’t know that there was a different way. And so, he gets the check. And a few months later, he gets a 1099 for $500,000, can you believe this? That means, by the way, 1099 means $500,000- means you owe taxes on $500,000 so his tax bill was over $240,000 so half of his dad’s retirement account was wiped out in taxation. That did not have to happen, right? Because with proper tax planning, all $500,000 could have gone to his son, and his son wouldn’t have owed that. So right there that family lost 50% of the wealth because there was no tax planning done. This happens on IRAs when you inherit them. It happens with IRAs when you withdraw money for your retirement. So, with simple tax planning, you can go from having to pay taxes to not having to pay taxes, and so that we, you know, you know, you and I have talked about this many times. Would you rather pay taxes on the seed or the harvest? So, imagine we have an account with $100,000 in it, okay? And it’s a tax deferred account. Well, that’s great. Every year gets bigger and bigger and bigger, we don’t have to worry about paying taxes on it, yeah. So, it goes from 100,000, 200,000, 300,000 but now all of a sudden we want to start taking money out. Well, we’re going to owe taxes on all $300,000 Exactly. Well, it might have been better to actually do some tax planning, whether that be through a Roth conversion strategy, right, or through some type of leveraging strategy where we’re hedging the tax liability for the family by utilizing the tax-free benefits of life insurance. But if you go to RightTrackMyTaxBill.com. This is the beginning of you getting clarity around how much money you’re going to owe to the IRS if you do no tax planning. And the first step to building a plan and coming up with a strategy is first identifying the problem. Once we identify the problem, now we can look for the solutions. And again, if you go to RightTrackMyTaxBill.com and when you’re there, you’re going to put in your information, it’s going to build a customized report for you for your situation, and then it’s going to give you an opportunity to come into the office and sit down if you want to talk about ways that you can eliminate the amount of taxes that the report is showing you that you would have to pay.
Rebecca Powers 17:59
Absolutely and if you choose to come into the office that is also complimentary. We really want to get to know you see, if we are right fit for you, and that’s where the planning begins, do not kick the can down the road that ticking tax time bomb when you’re 73, and you wake up and go, Whoa, what do I- oh- It’s better to know now, and that’s why we’re so excited about this. All right, we’ll be right back. Stay with us.
Speaker 1 18:22
We’ve got quite an extensive resume. Wow, so many years of management. I bet that was fun. So, this job requires basic knowledge of the social media and video platforms, content creation and SEO. How proficient are you in those areas?
Brian Quaranta 18:44
Going back to work after retiring is not ideal. I’m Brian Quaranta with Secure Money Advisors. If you have amassed a nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while you can. We specialize in retirement planning, tax mitigation, estate planning and more. Plan your retirement right Call now for your complimentary portfolio review and tax analysis.
Rebecca Powers 19:16
Welcome back. You know when you say, get rid of Uncle Sam, get him out of the relationship. It sounds too good to be true, but taxes are actually on sale right now, historically low tax rates. Why are people not told to take advantage of that? Wait until you’re 73, we want more of your money. Don’t worry about it. That’s the liberation you feel when you tax plan.
Brian Quaranta 19:39
Yeah. Well, I think that, again, financial planning is a lot different than investment planning, and we talk about the big box firms quite a bit. And the big box firms that I used to work for, they teach you how to put together a diversified portfolio of investments. Right. And they teach you how to take risk with people’s money, but they’re really not teaching you about retirement planning. I want people to understand the difference between investment planning and retirement planning is: with investment planning, you’re trying to grow somebody’s money that has time on their side, so when you’re trying to put together a risk strategy, you also have to take into account that that individual is going to experience volatility. There’s no way to avoid that, sure, but the way you mitigate volatility is through time, but when you retire, that time starts to shrink down on you, because that need for the money is different. You go through what we call the accumulation phase, where you’re growing the money to the distribution phase. Or another way of saying that is, I need my damn money right now.
Rebecca Powers 20:53
I gotta pay myself.
Brian Quaranta 20:56
I’ve got bills to pay, and I’ve got, you know, things I want to do on a monthly basis, and I need that stream of income. And retirement planning has to focus on income, and it has to focus on taxes, primarily, because the two things that will eat into your wealth and reduce your purchasing power faster than anything else, is inflation, right? We know that as things become more expensive, my dollar just doesn’t go as far, right. It’s shrinking. When I was driving back and forth from New Jersey to Pittsburgh to go to college, when I would leave, I would stop off at the local gas station in my town in New Jersey, and it cost me 82 cents to fill up per gallon to head back to Pittsburgh, right? And now, what is it? $2, $3 I mean, you know, more? I mean, it bounces around so much anymore.
Rebecca Powers 21:51
And diesel used to be cheaper, remember? And now it’s more expensive. That’s another- we have to do a show just on that.
Brian Quaranta 21:58
That is inflation. My dollar doesn’t go as far. Are you seeing a gallon of gas for 82 cents and now it cost me well over, you know, $2, almost three, well over three, depending on what time of year we’re talking about. So, but what about taxation? How does that reduce your purchasing power? Well, think about it like this, if you have to take $1,000 out of your retirement accounts, and you’re in, let’s say, a 20% tax bracket. Well, when you withdraw that $1,000 you have to pay that 20% so that means you’re really only going to net $800 after you pay the taxes. Now, what happens if tax rates go up? And if you’ve ever come to one of our educational events, we’ll ask a group of 50 people, do you think taxes are going up or down? And they’ll say, I think they’re going up. Everyone raises their hand. Everybody raises their hand. They believe they’re going to go up. Yeah. So, if now all of a sudden, your tax rate goes to 30% now that same $1,000 withdrawal that comes out of your account is not going to net you $800 anymore. It’s only going to net you $700 so just through taxation alone, there you lose purchasing power. Now add inflation into that, and now you can see how that purchasing power really declines. And this is why one of the variables that we can control here, Rebecca, is taxes. Because if we do good tax planning, and let’s define what tax planning is, right, because tax planning is different than actually getting your taxes done for the year completely different, right? When you- when you’re doing your taxes for the year, you bring your tax account and everything, you put it on their desk, and then they tell you how much you owe, right? Tax planning takes place years before retirement. So, I’ll use myself as an example. As I was building my company, I used, at first, what we call a SEP IRA. So, this is a self-employment type of IRA where I was able to contribute on the behalf of myself, because I didn’t have any employees at one point, right? And then, now today, we’ve got 30. Right. So, this SEP IRA that I had was a tax deferred retirement account, so I was getting a tax deduction for putting money in. But as that account grows and gets larger, I owe taxes on every penny. So how do I get rid of that taxation? I can do what they call Roth conversion, so I can start converting that to Roth money. And by the way, most of you probably know that they restrict or cap how much you can contribute to a Roth IRA, but they don’t cap how much you can actually transfer or convert to a Roth IRA. So, you could convert millions to a Roth IRA just like that and create all of that money now that you’ve converted to tax free money. And again, this is why, if you’re just joining us, I want you to go to RightTrackMyTaxBill.com. Again, it’s RightTrackMyTaxBill.com, it’s right at the bottom of screen there, and it’s going to take you to a tax calculator. That tax calculator is going to allow you to put in your own personal information, and it’s going to give you a customized report to show you that if you don’t do any tax planning, here’s what your tax bill is going to be, but with good tax planning, here’s how much you would pay, and you’re going to be amazed when you see the difference. And the reason why we spent so much time and money building out this calculator is because one of the biggest things that people are not having conversations with their financial advisers about is taxes. They might talk about like how much you have to pay on your income tax and your social security and your pensions and your RMDs, but I’m talking about creating large amounts of tax free wealth, whether that be tax free wealth that’s coming to you in retirement as you as you live your life and you start to create a paycheck again, I want that money to be tax free for you, because with proper planning, that $1,000 example that I gave you, where if we had 1000 and you took money out, you had to pay the taxes, and you’re netting less with tax planning, we could take $1,000 out and get $1,000 because it’s all tax free. So RightTrackMyTaxBill.com. Go there right now and go through the calculator and get that report. By the way, don’t forget too, that you can go to OntheMoneyOffer.com scan the QR code at the bottom of the screen. Or you can call 1-888-382-1298, and they’ll- my team’s standing by. They’ll send you a copy of the book. Schedule you to come in. I promise you that if you come in, my team will never sell you anything. They will never, ever sell anything. They’ll never press you to do anything. We’re here to truly help you solve a problem. And by the way, if you’re on the right track, and you don’t have a problem, we’re going to shake hands and tell you to keep doing what you’re doing, and you don’t need us.
Rebecca Powers 27:08
And the one word he forgot to say is, all of this is absolutely free. He truly has the heart of an educator, so the book will be mailed to you. Brian even pays for the postage when you get that appointment to come in. That is also complimentary to see if we’re the right fit for you. And as he said, Don’t forget about Right Track My Tax Bill, also completely complimentary. And it’s not like we’re asking for your email and your phone number and all these things we really want you to put in what your taxes might be. And it’s jaw dropping.
Brian Quaranta 27:40
It is. It’s one of the best things that we’ve created, and it gives people a lot of clarity around the work that they still need to do when it comes to retirement planning.
Rebecca Powers 27:49
It is all about peace of mind, and peace of mind starts with a plan. Thank you so much for joining us. We’ll see you next time.