70+ IRA Contributions

This is Darren Kuhn with the masculine journey podcast research the ancient paths to find ways that God brings light into a dark world and help set men free from the struggles that we all face on a day-to-day basis. Your chosen Truth Network podcast is starting in just a few seconds. Enjoy it, share it, but most of all, thank you for listening and for choosing The Truth Podcast Network. This is good Truth Network welcome to finishing well brought you by Cardinal guy, certified financial planner long Shiloh best-selling author and financial planners helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well welcome to finishing well lived friend and certified financial financial planner shine on today show is 70 Plaza minutes to do with our ages which force them out there quite yet, but 70+ IRA contributions and and so you know when you think about the whole idea contributions it it it is a from a biblical standpoint. You know very much a matter of sowing and reaping, and interestingly I was praying this week asking God, what my role was in the current against state of the United States of America based on all this been going on and he gave me this picture that had everything to do with plowing. Like being yoked to apply and and going deeper in the earth which which for me, I kinda interpreted. He was tell me to pray and smooth very specifically when I looked at those words as I would in the Hebrew the what he wanted me to pray was the 68th Psalm. So if you just wanted was a really cool Psalm to pray right now the season for this country. It has to do with God arising and strengthening the work that he had worked in when you look inside that that strengthening has to do with yoking yourself to this cloud is gonna break up this hardened soil was as you may know, he's all about getting the gospel in there in order to do that that's going take some plowing and and then after that plowing and forgiveness so something likely would with contributions and RA IRA. There is sowing and in there is reaping, but if you want to.

So some good seed right it's way more important than just sewing the other seed cadaver weeds in it, or whatever. So God's word right, it's the best seed you could possibly sell or in an and similar talk about contributing into our IRAs. The seed that were selling obviously is is important, but what soil are you are you putting it into right but you know if your firm yet or if you grew soybeans in that field. The last three years. It is not time to grow soybeans in that field. Again, that's it's time to consider tobacco or corn or whatever cash crop you may be thinking about.

But you've leached the minerals out of the soil of this regular thing. So the beauty of that when I look at it from what we talk about today with contributions is my really do feel blessed to have Hans as a friend because he he is a disciple of God's word, no doubt actually is in Hebrew. For now, I know that I love it, but is also a disciple of this concept of sowing and reaping financially and so I can remember. My stepfather was a farmer and when he got out there on his tractor and he was selling that man was having fun because he knew what he was doing each study that he knew what he done to the soil to prepare a team. He knew the kind of CD was selling and he knew all these things and so he was having a blast to see how he could partner with God to make his crop grow while this man and sit next to it, enters dentist about IRAs a minimum contributions and qualified charitable cut. He understands contributions okay.

Not only does he understand that you could see that he loves this stuff and it makes his heart come alive to see these things grow the way that you know that God intended in the in the idea of sowing and reaping, and so, as it were, you know, the whole Department of Agriculture/cart Congress has changed a bunch of the of the stuff on the way that we sow and reap when it comes IRAs since we been the biggest change in several years that came through was actually in 2019. It's called the secure act and that changed a number of things about the way you handle and manage change the tax implications of a number of things and then it didn't start till January 1, 2020 and it wasn't but three or four or five months in that we had this thing called the cares act that was passed because a covert, 19 in the economy and result in that covered some things about IRAs, but more about things in the economy and it had the PPP loans the payment protection loans. The stimulus money, but it had a whole big section of IRAs and it didn't really conflict with the secure act of talking about the same things but in different ways. In the cares act was just a one year thing for 2020. Pretty much ended Landon completely and because I got more extension of the but any case, what were talking about today is the secure act and the effect that it's had on people 70 and over. Sick, which has an effect on us that are taking care of people are 70 and older. Well, yet it has an effect on those of us that are 60 to like me and I'm going to be 70 and over in eight years and so I'm doing my planning constantly for what my IRAs go to provide for my wife and me after 70 okay so this is an effect on everybody would specifically in the secure act they did a few things as they said that your minimum distributions are now required minimum distributions RMD's.

You can now wait till 72 to start. Start a much earlier and in different amounts but you don't have to start until 72 that used to be 70 1/2.

Blessed are probably not news to everybody listing but then I came along in the cares act and they said oh you have sick any minimum distributions in 2020. So now they let everybody wait another year and they did a bunch of other stuff. So I'm back on the secure act that was one big changes essentially for some people to years of delay and this was done because people work longer.

Now just back then back many years ago just one an issue with people work and where we can do some special people work in over 70 is just a good tell him to retire and go all you know and just it's a different world now people are working much longer, and enjoying it so they want to set up retirement plans to accommodate that.

So you can delay RMD's or did Clay return required minimum distributions for two years. They also the secure act, said if you're working past 70 you can now contribute to your IRA and that's really what the title of the video and the title of the podcast and radio show that were talking about today is you can now use you Steve, you couldn't contribute once you are 70 or 70 1/2 or you could not make a contribution to your IRA. You could only make a distribution we could roll over money were no more contributions will that's changed under the secure as long as you're working in the you qualified to make a contribution to matter what your age is.

You can put up to the limits of even 9090, yet still make an IRA contribution say now you're selling, so all you need is service income you need money from work if you got that you can put up the limits of that conflict will then what I'm telling you about this when were prepared for the show Rob you say why would you want to yen and Mike my answer that was because you want to increase your money in your account which is kind of a flippant answer but your best why any that's why anybody would that be at your IRA doesn't want to increase the balance they will have more money in their can't reap if you never sell right you.

That's the deal.

And so what will I really want talk specifically to those people that are over 70 and still working. You may not want to contribute. So even though I gave my flippant answer to Robbie is I rely on the gentleman by the name of that slot is a CPA and he leads the IRA help.com and he's the reason America's IRA and so I attend two seminars a year and read all his stuff. He and I really rely on him because he watches the IRS he's reading everything in his staff is coming out of there and anything that has anything to do with IRAs, pension plans, 401(k) is just even the most minute thing. Then he's applying that to everything inside. I read his stuff.

If some is important to him.

It's important to me and my people read it as well and so he's really saying is the reporter doing this article just asked him say would you recommend your clients to contribute to their traditional IRA over 70. Even though secure exes and his was. My recommendation is no, don't do it because he didn't say that that's true for everybody to say my position is still too murky with the IRS and the I'm not gonna try to explain the detail of that point I agree with him on the logic, I wouldn't do it because there's and there's another way, in a another way is just put it on a Roth soon IRA but it's not one that you not going take a tax deduction use, put it in an IRA or Roth IRA and it's going to be then tax-free money, and so the reason he wouldn't put it in there is is thinking that you could get into some trouble with the tax deductibility of of it into a traditional IRA sleazy simpleton and a rough you will get a tax deduction but you will have the benefit of tax-free money over the Roth. Even if the system $6000 account and then you put the maximum that you can in there every year as long as you're working past 70 and then you'll just have a Roth built with you already have a Roth just put it in a rough time so you're still selling in your balance is getting bigger and hopefully it's too much money for a Roth past 70 make too much money for a Roth make too much like all you if you make more than what hundred and 50,000 or something as a couple. Hundred thousand or 90,000 as an individual you you you make too much money for a Roth contribution and then secondly you make, please make too much money for a Roth contribution but you could make a nondeductible IRA contribution to your you're not deducting it, but you're putting it in your IRA and then immediately once you asked me to question, yes, really. Why would you want do that.

Why would I want to do that.

Why would I want to put money in my IRA. If it's not deductible okay well you going to get tax deferral on price. So that's kind eyes and you're also going to be able to exclude the money that you put in there from paying tax on again because you put after-tax money in their essentially and so if you come to me. I can do what's called a backdoor raw so I can after you make that nondeductible contribution. Then I can help you convert it over to a Roth and now we've gotten around the income limit. So there's a legally gotten around how fun that some fancy farm and their susceptible you listed to certified financial planner Han shot out and today show is 70+ IRA contributions. Of course you can find all about IRAs, their cons cargo guide to planning for a living in retirement all there are�, We come back more fancy farm in with Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Han's expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to cargo guide.com and contact Tom to schedule a live recording of finishing well, your church, Sunday school, civic group, contact Tom Cardinal guide dog that's Cardinal guide.com welcome back to finishing well, a certified financial planner Han shot well today show is 70+ IRA contributions like the cool.

We've done some fancy farm in here with him in ways that that you can maximize our strength in the way that you're selling your seed now that were have this opportunity based on the cares act and so when she kind of take us back into that concept with the gist of this is correct past a year and 1/2 ago back in 2019. To take effect January 1, 2020. It made provision for when you're older than 70, you're still working which covers a lot of people nowadays, even if it's a part-time gig or a small business for something or just somebody keep working in their same job. It allows you if you're eligible. If you otherwise would be eligible to contribute to an IRA used to be. This is cut off at 70 1/2 so the secure act change that I think the point we wanted to make is just because the secure let you do certain things that it didn't let you do beforehand. That doesn't mean you want to do well that's for some people can get mixed up in people doing my job as a bookie we can do this now so we better go and do� Do it all because the secure act tells us that we could not sell it. It says, just as you could do this you need to make a decision to either do it or not, and so our whole point with.

There's still some the IRS come looking in ruling on some certain things, put some murkiness that you could face some trouble taking an IRA deduction at this point for service work past seven so you know if the 75 that in English for me and I may not make it any clearer than of you know what I'm trying to get my mind so one of the reasons I'm content contribute to this IRAs tube is to lower my tax income. You know, that holder you know I'm 65 but but good in your example, if I was 75 okay and I was Taylor this right and I was to make this contribution which would lower my income taxable income right at end, and there's the deal. So part of the reason I'm doing that is not just increase my balance but actually to get a tax benefit from this tax year. Based on that contribution.

However, what you're saying is an ad slot is saying is not so fast arriving there saying you contribute the money, but they're not so sure whether or not it's, really, if you just read the stuff in the law came out and even listen to me a year ago said great work past 70 contribute to the IRA.

What happens after these laws were passed as the Congress and the review on the news me they're going to go grandstand blade secure act. You can do this you can't do this, you can do this to and so the assumption is man we need to get on this and get on his contributions then people actually start doing these things and consumers and taxpayers, and they go to their accountants and this error in the secure act as a counter thing and so yet were doing this and then somehow the IRS is got a ruler. People asked the IRS to say why does his work and when you got people past 70 contributing there also making distributions, and so now you're getting into. Are you contributing and then distributing in the same year. That's why they had the old law is still murky.

Whether that's all gonna work out great for you tax wise now.

Maybe in a year I'll be or even six months I'll be reversing what I'm saying but for this point is, I agree with that slot. I think it's just not that big of a deal. I'm recommending that my clients just don't do it or they hold off. Perhaps use a different strategy but use a different strata trough or the back door Roth as well as other law through the backdoor raw so so you can put the same amount of money in a Roth if you qualify the secure acts let you do that, but you not taken a tax deduction for it, because Roth is after-tax money.

That's one solution and I think we pretty much beat that horse down so just you know somebody specifically out there is a questions call me up and then I'll give you a specific opinion as it relates to you on this, given general guidance here. The second thing is that we wanted to bring up is if you're over 70 and you've got money in a traditional IRA or you actually have to be over 70 1/2 by the end of the year. Still a little bit weird that you are eligible to do the Q CD which is a qualified charitable distribution and you can do that, up to $100,000 in any given year for any given IRA holders as you're the only one in your family that has an IRA you can you can give a substantial amount of money out of your traditional IRA directly to a qualified charity and certainly a church admissions or those lies are qualified charity, you can give the money directly from your IRA to the charity and it will count as a minimum distribution which you don't need it. 70 but you certainly needed at 75 it'll go directly to the charity and which is the church, if that's the case here and it'll never sharpen your tax return) you got this money never have paid income tax on right as it's in a traditional IRA and yet let's say you want to give to the Christian car guys Jesus labor left a shameless plug. Therefore, single moms with others in need car repair right this time year without a lot of people in a bit for bit essentially there. The money that they would you think of it distribution to make them make a distribution qualified charitable distribution just beware.

Don't try this at home on your own.

Okay, mean or read the rules of you to try at home.

One of things is got to be done. Your first distribution got be your first distribution of the IRA and authority given year. And so if you turn 70 1/2 this year. Then you qualify you you you need to do it now because if if this is your second distribution. If you just pull some money out because you needed and then later in the year selling give some to the bona fide charitable distribution that will work. This needs to be the first distribution of the year.

That's not saying you can't do others later, but it needs to be the first distribution of the year and so my fall on you again. If it if you do make your first distribution of qualified charitable distribution that you make another distribution to money me bit about the need come back later in the remake another qualified turn now to treat your way to the next year or wait till next year.

You can only make one you could send qualified charitable distributions to several charities. You could have six distributions all done at the same time that that be fine but it needs to go directly to the organization never shows up on your tax return. If it does show up on your tax return. We got problems because what I have to account for and pay taxes and then were going to have to so you don't want that to happen so need to be the first distribution of the year it is to go straight from you to the charity and you want to use traditional IRA money now not saying don't give your Roth IRA money to the church. I'd really have you been uniting to get a deduction for me. I can get a tax benefit. So if you don't play that game. I drill you distribute the IRA tax-free and then just give your money to the church and then take a tax deduction. So the whole beauty of this is giving money to charity or gets the money they don't pay tax on you, never paying tax on and you're also giving money in such a way that you're getting essentially the full tax deductions doesn't work that neatly for a lot of people doing your taxes under the new tax law.

They give money they think they're still getting a tax benefit, but they're really not because they're using the standard deduction. This is a way out of your IRA that you can make it. We get the full tax benefit of the contribution from and then there's the whole concept of with these IRAs of having beneficiaries your time you want closure meet the whole concept. I want to get across to people is really a big part of my city calling is is that most people are only focused on the investment in the growth of their account in their 401(k) or IRA and that's kind and what I want to lead you to get focused on is that's one thing that's important. The balance of the bigger we can make it the better it's going be, but now I want to get focused on when I get to retirement.

How I can distribute this money. Based upon my needs. So, how much income do I need and then home again distributed in such a way that I don't run out of money at 77 I started several years to leave once we start distributing out.

We want to look at the distribution in terms of I don't want to have any one or two years right pull out a lot because it's been dry my tax bill nods, but I also want to look at how much tax among a pay over my whole lifetime once I start distributing and then I want you to look at the estate planning ramifications of your eye because love gives us that all my give that to my daughter Esther stapling I got her name as the beneficiary. Okay good and that may just well work out great, tell your daughter you she's much younger than you would. She obviously is by definition, and then you pass away. The only way she can get that money is to drawn out of the IRA and what happens with that taxes and so there's a whole lot of people that inherit IRAs who inherit them and then the analysis is $200,000 in your daughter's normal income is $60,000 a year will then she cashes out that whole IRA to go buy something.

Her taxable income that years give you 260,000 and a lot of that doesn't even phase a younger person because they had no nothing before your deceased. This is their inheritance. They say what's the taxability sales can be 80 grand so you won't really get 200 you get 120.

This is my mentor and so you know we talk about in just the point I want to make here at the end is check your beneficiaries on everything dismissed.

Start with your IRA in your 401(k). Check the beneficiaries just see if you have listed exactly who you want to get that money because that's all they're going to go by � and like when I set up my 401(k) a true story, and all I had to get it never added the third one, but you know and when you start mentioned as I like and I never thought about it but you know these things change it and so you know on all your life insurance policies.

All these things that have beneficiaries which are really really handy.

Even your bank account if you get transfer on death.

Yet a beneficiary if you talk to bank about that and will bypass probate but again these things change over time. True then and they they have to be checked regularly through the so again we enjoyed talking with you today and I was 70+ contributions to your IRA and all this of course is in Hans's book the complete cargo guide to planning for and living in retirement found it cargo guide.com guide after Cardinal.com and so again really fun on thanks we hope you enjoyed finishing well with you by Cardinal guy.com visit Cardinal guide.com for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as cons best-selling book the complete guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows to get Hans book go to Cardinal guy.com if you have a question, comment or suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again that's Cardinal guy.com Cardinal guide.com this is the Truth Network