The Retirement and IRA Show

Chris is joined by Jacob to discuss listener emails on withdrawing an early Social Security claim to collect survivor benefits, how Medicare Part A back-dating can affect HSA contributions, details of a liquidity account, buffered ETFs, and buying a protection ETF after its outcome date.

(10:00) George asks whether a husband who claimed Social Security at 62 could withdraw his application within 12 months after his wife’s death, collect survivor benefits on her record, and later switch to his own benefit at 70.

(20:45) A listener points out that Medicare Part A’s six-month retroactive coverage may be counted back from when a Social Security appointment is made rather than when benefits begin, which can affect when HSA contributions need to stop.

(26:00) The guys get a request to define the liquidity account term heard on recent episodes, including how it is funded, how often it is replenished, and how much it should hold.

(37:30) Chris and Jacob field a question on how to gauge the historical performance of buffered ETFs and what happens to the cap and buffer if one is sold before the outcome period ends.

(58:30) A listener wonders how buying a structured protection ETF after its outcome date changes the cap rate and downside protection, and whether lower caps still compare favorably with CD rates.

The post Social Security, HSA Contributions, Liquidity Account, ETFs: Q&A #2645 appeared first on The Retirement and IRA Show.

If you would prefer to skip Jim and Chris chatting about Jim’s end-of-season garden update and what home-grown produce he’s going to try to get through TSA (and why), you can skip to 7:45.

Chris’s Summary

Jim and I continue our run of IRA topics with seven IRA mistakes that cannot be fixed once they are made. The list spans inherited IRA transfers, rollover limits and requirements, Roth conversions, net unrealized appreciation, and 72(t) distributions. In at least one case, nothing improper occurred at the time. We also distinguish these seven from errors that may still be corrected, such as certain missed 60-day rollovers.

Jim’s “Pithy” Summary

Chris and I keep the IRA conversation going this week. With all the rules attached to these accounts, I like to picture the Peanuts character Pigpen, with a cloud of rules, regulations, taxes, and penalties following the IRA from custodian to custodian and owner to beneficiary until it is finally closed. Plenty of slip-ups, like a missed RMD or an excess contribution, can be fixed. But some IRA mistakes, once made, you are stuck with. Their simplicity is sometimes their downfall, because people think they understand the rule and don’t quite.

Spouses and non-spouses do not get the same options for moving inherited dollars, and using the wrong method may create two problems at once. I put your feet in the shoes of a 40-year-old surviving spouse who makes a perfectly legal move that cannot be taken back. Chris tackles the one-rollover-per-year rule, earns a grade for it, and we discuss the 2014 tax court case that changed how that rule is counted. I also worked hard to come up with a realistic way someone could violate the same property rule, and it involves fat fingers.

We get into Roth conversion regrets and why I am still irked about losing my old cup of flour and butter knife approach. We touch on net unrealized appreciation and the moves that can wipe it out, along with the 72(t) payment schedule and the single word in its rules that people tend to miss. Chris also explains why he thinks a 72(t) calls for a compelling reason and careful precautions.

The post Seven Unfixable IRA Mistakes: EDU #2644 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener emails, starting with a listener PSA on HSA contributions and Medicare Part A, then cover Social Security survivor benefits, a Roth conversion rules follow-up, and moving an estate’s IRA into Inherited IRAs.

(8:00) George shares a PSA on an often-overlooked Medicare Part A consideration for anyone still contributing to an HSA after 65.

(19:15) A listener asks if there’s any truth to an article on Social Security survivor benefits. Specifically, if someone who started their own benefits at 65 must wait until full retirement age to collect 100% of their survivor benefits, and whether claiming early will reduce them.

(28:00) The guys revisit the Roth conversion example from Q&A #2640 in response to a question on whether the extra money deposited into the Roth IRA from a brokerage account would be an excess contribution.

(36:15) Jim and Chris tackle a question about an IRA that ended up with no named beneficiaries after an advisor moved it to a new account before the owner’s death. The question is whether the private letter rulings (PLRs) cited in an article can be relied on to transfer the IRA from the estate into Inherited IRAs without a taxable event.

The post HSA PSA, Survivor Benefits, Roth Conversions, Inherited IRAs: Q&A #2644 appeared first on The Retirement and IRA Show.

Chris’s Summary

Jim and I use two listener emails in this EDU dialog episode to consider whether each couple may be ready to retire. The first couple weighs relocating for taxes, a pricier next home, and all-equity portfolios with RMDs looming. Longevity, inflation, and a supposed $10 million target also come up. The second email involves a Social Security claiming plan, with a closer look at how spousal benefits and the earnings test work. We also discuss their options between monthly pension payments and a lump sum, along with some considerations around Roth conversions.

Jim’s “Pithy” Summary

Chris and I take a look at a couple of retirement scenarios based on listener emails in this EDU dialog episode. The first couple, 66 and 60, is trying to figure out if they’re ready to retire, and they’d like to pull the trigger now. The couple is thinking about leaving Oregon in a year or two, haven’t picked where, and taxes seem to be driving the decision. Don’t let the tax tail wag the dog, folks! Their next home will likely cost more than their current one, and we talk about why the idea that you have to downsize in retirement isn’t always right. We also discuss what 100% equities looks like when you do the mental accounting across the whole portfolio, and why RMDs looming in six years should have them asking an important question. Then there’s the longevity and inflation worries, and how the Minimum Dignity Floor ties into both. The last sentence of their email made me go, “huh.” They feel they’re far from the illustrious $10 million mark. I don’t know where they got that number, but we’ve seen people with less than a million live comfortably, and people with four, five, six million projected to run out because of how they spend.

The second emailer, age 61, has a Social Security claiming plan that we dig into, and Chris adds some clarity on spousal benefits and the earnings test. He’s also choosing between monthly pension payments and a taking a lump sum. Chris pulls an income annuity quote for comparison, while I explain why pension risk transfer and the term “state guarantee fund” may change the picture. We also weigh his plan to convert about half of their traditional IRA money to a Roth in the first few years after he retires to fill the 10% or 12% tax bracket, and how charitable giving can change the picture.

The post Ready to Retire?: EDU #2643 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener emails on choosing a life-changing event for an IRMAA reduction request, declining Medicare Part A to keep making HSA contributions, the hypothetical retroactive spousal RMD rule, using HSA funds for pre-65 health premiums, and using guaranteed universal life insurance as a tax-efficient inheritance.

(10:30) George asks if it matters which qualifying life event he selects on Form SSA-44, since two apply, when requesting a reduction in IRMAA. He also wonders whether the adjustment is still avoided if 2027 modified adjusted gross income (MAGI) comes in higher than estimated but stays under the first married filing jointly bracket.

(22:00) A listener inquires whether someone over 65 can decline Medicare Part A when starting a Social Security survivor benefit in order to keep contributing to a health savings account (HSA).

(44:15) The guys get a request to explain the purpose of the hypothetical retroactive spousal RMD rule for IRAs and to walk through the example from a recent EDU episode more slowly.

(57:45) Jim and Chris respond to a note saying that retirees who stay on their former employer’s health plan can use HSA money to pay premiums before age 65.

(1:01:30) A listener seeks guidance on using a guaranteed universal life insurance policy to tax-efficiently pass an inheritance to trusts for two adult children.

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