How can you reduce taxes, IRMAA, net investment income tax, and required minimum distributions when you’ve got too much money in your tax-deferred retirement account (traditional IRA) – and just how much Roth conversion should you do? That’s today on Your Money, Your Wealth® podcast 423 with Joe Anderson, CFP® and Big Al Clopine, CPA. Plus, can you contribute to a Roth by transferring stocks “in kind”? If the check you send off to pay your estimated taxes isn’t cashed before the deadline is it late? How does SECURE 2.0 impact 529 plans, and is 529 better than Roth IRA for college savings? Finally, the fellas spitball a 401(k) in-plan Roth conversion and retirement account consolidation strategy. Podcast show notes, free financial resources, episode transcript:

00:00 – Intro
00:48 – We Have Too Much in Traditional IRA. How’s Our Roth Conversion Plan? (Kelly, Idaho)
10:17 – Download the Tax Takedown Guide:
Watch YMYW TV: Tax Takedown:
10:54 – Can I Make a Roth IRA Contribution by Transferring Stocks “In Kind”? (GDO, Delco)
14:36 – How to Pay Estimated Taxes: If My Check Isn’t Cashed Immediately, Is It Late? (Judi, San Diego)
16:15 – Download the 2023 Tax Planning Guide:
16:51 – 529 Plan vs. Roth IRA: Does SECURE 2.0 Affect 529 College Savings? (George)
20:49 – 401(k) In-Plan Roth Conversion and retirement account Consolidation (Steve, Maine)
27:07 – The Derails

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• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
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CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period….(read more)

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As heard on the Your Money, Your Wealth podcast episode 423, traditional IRAs can be a great way to save for retirement. However, what happens when there’s too much money in your traditional IRA? It’s not uncommon for individuals to accumulate a significant amount of money in their traditional IRA as they save for retirement. But, with the required minimum distribution (RMD) rules, having too much money in your traditional IRA can create problems.

First, it’s important to understand RMDs. Once you reach the age of 72 (70.5 if you turned 70.5 before January 1st, 2020), you are required to take a minimum distribution from your traditional IRA each year. The RMD is calculated based on the account balance and your life expectancy, and the amount you must take out increases each year. Failure to take the RMD results in a significant penalty of 50% of the amount that should have been withdrawn.

If you have a significant amount of money in your traditional IRA, your RMDs could become a burden. Not only do you have to take the RMD each year, but the amount you’re required to take could be more than you actually need. Additionally, taking too much out of your traditional IRA could result in higher taxes or triggering the Medicare surcharge.

So, what can you do if you have too much money in your traditional IRA? Here are a few options:

1. Roth conversions: Converting some or all of your traditional IRA into a Roth IRA can help reduce your RMDs. Roth IRAs do not have RMDs, so converting money each year would result in a lower RMD amount. However, converting money from a traditional IRA to a Roth IRA is a taxable event, so it’s important to understand the tax implications before making this decision.

2. Qualified Charitable Distributions (QCDs): If you’re 70.5 or older, you can donate up to $100,000 from your traditional IRA directly to a charity. This counts towards your RMD and is not included in your taxable income. QCDs can help satisfy your RMD and lower your taxable income.

3. Retirement plan contributions: If you’re still working and have access to a retirement plan, you can contribute to it to reduce your taxable income. This could result in a lower RMD amount in the future.

4. Estate planning: If you expect to have a significant amount of money in your traditional IRA at the time of your death, it’s important to have a plan in place. Naming a qualified charitable organization as the beneficiary of your traditional IRA can help reduce the tax burden on your heirs.

In conclusion, having too much money in your traditional IRA can create problems with RMDs. But, there are options available to help reduce your RMDs and minimize your tax liability. It’s important to work with a financial professional to determine the best strategy for your situation.