1 00:00:08,480 --> 00:00:11,640 S1: Retirement isn't about just how much you save, it's about 2 00:00:11,640 --> 00:00:15,360 S1: how wisely you plan. Hi, I'm Rob West. When it 3 00:00:15,360 --> 00:00:18,759 S1: comes to IRAs, the choices you make today can shape 4 00:00:18,760 --> 00:00:22,160 S1: your tax bill and your income for decades to come. 5 00:00:22,200 --> 00:00:26,920 S1: Traditional or Roth contribute or convert. Mark Miller joins us 6 00:00:26,920 --> 00:00:30,120 S1: to break down how to make sense of your IRA 7 00:00:30,160 --> 00:00:33,840 S1: options so you can move forward with clarity and confidence. 8 00:00:34,040 --> 00:00:38,680 S1: Then we'll take your phone calls today at 800 525 7000. 9 00:00:38,760 --> 00:00:43,840 S1: That's 800 525 7000. This is faith and finance. Live 10 00:00:44,040 --> 00:00:50,880 S1: biblical wisdom for your financial decisions. Well, Mark Miller is 11 00:00:50,880 --> 00:00:54,600 S1: executive editor and senior portfolio manager at Sound Mind Investing 12 00:00:54,640 --> 00:00:57,920 S1: a long time and faithful underwriter of this program. Mark, 13 00:00:57,920 --> 00:01:00,620 S1: so thankful for your partnership and always a joy to 14 00:01:00,620 --> 00:01:01,260 S1: have you here. 15 00:01:01,540 --> 00:01:03,180 S2: Thanks, Rob. Great to be back. 16 00:01:03,820 --> 00:01:06,940 S1: Mark, you've written a helpful piece in the SMI newsletter 17 00:01:06,940 --> 00:01:11,020 S1: on making sense of your IRA options. This is a 18 00:01:11,020 --> 00:01:14,020 S1: topic that comes up very frequently on this program, so 19 00:01:14,260 --> 00:01:16,620 S1: I'm glad we're tackling it. But before we get into 20 00:01:16,620 --> 00:01:19,619 S1: the specifics, let's zoom out a bit. When we think 21 00:01:19,620 --> 00:01:23,619 S1: about retirement income here in America, what's the big picture 22 00:01:23,620 --> 00:01:25,260 S1: framework people should have in mind? 23 00:01:25,300 --> 00:01:29,740 S2: Yeah, sure. Rob. Well, historically, most Americans have relied on 24 00:01:29,740 --> 00:01:33,580 S2: a three legged stool for retirement income. Social security is, 25 00:01:33,580 --> 00:01:38,220 S2: of course, an important leg, and that historically has provided 26 00:01:38,220 --> 00:01:44,020 S2: about 35 to 45% of most retirees monthly income. Now, 27 00:01:44,020 --> 00:01:47,300 S2: the second leg of that stool used to be company 28 00:01:47,300 --> 00:01:51,740 S2: pension plans. Of course, those are increasingly rare now. And 29 00:01:51,740 --> 00:01:57,360 S2: these days, employer sponsored retirement plans like 401 S KS403. 30 00:01:57,400 --> 00:02:01,880 S2: Bees have filled this role. Now, in the past, those 31 00:02:01,880 --> 00:02:06,920 S2: plans provided about 15 to 20% of retirees monthly income. 32 00:02:07,120 --> 00:02:10,520 S2: As we rely more and more on self saving through 33 00:02:10,520 --> 00:02:14,760 S2: 401 s and whatnot, expect that percentage to grow. And 34 00:02:14,760 --> 00:02:17,880 S2: then the third leg of that retirement income stool has 35 00:02:17,880 --> 00:02:22,280 S2: always been personal savings. A key vehicle for building those 36 00:02:22,280 --> 00:02:27,000 S2: personal retirement savings has been the individual retirement account or 37 00:02:27,000 --> 00:02:31,919 S2: the IRA. And that's doubly true today. If a person 38 00:02:31,919 --> 00:02:36,560 S2: doesn't have a good company retirement plan, like a 401 39 00:02:36,560 --> 00:02:40,800 S2: K available to them, because in that case, this personal 40 00:02:40,800 --> 00:02:43,480 S2: savings leg is going to have to really pick up 41 00:02:43,480 --> 00:02:46,400 S2: the slack for both of those legs of the stool. 42 00:02:46,440 --> 00:02:50,880 S1: Yeah. Really helpful. Very interesting. All right. I often describe 43 00:02:50,880 --> 00:02:55,040 S1: retirement income as coming from different buckets. That's a framework 44 00:02:55,139 --> 00:02:56,340 S1: you'd agree with, right? 45 00:02:56,380 --> 00:03:00,500 S2: Oh, yeah. Absolutely. And it's probably worth also mentioning, Rob 46 00:03:00,500 --> 00:03:03,900 S2: right out of the gate, because it's a frequent misunderstanding 47 00:03:03,940 --> 00:03:08,220 S2: that an IRA itself is not an investment. It's a 48 00:03:08,220 --> 00:03:13,620 S2: tax sheltered account that holds investments and provides better tax 49 00:03:13,620 --> 00:03:17,619 S2: treatment for those earnings. So what I'm saying is within 50 00:03:17,620 --> 00:03:22,139 S2: an IRA, you can put most of the same investments 51 00:03:22,139 --> 00:03:26,859 S2: of any other investment account stocks, bonds, mutual funds, ETFs, 52 00:03:26,900 --> 00:03:30,540 S2: CDs it can all go in your IRA. And the 53 00:03:30,580 --> 00:03:35,300 S2: big idea here is you can likely invest your IRA 54 00:03:35,340 --> 00:03:39,660 S2: using the same investments, the same long term plan as 55 00:03:39,660 --> 00:03:44,660 S2: the rest of your investment and your long term investing plan. 56 00:03:45,020 --> 00:03:49,620 S1: Yeah, yeah, that's really helpful. Let's unpack the two primary types, 57 00:03:49,780 --> 00:03:52,500 S1: especially for those who may be new to this. So 58 00:03:52,540 --> 00:03:57,080 S1: when someone hears traditional versus Roth, what's the fundamental difference 59 00:03:57,080 --> 00:03:58,160 S1: they need to understand? 60 00:03:58,360 --> 00:04:02,520 S2: Yeah, traditional IRAs came first. So they're almost 50 years old. 61 00:04:02,520 --> 00:04:06,960 S2: And the biggest point to understand with traditional IRAs is 62 00:04:06,960 --> 00:04:10,520 S2: you normally get to take an immediate tax deduction right 63 00:04:10,520 --> 00:04:14,360 S2: now for whatever amount you contribute. In other words, you 64 00:04:14,400 --> 00:04:18,039 S2: save taxes on or you save on your taxes right now. 65 00:04:18,279 --> 00:04:21,680 S2: And then when the money comes out in retirement, you're 66 00:04:21,680 --> 00:04:24,480 S2: going to pay tax on all of it, both the 67 00:04:24,480 --> 00:04:29,320 S2: contributions and the earnings. Now with Roth we just flip 68 00:04:29,320 --> 00:04:34,160 S2: that equation. So with a Roth your contributions aren't deductible. 69 00:04:34,200 --> 00:04:38,560 S2: You don't get any tax benefit today. But in retirement, 70 00:04:38,560 --> 00:04:41,679 S2: when you take that money out all of it comes 71 00:04:41,680 --> 00:04:42,840 S2: out tax free. 72 00:04:43,839 --> 00:04:47,320 S1: Yeah. And that's a big distinction, especially if tax or 73 00:04:47,320 --> 00:04:50,320 S1: excuse me if time is on your side. Well, when 74 00:04:50,320 --> 00:04:52,860 S1: we come back with Marc Millar today, we'll continue to 75 00:04:52,860 --> 00:04:57,140 S1: unpack this. Some key questions that come up related to IRAs. 76 00:04:57,180 --> 00:05:01,620 S1: What about converting a portion from traditional to Roth, especially 77 00:05:01,779 --> 00:05:04,820 S1: as you get closer to retirement? Does that ever make sense? 78 00:05:04,820 --> 00:05:07,820 S1: And if so, when? We'll take your questions as well. 79 00:05:07,860 --> 00:05:11,380 S1: Mark's going to stick around for the entire broadcast today. 80 00:05:11,380 --> 00:05:16,220 S1: So we're taking questions specifically on your portfolio. The market. 81 00:05:16,220 --> 00:05:18,820 S1: We'll talk about the slide in gold and what you 82 00:05:18,820 --> 00:05:21,980 S1: need to know about that. And if you have IRA questions, 83 00:05:21,980 --> 00:05:26,740 S1: call right now 800 525 7000. Back with Mark Miller 84 00:05:26,740 --> 00:05:27,460 S1: after this. 85 00:05:32,700 --> 00:05:36,020 S3: The opinions offered during this program represent the personal or 86 00:05:36,020 --> 00:05:40,900 S3: professional opinions of the participants given for informational purposes only. 87 00:05:41,140 --> 00:05:44,740 S3: Any information provided is not intended to replace advice from 88 00:05:44,740 --> 00:05:49,640 S3: a financial, medical, legal or other professional who understands your 89 00:05:49,640 --> 00:05:51,000 S3: specific situation. 90 00:05:56,240 --> 00:05:58,719 S1: Thanks for joining us today on Faith and Finance Live. 91 00:05:58,720 --> 00:06:01,320 S1: I'm Rob West with me today. My friend Mark Biller. 92 00:06:01,320 --> 00:06:05,040 S1: Mark is executive editor at Sound Mind Investing. He's also 93 00:06:05,040 --> 00:06:09,200 S1: senior portfolio manager there, a long time underwriter of this program. 94 00:06:09,200 --> 00:06:12,480 S1: We're talking about an article that he's written recently for 95 00:06:12,480 --> 00:06:16,880 S1: the SMI newsletter called Making Sense of Your IRA Options. 96 00:06:17,240 --> 00:06:19,320 S1: You can find it and do a deeper dive on 97 00:06:19,320 --> 00:06:24,479 S1: this topic at sound mind investing. Dot o r g. Mark, 98 00:06:24,480 --> 00:06:28,599 S1: just as we round out this particular portion around just 99 00:06:28,600 --> 00:06:32,200 S1: what our IRAs and how they can work for you, 100 00:06:32,200 --> 00:06:34,760 S1: it sounds like really the key question that listeners should 101 00:06:34,760 --> 00:06:38,080 S1: take away is the difference between the Roths are or 102 00:06:38,080 --> 00:06:41,680 S1: excuse me, the IRAs are with Roth and traditional. Do 103 00:06:41,680 --> 00:06:44,960 S1: I take the tax benefit today or do I defer 104 00:06:45,000 --> 00:06:46,400 S1: it and take it later? Right. 105 00:06:46,400 --> 00:06:49,940 S2: Yeah. That really is the biggest distinction. And because of that, 106 00:06:49,940 --> 00:06:54,179 S2: the question of which type to choose largely boils down 107 00:06:54,180 --> 00:06:56,620 S2: to whether you expect to be in a higher tax 108 00:06:56,620 --> 00:07:00,060 S2: bracket when you retire than the one you're in now. 109 00:07:00,460 --> 00:07:05,020 S2: So because most younger people are still in relatively low 110 00:07:05,020 --> 00:07:10,340 S2: tax brackets, that makes it a pretty easy choice typically 111 00:07:10,340 --> 00:07:13,380 S2: for young people to choose Roth accounts. That's why we 112 00:07:13,420 --> 00:07:17,180 S2: kind of default to that when we're talking with young people. Um, 113 00:07:17,460 --> 00:07:22,420 S2: but when people get a little bit closer to retirement, 114 00:07:22,420 --> 00:07:26,340 S2: maybe they're within 10 to 15 years of retirement, they're 115 00:07:26,340 --> 00:07:30,740 S2: in their peak earning years and they're currently paying taxes 116 00:07:30,940 --> 00:07:34,620 S2: in the higher brackets. That's when the decision gets a 117 00:07:34,620 --> 00:07:38,100 S2: little bit more complicated, because you could have a situation 118 00:07:38,100 --> 00:07:41,660 S2: where if you're earning a good income, you're paying relatively 119 00:07:41,660 --> 00:07:46,080 S2: high tax rates today, you might be better off taking 120 00:07:46,080 --> 00:07:50,720 S2: the deduction today and saving on those taxes, perhaps with 121 00:07:50,720 --> 00:07:54,280 S2: a plan to use some of your early retirement years 122 00:07:54,280 --> 00:07:57,160 S2: when your income is low and you'll actually be in 123 00:07:57,160 --> 00:08:01,720 S2: a lower tax bracket to do some conversions of those IRAs. 124 00:08:01,920 --> 00:08:05,920 S2: So the big takeaway here, Rob, if you're younger and 125 00:08:05,920 --> 00:08:09,640 S2: paying relatively low tax rates, the Roth is absolutely the 126 00:08:09,640 --> 00:08:13,040 S2: right choice. Gets a little more complicated for those closer 127 00:08:13,040 --> 00:08:16,360 S2: to retirement. And we have some more detail on that 128 00:08:16,360 --> 00:08:20,200 S2: in the article that we're talking about. So if that 129 00:08:20,200 --> 00:08:24,440 S2: describes you, I would definitely encourage those listeners to to 130 00:08:24,480 --> 00:08:25,760 S2: read this article. 131 00:08:26,080 --> 00:08:29,800 S1: Yeah. Sound mind investing to read the article while you're there, 132 00:08:29,800 --> 00:08:33,120 S1: check out the SMI newsletter. Listeners to this program have 133 00:08:33,240 --> 00:08:37,000 S1: relied on that for their mutual fund selections and the 134 00:08:37,000 --> 00:08:40,640 S1: content for decades. Also, the private client group. You can 135 00:08:40,640 --> 00:08:44,420 S1: learn more about that sound mind investing.org. We're taking your 136 00:08:44,420 --> 00:08:49,180 S1: questions today for Mark Biller related to the markets, the economy. Uh, 137 00:08:49,179 --> 00:08:53,020 S1: I was specifically is it, uh, right for you to 138 00:08:53,059 --> 00:08:56,300 S1: convert a portion of your traditional to Roth? Whatever's on 139 00:08:56,300 --> 00:08:58,780 S1: your mind today in those areas call right now. We've 140 00:08:58,780 --> 00:09:05,260 S1: got lines open 800 525 7000. We will also tackle, uh, 141 00:09:05,260 --> 00:09:08,220 S1: a question around gold, just how you should think about 142 00:09:08,220 --> 00:09:12,300 S1: that in your portfolio. Coming up, let's head to Ohio. Uh, Rob. 143 00:09:12,340 --> 00:09:12,940 S1: Go ahead. 144 00:09:13,540 --> 00:09:15,820 S4: Yeah. Rob. Hi. Nice to meet you. 145 00:09:16,020 --> 00:09:16,940 S1: You as well, sir. 146 00:09:17,700 --> 00:09:19,380 S4: So excited to talk to you. Listen to you all 147 00:09:19,380 --> 00:09:23,180 S4: the time. Great. Um, well, I had my, my question 148 00:09:23,220 --> 00:09:26,260 S4: kind of pertains to what you guys were talking about. Um, 149 00:09:26,260 --> 00:09:30,540 S4: currently I have a 401 at work. It's a traditional 150 00:09:31,179 --> 00:09:35,700 S4: and they also offer a Roth and I was wondering, 151 00:09:35,940 --> 00:09:40,380 S4: would it be better for me now to switch it 152 00:09:40,380 --> 00:09:44,480 S4: to the wrath from the traditional or contribute to the 153 00:09:44,480 --> 00:09:47,040 S4: wrath and the traditional. Mhm. 154 00:09:47,160 --> 00:09:51,520 S1: Yeah. How far, how far out is retirement for you, Rob? 155 00:09:52,240 --> 00:09:54,280 S4: I have about ten years. 156 00:09:54,720 --> 00:09:58,200 S1: Okay. And you're currently putting 100% in traditional. And you 157 00:09:58,200 --> 00:09:59,560 S1: always have. Is that right? 158 00:09:59,600 --> 00:10:00,280 S4: Right. 159 00:10:00,640 --> 00:10:03,960 S1: Okay. And so you're you have both options. So you're 160 00:10:04,000 --> 00:10:06,560 S1: wondering if at this point, ten years out of retirement, 161 00:10:06,559 --> 00:10:10,400 S1: you ought to just switch or start contributing to both 162 00:10:10,400 --> 00:10:15,200 S1: as you progress toward retirement, right? Yeah, yeah. Great. Mark, 163 00:10:15,200 --> 00:10:16,360 S1: how do you make that call? 164 00:10:16,679 --> 00:10:19,160 S2: Yeah, it's a tricky one, Rob, to be honest. And 165 00:10:19,160 --> 00:10:22,600 S2: I'm going to give you some kind of broad brush, uh, 166 00:10:22,600 --> 00:10:26,320 S2: council here, but I should also note that this is 167 00:10:26,320 --> 00:10:31,240 S2: the exact type of situation where a good planner or 168 00:10:31,320 --> 00:10:35,400 S2: a good tax professional can really come in handy because 169 00:10:35,400 --> 00:10:41,100 S2: they can run more specific scenarios based on on your 170 00:10:41,140 --> 00:10:46,100 S2: setup and like what your exact tax rates are today, um, 171 00:10:46,140 --> 00:10:48,459 S2: can give you some options in terms of what you 172 00:10:48,460 --> 00:10:53,980 S2: might do early in retirement and so forth. But generally speaking, Rob, um, 173 00:10:54,340 --> 00:10:59,580 S2: I am actually a fan of the idea of tax diversification. 174 00:10:59,580 --> 00:11:06,420 S2: We diversify our assets, um, to kind of protect against different, uh, outcomes, 175 00:11:06,420 --> 00:11:09,260 S2: different scenarios that could come along. And I think that 176 00:11:09,260 --> 00:11:13,020 S2: actually that idea pertains to our taxes too. So in 177 00:11:13,020 --> 00:11:16,900 S2: a case like yours where you've got all traditional to 178 00:11:16,940 --> 00:11:21,140 S2: this point, it probably wouldn't be a terrible idea to 179 00:11:21,179 --> 00:11:24,860 S2: have at least some Roth assets as well, so that 180 00:11:24,860 --> 00:11:29,420 S2: as you're navigating withdrawals during retirement, you have some options 181 00:11:29,420 --> 00:11:33,700 S2: in terms of, um, getting some of the money without 182 00:11:33,740 --> 00:11:36,900 S2: taxes and then being able to manage your tax bill 183 00:11:36,900 --> 00:11:39,520 S2: a little bit more than if you're having to pay 184 00:11:39,520 --> 00:11:45,839 S2: tax on everything. You withdraw from your personal savings during retirement. Now, again, 185 00:11:45,880 --> 00:11:49,480 S2: that's where things can get a little complicated because another 186 00:11:49,480 --> 00:11:53,560 S2: avenue to get to that same place could be to 187 00:11:53,600 --> 00:11:58,120 S2: continue contributing to your traditional and getting the tax deduction 188 00:11:58,120 --> 00:12:00,640 S2: for that now. And a lot of that depends on 189 00:12:00,640 --> 00:12:04,440 S2: what your current tax rate is. Um, and then doing 190 00:12:04,440 --> 00:12:08,840 S2: some very intentional planning to do some conversions perhaps early 191 00:12:08,840 --> 00:12:13,840 S2: in retirement when you're going to potentially face lower tax rates. 192 00:12:13,840 --> 00:12:17,640 S2: That's really difficult to get into here. But that is 193 00:12:17,640 --> 00:12:20,680 S2: the type of scenario planning that a good CPA or 194 00:12:20,679 --> 00:12:22,640 S2: planner can do with you. 195 00:12:23,320 --> 00:12:24,720 S1: Yeah. Rob. Does that make sense? 196 00:12:25,320 --> 00:12:27,360 S4: Yeah. That does. I was kind of thinking the same 197 00:12:27,360 --> 00:12:31,000 S4: thing because I've been reading some books and stuff now about, um, 198 00:12:31,000 --> 00:12:35,160 S4: how to make your, um, pay your retirement paycheck from 199 00:12:35,160 --> 00:12:39,220 S4: your 401 K or your IRA. And it talks about 200 00:12:39,220 --> 00:12:42,620 S4: different avenues like that and stuff. So. Mhm. Um, yeah, 201 00:12:42,660 --> 00:12:43,660 S4: that does make sense. 202 00:12:43,860 --> 00:12:46,260 S1: Very good. Well, if you need, uh, an advisor to 203 00:12:46,260 --> 00:12:48,940 S1: help you walk through this and you don't have one. Rob, 204 00:12:48,940 --> 00:12:51,939 S1: you could connect locally there in Ohio with a certified 205 00:12:51,940 --> 00:12:56,699 S1: kingdom advisor. Uh, just go to find a k.com. Hey, 206 00:12:56,700 --> 00:12:59,579 S1: thanks for calling and for listening regularly. We appreciate it. 207 00:12:59,620 --> 00:13:01,820 S1: We're going to continue to take your questions throughout the 208 00:13:01,820 --> 00:13:05,580 S1: broadcast today. Mark, just about a minute before the break here. Uh, 209 00:13:05,580 --> 00:13:09,939 S1: obviously contribution limits matter when it comes to IRAs and 210 00:13:09,940 --> 00:13:12,780 S1: those change year to year. So update us on that. 211 00:13:13,059 --> 00:13:17,699 S2: Yeah. So for 2026, total contributions to an IRA are 212 00:13:17,740 --> 00:13:22,820 S2: capped at 7500 per person unless you're 50 or over, 213 00:13:22,860 --> 00:13:27,100 S2: in which case you can contribute $8,600. And of course, 214 00:13:27,100 --> 00:13:31,060 S2: that applies to both a husband and a wife. Even 215 00:13:31,059 --> 00:13:34,480 S2: if one doesn't work outside the home as long as 216 00:13:34,760 --> 00:13:39,960 S2: the couple's combined income is enough to cover both contributions. 217 00:13:40,400 --> 00:13:44,680 S1: Yeah, that's really important, and you can contribute for the 218 00:13:44,679 --> 00:13:48,200 S1: prior year until you file that year's return, right? 219 00:13:48,400 --> 00:13:52,240 S2: Yeah, absolutely. So you've got really until April 15th, assuming 220 00:13:52,240 --> 00:13:54,439 S2: you haven't filed yet this year. 221 00:13:54,880 --> 00:13:57,120 S1: Yeah. So you could, if you had the ability, go 222 00:13:57,120 --> 00:14:00,960 S1: ahead and fund last year that wouldn't touch this year's 223 00:14:00,960 --> 00:14:05,600 S1: contribution and perhaps, you know, even lower your taxable income 224 00:14:05,600 --> 00:14:08,720 S1: for last year, which could save you some tax dollars 225 00:14:08,720 --> 00:14:11,800 S1: while you're saving for retirement. Mark Miller is here today. 226 00:14:11,800 --> 00:14:14,360 S1: More questions. Lines are full, so we'll get to as 227 00:14:14,360 --> 00:14:16,480 S1: many as we can in the next segment. Check out 228 00:14:16,480 --> 00:14:21,000 S1: this article at Sound mind investing.org. It's called making sense 229 00:14:21,000 --> 00:14:29,880 S1: of your IRA options. We'll be right back. Hey, great 230 00:14:29,880 --> 00:14:31,840 S1: to have you with us today on Faith and Finance Live. 231 00:14:31,900 --> 00:14:36,860 S1: we're talking IRAs. Understanding your IRA options is really the 232 00:14:36,860 --> 00:14:40,500 S1: focus today. But really taking any calls and questions today 233 00:14:40,500 --> 00:14:43,820 S1: on the markets, the economy. The reason is Mark Millar's here. 234 00:14:43,820 --> 00:14:47,580 S1: He's our good friend. He's executive editor and senior portfolio 235 00:14:47,580 --> 00:14:52,140 S1: manager at Sound Mind Investing. And Mark uh, March Madness underway. 236 00:14:52,180 --> 00:14:54,140 S1: How's Kentucky going to do this year? 237 00:14:54,380 --> 00:14:56,500 S2: Well, I don't know about that, but we've got some 238 00:14:56,540 --> 00:14:58,460 S2: madness in the markets, don't we? 239 00:14:59,100 --> 00:15:03,940 S1: We sure do. Especially with well, all over the board oil, uh, 240 00:15:03,940 --> 00:15:07,380 S1: the the broad markets, but also gold. I'd love for 241 00:15:07,380 --> 00:15:08,540 S1: you to touch on those. 242 00:15:08,580 --> 00:15:11,020 S2: Yeah. I'm sure there are a lot of listeners really 243 00:15:11,020 --> 00:15:13,700 S2: scratching their head about what's going on with gold. For 244 00:15:13,700 --> 00:15:17,340 S2: those who haven't been paying close attention, uh, gold has 245 00:15:17,340 --> 00:15:21,740 S2: been ripping for basically two years, just zooming higher. Um, 246 00:15:21,740 --> 00:15:26,860 S2: we went from roughly $2,000 an ounce, um, a little 247 00:15:26,860 --> 00:15:31,160 S2: over two years ago, February of 2024, all the way 248 00:15:31,160 --> 00:15:37,280 S2: up to 5400, uh, earlier this year. Um, and we've 249 00:15:37,280 --> 00:15:41,200 S2: come down now, we were down about 5% in gold today. 250 00:15:41,200 --> 00:15:44,320 S2: That's a huge down day for an asset like gold. 251 00:15:44,560 --> 00:15:47,680 S2: And that brings the total decline over the last month 252 00:15:47,680 --> 00:15:50,920 S2: or so since the Iraq War started to somewhere in 253 00:15:50,920 --> 00:15:55,480 S2: the neighborhood of 12 to 15%. Uh, that gold has 254 00:15:55,480 --> 00:15:58,000 S2: lost since this war began. Now, a lot of people 255 00:15:58,000 --> 00:16:01,600 S2: are probably thinking, wait a second, a war? Isn't that 256 00:16:01,600 --> 00:16:05,200 S2: supposed to drive gold higher? The flight to safety and 257 00:16:05,200 --> 00:16:09,200 S2: all of those things? Well, you can never completely divorce 258 00:16:09,200 --> 00:16:11,720 S2: a current move from the prior move. So of course, 259 00:16:11,720 --> 00:16:15,120 S2: this huge run up in gold does play a role 260 00:16:15,120 --> 00:16:19,000 S2: in what it does next. And having some some room 261 00:16:19,000 --> 00:16:21,520 S2: to to drop. But I would say there are a 262 00:16:21,520 --> 00:16:26,000 S2: few factors playing into this, this recent drop one, um, 263 00:16:26,520 --> 00:16:29,700 S2: we were talking last year about how one of the 264 00:16:29,700 --> 00:16:34,780 S2: big drivers, uh, pushing gold higher, has been that many 265 00:16:34,820 --> 00:16:38,540 S2: central banks around the globe have been turning to gold 266 00:16:38,700 --> 00:16:43,020 S2: as an alternative to dollars in U.S. Treasury bonds. And 267 00:16:43,020 --> 00:16:47,380 S2: so with all these central banks and governments buying gold 268 00:16:47,380 --> 00:16:51,060 S2: loading up on gold, it's important to remember that they 269 00:16:51,100 --> 00:16:55,900 S2: are looking at that gold basically as their cash savings account. 270 00:16:56,020 --> 00:16:58,780 S2: So when you have a crisis like we have with 271 00:16:58,780 --> 00:17:02,860 S2: this war now, it's difficult to get good data in 272 00:17:02,860 --> 00:17:05,500 S2: real time on this kind of thing. But there's a 273 00:17:05,500 --> 00:17:10,540 S2: lot of speculation that these Gulf states that suddenly are 274 00:17:10,540 --> 00:17:15,260 S2: seeing their oil revenues, their natural gas revenues, just slashed, 275 00:17:15,260 --> 00:17:19,780 S2: they're basically at a standstill that they may be tapping 276 00:17:19,780 --> 00:17:23,980 S2: these gold reserves and selling their gold to raise the 277 00:17:23,980 --> 00:17:28,200 S2: funds to keep their governments running basically. And that that 278 00:17:28,200 --> 00:17:31,680 S2: is a portion of the selling pressure. Of course, anytime 279 00:17:31,680 --> 00:17:35,160 S2: you have such a parabolic, uh, up move in an 280 00:17:35,160 --> 00:17:37,720 S2: asset like we had in gold, that means you've had 281 00:17:37,720 --> 00:17:40,400 S2: a lot of people buying towards the end as well. 282 00:17:40,560 --> 00:17:42,919 S2: And so with the uncertainty, you could just kind of 283 00:17:43,000 --> 00:17:47,120 S2: have a, a weak hand selling kind of a phenomenon too, 284 00:17:47,359 --> 00:17:51,040 S2: but it's not out of the, the normal realm that 285 00:17:51,040 --> 00:17:54,880 S2: when interest rates spike, when the dollar spikes higher, which 286 00:17:54,880 --> 00:17:58,600 S2: is another flight to safety trade, that those higher rates, 287 00:17:58,600 --> 00:18:02,880 S2: higher dollar, um, will, will make an impact on gold 288 00:18:02,880 --> 00:18:06,560 S2: and temporarily send it lower. I would say that long 289 00:18:06,600 --> 00:18:12,000 S2: term the bullish case is very much intact. Um, especially 290 00:18:12,000 --> 00:18:16,239 S2: if we see any kind of government stimulus type of 291 00:18:16,240 --> 00:18:21,280 S2: response as an ultimate outcome of this war. That's typically 292 00:18:21,280 --> 00:18:25,420 S2: when we see gold, uh, really jump. You'll see. It 293 00:18:25,420 --> 00:18:29,620 S2: often sell off early in a crisis. Um, that's what 294 00:18:29,619 --> 00:18:33,340 S2: happened in 2008. Gold fell 20% with the market through 295 00:18:33,340 --> 00:18:37,300 S2: the first part of that crisis, the global financial crisis. 296 00:18:37,540 --> 00:18:41,540 S2: And then it bottomed before everything else. And as these 297 00:18:41,540 --> 00:18:46,020 S2: government programs then were rolled out, gold just soared again 298 00:18:46,020 --> 00:18:51,659 S2: on the prospect of that debasement and government stimulus. So 299 00:18:51,700 --> 00:18:55,140 S2: that's kind of the typical pattern in past crises. I 300 00:18:55,140 --> 00:18:58,660 S2: wouldn't panic if you're a gold owner at this point. 301 00:18:58,660 --> 00:19:02,859 S2: But with that said, um, you know, this crisis could 302 00:19:02,859 --> 00:19:05,420 S2: go any which way and it's possible that gold could 303 00:19:05,420 --> 00:19:10,820 S2: have more downside before it finally stabilizes and resumes its uptrend. 304 00:19:11,380 --> 00:19:14,780 S1: Yeah, that's a really helpful analysis. So I suspect in 305 00:19:14,780 --> 00:19:17,620 S1: the same way you said while it was going crazy 306 00:19:17,660 --> 00:19:21,580 S1: on the upside, you know, don't go beyond what your 307 00:19:21,800 --> 00:19:25,520 S1: allocation should be no more than, for the most people, 308 00:19:25,520 --> 00:19:29,919 S1: 5 to 10% in the same way as it's coming down. Uh, 309 00:19:29,920 --> 00:19:34,400 S1: don't jump out necessarily if you're allocated properly. Is that right? 310 00:19:34,560 --> 00:19:37,240 S2: Yeah, that's absolutely right. And this is such a great 311 00:19:37,240 --> 00:19:41,160 S2: example of something we see so often in investing. And 312 00:19:41,160 --> 00:19:44,880 S2: that's time frame and perspective. So if you're looking at 313 00:19:44,880 --> 00:19:49,119 S2: the last month and you're saying, wow, gold is down 15%, 314 00:19:49,119 --> 00:19:51,400 S2: I got to get out of here. Well, you know, 315 00:19:51,440 --> 00:19:54,240 S2: I would just encourage taking a little bit longer view 316 00:19:54,280 --> 00:19:58,120 S2: because if I had told most gold owners at the 317 00:19:58,119 --> 00:20:02,120 S2: beginning of this year, less than three months ago, that 318 00:20:02,119 --> 00:20:05,840 S2: gold would be up 7% year to date in the 319 00:20:05,840 --> 00:20:08,399 S2: first three months of the year, they would have been 320 00:20:08,400 --> 00:20:12,000 S2: jumping up and down with excitement because that's roughly a 30% 321 00:20:12,000 --> 00:20:16,920 S2: annual return, and that's exactly where we are today. However, 322 00:20:17,080 --> 00:20:20,899 S2: when you're up 25% at one point and that comes 323 00:20:20,900 --> 00:20:24,900 S2: down to seven. Well, that hits very differently doesn't it? 324 00:20:24,900 --> 00:20:28,419 S2: So yeah, a lot of this is just the perspective 325 00:20:28,420 --> 00:20:31,740 S2: and the path that you take to get to those returns. 326 00:20:32,220 --> 00:20:36,580 S1: Mhm. That's well said. Mark Billers here today. We're talking, uh, investments, 327 00:20:36,619 --> 00:20:40,179 S1: IRAs in your portfolio. Let's head back to the phones. Uh, 328 00:20:40,180 --> 00:20:41,980 S1: Katia in Montana. Go ahead. 329 00:20:42,540 --> 00:20:47,300 S5: Yes. I'm a 72 year old widow. And my question is, 330 00:20:47,340 --> 00:20:51,300 S5: is it financially better to use a home equity loan 331 00:20:51,300 --> 00:20:56,780 S5: with a variable rate of 7.625, or withdraw the money 332 00:20:56,780 --> 00:20:59,020 S5: for this home improvement that I want to do with 333 00:20:59,020 --> 00:21:03,020 S5: the bathroom laundry from my retirement funds, which would probably 334 00:21:03,020 --> 00:21:08,420 S5: be taxed at 15%. I've been approved for $100,000 equity 335 00:21:08,420 --> 00:21:11,460 S5: loan and I have till Monday to cancel it. So 336 00:21:11,460 --> 00:21:15,260 S5: I was wondering which is the biblically more financially sound 337 00:21:15,300 --> 00:21:17,820 S5: way to go. If I do tap into the home 338 00:21:17,820 --> 00:21:22,240 S5: equity loan or my IRAs or Roth IRAs. My husband 339 00:21:22,240 --> 00:21:26,800 S5: was a financial broker and CPA, so he invested very well. 340 00:21:27,000 --> 00:21:29,960 S5: And so but I don't have him to ask. 341 00:21:30,400 --> 00:21:32,680 S1: No. Well, we'd be happy to weigh in. What is 342 00:21:32,680 --> 00:21:34,359 S1: the project going to cost? Do you think? 343 00:21:35,240 --> 00:21:40,080 S5: Um, probably. Well, you know how it goes. I'll say 60, 70,000. 344 00:21:40,119 --> 00:21:43,439 S5: And then suddenly we the septic isn't working or the 345 00:21:43,440 --> 00:21:46,280 S5: water is not working, and we're at 100,000. So. 346 00:21:46,480 --> 00:21:48,480 S1: Got it. All right. We'll give you our answer right 347 00:21:48,480 --> 00:21:51,000 S1: after this break. Stay right there. We'll be right back. 348 00:22:00,080 --> 00:22:02,560 S1: You know, when it comes to IRAs, the choices you 349 00:22:02,560 --> 00:22:05,800 S1: make today can shape your tax bill and your income 350 00:22:05,800 --> 00:22:09,679 S1: for decades to come. But there are some questions. Roth traditional. 351 00:22:09,720 --> 00:22:13,480 S1: What about Roth conversions? Is that appropriate for your situation? 352 00:22:13,480 --> 00:22:16,000 S1: We're talking about these topics and more as we unpack 353 00:22:16,160 --> 00:22:19,180 S1: a brand new article from the team at Sound Mind Investing. 354 00:22:19,700 --> 00:22:21,860 S1: You need to check it out. It'll give you lots 355 00:22:21,859 --> 00:22:26,180 S1: of helpful insights if you're considering some of these topics, 356 00:22:26,180 --> 00:22:29,500 S1: it's called making sense of your IRA options. You'll find 357 00:22:29,500 --> 00:22:32,619 S1: it at sound mind investing.org. Mark Miller is here today. 358 00:22:32,619 --> 00:22:36,020 S1: He's executive editor, and he's our go to guy with 359 00:22:36,060 --> 00:22:39,740 S1: topics in this area. Before the break, we were talking 360 00:22:39,740 --> 00:22:45,419 S1: to Katja and she's wondering about $100,000 spend on a 361 00:22:45,460 --> 00:22:48,820 S1: home improvement project. She's been approved to take a home 362 00:22:48,820 --> 00:22:53,780 S1: equity loan at 7.625. She can cancel that. She also 363 00:22:53,820 --> 00:22:57,460 S1: has retirement assets, and she's just wondering which option makes 364 00:22:57,460 --> 00:23:00,420 S1: most the most sense. Katie, before we get Mark to 365 00:23:00,420 --> 00:23:03,060 S1: weigh in on this, give me a just a rundown 366 00:23:03,100 --> 00:23:07,540 S1: of of what you've got in terms of retirement assets. Uh, just, uh, 367 00:23:07,540 --> 00:23:10,900 S1: you know, that you're drawing from currently. What are the balances? 368 00:23:12,619 --> 00:23:18,360 S5: I'm not exactly Sure, but it's substantial. Okay, I think. Yeah. 369 00:23:18,760 --> 00:23:20,320 S5: Is this on air? Because I don't. 370 00:23:20,359 --> 00:23:23,240 S1: Really. It is. Yeah. No problem. So. Yeah. And are 371 00:23:23,240 --> 00:23:28,399 S1: you drawing from these retirement assets monthly to. To support 372 00:23:28,400 --> 00:23:29,119 S1: your income? 373 00:23:29,560 --> 00:23:34,520 S5: Um, I get, uh, $2,000 a month to handle. You know, 374 00:23:34,560 --> 00:23:39,320 S5: various things, plus my social Security and. All right. Yeah. Okay. 375 00:23:39,359 --> 00:23:42,879 S1: Excellent. Mark. Uh, how do you make this call? I mean, obviously, 376 00:23:42,920 --> 00:23:47,399 S1: that's expensive money at 7.625, but, you know, she's also 377 00:23:47,400 --> 00:23:51,120 S1: got retirement assets that are growing and would be taxable. 378 00:23:51,280 --> 00:23:53,720 S2: Yeah. I think there are two lenses that I would 379 00:23:53,720 --> 00:23:57,480 S2: look at this through Katya. The first is the strictly 380 00:23:57,480 --> 00:24:01,600 S2: financial lens. And through that lens, the way this shapes 381 00:24:01,600 --> 00:24:07,240 S2: up is you can borrow the money at 7.625%, which 382 00:24:07,240 --> 00:24:12,440 S2: basically means that the alternative of the IRA money would 383 00:24:12,580 --> 00:24:18,140 S2: need to earn at least 7.625 as your break. Even 384 00:24:18,300 --> 00:24:22,460 S2: where it really didn't wouldn't make a financial difference. Which 385 00:24:22,460 --> 00:24:26,500 S2: one of those two options you take now as a retiree? 386 00:24:26,859 --> 00:24:29,340 S2: I don't know how that money is invested right now, 387 00:24:29,580 --> 00:24:34,619 S2: but 7.625 is not a gimme. It's not a an 388 00:24:34,619 --> 00:24:37,859 S2: automatic assumption that we're going to earn that much. And 389 00:24:37,859 --> 00:24:41,300 S2: the worst case scenario would be to borrow the money, 390 00:24:41,500 --> 00:24:46,619 S2: be paying the 7.625, and then have a market decline 391 00:24:46,619 --> 00:24:50,180 S2: where you're actually losing ground with your assets. That would 392 00:24:50,180 --> 00:24:52,900 S2: be the worst case scenario. Of course, if you earn 393 00:24:52,900 --> 00:24:56,900 S2: more than the 7.625 with the investments, you could at 394 00:24:56,940 --> 00:25:00,260 S2: least make a financial case that maybe that was a 395 00:25:00,260 --> 00:25:03,340 S2: better move to borrow at the lower rate, earn at 396 00:25:03,340 --> 00:25:06,100 S2: the higher rate. But I think there's a second lens 397 00:25:06,100 --> 00:25:09,340 S2: here too, and that's the biblical lens. And I think 398 00:25:09,340 --> 00:25:13,159 S2: the Bible is pretty clear that, generally speaking, we don't 399 00:25:13,160 --> 00:25:15,920 S2: want to take on debt that we don't need to 400 00:25:15,960 --> 00:25:19,840 S2: take on. And so given that your IRA assets are 401 00:25:19,840 --> 00:25:23,720 S2: substantial and it sounds like you probably could fund this 402 00:25:23,720 --> 00:25:28,960 S2: from those IRA assets without it really making an impact 403 00:25:28,960 --> 00:25:32,920 S2: on your ability to meet your spending needs. I would 404 00:25:32,920 --> 00:25:38,119 S2: definitely encourage that option. Um, you know, if you're borrowing 405 00:25:38,160 --> 00:25:42,160 S2: this money at 3%, maybe you've got a little different situation. 406 00:25:42,160 --> 00:25:45,800 S2: But given that that rate isn't so attractive, I think 407 00:25:45,800 --> 00:25:49,080 S2: it's a fairly easy call given the strength of the 408 00:25:49,080 --> 00:25:52,359 S2: biblical argument, to just go ahead and fund that out 409 00:25:52,400 --> 00:25:55,800 S2: of your own assets rather than taking on the debt. 410 00:25:56,200 --> 00:25:58,560 S1: Yeah, it's really well said. I couldn't agree more. Katie, 411 00:25:58,600 --> 00:26:00,720 S1: what follow up questions do you have or thoughts? 412 00:26:02,040 --> 00:26:05,760 S5: Um, even if it means that by taking the money 413 00:26:05,760 --> 00:26:07,760 S5: out of and it could be a Roth, it could 414 00:26:07,760 --> 00:26:10,980 S5: be an IRA, it could be mutual funds. I have other, 415 00:26:11,020 --> 00:26:14,900 S5: you know, things that are, um, gaining interest and stuff. 416 00:26:14,940 --> 00:26:18,179 S5: It's the taxable where I would be taxed by taking 417 00:26:18,180 --> 00:26:22,300 S5: that money out as at 15%. Taking that money out. 418 00:26:22,540 --> 00:26:24,500 S5: That's where I'm looking at. AM I going to be 419 00:26:24,500 --> 00:26:27,699 S5: taxed more by taking it out? Or is it better 420 00:26:27,700 --> 00:26:31,419 S5: that I'm taxed? Um, interest rate less. 421 00:26:31,460 --> 00:26:34,619 S1: Yeah. Good question. So are you saying, just to clarify 422 00:26:34,780 --> 00:26:38,420 S1: that you have both Roth and traditional accounts and you 423 00:26:38,420 --> 00:26:39,900 S1: could pull from either one? 424 00:26:40,460 --> 00:26:43,140 S5: Yes. And I have other mutual funds as well. 425 00:26:43,180 --> 00:26:46,660 S1: Okay. Yeah. The mutual fund is really the investment type. 426 00:26:47,020 --> 00:26:51,860 S1: The primary question is the type of account the Roth is, 427 00:26:51,900 --> 00:26:55,139 S1: is tax free. Uh, so you you already pay the 428 00:26:55,140 --> 00:26:57,460 S1: tax when it went in. And so you could pull 429 00:26:57,460 --> 00:27:02,220 S1: that out with zero tax consequence. The traditional is going 430 00:27:02,220 --> 00:27:05,459 S1: to be taxable as it comes out. Uh, you know, 431 00:27:05,500 --> 00:27:09,359 S1: really the, the investments inside it are less of a concern. 432 00:27:09,359 --> 00:27:11,840 S1: But you have both options at your disposal, right? 433 00:27:11,880 --> 00:27:12,400 S5: Yes. 434 00:27:12,800 --> 00:27:15,120 S1: Okay. So Marc, how would you think through that? 435 00:27:15,320 --> 00:27:19,760 S2: Yeah. Well, I would definitely advise, um, you to have 436 00:27:19,760 --> 00:27:22,480 S2: your tax preparer take a look at this and give 437 00:27:22,480 --> 00:27:26,360 S2: you some counsel on, on which of those paths, um, would, 438 00:27:26,520 --> 00:27:29,679 S2: would be best overall for your tax situation or if 439 00:27:29,680 --> 00:27:31,880 S2: you have a financial planner, they could do that same 440 00:27:31,880 --> 00:27:35,560 S2: thing for you. Um, you know, you're trying to manage 441 00:27:35,560 --> 00:27:40,679 S2: that taxable income. And so it, it really depends on 442 00:27:40,680 --> 00:27:43,200 S2: what bracket you're in and how close you are to 443 00:27:43,240 --> 00:27:45,880 S2: the top of that bracket, whether you would want to 444 00:27:45,920 --> 00:27:51,119 S2: just go all Roth IRA, um, withdrawal. And like Rob said, 445 00:27:51,119 --> 00:27:54,560 S2: that wouldn't add anything to your tax bill or if 446 00:27:54,560 --> 00:27:57,120 S2: maybe a mix or taking it all out of the 447 00:27:57,119 --> 00:28:02,240 S2: traditional paying the tax now, but then having more Roth 448 00:28:02,240 --> 00:28:07,540 S2: assets to use later would be more advantageous. So it's 449 00:28:07,540 --> 00:28:11,300 S2: hard to make a strong call on that without running 450 00:28:11,300 --> 00:28:14,820 S2: those types of detailed, uh, scenario analysis. 451 00:28:15,060 --> 00:28:17,500 S1: Yeah. I think the other consideration here is, to the 452 00:28:17,500 --> 00:28:20,780 S1: extent you have some investments in either of these accounts 453 00:28:21,060 --> 00:28:25,700 S1: that are earning, you know, considerably less than that 7.625 454 00:28:25,740 --> 00:28:29,060 S1: that just further strengthens that argument that it ought to 455 00:28:29,060 --> 00:28:31,899 S1: come from the retirement accounts. Again, you could get it 456 00:28:31,900 --> 00:28:33,780 S1: from the Roth tax free, or you could do a 457 00:28:33,780 --> 00:28:37,379 S1: combination of the two. And to Mark's point, maybe fill 458 00:28:37,380 --> 00:28:42,300 S1: up that lower tax bracket up to that, uh, you know, 459 00:28:42,340 --> 00:28:45,700 S1: the upper end of that tax bracket, whether that's 12 or, 460 00:28:45,740 --> 00:28:49,820 S1: or 20% and then switch over to the Roth, but 461 00:28:49,820 --> 00:28:52,780 S1: your CPA could run that analysis. Do you have somebody 462 00:28:52,780 --> 00:28:54,220 S1: that prepares your return? 463 00:28:54,820 --> 00:28:57,500 S5: Yes. I had to my husband put somebody in place, 464 00:28:57,500 --> 00:28:59,380 S5: and then that guy had a heart attack two weeks 465 00:28:59,380 --> 00:29:03,000 S5: before my husband died. And so, oh goodness, I've been scrambling, 466 00:29:03,000 --> 00:29:05,440 S5: but yes, I, I have a call in to my 467 00:29:05,440 --> 00:29:08,440 S5: CPA because he did my tax return and I'm getting 468 00:29:08,440 --> 00:29:11,520 S5: money back this year instead of shelling it out because 469 00:29:11,520 --> 00:29:14,400 S5: I keep overpaying for the last two years. And so. 470 00:29:14,840 --> 00:29:15,160 S1: Yes. 471 00:29:15,200 --> 00:29:16,280 S5: Yeah. Okay. 472 00:29:16,320 --> 00:29:19,080 S1: Okay. So I think what you're hearing is we like 473 00:29:19,120 --> 00:29:21,840 S1: the option of paying for it out of the retirement accounts, 474 00:29:21,880 --> 00:29:25,520 S1: not taking on the loan and let your CPA direct 475 00:29:25,520 --> 00:29:29,600 S1: you as to which account or perhaps multiple accounts to 476 00:29:29,640 --> 00:29:31,640 S1: pull from, and if so, how much from each? 477 00:29:32,480 --> 00:29:36,520 S5: Okay. And if is there more to a retirement fund 478 00:29:36,520 --> 00:29:41,040 S5: than an IRA and a Roth IRA? Because I have stocks, 479 00:29:41,280 --> 00:29:45,080 S5: the stock market too is invested in. And so that's 480 00:29:45,080 --> 00:29:49,320 S5: where I've been getting money is, is cashing in a 481 00:29:49,320 --> 00:29:54,320 S5: stock in order to pay for that. And so that's that. Yeah. 482 00:29:54,720 --> 00:29:57,280 S1: Yeah, it comes down to the type of account. So 483 00:29:57,440 --> 00:30:00,240 S1: you could have just a straight brokerage account which has 484 00:30:00,240 --> 00:30:04,940 S1: taxable investments in them, meaning if there's gains on the 485 00:30:04,940 --> 00:30:08,060 S1: stocks or the mutual funds inside of that brokerage account, 486 00:30:08,060 --> 00:30:11,260 S1: as you sell them, you create a taxable event, either 487 00:30:11,260 --> 00:30:13,700 S1: a long term or a short term capital gain. And 488 00:30:13,700 --> 00:30:18,620 S1: then you have retirement accounts like IRA Roth and traditional 489 00:30:18,620 --> 00:30:24,220 S1: 401 K pensions. And those are either tax deferred or 490 00:30:24,220 --> 00:30:27,340 S1: tax free, depending on their tax treatment. And it's really 491 00:30:27,340 --> 00:30:30,500 S1: less about the investments inside of them and more about 492 00:30:30,500 --> 00:30:34,860 S1: the retirement account structure that you've got going on. So, 493 00:30:34,900 --> 00:30:37,220 S1: you know, I think those are the primary issues. And 494 00:30:37,220 --> 00:30:39,780 S1: perhaps to the extent there's confusion, I'd reach out to 495 00:30:39,780 --> 00:30:42,860 S1: your advisor to talk further about that. Katya, thanks for 496 00:30:42,860 --> 00:30:45,900 S1: your call today. Stephen. Susan, coming your way. Stay with us. 497 00:30:51,260 --> 00:30:53,300 S1: Great to have you with us today on faith and finance. 498 00:30:53,300 --> 00:30:55,660 S1: Live here in the final segment while Mark Miller is 499 00:30:55,660 --> 00:30:57,940 S1: here today from Sound Mind Investing. We'll get to as 500 00:30:57,940 --> 00:31:00,920 S1: many calls as we can. Let's go to Florida. Stephen, 501 00:31:00,920 --> 00:31:02,360 S1: thanks for your patience. Go ahead. 502 00:31:03,200 --> 00:31:04,800 S6: Yes, sir. How are you doing today? 503 00:31:05,120 --> 00:31:06,640 S1: Doing great. Thanks for your call. 504 00:31:07,080 --> 00:31:10,760 S6: Wonderful. I really appreciate you guys and the biblical paths 505 00:31:10,760 --> 00:31:12,880 S6: that you guys lead us on. I really, really do 506 00:31:13,160 --> 00:31:17,720 S6: appreciate that. Uh, my question is, uh, I have A41K 507 00:31:17,760 --> 00:31:21,840 S6: that I have enough money to pay. Uh, 22,024 tax bill. 508 00:31:22,040 --> 00:31:25,360 S6: I have a stock account that I have enough. If 509 00:31:25,360 --> 00:31:27,360 S6: I cash the truck out, I have enough to pay 510 00:31:27,360 --> 00:31:30,960 S6: for the tax bill that I have for 2024. And 511 00:31:30,960 --> 00:31:35,240 S6: I also have a Roth IRA account that again, same, 512 00:31:35,280 --> 00:31:38,120 S6: same situation. What I'm trying to find out is do 513 00:31:38,120 --> 00:31:42,920 S6: you have to pay, uh, does that create a tax, uh, 514 00:31:43,400 --> 00:31:47,120 S6: event when you are paying property taxes, like you pay 515 00:31:47,160 --> 00:31:49,360 S6: tax on something that you're paying tax on? That's what 516 00:31:49,360 --> 00:31:51,080 S6: I'm trying to like income tax on something that you're 517 00:31:51,080 --> 00:31:52,280 S6: paying property tax on. 518 00:31:52,640 --> 00:31:55,320 S1: Yes. Uh, yeah. Mark your thoughts. 519 00:31:55,640 --> 00:31:59,260 S2: I'm not entirely sure I understand the question. I'm sorry. 520 00:31:59,740 --> 00:32:02,900 S1: So you're talking about pulling money from a 401 K 521 00:32:02,940 --> 00:32:04,780 S1: to pay a tax bill. Is that right? 522 00:32:05,340 --> 00:32:09,700 S6: A 401 K stock or a Roth IRA? I've got 523 00:32:09,700 --> 00:32:12,140 S6: three different accounts that I could pull from to have 524 00:32:12,140 --> 00:32:15,140 S6: enough money in them to pay a property tax bill. 525 00:32:15,380 --> 00:32:18,340 S6: And because I'm paying taxes, would I have to pay 526 00:32:18,380 --> 00:32:20,780 S6: income taxes on something I'm pulling out to pay taxes on? 527 00:32:20,820 --> 00:32:23,660 S1: Yeah. So there's two separate issues going on here. One 528 00:32:23,660 --> 00:32:27,060 S1: is whether or not there's a taxable event created by 529 00:32:27,180 --> 00:32:30,940 S1: the withdrawal or the distribution. And then the second issue 530 00:32:30,940 --> 00:32:33,780 S1: is what you do with that money. But one does 531 00:32:33,780 --> 00:32:36,260 S1: not relate to the other. And so if you pull 532 00:32:36,300 --> 00:32:38,940 S1: money from a 401 K, whether you pull it out 533 00:32:38,940 --> 00:32:41,620 S1: to spend it, save it or pay a tax bill, 534 00:32:41,900 --> 00:32:44,739 S1: it's going to be taxable because it's coming out of 535 00:32:44,740 --> 00:32:47,540 S1: a traditional 401 K. If you pull money out of 536 00:32:47,540 --> 00:32:50,260 S1: a Roth, so long as you're eligible to do so, 537 00:32:50,500 --> 00:32:54,060 S1: or you're only pulling your original contributions, there's no tax. 538 00:32:54,060 --> 00:32:57,440 S1: And again, that's irrespective of what you turn around and 539 00:32:57,440 --> 00:33:00,080 S1: do with it. Now, whether or not you get some 540 00:33:00,080 --> 00:33:04,040 S1: credit on your tax bill. Uh, you know, for paying 541 00:33:04,040 --> 00:33:06,920 S1: a property tax bill that's separate. And aside from whether 542 00:33:06,920 --> 00:33:10,400 S1: or not you created a taxable event by taking the withdrawal, 543 00:33:10,400 --> 00:33:11,360 S1: does that make sense? 544 00:33:11,560 --> 00:33:14,440 S6: I appreciate that so much. That makes absolute sense. Thank 545 00:33:14,440 --> 00:33:16,160 S6: you guys so much for everything you do. 546 00:33:16,480 --> 00:33:19,760 S1: All right Stephen. Lord bless you bud. Uh, to Virginia. Susan. 547 00:33:19,760 --> 00:33:27,960 S1: Go ahead. Hi, Susan. Are you there? All right, let's, uh, 548 00:33:27,960 --> 00:33:30,040 S1: we'll put Susan on hold. Our team will work with 549 00:33:30,040 --> 00:33:32,640 S1: her and see if we can get her, uh, on 550 00:33:32,640 --> 00:33:35,960 S1: the line. Let's go to, uh, Lee in Florida. Go ahead. 551 00:33:37,080 --> 00:33:39,800 S7: Hi. Thank you so much for taking. This. Call is 552 00:33:39,800 --> 00:33:40,840 S7: being recorded. 553 00:33:42,160 --> 00:33:43,000 S1: How can we help? 554 00:33:43,800 --> 00:33:47,680 S7: I'm giving a call regarding a Roth conversion. I took 555 00:33:47,680 --> 00:33:51,920 S7: a Roth conversion in my 50s because I was going 556 00:33:51,920 --> 00:33:55,180 S7: to separate from work for a year, and it was 557 00:33:55,180 --> 00:33:57,940 S7: the lowest my income would be. Throughout my career, it 558 00:33:57,940 --> 00:34:03,300 S7: was my my perspective. Okay, so I did a share conversion. 559 00:34:03,660 --> 00:34:09,140 S7: From a traditional to a Roth investment share conversion and 560 00:34:09,620 --> 00:34:13,860 S7: an additional year of being unemployed occurred. So with two 561 00:34:13,860 --> 00:34:17,740 S7: years of not working, as I look to go back 562 00:34:17,739 --> 00:34:24,980 S7: into the workforce. Are there any benefits to continuing? Roth 563 00:34:24,980 --> 00:34:31,340 S7: conversions or any additional steps I should take? Going back 564 00:34:31,340 --> 00:34:34,860 S7: into full time employment to recover for retirement? 565 00:34:35,260 --> 00:34:36,020 S1: Yeah. Mark. 566 00:34:36,420 --> 00:34:41,100 S2: So you still have some traditional assets. Li that you 567 00:34:41,140 --> 00:34:43,900 S2: could convert to Roth if you wanted to. 568 00:34:45,580 --> 00:34:49,460 S7: I have a small portion in a Roth 401 K. 569 00:34:50,020 --> 00:34:57,480 S7: I have a traditional IRA that is invested, but around, uh, 570 00:34:57,480 --> 00:35:02,680 S7: over 100,000. That's in a brokerage CD, IRA. So as 571 00:35:02,680 --> 00:35:05,279 S7: I look to go forward in the future, that's where 572 00:35:05,280 --> 00:35:06,520 S7: I could use guidance. 573 00:35:06,760 --> 00:35:10,560 S2: Sure, sure. Well, it could be that there would be 574 00:35:10,560 --> 00:35:16,480 S2: some tax benefit to, uh, continuing to do traditional do 575 00:35:16,480 --> 00:35:21,320 S2: Roth conversions. Um, during this, this period where your income 576 00:35:21,320 --> 00:35:24,520 S2: is relatively low, but for a lot of people in 577 00:35:24,520 --> 00:35:29,040 S2: a situation like you're describing, Lee, the, the bigger consideration 578 00:35:29,040 --> 00:35:34,359 S2: really is whether they have extra funds to pay the 579 00:35:34,360 --> 00:35:38,120 S2: tax that has to be paid when you do the conversions. 580 00:35:38,320 --> 00:35:41,719 S2: And this is a point that's often lost on people. 581 00:35:41,960 --> 00:35:47,200 S2: It's great to convert, but generally speaking, most advisors will 582 00:35:47,200 --> 00:35:52,339 S2: only recommend doing a conversion. If you can pay the 583 00:35:52,340 --> 00:35:56,859 S2: tax bill that it generates out of assets that are 584 00:35:56,860 --> 00:36:00,859 S2: not part of the retirement pool. In other words, you 585 00:36:00,860 --> 00:36:03,140 S2: don't want to take money out of your IRA to 586 00:36:03,180 --> 00:36:06,620 S2: pay the taxes that the conversion is going to generate. 587 00:36:07,300 --> 00:36:10,460 S2: If you have excess funds and can pay for that 588 00:36:10,540 --> 00:36:14,060 S2: essentially out of pocket, is what I'm saying. Then the 589 00:36:14,060 --> 00:36:18,540 S2: conversion can have a beneficial impact for you down the road, 590 00:36:18,540 --> 00:36:22,259 S2: but it usually doesn't work out math wise. If you're 591 00:36:22,260 --> 00:36:26,140 S2: having to raid the retirement account to cover the taxes. 592 00:36:26,380 --> 00:36:30,300 S2: So I think that that would be a primary consideration. 593 00:36:31,340 --> 00:36:32,739 S1: Yeah. Is that helpful? 594 00:36:33,580 --> 00:36:36,779 S7: It is. Thank you very much. That's very helpful. And 595 00:36:36,780 --> 00:36:41,100 S7: I understand that because the taxes can be steep. So 596 00:36:41,580 --> 00:36:44,940 S7: it would actually take away from my future return, right? 597 00:36:44,980 --> 00:36:47,140 S1: Yeah. That's exactly right. And so you want to keep 598 00:36:47,140 --> 00:36:49,239 S1: as much of that working for you as possible. And 599 00:36:49,239 --> 00:36:52,640 S1: so that's one of the key factors to look at 600 00:36:52,640 --> 00:36:55,200 S1: it apart from, you know, whether or not you'll be 601 00:36:55,200 --> 00:36:59,360 S1: in a higher or low tax bracket later, among other considerations. 602 00:36:59,360 --> 00:37:01,600 S1: So thanks for calling today. We appreciate you being on 603 00:37:01,600 --> 00:37:04,120 S1: the program to Georgia. Hi, Jimmy. Go ahead. 604 00:37:04,880 --> 00:37:08,239 S8: Uh, yes, sir. We're in our late 30s. Uh, excuse me, 605 00:37:08,280 --> 00:37:14,279 S8: late 70s. And, uh, thanks to the biblical teaching involved there, we, uh, 606 00:37:14,440 --> 00:37:18,160 S8: we live within an income and have no debt. Uh, 607 00:37:18,280 --> 00:37:24,760 S8: right now, most everything we have is in, uh, high yield, uh, CDs, 608 00:37:24,800 --> 00:37:28,279 S8: I bonds and we were, we're conservative and we were 609 00:37:28,280 --> 00:37:33,480 S8: just considering as the redemption time comes up, uh, with 610 00:37:33,520 --> 00:37:38,720 S8: the secure, the safest way to, uh, is to divide 611 00:37:38,719 --> 00:37:43,960 S8: it up into, uh, for, uh, bond funds that y'all 612 00:37:43,960 --> 00:37:45,500 S8: have within SMI. 613 00:37:46,180 --> 00:37:47,260 S1: MM. Yeah. Mark. 614 00:37:47,500 --> 00:37:52,020 S2: Yeah. Um, I, I really. Of course, like those bond funds, 615 00:37:52,180 --> 00:37:55,100 S2: we wouldn't have picked them if we didn't. But I 616 00:37:55,100 --> 00:37:59,340 S2: think that it gives you a good diversified bond portfolio. 617 00:37:59,340 --> 00:38:02,540 S2: So for someone like yourself that is trying to keep 618 00:38:02,780 --> 00:38:06,660 S2: that money growing, but keep it conservative, keep it in 619 00:38:06,660 --> 00:38:11,340 S2: the bond universe, but maybe a little bit more aggressive 620 00:38:11,340 --> 00:38:17,180 S2: version of that than just settling for almost CD like returns. 621 00:38:17,340 --> 00:38:21,859 S2: That's a really nice combination because those four funds are 622 00:38:21,860 --> 00:38:24,660 S2: all a little bit different, these four bond funds and 623 00:38:24,660 --> 00:38:28,900 S2: our bond upgrading portfolio, um, they all, they all handle 624 00:38:28,900 --> 00:38:30,700 S2: things a little bit different. So you get a little 625 00:38:30,739 --> 00:38:36,660 S2: bit of diversification within the bond space. Um, and hopefully 626 00:38:36,660 --> 00:38:40,180 S2: you're going to get a little bit better bond returns 627 00:38:40,180 --> 00:38:44,360 S2: from that combination than if you were settling for something 628 00:38:44,360 --> 00:38:46,120 S2: that was a little more plain vanilla. 629 00:38:47,200 --> 00:38:48,280 S1: Yeah. Is that helpful? 630 00:38:49,440 --> 00:38:52,840 S8: Oh, yeah. Very, very much so. And, uh, Rob, I 631 00:38:52,840 --> 00:38:55,840 S8: appreciate your, your work on the show and I certainly 632 00:38:55,840 --> 00:38:58,040 S8: appreciate SMI too. Thank you. Mark. 633 00:38:58,520 --> 00:39:02,400 S1: Good. I couldn't I couldn't agree more. Um, you know, Mark, 634 00:39:02,400 --> 00:39:05,640 S1: for somebody who's listening today who's not familiar with the 635 00:39:05,680 --> 00:39:09,160 S1: SMI funds and the SMI newsletter that Jimmy referred to, uh, 636 00:39:09,160 --> 00:39:11,600 S1: just shed some light on what he's describing there. 637 00:39:11,640 --> 00:39:14,319 S2: Yeah. So what Jimmy was talking about was one of 638 00:39:14,320 --> 00:39:18,880 S2: our model portfolios, which is fund upgrading, and we have 639 00:39:18,920 --> 00:39:21,799 S2: a stock portion of that and a bond portion of 640 00:39:21,840 --> 00:39:25,920 S2: that where we recommend several different stock funds, several different 641 00:39:25,920 --> 00:39:30,279 S2: bond funds. Um, and our members can just go in 642 00:39:30,280 --> 00:39:35,120 S2: through their own accounts, purchase those funds in the percentages 643 00:39:35,120 --> 00:39:39,040 S2: that we recommend, and they've got a well diversified stock 644 00:39:39,040 --> 00:39:45,660 S2: and bond portfolio that we're effectively managing the recommendations, but 645 00:39:45,660 --> 00:39:48,980 S2: they are the only ones that are doing anything in 646 00:39:49,020 --> 00:39:51,739 S2: that account. In other words, they're not paying us to 647 00:39:51,780 --> 00:39:54,940 S2: manage that. We're just telling them what we think are 648 00:39:54,940 --> 00:39:58,259 S2: the best choices to make. So that's that's one of 649 00:39:58,260 --> 00:40:01,339 S2: the strategies we offer through the SMI newsletter. We have 650 00:40:01,340 --> 00:40:04,620 S2: a couple of others that work very similarly, and they 651 00:40:04,620 --> 00:40:08,580 S2: fill different roles in a portfolio. And then what you 652 00:40:08,580 --> 00:40:12,379 S2: often mention, Rob, is our private client program. That's where 653 00:40:12,380 --> 00:40:16,739 S2: people jump over the fence and actually have us manage 654 00:40:16,739 --> 00:40:20,180 S2: the money, manage the accounts, do all the transactions and 655 00:40:20,180 --> 00:40:22,380 S2: so forth, like any other advisor would. 656 00:40:22,739 --> 00:40:26,140 S1: Very good. Mark, before we let you go today, obviously, uh, 657 00:40:26,140 --> 00:40:30,299 S1: several folks, uh, in our listening audience to say the least, uh, 658 00:40:30,300 --> 00:40:33,820 S1: watching this market, uh, and some of the volatility here, 659 00:40:33,860 --> 00:40:36,500 S1: you know, we were moving along at a pretty good clip. 660 00:40:36,540 --> 00:40:39,719 S1: I mean, experiencing about to experience, you know, know, higher 661 00:40:39,719 --> 00:40:43,920 S1: than average tax refunds and good corporate earnings and forecasts. 662 00:40:43,960 --> 00:40:49,000 S1: Moving forward, obviously, this, uh, for, you know, depending on 663 00:40:49,000 --> 00:40:52,080 S1: how long it lasts, could be a major disruption, even 664 00:40:52,080 --> 00:40:54,680 S1: lead to a global recession. What's your take on all that? 665 00:40:54,840 --> 00:40:56,560 S2: Yeah, I think that you hit the nail on the 666 00:40:56,560 --> 00:40:59,280 S2: head there. It really does come down to how long 667 00:40:59,280 --> 00:41:04,000 S2: this lasts. I've been fairly amazed that the market has 668 00:41:04,000 --> 00:41:07,480 S2: not responded more strongly to this point. I mean, the 669 00:41:07,480 --> 00:41:11,080 S2: S&P 500 is only down about 5% from its all 670 00:41:11,080 --> 00:41:14,720 S2: time high in spite of this 3 to 4 week 671 00:41:15,000 --> 00:41:19,359 S2: um war. But as you say, if that if the 672 00:41:19,360 --> 00:41:23,359 S2: Strait of Hormuz stays closed for very much longer, there 673 00:41:23,360 --> 00:41:28,120 S2: are some pretty significant economic ripple effects that are going 674 00:41:28,160 --> 00:41:31,839 S2: to start to be felt. And that could, um, have 675 00:41:31,840 --> 00:41:35,640 S2: an impact on U.S. corporate earnings, which is really what 676 00:41:35,640 --> 00:41:39,460 S2: drives the stock market. So I think if investors get 677 00:41:39,460 --> 00:41:44,300 S2: the sense that this is going to drag out considerably longer, 678 00:41:44,300 --> 00:41:46,540 S2: I think the assumption has been this is going to 679 00:41:46,540 --> 00:41:51,220 S2: wrap up fairly soon. But if that assumption starts to turn, um, 680 00:41:51,260 --> 00:41:54,700 S2: it could could cause some storm clouds in the stock 681 00:41:54,700 --> 00:41:55,780 S2: market for sure. 682 00:41:56,300 --> 00:41:59,140 S1: Yeah. That's helpful. We'll certainly keep an eye on it. Mark. 683 00:41:59,180 --> 00:42:02,940 S1: As always, amazing advice and really helpful as you break 684 00:42:02,940 --> 00:42:05,820 S1: down these complex ideas. Thanks for your time today. 685 00:42:06,100 --> 00:42:07,420 S2: Always a pleasure, Rob. 686 00:42:08,060 --> 00:42:10,500 S1: That's Mark Biller. He's our go to guy on the 687 00:42:10,500 --> 00:42:14,339 S1: markets and the economy. And today I r a s 688 00:42:14,340 --> 00:42:17,660 S1: he's executive editor and senior portfolio manager at Sound Mind 689 00:42:17,660 --> 00:42:20,460 S1: Investing and underwriter of this program. If you want to 690 00:42:20,460 --> 00:42:23,940 S1: check out this article making sense of your IRA options, 691 00:42:23,940 --> 00:42:27,380 S1: go to Sound Mind investing.org and check out the newsletter 692 00:42:27,380 --> 00:42:29,900 S1: and the private client group while you're there. Big thanks 693 00:42:29,900 --> 00:42:32,620 S1: to my team today. Josh, Tara, Taylor and Omar. Faith 694 00:42:32,620 --> 00:42:35,899 S1: at finance lives, a partnership between Moody Radio and Faith fi. 695 00:42:35,940 --> 00:42:36,540 S1: See you tomorrow.