The Retirement and IRA Show

Jim and Chris discuss a listener PSA on WEP treatment for foreign pensions, followed by questions on Social Security strategies, benefit calculators, account consolidation, and MYGA selection.(13:00) Georgette shares a PSA on how a lump-sum superannuation payout impacted WEP treatment under the POMs rule and led to a successful Social Security appeal.(21:45) George outlines his family’s situation and asks if claiming Social Security now is the best strategy to activate child-in-care and DAC benefits.(36:15) A listener asks which online calculator Chris previously recommended to determine the taxable portion of Social Security benefits.(38:45) The guys address a question about whether the SSA benefit estimates shown at FRA and age 70 include COLA adjustments.(43:30) Jim and Chris respond to a question about how different retirement plan components might be treated when considering account consolidation.(56:00) A listener asks what criteria to use in MYGA selection, including how to evaluate insurers and what the minimum AM Best rating should be. The post Social Security, Account Consolidation, and MYGA Selection: Q&A #2537 appeared first on The Retirement and IRA Show.

If you would like to skip over Chris and Jake chatting about Jake’s recent trip to Ireland you can go to 7:00. Chris’s SummaryI am joined by Jake today, while Jim is traveling, to examine taxes in retirement. We look at why not all taxes belong in the Minimum Dignity Floor. We also consider the trade-offs between Roth conversions and IRMAA, and the role of a cash reserve during the delay period in protecting both essential and discretionary spending when markets move against you. Jim’s “Pithy” Summary While I’m traveling, Chris and Jake dig into taxes in retirement. The Minimum Dignity Floor comes up, and a lot of folks get part of this wrong. It’s about protecting the basics with secure income. Start dragging every tax expense into it and that’s when you end up purchasing annuities you don’t need. Roth conversions and IRMAA can trip people up too. Skip the conversions and you dodge the tax bill for now—but that just means bigger RMDs and bigger taxes later. Convert more today and you feel the hit right away, sometimes with IRMAA stacked on top. There’s no move that makes it painless, and with larger portfolios IRMAA simply becomes part of life. The delay period brings up that old 3% safe withdrawal. The problem is what it puts at risk when markets stumble. It’s not the basics that get cut first—it’s the Fun Number. That’s why Chris and Jake talk about keeping a moat. A pool of safe assets would give you the security and confidence to keep enjoying retirement even if the markets dip. The post Planning for Taxes in Retirement: EDU #2537 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener questions on surviving spouse Social Security benefits and Roth conversions, SSDI and pensions, the Social Security Fairness Act, managing large HSA reimbursements, and choosing between MYGAs and the TSP G Fund.(7:45) George asks whether Roth conversions count toward the earnings test when planning to claim his surviving spouse Social Security benefits.(26:30) A listener asks how SSDI interacts with pensions, how SSDI transitions to regular Social Security, and why SSDI can sometimes be higher.(35:00) The guys address a listener’s point that repealing WEP and GPO also benefits immigrants with foreign pensions, not just government employees.(44:45) Jim and Chris consider whether taking large HSA reimbursements could increase the risk of an IRS audit.(52:00) Georgette wonders whether to move fixed income from the TSP G Fund into MYGAs, including questions on protection limits and rate comparisons. The post Social Security, HSA Reimbursements, and MYGAs: Q&A #2536 appeared first on The Retirement and IRA Show.

Chris’s SummaryJim and I look at behavioral finance in retirement planning, noting that spending from secure income feels safer while drawing from assets feels like a loss. People resist balances going down after decades of saving, even though the money was built to be spent. We highlight how framing savings as deferred spending and covering the Minimum Dignity Floor with income addresses uncertainty, complexity, and the tendency for retirees to underspend. Jim’s “Pithy” SummaryChris and I dive into two listener-sent pieces — a Kiplinger’s article and a research report from Blanchett and Finke — and they line up perfectly with what we’ve been saying for years. Folks, this is behavioral finance! Retirees spend Social Security, pensions, and annuity checks with ease, but hesitate to touch their own savings. I call it the bottomless cup of coffee: when the pot keeps getting refilled, you drink. When it’s just a thermos, you guard it and leave joy on the table. We also get into how framing makes all the difference. Too many people see their IRA as wealth to preserve instead of deferred spending to use. That’s why Required Minimum Distributions suddenly feel like permission slips — people spend because they think they’ve been told they can. And while loss aversion is real, taxes push those same buttons too. This is why we push to cover the Minimum Dignity Floor with secure income. If food, utilities, transportation, housing, and healthcare are guaranteed, you take uncertainty and complexity off the table. That’s what gives you the confidence to pursue your Fun Number, knowing the basics are covered and you can spend without second-guessing every dollar. Show Notes: Blanchett and Finke Report The post Behavioral Finance in Retirement Planning: EDU #2536 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener questions on Social Security timing rules, retroactive benefits for an ex-spouse, investment strategy philosophy, fraternal benefit societies, and Roth conversions.(6:30) The guys address a listener’s question about whether applying for Social Security at 70 requires enrolling in Part B or if retroactive filing is an option without losing payments.(16:00) A listener asks why their 75-year-old father was denied six months of retroactive spousal benefits while a widowed friend who applied at the same time received them.(33:30) Jim and Chris respond to a listener who questions the “You won the game, why take the risk” from a previous episode and asks whether a high-equity portfolio still makes sense.(53:00) The guys respond to a listener’s email about fraternal benefit societies that operates outside guaranty associations.(1:12:00) Georgette asks whether converting to a Roth and then spending from it makes more sense than other withdrawal options. The post Social Security, Risk Philosophy, Fraternal Benefit Societies, Roth Conversions: Q&A #2535 appeared first on The Retirement and IRA Show.

If you are not in the mood for Jim and Chris’s delightful banter, you can skip ahead to (5:45). It should be noted that of all the episodes to start sharing that information, it’s the one in which Jim said “we didn’t even banter!”. But, from now on, right here before the guys’ summaries you can find the timestamp to jump ahead to if you want to get to the meat of the show. Chris’s SummaryJim and I continue working through Ed Slott’s advisor quiz. After introducing the mandatory Roth catch up rule last week, we now focus on how W-2 wage definitions determine who’s affected, which plan types are exempt, and how administrative delays impact implementation. We also clarify rules around QCDs from inherited IRAs and debunk common errors made by ChatGPT when interpreting the 60-day rollover rule and plan eligibility. Jim’s “Pithy” SummaryChris and I keep going with the Ed Slott quiz, diving deeper into how the mandatory Roth catch up rule will actually work when it takes effect. We go through how wages are defined for this purpose—specifically Box 3 of the W-2, not Box 1—and why that matters for who’s subject to the rule. That single detail creates big carve-outs for groups like self-employed individuals and many state or local government employees who don’t pay into Social Security. We also highlight how a plan’s design matters. If your employer doesn’t offer a Roth option and you’re over the wage limit, you won’t be allowed to make catch up contributions at all. And we explain how the one-year look-back works, including why a job change can give someone a temporary exemption. ChatGPT joins us again and gets several key questions wrong—like saying the rule applies to SIMPLE IRAs (it doesn’t), or insisting QCDs can’t come from inherited IRAs. Wrong again. If the beneficiary is over 70½, QCDs are allowed, and the IRS has even designated a code on the 1099-R for that exact scenario. Once it thought a little harder, Chat backed off and conceded. Smack talk retracted. We close with a scenario on the 60-day rollover rule—what happens if a distribution check shows up while you’re out of town for months. Chat claimed the clock starts when it hits your mailbox. But that’s not how it works. According to private letter rulings, the 60-day window starts when you actually receive the check. The post Roth Catch Ups and the 60-Day Rollover Rule: EDU #2535 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener questions on Social Security retroactive payments and delayed retirement credit timing, share a listener PSA on horse speed, and answer questions on fixed indexed annuity default credits, a living benefit rider with a proprietary index, and RMD rules for an inherited account. (15:45) A listener asks if the lack of a prior formal application affects eligibility for retroactive spousal benefits following the GPO repeal.(27:30) The guys address a question about how delayed retirement credits are calculated based on specific months and what to consider when not claiming exactly at full retirement age or 70.(37:45) Georgette shares a PSA on an earlier episode’s horse speed discussion.(44:00) A listener seeks clarification on how a fixed indexed annuity with withdrawal benefits might outperform a DIA, particularly how default credits and fees interact.(1:07:30) Jim and Chris respond to a listener who shares details about their nationwide annuity with a living benefit rider, its performance, fees, and expected income stream.(1:25:45) George asks whether RMD rules for an inherited account require a distribution in the year of his mother’s death, despite the Vanguard calculator indicating otherwise. The post Social Security, PSA, Annuities, RMD Rules: Q&A #2534 appeared first on The Retirement and IRA Show.

Chris’s Summary Jim and I review catch up contributions across IRAs and workplace plans using questions from the Ed Slott training quiz. We clarify the $1,000 IRA catch up (now indexed), explain the age 60–63 super catch up in 401(k)/403(b) plans, and outline the Roth mandate that will require high earners’ catch ups to go to the Roth side. I focus on what’s actually changing and where these rules create practical planning tradeoffs. Jim’s “Pithy” Summary Chris and I dig into the latest Ed Slott quiz, focusing heavily on catch up contributions and how Secure Act 2.0 continues to reshape the rules. We start by clarifying what’s true and false about the standard catch up, then dive into the new super catch up available between ages 60 and 63. I explain why I find this provision frustrating, since adding a few thousand dollars so late in the game hardly moves the needle compared to what earlier compounding could have achieved. And here’s the part that drives me nuts: Congress pats itself on the back for giving people in their 60s this special window, but where was that option decades earlier when it really mattered? If you let someone in their 30s or 40s make bigger contributions, you give compounding time to actually do its job. Instead, they created a rule that looks generous but, in practice, is mostly symbolic. From there, we tackle the Roth mandate for higher earners. If your wages exceed the threshold, your additional catch up dollars must go into the Roth side of the plan. That’s going to be a big surprise for many workers who are used to putting everything pre-tax, especially in higher-cost states where salaries above the threshold aren’t unusual. The upshot is that many workers in this situation will find their catch up contributions directed into a Roth account, which takes away the immediate deduction but allows those dollars to grow and be withdrawn tax-free later in retirement. The post Catch Up Contributions: EDU #2534 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener questions on Social Security spousal benefits, filing logistics and spousal eligibility with a disabled child, an inherited Roth IRA, and IRMAA concerns.(14:30) A listener asks why his spouse’s Social Security spousal benefit is less than half of his primary benefit amount.(21:45) George asks about the process and documentation needed when filing for Social Security benefits that will also increase payments for his spouse and disabled adult son, and about eligibility for a spousal benefit while delaying his own claim.(40:30) The guys review a ChatGPT summary of Inherited Roth rules and whether there are RMDs for a non-spouse beneficiary that inherited in 2023.(1:03:30) Jim and Chris address a question about an IRMAA increase caused by a lump-sum Social Security payment. The post Social Security, Inherited Roth, and IRMAA: Q&A #2533 appeared first on The Retirement and IRA Show.

The conversation dives into Robert Merton's retirement income framework, comparing discretionary spending strategies. The hosts emphasize the importance of liquidity and principal protection for funding those treasured 'Go-Go' years. They critique the notion of sacrificing passions during market fluctuations and explore the potential pitfalls of high-risk investments for non-essential expenses. Listeners gain insights on how to balance guaranteed income with aspirational spending, making retirement enjoyable while safeguarding their financial future.