Why Traditional IRAs Are a Tax Trap And How To Convert Them to a Tax-Free Retirement (Episode 9)

[Music]

this is 93 million with Doug Andrew welcome to 93 million with Doug Andrew where we talk about how to optimize your assets minimize taxes and empower the three dimensions of your authentic wealth my name is Greg Duke your host facilitator and IL specialist and in today's show we're talking about national debt impacts issues with IAS and 401ks and related tax strategies and we're joined by New York Times bestselling author the pioneer of MaxF funded IL and the author of the laser

fund Doug Andrew good to have you Doug co-author of the Laser Fund and IL mastermind and a lover of old physical calculators Emran Andrew that's me also co-author of the laser fund the IL Einstein and the top IL specialist in the world Aaron Andrew thank you it's true it's true i read it on a tech screen somewhere and our featured host for today president of Laser Financial and IL mastermind and one of the nicest guys you'll ever meet Brandon Johnson welcome Brandon excited to be here yeah

welcome back it's good to have you all right gentlemen and we have some of our most popular topics uh for today so I'm

really excited to jump uh right in with our first segment the definitive deficit dilemma okay I'm going to show a picture here on the screen uh here's a picture of our current US spending versus our US revenue according to heritage.org now Doug what do you see when you look at this graph what do you see well red versus green the red is the debt and uh if you were to round those two numbers up uh to you know 7 trillion that's what's being spent by the government

it's a lot of money and the the green uh just under 5 trillion so uh what that tells me is if you or I were making 50,000 a year and we kept spending 70,000 a year because that's what's been going on for several years in fact during CO 19 uh we only brought in 4 trillion and we spent more than double that okay uh we would have to go bankrupt right right but uh the government doesn't do that and in this episode I'm sure we're talk about what the government does and there's two

main things um you know they've got to increase taxes or they got to u somehow decrease the spending yeah i wish there was no consequence i could just spend whatever I wanted without regard with what I was collecting and if you could print more money right yeah yeah you know if I didn't have to watch it you know I could just spend more than I make that would be Yeah that would be kind of nice honey honey we need to print more money this month well too bad that's called a fairy tale not reality

that's the case if any of us were in this situation like at the lower level we'd be in real trouble you know yeah you'd be kicked out of your house you'd be in you'd be in ma major credit card debt and I mean you'd be buried yeah you would just be it just it' just be nonsense ready to Yeah file bankruptcy all right so So Amron um what do you think that there's a prayer that we can actually cut all of that deficit spending in the long term well I mean if we can get uh there usually there always

is i mean if you get into a situation you come in you find out where are we spending unnecessarily right i think we're seeing that right now i mean you see I think I mean if you you always want to validate what it is but man and what's being revealed right now is we've got so much of unnecessary spending maybe some fraudulent spending but I mean just getting rid of that alone could do some a major things i don't know if it would be enough but it would definitely put a

major dent into this for sure yeah erin what are your thoughts well like think about this i'm thinking about like a clients I meet with and it's like you look at someone because sometimes we meet with somebody where we can't do much for them because they're in so much debt they don't have any money to save they don't have and it's like let's look at your situation and let's see where we can cut back where can we cut back what is not necessary what can um what can

you live without and where can we kind of trim off the sides and so forth so same thing like we need to do this as a country really do i mean we got way too much spending we don't have enough coming in we've got to do something otherwise um yeah it's just going to get worse and worse most business owners have been faced with this kind of a situation and they have to cut spending and you know whether you like him or not Elon Musk uh he's he's a businessman and so he's naturally looking for places

where they can cut spending unnecessary spending spending that is not required for us to survive or even thrive for that matter brandon you like to spend money what do you What do you All you have to do is talk to Margie about that my wife loves Here's a fun stat every day we spend $3 billion just on interest for our debt not one penny of that goes to pay off principal that's just to service the interest wow three billion a day so rap that's a lot in a credit card that's

like a Yeah now lot of credit card interest there doug did mention Doug mentioned um Elon Musk and so um with with Doge and when when uh I think I said that right Doge Doge depending on where you're from I guess so he actually came out and said when when they asked what's your goal like how much do you want to cut um he was supposed to say $1 trillion the guy that like you know that he was working with along with Trump that appointed him the plan was 1 trillion he said two trillion

was trillion trillion so the goal is the goal is by next year mid 2026 to have 1 trillion cut so so that does give me a little bit of hope that finally some people are are in there doing some good to cut like you said some fraud waste if someone would have asked you 5 years ago if you thought the government could cut fraud waste and abuse like this you know what I mean what that I I don't know if I would have believed it i know you would want it but could you believe it

would actually happen yeah well I I I mean I've seen reports of people like "Hey there's all this fraud like we've been reporting on it but no one wanted to care or listen about it people are finally being aware of it how much waste and fraud there is and it's like it's hard we have to deal with it we just got to deal with it some people that don't want to cut it's like we need to cut it's just think about it in a personal situation you've got to cut that's fraud

i mean if you have to cut the other harder stuff I mean let's cut the crap first before then you get into the hard cuts it's easy to cut nonsense correct and that's what we got to get rid of first we got to get rid of the nonsense and it shouldn't be a politically divided it should just be like "Hey for the sake of the country for our children our children's children let's just cut

the waste and and and the abuse." Okay well according to a pen mut uh Penn Wharton University of Pennsylvania budget model our total national debt

when you include explicit debt debt we have and implicit or future obligations total indebt indebtedness is at 92 trillion and uh many believe it's a lot higher than that doug what does a national debt like that mean for retirement picture and Americans retirement plans and all the planning they're trying to do for the future oh yeah because again when there is that much uh when you add the uh the additional debt in other words what what are what's called unfunded liabilities

okay social security the government owes in future social security benefits to who the people they withdrew it from okay and Medicare uh we're we're over a hundred trillion right and so where wait you're telling me all the social security I'm paying in right now and all the Medicare I paid I'm paying that's what I had that money is not sitting there for me i didn't they put that in a lock box my money's not there for me your money they called it social security trust fund it's got a lock box

there's like there's like a pin pin to the lock they basically you know I remember clear back in 2009 they said if they stopped withholding FICA social security for people's paychecks in 9 months they would be out of money to pay social security recipients they barely got this cushion going on and it's it's unfunded and you know I I've said this for years oh so what's the definition of a system where you have to constantly bring in new money to cover old li pay

off old liabilities of people you took it from that's a Ponzi scheme yeah and I thought it was comical when Musk came out and said social security a Ponzi scheme right yeah we've seen that it fits the definition of Ponzi that the government gives uh with the FBI and and the Securities Commission well what happens when when a Ponzi scheme finally falls apart is when they don't have enough right you know what happens when child birth rates go goes down right does that

mean it's on the decline right now right it has been absolutely that's very true it's coming to a head in fact if you actually go to sso.gov social security they have been publishing for decades now that they are going to run out of money i mean you as me as an American citizen if you go to social security you log in and they have warnings on there telling you as an American we will not have enough money in approximately 2030 2032 they're not hiding just on the

book basically it's right there the upcoming workforce uh is not as big as the retired baby boomer who are collecting Social Security so that's why it's destined it it's it's a train wreck waiting to happen and they've already spent all the money all the money they we they put in social security is already spent it's not there correct it's it's all of us working now paying for people that are on social security you're paying to a whole bunch of people that never paid

into it either yeah that's that's that's a that's a problem so taxes have to eventually go okay that's so that's

that's the program that's the next thing on here according to the same paper restoring a long-term uh balance in other words paying off the debt would require to a couple of instances that you could do but the first thing that they say is a 14% 14.6% increase in federal taxes in addition to an equal percentage cut in federal spending so if you equally raise taxes and cut spending which could be questionable depending on our history of cutting spending right

but if you could do that it would still be a nearly 15% increase in spending so Aaron you you deal with a lot of clients who have the concern of taxes over the years h how what would happen for and for people listening and watching if you had an in 15% increase starting today in your retirement in your taxes from today forward for forever how would people some people Well some people that are on a fixed income fixed budget and they're barely scraping by they're going to have

to go back to work honestly they're going to have to go back to work they're going to have to sell or downsize or something let's hope Walmart is hiring and yeah like honestly it's just there there's so many issues with with this code yeah people's retirement so it's like yeah it's going to hurt people big time they got to go back to work they got to cut it's going to be very detrimental that's why they haven't done this it's like it's a big deal yeah and and now for the rest of the story okay

here's the next part if we didn't cut any spending okay what kind of a tax increase would it would take and that is a 33.4% federal tax increase ouch if we didn't cut any spending okay so uh so Eron what do you think about that how would how would that be taken by the American people well I don't know unless you want to just stab us in the eye i mean it might be less painful go i mean yeah you're going to kick somebody down while while it's that hard i mean you're

talking about tax rates that are higher than anywhere else in this country i mean I mean at that point I don't see that other than just highway robbery that is theft it's honestly people would have to get another job like think about that that's that's you'd have to and it me from even working like so if you take a a whole half of the population if you did that to them they wouldn't even be incentivized to work anymore and one of the greatest attributes of America is

our resiliency doing something like that though you're put you're you're that's in a direct attack on American resilience you're taking away ownership of the thing yeah you're taking away the motivation to actually get out there so you're trying to destroy the American dream well even right now I have clients that um the second you know the other spouse has a job and sometimes they quit because they're like "Hey my income's on top of my spouse's and if it's at that

higher bracket it's not worth it." If it went up that much they would definitely many people would quit and they're like "It's not worth it it's not worth working anymore too much is going to the

government." The problem is if they don't cut spending and all they do is increase taxes who are they taxing the people who have the money right and those are the ones you're hurting the most right because people saved and now you're penalizing the people who saved who wanted to be financially independent yeah and and this report actually says it right there in the report if you look at it says tax increases are assumed not to reduce the labor supply so this report's kind of assuming no negative

impact on labor supply what would be the domino effect of this yeah exactly right there's a that's a dubious some politicians want to do this some want to you know go that high of increase and and we just imagine what would happen if you know Yeah uh Brand Brandon you work with a lot of clients how big of a deal is taxes for them it's huge and what's incredible is when you look at their IRA and 401k accounts which the majority of them have saved um most of the people

that come to us you know they did a pretty good job saving but they've stacked up so they're kind of lopsided where they're in very high taxable um accounts and so when we start talking about strategically rolling out getting more tax efficient it's like they get this angst because they're like "Well if I do that I'm going to have to pay this much in taxes right now." And they don't

realize that's it's a kind of a toxic relationship you're in with a partner right now that that you owe that partner that's actually their money so let's get out of that toxic relationship and let's make it so that it's your money your bucket and you have full control over it and so that's part of the education is some people just look at it's like well no 100% of that that's mine but it's not let's get out of that partnership ASAP because it's not a great partnership

yeah absolutely all right well let's get into our next segment but first just a reminder that if you enjoy this content and you want to see more of it please like and subscribe and ask us a question comment we may use it in one of our next shows we'd love to hear from you all right 401k is a lot of money not really what okay right here says right here in this this account we have $41,000 check you missed it nope uh that says you have a 401k account what if you

liquidate that right now you'll have you know maybe $5,000 so what happened to the other $396,000 exactly gotcha gotcha that's awesome will jackpot all right okay well joking aside you know a lot of people they look at their 401k and they go "Hey we got money in there you know and in reality taxes gobbles up a lot of it right um Doug uh what's um what what uh why are pro accounts like qualified accounts like IRA 401ks what's the trouble with issues with accounts

like that?" Well it's because so many people like uh Brandon was just talking about they're looking like "Oo I have this million-doll nest egg and then I have to be the bearer of bad news." Well that's not all your money that's why when people would come to their first appointment I would say "Oh be sure and bring your after tax IRA 401k

statements." And they would go a after tax i knew they'd have and then I'd have to Well you that a million you only have really 700,000 that's your money and uh that that little clip reminded me of the cartoon I put in my third book Last Chance Millionaire it shows this retiring couple sitting on the couch and the husband's uh talking to his wife with his laptop and his calculator and he goes "Well honey I figure if we take a late retirement and opt for an early death

we'll barely squeak by." Yeah that's awesome that's what happened that's planning get this illusion oh you know I got this much money in there and uh it's not all their money or if they had a million and they thought they could pull out 7.5% a year 75 grand they're only netting $50,000 to buy gas groceries prescriptions and golf green fees most savers are not in lower tax brackets and that's the whole premise that people were duped into putting money in the Oh

you'll likely be in a lower bracket so keep deferring and deferring some future perceived unknown advantage most Americans think that taxes in the future will likely be higher yes yeah and and that's and that's kind of what we were talking about in the last segment too

right with national debt taxes likely would be higher emerin we've talked about strategic rollouts before what what is a strategic roll out what does it mean how does one actually do a strategic roll out what does that what does that mean well and the key word to this right here is strategic right we want to be strategic uh and so you want to figure out I mean the idea if I'm being strategic on what am I being strategic about i'm trying to pay am I going to have to pay taxes yeah I'm

going to have to pay taxes right but let's try to figure out how I can pay the least amount of taxes possible and reclaim my financial future let's reclaim control cuz that's the biggest thing when I look at an IR 401k the biggest problem with it is I ask you know who who h who has ownership over the control of the account or the control of the split right between me and the government who controls the split of ownership the government that government decides how much they want

and that's the problem we've got to help people reclaim control their financial future the only way to do that is to get out of these i mean it's hilarious i've been watching you know I've been seeing reals come up on my phone of of financial advisors you know and it's always like the number one advice the number one piece of advice every adviser is always giving is always hey max out your IAS and 401ks first and then look at other investment options yeah it's always the default it drives

me nuts why why are you trying Why Why do we put so much money into a partnership with the government i Why because like Doug said if you The more you save in these accounts the bigger the tax trap you're creating for yourself right yeah yeah and with that I have clients that come like I had one just the other day that's like "Wait but if I if I take money like in the 60s if I take money out of my IRA 401k I'm going to lose all this money and I'm going to start have a lower balance it's

going to take me forever to recover that money right so they they look at it like as a binary choice like I if I do this right now I'm going to just lose all that money and I'm going to have less growing and I'm not going to have I'm going to have less money down there let's do a little example newslash it wasn't his money to begin with that's the thing right let's go to the coffee table okay we're going to go to the whiteboard so this client this is what I

just did with him the other day i had to give him an example so I said "All right let's use an example." Because he was all worried about "Hey if I pay the taxes now," and again we don't pay it all at once and said strategically we're going to do this over a few years but just as an example let's say we have $100,000 and we're going to use a 30% tax bracket so I I just did this with a client just on the phone and on Zoom

said "Okay have $100,000." And he said "Well if I pay taxes now in a 30% bracket going to pay 30% in tax that's of course 30 grand." So he's like "If I pay taxes now that's $30,000 and I'm going to um have only 70,000 left over to invest or work with." So now I got to recover that loss i just lost 30 grand and I have less money growing for me

right and I said "Well hold on." Okay hold on you know going to call him Bob and so I said "Hold on Bob now let's use the example if you leave it in the deferred accounts the IRA 401k accounts so let's say say we still have our $100,000 we don't pay the taxes yet." He's like "Yeah I got more money in there i got more money right oh let's grow a higher number on my statement."

Yeah it's going to grow to a larger amount okay let's just use simple math let's say this money doubles after a period of time so how much does 100,000 double to 200,000 right as Emran's putting it right there on the screen that uh doubles to 200,000 well okay he's got a lot more money there what if we have the 70,000 we got to recover from that loss remember he thought he had to recover from that tax loss we double the 70,000 that doubles to 140,000 we have less money we got less

money now let's use the same tax bracket okay use the same tax bracket use 30% if we had to pay 30% on our 200,000 now what's the net what's 30% of 200,000 that's 60 grand 60 grand so guess what wait a minute it's the same amount uh are you guys seeing that 140 140 so it's the same exact story at the end of the day if you're in the same tax bracket this is why they say "Oh if you're in a lower tax bracket retirement," but most people are finding themselves in a higher and if you like

we just talked about if we're worried about taxes going up down the road get them over and done with now yeah because if that if that 30% in 10 or 15 or whatever that doubles it's 35 or 40 35 or 40 then all of a sudden you're paying way more tax and on a higher balance so the big thing I want you guys to take away from this though is don't think by paying taxes now you're going to have less in there and you got to recover from this loss i get that question all the time right you do this simple

example and it's like it's the same bottom line down the road yeah it's the same bottom line the government may be really dumb but when it comes to taxes and collecting taxes they're really smart they're going to get their money right like they know the math this this reminds me and this will date me okay there was an old Fram an auto light commercial where the automobile mechanic would hold up an oil filter and say "Uh you can e either pay me uh now to replace your oil filter or you can wait

and pay me later and replace your engine." Yeah that's what this is either get the taxes over and done with now and grow taxree from now on or you want to bet that taxes are going to be lower in the future no you're going to pay big time yeah the greatest thing you need when you retire is more predictability and the taxes and tax rates are not predictable it it creates uncertain so

if I get the taxes over and done with now I put myself into a predictable situation right and that is probably the one of the greatest financial freedoms most people don't ever consider you want to increase predictability when you retire yep get that variable of taxes out of your future eliminate it biggest complaint I have with clients yeah go ahead yeah i was going to say the unknown is always the the scariest right if you you don't know we know what they are today we don't know what they're

going to be 10 years 15 20 years from now but we know frankly even if I paid a little bit more today I'd pay a little bit more today for that sense of security and that predictability now i highly doubt I'm pay I highly doubt taxes are lower in 10 15 years from now but would I pay a little bit more for that for that predictability and security yes I would and I don't think taxes are going to be any lower there's a prayer they're going to be lower than they are today so we're

fighting just to keep them well you know those people that are swimming in the clouds they can keep swimming in the clouds all right well if you're enjoying this content and are wondering how to take advantage of these ideas Laser Financial helps individuals and families like yours implement proven strategies and grow to grow and protect your wealth one of our most powerful tools is the index universal life policy or IL it's not just insurance it's a tax-free

retirement strategy a way to grow your money with compound interest and a safety net against market downturns

imagine being protected from market losses while still participating when the market goes up and tax-free income that allows you to keep more of what you've worked so hard to save go to laserfinanicial.com or call 80150549 to schedule a free consultation and see how these strategies can work for you that's laserfinanicial.com or call 8015055049 don't wait take the first step toward a brighter more secure financial future today this content is also brought to you by IL insiders are

you a financial professional wondering how you can expand your business working with index universal life or IL let me ask you this are you leveraging IL to its full potential that's where IL Insiders comes in in the next few weeks they're hosting the IL Challenge it's a free 3-day event designed specifically for financial professionals to help you build a thriving scalable business that sets apart sets you apart from the competition you'll learn proven strategies to market design and sell

properly structured policies that deliver incredible results for your clients and for your bottom line if you're ready to elevate your practice and scale your business visit ulchchallenge.com/93 to save your seat spots are limited so don't wait that's iulchallenge.com/93 take your business to the next level okay onto our next segment a century of tax advantages from the beginning of time or at least the beginning of the Internal Revenue Code okay this is a little exercise that I

call does chat GPT know more than Doug Andrew okay let's let's see here i asked Chad GPT what sections of the Internal Revenue Code allow tax advantage for tax advantages for life insurance any guesses on how accurate Chad GPT well if it refers to Doug's book and stuff like that right let's see i think it be I think it' be pretty accurate it turns out it's pretty accurate so um you know it's got it's got all the tax code it's really looks really good actually i was really

impressed uh Brandon I want to start with you on this one we talk a lot about IL or index universal life what are tax advantages that life insurance generally have uh for as tax advantages you know it's it's beautiful so yeah we I I love it um it gives you the ability to grow money tax advantage tax deferred yep um you can also access money taxfree via the 7702 um access code or it's it's an internal revenue code that's been around since longer than most people's

grandparents so 1913ish a long time ago um and the other is is upon um graduating from life you get to transfer all money from that policy taxree to your loved ones beneficiaries know taxfree growth access it taxree transfer and pass it taxree um it's it's great not a lot of vehicles out there that can check all those boxes yeah that's great Erin how big is a of a deal is is taxfree income to the clients that you work with uh that's the biggest complaint on the other side the biggest

complaint clients have paying taxes right so when clients have something that's taxree it's their favorite retirement asset their favorite vehicle is because they're taking taxfree income like have a client taking $250,000 a year taxree that doesn't show up anywhere on his tax return that's like safe secure he can take that money out taxree other clients are like always complaining about taxes in retirement because they don't have income coming in they're like I got to pay taxes with

this imagine if taxes go up 33% right yeah this is all this is all taxree for them this is all taxree pull people down into the RMDs right i mean when they get when they have when they're two top heavy IAS and 401ks they don't want to they don't want to pay taxes so then they go down to the default the minimum RMD so now I'm cutting back my lifestyle i don't have Where did those golden years go mhm i mean they're sitting in your account and all they're going to go

to is who they're going to go to Uncle Sam right great uncle Sam's got your go and you know eventually he's going to get you try to defer defer defer until you finally die there's no step up in basis on IRA and 401ks right yeah they're going to pay a lot of taxes eventually yeah they're going to get those taxes no matter what so Brandon you brought up a good point when people hear taxfree they think what's the is there a loophole here like what's you know it's an internal revenue code that

these insurance carriers who've been around for a hundred some of them 150 plus years have have designed specific products to take advantage of these tax codes that that our clients that if you structure them properly and you know how to structure them right Yeah key point right there key point yes they can be just fantastic yeah that's awesome you know we're talking about the benefits of life insurance in section 101A when you die so quick story i had a gentleman

that was 70 and a half back when he had to start taking RMDs and he came to my seminar he had 500 grand in his IAS and I was going to show him story i was

going to show him a strategic roll out 100 grand a year for five years put into an IL and then he goes "Doug I've been thinking a lot since the seminar i am never going to be in a lower tax bracket i'm in a 40% bracket i don't need this money and he had his son with him and he said I want to maximize what I leave behind and all of a sudden I thought okay he says I'm just going to pull out the whole whole 500 grand and pay 40% and take the 300,000 net and I want to put it into a

life insurance policy how much life insurance can I get what would 300,000 get me for let's say 10 years and then if I'm still alive I can throw in some more money i got him a million half dollars of death benefit he passed away within 10 years his children got $1.5 million tax-free instead of 300,000 after tax in an IRA or 401k cuz they don't get a step up in basis they have to pay tax on it that's called optimizing assets i always look at it if you like accountability and

responsibility an IL is for you if you want to go ahead and sit back and let somebody else like the government take care of your future great and keep doing what you're doing but for those that are attracted to taking accountability and responsibility they want they want to be they want to be self-reliant if you like self-reliance I is something that you should definitely look at now let me ask you this and and maybe Doug you can wrap us up on this but do you think what are

the chances that Congress changes these tax laws or these tax laws get changed in the future very good question um back in 1990 uh the General Accountability Office the House Ways Minute and Senate Finance Committee issued this big report like a white paper uh should should

these be taxed should we change the taxation on the inside buildup inside life insurance basically three conclusions no they were sharp enough back then to say this would actually cost us in the long run more than it would make us because these people are trying to be you know responsible and accountable for their own retirement and we're going to create dependent people right number two a lot of Congress people have these and they didn't want to didn't want to shoot themselves in

the foot right but number three they said "If you ever do do this uh we want to grandfather people who already established these life insurance contracts under previous tax law we want to grandfather them it would only affect people who take out new ones after a change that's called the exposacto

provision in the Constitution." Uh and so that's uh been sort of the way they've been doing it in fact they didn't uh make it worse they made it better when did they make it the last co bill in December 28th of 2020 yeah they came out with a I think it was HR 133 or something they came out with the with that that bill that's like 5,000 pages you know everything gets thrown into these bills these days but in there we didn't even know it was going to happen but it been the insurance industry has

been lobbying for this and it got thrown in there we found out the first week of 2021 that this law went into effect and it changed January 1st of 2021 that now we can get away with lower insurance than ever by about 30 to 40% depending on your age we can get away with less insurance for how much we're putting in basically what that means 30 to 40% lower cost lower expenses lower the death benefit equals fees right the insurance equals fees and so that means the policy is more efficient less

expensive and yeah better for you so that's been that was the better change they made you know back in 2021 it's been awesome a great change yeah i'm going to ask is it a loophole how many times do people say "Well what happens when the IRS finds this out and closes the loophole?" It's not a loophole right it's not a loophole i mean if a loophole is something that is not currently in the Internal Revenue Code it's not intended either yeah yeah it's like it's like a a

new a new idea comes about and people start this is not a new idea it's been in the tax code since it was written from the very very beginning and it's intentionally written in the code yeah and so yeah it's absolutely not a loophole and therefore there is no loophole to close it's already been closed it's called section 101A 72E and 7702 it's there for us to take advantage of for in fact insurance companies create these products specifically so that people can have taxfree income and

they they optimize these products specifically for these purposes that we talked about absolutely yeah all right well if you're enjoying this content and are wondering how to take advantage of these ideas at Laser Financial we help individuals and families like yours implement proven strategies to grow and protect your wealth go to laserfinanicancial.com or call 80150549 to schedule a free consultation and see how these strategies can work for you don't wait take the first step

toward a brighter more secure financial future today this content also brought to you by IL Insiders if you're a financial professional tuning into the show and you're wondering how you can expand your business working with Index Universal Live for IL join us for the IL challenge it's a free 3-day event designed specifically for financial professionals who want to master the art and science of IL visit ulchchallenge.com/93 to save your seat spots are limited so don't wait that's

ILchallenge.com take your business to the next level all right and now for the podcast question of the day day this is from Rick on YouTube got a really good comment so I really wanted to pull this out and have us discuss this he says "Uh I am currently retired with over a 1.3 million uh dollar traditional IRA

balance." I feel your pain buddy i feel your pain how can I That's a lot of money to have in a tax deferred uh qualified account first congratulations to him for saving it's awesome right did a great job you've saved that is huge you have saved yeah how how can I he keep he he goes on how can I fund an IL from a qualified traditional IRA without realizing the huge impact of the taxes at the time of the conversion if I have to pay taxes on all the all that money

at one time in a conversion that would put most of the tax rates into the 37% tax bracket this is kind of what you were talking about Doug yeah so I lose over a third of my IRA balance day one so I would have a much lower starting balance in the IL it's kind of what you were talking about Aaron so this is a really common question you guys that we get um Eron I want to throw this to you

what What do you say to Rick what's your response to Rick and kind of what he's put out there well first of all Rick I mean you're you're I mean you're thinking on the right track right right i've got this 1.3 million you understand the tax trap that you've got that liability right you've got this tax trap how do I how do I is there a way out or is there a better way out and uh yeah your initial gut is like man if I transfer all of it over I'd go into a 37% tax bracket maybe actually you'd

actually go to a 39% tax bracket um and so that's why you don't do it all at once a lot of people think "Oh I've got to even if even if you really to consider a Roth conversion rather than an IL most people think oh I got to convert the entire account all at once."

Right right no no no no no no no no that's why we call it a strategic roll out so what we would want to do is we don't want to analyze where are you at how much room do you have in your existing tax brackets i mean I've done this I've done this before where I might get somebody out in two or three years i've actually taken somebody a lot like Rick he had about $1.9 million in his IAS and 401ks and based upon his income and situation we took 14 years wow so we put together a 14-year

strategy to convert you to tax-free so sometimes you know sometimes you can do it fast 1 2 3 4 5 years is typically what we see sometimes it might have to be if you've been disciplined like Rick has right it might take just a little bit longer than just 3 to 5 years to make sure we optimize your money and your situation yeah like what's your income now what's brackets in the 22 24% bracket and what's your income going to be in the next few years when are you retiring and

we we got to take all that into consideration yeah like like what's the purpose of it what's the goal with that do you is it a legacy where you want to just I want my kids to inherit this and then we can you know maybe stretch it out pay less taxes like you said or no I want to use this for income i want to supplement my income but I want it to be taxfree so do do more of a five six years strategy and some people may just be looking to diversify their portfolio

right create a a portion of their money that's taxfree not the entire you know 1.3 but a a portion of that it depends on their goals and objectives right yeah like Doug's like Doug's line I mean if they if they didn't need the money at all he to maximize what it leaves behind that's a different objective pay the 37 39% right now right because it blossoms into 1.5 million right especially if you're never like that's one of the key things is the high the people that are

in the highest tax bracket they get it yeah they're like why in the world would I even wait why would I string this out over 10 15 years if I'm going to string it out because it might the people that have their t the the target on their back the biggest are the ones that are in the higher tax bracket so if you're already in a 30 plus% tax bracket beware they're going to come after yeah you're you're you've got a bigger target on your back than everybody else 100% we

see that every day in the in the discourse all right Doug you want to wrap us up on this subject yes um you know there's been many of my clients where maybe I did a strategic roll out over 10 years you you said maybe it might be 14 years and what I find is that with the annual reviews because tax thresholds keep going I can usually squeeze it down to 9 years or 8 years or seven years based upon this situation but also as a tax strategist many times I've been able to help people u

resurrect deductions that they had been killing which then helps offset the tax during the roll out process uh and so there's all kinds of situations so uh Rick thank you for the question we would love to show you um an example of a strategic roll out and it's extremely flexible but Greg I am dying to share a response I just put on YouTube before we went on the air okay all right this person's watching one of my videos and and and says "Um are you seriously pushing universal life insurance as an

investment?" No we're not so I responded "Absolutely not maxf funed IL is not a an quote investment unquote it's far better than those Investments are taxed sooner or later and are subject to market volatility il is tax-free and protected from market losses okay uh my 3,000 clients you know back in 1980 were never happier than when I got their money out of volatile mutual funds and into stable tax-free returns and IL averaging 9.62% net of all costs and fees yeah it's not an

investment it's way better yeah yeah if it was an investment it' be taxable we don't ever want it to be classified as an investment right we don't call it an investment that's fine we're fine with that and everybody everybody who's seen you know their accounts go down they're calling their their advisors you know meaning like their their investments in the market and they're just saying

"Write it out write it out." You know write it out we don't have to worry about that we didn't even get into that today but we have zero the hero we have protections from the market loss that's another episode we will get to it okay okay we'll get to all the things all right well before we wrap up just a reminder that if you enjoy this content and you want to see more of it please like and subscribe and if you'd like to ask us a question like Rick did please comment on this video we may use your

question in one of our next shows well that's all the time we have for today beware the national debt plan for future taxes and understand what tax advantages are available to you thanks and we will see you next week thanks everybody thank you thank you everybody thank you [Music]