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Nicole Bell Cleland of Legacy Protection Lawyers returns to answer some of the most common questions that come up around Florida probate and estate administration. She and John discuss what happens when someone dies without a will, special considerations for blended families and inherited property, when an attorney is required, and what the probate process may cost. Legacy Protection Lawyers: https://www.legacyprotectionlawyers.com/   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Speaker 1: Welcome into another edition of Retirement Planning Redefined with John and Nick, financial advisors at PFG Private Wealth.   And Nick is off again on this episode as we have Nicole Cleland joining us again to follow up with a Q&A conversation, some questions and answers about the probate conversation we just had on our prior podcast.   So John's going to jump in and toss out some of the most frequently asked questions that these guys get when dealing with this. And of course, if you need some help, go and check them out online at legacyprotectionlawyers.com.   That's legacyprotectionlawyers.com. We'll have a link in the show descriptions along with John and Nick at pfgprivatewealth.com. But first, Nicole, welcome back.   Nicole Cleland: Thanks for having me.   Speaker 1: Absolutely. Great stuff last time, so thanks for being here. And of course, John, thanks for being here, buddy.   John: Yeah, yeah. Having a good time here. School year started for the kids, which has been fun. So kids are excited to go back to school. I'm sure parents are a little excited too to have their own little break, but all is good.   Speaker 1: For sure. Well, we had some good response to the prior podcast episode, and so you guys deal with this stuff a lot. Obviously you guys work as a team as well. And so what are some of those top questions, John? I know you got a couple we want to cover on this episode, so take it away.   John: Yeah. So one question I get from clients and some stuff I'm curious on. So one is, and we try to avoid this by doing proper planning upfront, but Nicole, what happens if someone doesn't have a will, or there's no beneficiary listed on an account, or it's not listed correctly?   Nicole Cleland: Yeah, so if someone dies what we call intestate, so they had not signed a will prior to their passing, then we have to look to Florida law, Florida's intestacy statutes to find who their intestate heirs are.   And the idea behind the law is to reflect what most people would naturally want. And if you think about it under Florida intestacy laws, if you're survived by a spouse, then usually 100% goes to the spouse. If no spouse then to your children, if no children are descendants, then it goes back up to parents and then out to siblings.   Obviously with blended families, stepchildren, half siblings, that can vary a little bit, but Florida law tries to reflect what most people would had intended had they created a will themselves.   John: Okay. So in essence, the courts try to make their best effort to do who gets what?   Nicole Cleland: Well, not the courts so much as the law.   John: Oh, okay.   Nicole Cleland: And what I mean by that is, if you passed away tomorrow and you had three children and you were estranged from one of them, but you had not signed a will disinheriting that child, then under Florida law, that child's going to take an equal third.   The court has no discretion on that. So the estrangement of the child has no bearing. It's just a matter of what Florida law states.   John: Gotcha. And then you mentioned blended families, something that does come up every once in a while, and I think most people miss it. Tell us about elective share.   Nicole Cleland: Yeah, so in Florida you can, and actually most states, all but one, I think, have a similar law that states that you can leave your assets to whomever you want. You can disinherit your children, you can disinherit parents, but the one person you cannot disinherit is your spouse.   So in Florida law, your spouse is entitled to a minimum of 30% of your overall estate, not just your probate estate. So that would include real estate, bank accounts, life insurance. Well, depending on the life insurance, but it can vary.   But essentially, if you had any desires to leave your spouse with nothing, then they're going to be a little bit more trickier than you may have thought.   John: And I think maybe this could be a deep dive session, but if you own assets 50/50 with your spouse, how much is considered theirs and yours in this, if it were to come up?   Nicole Cleland: Oh, that's a good one too. Hard-hitting questions, John. So that's where we can sometimes go a little bit beyond ownership and we look at the character of the asset.   And what I mean by character, I mean, is it separate property? Is it community property? How is the ownership on that jointly owned property? And really digging into the facts.   So this is why in the very first, the last session we had, I mentioned why that due diligence period prior to opening a probate is so important is you can look and ask these types of questions.   So I would say for a lot of blended families, for a lot of married couples, actually, most married couples own things in joint name. And sometimes when you have blended families, if there's not proper planning, I've seen unintentional disinheritances.   So you leave everything to your spouse, but then your spouse leaves everything to their children from their first marriage. Is that what the first today spouse wanted? Probably not.   John: Yeah, unfortunately I've seen that happen as well. So definitely do your planning whether-   Nicole Cleland: Yes, especially with blended families, for sure.   John: Yeah, agreed. All right, another question. Something you mentioned last week, we were talking about homes, and I think you mentioned where someone might want to keep the asset. So let's say someone passes away, the kids say, "Hey, I want to keep this house." How does that pass to the beneficiaries? Is there any specific documentation?   Nicole Cleland: So it again might boil down to how did it pass to these beneficiaries? Are we going through a probate proceeding where a personal representative is in charge and has the final say-so? If that is the case, then that personal representative decides.   They've got the ultimate decision on whether or not a piece of real estate or any asset is liquidated or transferred what I call in kind. Meaning if it was received as a piece of real estate, it'll be distributed as a piece of real estate.   So it can depend on the situation. Now, if you've got maybe a mom who added her two kids to the deed before she died, and now these two kids own the property 50/50 and one of them wants to keep it, one of them wants to sell it, how do you force the hand of the one that wants to keep it? And sometimes it requires court action if they can't agree.   So it very much can depend on how the property was inherited and really who has the legal authority over that asset. Does that answer that question there?   John: It does. So it depends on how it was titled initially and did it go through probate officially or putting it on the deed bypass probate.   Nicole Cleland: Right, right.   John: Okay, got it. And then what about some question some people will ask is, do you need an attorney to help you with the probate process?   Nicole Cleland: So in Florida-   John: And what is the cost?   Nicole Cleland: Yeah, always the bigger question there. So with a formal administration in Florida, you do have to have an attorney. And I understand why, and it's because there are so many rules regarding probate and those administrations that you really do need not just an attorney, but an attorney that does administrations to do it well.   And that being said, with a summary administration, you can do it on your own in the sense that you don't have to have a lawyer. Oftentimes though, if I'm getting a call that someone who's started the summary administration proceeding and they can't get across the finish line, it takes a lot more work for an attorney to clean it up.   So unless you feel very confident in your abilities and maybe even gone to a legal aid center to help you fill out the summary administration paperwork, it can be tricky to do, especially if there's creditors involved.   But in terms of costs, it definitely can depend on the scenario. And for the most part, when it comes to formal administrations, there is a statute that outlines what is reasonable compensation for an attorney for a personal representative.   And it roughly falls a percentage schedule where on the first million, it's about 3% of the probate assets. And then as the millions go up, the percentage typically goes down. And that attorney fee schedule actually is comparable to a personal representative's presumed reasonable fee schedule.   But that being said, there's a

Probate can feel overwhelming, especially when you're trying to understand what happens after a loved one passes away. In this episode, John is joined by Nicole Bell Cleland of Legacy Protection Lawyers to break down the Florida probate process and explain what personal representatives and families should expect along the way. They cover the major stages of probate, including identifying assets and debts, handling creditors and taxes, opening estate accounts, making distributions, and understanding the responsibilities that come with administering an estate. Legacy Protection Lawyers: https://www.legacyprotectionlawyers.com/   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Speaker 1: This week on Retirement Planning - Redefined, let's talk about navigating Florida probate and all that comes with that with John, and Nicole is joining us from Legacy Protection Lawyers. Welcome into the podcast everybody. Thanks for tuning in to Retirement Planning - Redefined with John and Nick. Nick's not here today. We're swapping him out with Nicole, which is going to be fun because Nicole's going to talk to us about navigating Florida probate and she's just peppier than Nick, so we're just going to have fun talking with her. How you doing, Nicole? John Teixeira: Just a little peppier. Nicole Cleland: I'm doing good. Thanks for having me. Excited to be here today. Speaker 1: Yeah, absolutely. Thanks for joining us. And of course, John, welcome in buddy. Thanks for being here. John Teixeira: Yeah, yeah. I'm excited to have Nicole back on. She's a wealth of information, so it's always good to have her. Speaker 1: Yeah. And we'll have links in the descriptions if you guys want to reach out if you have some questions to legacyprotectionlawyers.com, we'll have a link in there that you can follow up with, of course, along with the guys as well for the financial side of things. So let's jump in and talk about navigating Florida probate. I know it sounds a little boring and a little worrisome, but it's also important stuff, Nicole. So let's get you rolling in there a little bit with some places to start. What's a good place to start with this? Just the pre-filing diligence, determining what it is that you have and need? Nicole Cleland: Yeah, exactly. So when someone passes away and we're looking at what type of administration might be needed, I usually suggest to clients to really take the time to look at the whole picture. Sometimes you find one asset where you feel like you might need to jump in and go ahead and handle that, but sometimes I think it behooves a lot of people to take a step back, make sure you have your arms around everything before really jumping into one of the options. And the reason why is some people may have gone through experience personally. You might go down one road and find the facts have changed a little bit and now you're leading down a different road. And that can lead to delays and expenses, and it really helps to really take the time to assess everything. Read the estate plan, what are the assets, what are the debts, and then go from there. Speaker 1: Gotcha. And what are some of the administrative type things to think about as far as some bullet point items for folks? Nicole Cleland: Sure. So there's really a handful of different types of administrations. And focusing on probate alone, there are three different types in Florida at least. The first one is very uncommon. It's when the size of the estate costs less or the assets in the estate are less than a funeral bill. So not a very common one and a little bit more difficult to go through. But the big ones are what we call formal administration and a summary administration. And when people think of probate, usually it's the formal administration that they think of, the process that can take a bit longer, be a little bit more expensive, but there's also an abbreviated or an abridged probate process called a summary administration. And those are permitted in estates where a person has been deceased for over two years, or if the size of the estate is less than $150,000. And that's actually a newer statute that just passed in July. So that's a convenient one that we've upped the threshold for a summary administration from $75,000 to $150,000. Speaker 1: Gotcha. Okay. John, what do you think? John Teixeira: Yeah, Nicole, quick question on that. Now, is that the full estate or just what's going through probate? Nicole Cleland: Yes, great question. So it's only the assets that are subject to probate. So what assets are subject to probate? And my rule of thumb is any assets that should go through a probate proceeding are the assets that are in someone's individual name with no joint owners. So assets that are not in a trust, not necessarily in a company, that don't have any other spouses, family members, no joint owners on it, and no beneficiaries listed on those assets or accounts. Speaker 1: Okay. So what's the process, I guess, for opening the estate? What steps are we looking at? Nicole Cleland: Sure. So step number one is really assessing what the estate plan is. And believe it or not, whether or not you've done planning, you have an estate plan. So it's either an estate plan you've created or one that the state of Florida gives you if you're a resident of Florida, and really understanding who our parties are, who are our beneficiaries, what is the estate plan? And then looking at who is the personal representative. That's what we call the executor here in Florida. And that's who typically would be my client, that personal representative, and going through the process of determining if they're eligible, if they were named in a will to serve as that personal representative. So in Florida, you have to be either a blood relative of the decedent or a resident of Florida if you're not a blood relative. And you can't have any felonies, you can't have any allegations of elderly exploitation, and there's a few other caveats in there, but really going through that eligibility process and then making sure that the potential personal representative understands what their fiduciary responsibility is, their responsibility to the estate and to the beneficiaries and walking them through that. But typically, once we've gone through all of that with the client, then it's preparing the paperwork where you essentially are requesting the court to admit that will and/or to appoint that personal representative and to therefore open the estate officially. John Teixeira: So Nicole, is that like doing the petition, assigning that PR once you figure out who it is? Nicole Cleland: Yes. Yes. So in that petition, it would state who's asking to open it, who the beneficiaries are, potentially who creditors could be, and that this is the right venue to open up that probate. And there's a handful of documents with the petition that are filed at the outset, but essentially all the documents that can vary by county, what would be needed to open the estate formally. John Teixeira: And then that's, I know working with it through Jenny, my wife, there's the, I don't want to say the magic, but the letters of administration was what she happened to give to everybody. Nicole Cleland: Yeah. So that's what I call your golden ticket. So once the estate is officially opened, the court will issue, and they vary amongst the states what they're called, but in Florida, they're called letters of administration. And that gives a personal representative the ability to act and do anything essentially that the decedent could do. So again, that golden ticket to step into the shoes of the decedent in terms of legal and financial matters. John Teixeira: I'm just going through, again, personal experience. What about finding all the assets? And that's part of it where you submit, hey, here's what the person had, and this is what's going through probate? Nicole Cleland: Yeah. And that's why I usually recommend going through that due diligence process before we open up a probate, because when it's after you've opened up a probate, now you've got a fiduciary hat on. Your job is a little bit different. So when you do open up the estate, not everyone knows what all of the assets are. Sometimes we discover things six months down the road. But the goal is that whenever someone is serving as personal representative, one of their top jobs is going to be to marshal the assets, to really take the time to determine what is out there and locate all of those assets. They've got that fiduciary obligation. And that can be really hard if the decedent didn't have a list of everything written down, and that personal representative's really having to search and make phone calls and sit on hold and go into the banks and all that stuff. John Teixeira: Yeah, I'll say, I think as people listen to some good tidbits are, getting that tax return will help figure out what investment or bank accounts were open with 1099s issued. Nicole Cleland: Absolutely. Absolutely. Tax returns help, looking through paperwork, requesting a cr

Over the past year, one retirement video on YouTube pulled in 3.7 million views. The title: "Sell These 5 Things Before You Retire." We thought it was worth a conversation — not to tear it apart, but to react honestly. Do we agree? How often do we actually see this play out with real clients? Let's get into it.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Marc: Do a little reaction conversation this week here on the podcast. Over the past year, one retirement video on YouTube pulled in 3.7 million views. The title was Sell These Five Things Before You Retire, so we thought it was worth a conversation, not necessarily to tear it apart, but just to react to it honestly. Do we agree? Do we not? Let's dive in this week here on Retirement Planning Redefined with John and Nick.   Welcome in once again to the podcast. This is Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com, that's pfgprivatewealth.com, and we're going to talk about this video this week, guys. I want to kind of break down these couple of sections here. Now, we can throw a link into the descriptions for folks if they want to go check it out, but this video, as I said in the teaser, got just under four million views last year for the five things you should sell before you retire. I wanted to get your guys' take on this. First of all, how are you doing this week, John?   John: I'm doing good. I'm doing good. I was telling Nick earlier, I started trying to give my kids something to do this summer, and I have them working out, because they want to get better at gymnastics, so I put together a program and told them it was time they learn a language. We started doing some Portuguese, so it's interesting listening to them try to pronunciate the words, but it's been fun.   Marc: Nice. Nice. That's very cool. Very good. Good job parenting there, sir. Absolutely. What about you, Nick, buddy? You doing all right this week?   Nick: Yeah. Yeah. I have visitors in from out of town for a bit, so that's always fun, but they're easy. We've been having a good time enjoying the new house.   Marc: Well, you're a good guy in that regard. You were saying it's going to be a bit that they're staying. See, I was brought up with the rule and I live by the rule of, house guests and fish, same timeline, three days. After three days, they've got to go.   John: Nick is having home-cooked meals I think daily, and I think they're just helping out around the house, so he's probably very comfortable right now.   Marc: Okay. Nice. Nice.   Nick: Yeah. There is a net gain in the scheme of things for me.   Marc: Okay. All right. Fair enough.   Nick: Yeah.   Marc: That adds to the equation, right?   Nick: It definitely helps. It definitely helps.   Marc: Look, you're always planning, right? You're always doing the math on the situation, right? Well, let's talk about this video this week. 3.7 million views on this, so let's start with the first one. I'm going to get your guys' reaction to it. The oversized house. The house that was perfect for raising a family isn't always the right house for retirement. Certainly, this one's kind of understandable. Selling it can free up some significant equity, especially in today's market, depending on where you're at, right, so what's your thoughts on this being one of the five things you should sell before you retire? Whoever wants to start.   John: I can jump in on this. I think, like we say with everything, it depends, but this could be, depending on the outflows of the house, the maintenance, property taxes, insurance, just how big it is, one of those spots where it could make sense, if you're ready, just to kind of start eliminating some of your to-do lists and outgoing cashflow and stuff like that, where this is definitely a spot where we see a lot of people say, "Hey, is it time to downsize, and what does that look like for me? If I downsize, what else can I do with the extra cash flow I now have? Maybe I pocket a lump sum balance, that I could do something else with it."   Marc: Yeah. I mean, especially again, depending on where you're at, you could make some good cheddar on that, right? Unless you were going to buy another house, Nick, right? Because then it might cost you more.   Nick: Yeah. Yeah, it's tricky too, because for example, right now Florida's in the news quite a bit from the perspective of property tax and potential property tax reform, but one thing that does happen here is a homestead exemption, and property taxes can only go up by a certain percentage each year. We will see instances of somebody maybe looking to downsize the house locally and maybe move out of state, so there are opportunities to essentially kind of carry over. There's some portability in the state of Florida on property taxes, but if you shift to another state, that isn't necessarily the case, and if somebody, especially the way that taxes have, or, I'm sorry, values on homes have gone up here in the area, if you've been in your house for 15, 20 years locally and are looking to sell and shift elsewhere and maybe go to a state that has a state income tax, and then you start to factor in ... If you're selling your home for ... There's something to downsizing size, but what we also have found is that people that are, if they're selling their house for 800,000 to a million dollars, they don't want to buy a 200,000 dollar condo. They want to buy a 600 or 700,000 dollar condo. That's just easier to handle and maintain, and then when you start to tack on some of those other expenses, a lot of times in can end up being actually pretty close.   Marc: Got you.   John: Yeah, and to jump in with that, you definitely want the downsize to be worth it. It's not worth it if it's 100,000 or something like that. You really want to make sure, if you're downsizing to either free up some cashflow or get some type of lump sum balance to do something else with, you want to model it to make sure it makes sense, because Nick mentioned the pitfalls, property taxes. You've got realtor fees, things like that. You want to really itemize, "Hey, what is this expense going to be, and what is the benefit of it?"   Marc: Okay, that's a great point, so that's the first one. The second one, second point on here, guys, of this video, was financially supporting adult children. I kind of roll with this one too, right? This is the hardest one for every parent because everybody's going to be a little bit different. The argument is, some people feel like they've got to help their grown kids out, and others say, "Heck no," right, so how do you feel about that, first of all, and second of all, how do you approach that with clients?   John: Yeah, I'll let Nick take this one so he can be the bad guy.   Nick: Yeah, I'll go first, and I'm not a parent, so that's my disclaimer. We see this more and more, and one of the things that we hear about this quite a bit are that, and we agree to a certain extent, is that the barriers to entry on certain assets or kind of landmark acquisitions in the lives of people that are in their late 20s, early 30s, dependent upon where you are, and this area is one of them, they are harder to achieve. Granted, and people that have had assets or substantial assets over the last 10 years have gotten some massive appreciation and have really benefited, where people that don't have assets haven't been able to participate. Dependent upon what it is, as long as it's not having a material negative impact on the plan of our clients, we do tend to be pushing them in the way of, "Hey, let's kind of cut some of this stuff off," especially if it's an ongoing monthly sort of support, if there's not any sort of major medical or whatever and it's just like a failure to launch scenario. Up north we used to have basements. It's like, if somebody's kid is in the prototypical, in the basement for the last 10 years and they need to get out, then we may have some gentle nudging related to that.   For example, one instance I've seen is people helping with IVF, for example, which can be really expensive, and their kids want to start a family and they don't have the money to start a family, and that's been a gift that, giving some money to help that sort of thing. Something like that makes a ton of sense, if they can afford it. For them to buy a motorcycle or something, that maybe if they were just kind of ... The kid maybe worked more or had some sort of plan or was making good income, and it wasn't just to make them happier because they felt guilty, that's a different sort of conversation.   Marc: All right. John, you want to stay away from being the bad guy on this one, or are you good with that?   John: No, I can jump in here with some thoughts. No, we see it a lot more often recently. I'll tell you that home purchases, home prices have skyrocketed, so I've seen a lot of clients where it's like, "Hey, I'm going to help them with a down payment." It goes back to everyth

Today we're trying something a little different. We're going to walk through a real retirement story in chapters — and as each new detail comes in, we're going to react to it the way a financial advisor would. Fran is 62, she figured a lot of this out on her own, and she's only now sitting down with a professional for the first time. Let's see what we find and what we might do differently from here.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Marc: Today we're trying something a little different. We're going to walk through a real retirement story in chapters. As each new detail comes in, we're going to react to the way a financial advisor would for Fran. She didn't plan to retire at 62, and here's what happened. So let's talk about Fran's story.   Hey everybody, welcome into the podcast. This is another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. And if you need some help, got some questions, want to reach out to the fellows, give them a jingle, or I guess not a jingle, but find them online at pfgprivatewealth.com. That's pfgprivatewealth.com. Of course, you can call them at 813-286-7776. We'll have details in the show description below if you'd like to get ahold of them. And we're going to talk about this kind of a retirement story here today, guys. Kind of break this down a little bit, so we'll get started in just a second. But Nick, how are you my friend? You doing all right?   Nick: Yeah, doing pretty well. Thanks.   Marc: Good, good. Good to have you here. Good to chat with you as always. And John, how are you, my friend?   John: I'm doing okay. Summertime started for the kiddos, which means I get to sleep in an extra 30 minutes.   Marc: Oh, there you go. Little extra sleep is always good. Exactly.   John: So it's good, yeah.   Marc: Well, let's dive in. Let's start with this chapter breakdown. So guys, we've got this story again, kind of a real case study here. So who is Fran? Whoever wants to do the setup here. Tell us a little bit about the story here.   Nick: Yeah, so I'll go ahead and start. So Fran, 62 and single, spent 30 years teaching in public schools kind of up north and decided wanted a change. So about five years ago, she moved south, rented a home, picked up a full-time admin job at a local office, and kind of did it from the standpoint in the sense of it wasn't something that she loved or had always wanted to do. It was just kind of stabilize, get a job, earn some income, and be able to cover bills and figure out what she wants to do.   Marc: Gotcha. And that's fairly normal, right? A lot of people are going down to Florida, doing this snow bird thing. And so for a first time situation, somebody walking in, like you're reviewing this case for somebody who's coming in saying, "Hey, I'd like to talk to you about getting some help." What's a couple of things from just the story setup that stands out to you?   Nick: Yeah. As somebody who kind of helps people plan for a living, I start to twitch a little bit just from the standpoint of it seems like the decisions being made are a bit on a whim and there's not necessarily kind of a broad based strategy put in place. So for example, seeing somebody that had retired as a public school teacher, most likely there's a pension involved. And we'll learn that she had waited on the pension a little bit, but was there an opportunity to take something sooner or not? Obviously with her being under the age of 65, then there's going to be costs associated and probably substantial costs associated with healthcare. So that's something that would factor into the job opportunity that she was looking for.   In this case, she had rented a home, which in situations like this oftentimes does make sense dependent upon where she's coming from, but we don't know if she had sold a previous house or had rented before and then came down to rent as well. So we've got kind of variability and costs associated with a home. And then just getting a better understanding of what other sort of assets are in play and/or what's the game plan, maybe like post 65 are all things that would help us from a planning perspective.   Marc: All right. So let me jump in and do the next piece for you. Kind of a turning point here in the story. A few months ago, guy's, Fran's office restructured. She was offered a new role, more training, longer hours, not much more pay as a single person whose paycheck covers everything, taking on more of roughly the same didn't make a lot of sense so she walked away and unfortunately she got let go, not exactly by choice but not exactly against her will either. So I guess when somebody lands in Fran's position, retired before they planned as well, Nick, as you mentioned, what's the most important thing to get some clarity on? How do you proceed in a situation like that? Now you find yourself without a job.   Nick: Yeah, this tends to be a tricky one and we've kind of run into this where, and it seems like it's happening more. We've seen this more in the last 12 months where people in their early 60s with the expectation of working a few more years and are sub 65, so have to deal with cost of healthcare and that sort of thing have been downsized, and there's substantial difficulty whether they're like a quote unquote highly trained or more specialized position, or in like France position, somebody that had done that previously and had shifted into a role that was maybe not as dynamic as had been and the other way. And so again, kind of having to adjust to whatever's going on and the situation being dictated to her versus maybe being in the driver's seat and having more options on what to do as she moves forward.   Marc: Yeah, that's the risk I think, to your point about not planning, is you're not in the driver's seat, or the catbird seat, right? You're kind of reacting to things on how they go. To that point, what she did next is started drawing Social Security right away at 62, right? So locked that in that early. So you're taking that what, 30% haircut right off the bat there?   Nick: I believe so.   Marc: Yeah. So she also picked up a part-time job at a gym she goes to. Nothing too demanding, keeps a little extra money coming in. So her monthly picture is now looking like 1,450 in social security, about 800 from the gym job, but 1,600 going out in rent before anything else. So how do you react now?   Nick: Yeah, see that's kind of the tough thing at that point, what do we have? 2,250 in income coming in from the social security and the job and a huge percentage of that is just going out just to cover rent.   Marc: Yeah, not utilities, just rent. Yeah.   Nick: Right. Not utilities, not food, not car insurance, not gas, a lot of different things.   John: No vacations.   Nick: Yeah, no vacations, not doing the things that maybe she wanted to do. And so this makes us rewind a little bit even further back, and in retrospect kind of look at as an example. So a conversation with somebody like Fran that we would have probably had if we had met her early on, knowing how dynamically an extra few years of working at a job that has a pension related to it, like a teacher.   So we might have had discussions and kind of doing some projections on maybe even a couple extra years as a teacher and then spending summers in the south, what that could have done to kind of ease her way into it and maybe break up the monotony of what she had been doing over a period of time, making sure that she really understood the impact of taking Social Security at 62 would have.   It's like in this scenario, she doesn't really have a whole lot of other options unless she would have found another full-time job. And what we start to kind of see is that if at that point in life, if somebody's kind of let go and after a few months they haven't had an opportunity to find another position, the freak-out factor really starts to kick in and they want to have something coming in no matter what and ... Go ahead.   Marc: No, I was going to say to that point, you mentioned the Social Security, right, or excuse me, the pension earlier, she's just basically getting by with what she has. What she hasn't touched, and I guess that's where it gets more interesting and I wanted to kind of tee that up since you mentioned that earlier. She hasn't touched that teacher's pension, which she hasn't started yet. 1,100 a month is going to be available but at 65, so you still got a three-year window there, right? But also the 403B with about 210 grand in it that she hasn't touched. So now you can kind of start to factor some of that stuff in. So I guess right now she's basically living paycheck to paycheck. So now you get a bit more of the fuller picture. How does that start to shift some things?   Nick: Yeah. And one of the things that we will see is that people, their normal reaction will oftentimes be to avoid using any sort of investments just because they like the idea, or there's like a psychological aspe

In this episode, John and Nick explain the Mega Backdoor Roth strategy and how high-income savers may be able to contribute significantly more to Roth accounts through their workplace retirement plans. They break down the rules, requirements, and potential tax benefits, while highlighting who may benefit most from this advanced retirement planning strategy.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Marc: This week on Retirement Planning Redefined, part two of our conversation about the backdoor Roth IRA. This is the mega backdoor Roth. Let's get into that conversation with John and Nick.   Hey, everybody. Welcome into the podcast. This is Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find the guys online at pfgprivatewealth.com. That's pfgprivatewealth.com. And it sounds like something, guys, out of a, I don't know, out of a superhero story or something. It's the mega backdoor Roth. And that's the topic of the conversation this week. So we're just going to dive right in because there's a lot to cover anyway. So we'll just jump in and get going.   I guess, Nick, if you want, why don't you talk to us, give us a really, really short recap of what we talked about last week for those who may have not listened to that podcast. And then what's to understand what to do if you want more than the IRA limits and just kind of set us up here a little bit for understanding the mega backdoor Roth.   Nick: Sure. So just a quick recap on a Roth IRA and the benefits of it. So contributions typically are with after tax dollars. So income that has already been taxed. The account grows tax deferred, so you don't receive a 1099 each year. And then the withdrawals are tax-free after 59 and a half. The Roth IRAs do not require required minimum distributions, which are nice. And they're a great place to have more of your growth oriented assets because of the tax-free upside and the fact that you can leave a tax-free account to your beneficiaries.   Marc: Gotcha. And I guess some confusion here, guys, and help me out to understand this a little bit, is that we've been thinking about the Roth. We typically just, I've been saying just the Roth, that's the IRA. But because they have now created the Roth 401Ks, that adds a little confusion to the conversation as well. It's always funny because the word contribution and contribution, excuse me, and conversion confuse people. So it just confused me right now. But also 401, the Roth 401k and then the Roth IRA is now confusing people as well too. So are we talking a little bit more about on this episode, that mega backdoor Roth being from the workplace plan? Is that what we're looking at here?   John: Yeah. So we'll have to leave the IRA world and jump into the 401k plans where they have much larger contribution limits, which is where we get our superhero work.   Marc: The mega term. Okay. Yeah.   John: Exactly. We could do a lot more of what we discussed last week. So if you like the benefits Nick went over, this is a great way to really maximize those benefits.   Marc: Okay. Well, let's start with the limits. What are the limits? I guess again, we're in the 401k plan now.   John: Yeah. So for 2026, under the age of 50, standard contribution limit is 24,500. There is a catch-up, and for today's purpose, we'll just talk about the standard contribution. When you are talking catch-ups, just whatever we're discussing, add the catch-up to it. But for today's purpose, to keep it simple because we are going to do a deep dive into some of these numbers, let's just assume standard contribution limit, which for this year, 24,500. And what a lot of people aren't aware of because it typically doesn't apply is your total limit to the 401k contributions. Now this is employee and employer is actually 72,000 for 2026, and that gets adjusted up every year similar to the standard contribution limits.   Marc: Oh, okay. Wow, that is a big number.   John: Yeah, it's mega.   Marc: Yeah, it's mega. Yeah. So why would the IRS build a $72,000 ceiling if they cap the personal down so low? So I guess what's the other 47,500?   John: Yeah. So one of the things that we focus on is 401ks, which comes with employee benefits, perks, things like that. And some people hear the term matches quite a bit.   Marc: Sure.   John: Another one is profit sharings. So that $72,000 limit is basically the IRS saying, hey, the employee can do this amount, and if the employer's going to give X amount of benefits, it really can't go over this $72,000 threshold. So that's pretty much what it is. The IRS basically said, hey, let's put some limits to this so we can't over commit to people or do ... They want to be able to provide a benefit, but not go crazy with it. So that's where we get the number.   Nick: And to kind of summarize that, a away to think about it is that there are standard limits for the employee contributions. And sometimes as an example, we've seen clients say, we've told them, especially new clients, like, "Oh, well, I'm maxing it out when you include the employer match." And it's like, no, those contributions are for your dollars. And then this overall maximum amount that John's referring to is a combination of employee and employee dollars. So it's like two separate tranches within the same year of the same plan.   John: To confuse everyone a little bit more, part of that 72,000 is, if your plan allows it, and we'll dive into this, is what they call the after tax contribution to a 401k. And I know we hit it last week, but that is something that goes into this feature, which is actually older than a Roth 401k, but it's not used very often or not many people are very aware of it, but we'll jump into it today.   Marc: Okay. So the mega backdoor strategy is the employee kind of hacking, if you will, this potentially unused space. So can one of you guys maybe do a numbers example where it maybe will make a little bit more sense for folks?   Nick: Sure. I'll kind of break it down and give an example. So let's say that there's a 40-year-old and because they're under age 50, their standard contribution into their retirement plan is going to be 24,500, so around two grand a month. In this case, their employer matches and the total amount of the match throughout the year is 10,500. So when you combine those two amounts, the total balance for the year, not including any gains or growth is going to be the total amount contributed is $35,000 for the year. So when we go back to that aggregate ceiling that John mentioned, the 72,000. So with our basic math, and if you're not good at basic math, now we have AI that helps us.   Marc: You got 37 grand basically, right?   Nick: Yep. So 72 minus 35 is $37,000. That is the gap or kind of the unused space below the IRS guideline. So that's the number that we can target should the plan allow it to build in or if you have ... All this is dependent upon cash flow, of course, but if you have the cash flow to be able to save additional money into the plan.   Marc: Gotcha. Okay. So that makes a little bit more sense, right? So you've got that space. It's almost kind of like filling up your tax brackets before you move to the next tax bracket, if you want to think about it that way, not to add more confusion to it.   John: Yeah. It's like filling up your gas in your tank here. I got this gap here. Let me, with the rest of this, like we said, Nick said, I said, if the plan allows it, I can do some after tax contribution up to that ceiling.   Marc: So all right, with the Roth 401k existing now, and those contribution numbers are higher, because part of the reason for this hybrid guys, when they made the Roth 401k is you get the income limits of a traditional 401k, but you get the Roth benefits of the Roth IRA. That's why they kind of merged these two together because people often say, "Hey, I make too much money to use a Roth IRA." But the Roth 401k is higher. Isn't this just what this is, just a contribution to a 401k? It kind of feels like it.   John: It’s not because the Roth 401k is a formal tax designation that falls under that standard contribution limit, that 24,500.   Marc: Okay. All right. Back to the standard 24. Okay. Yeah.   John: Yeah. Yeah. So kind of think about it that way. It's that, hey, your pre-tax 401k contribution and the Roth 401k contribution are subject to that standard contribution limit, which in 2026 it's 24,500. And with the Roth 401k, it's after tax money and growth is tax deferred and tax-free distribution. Where the after tax, and we talked about that in detail, it's after tax contribution, but the growth is tax deferred, but the growth if pulled out will be taxed, the earnings on that. So again, kind of caveat to understand the difference between those two contribution types.   Marc: Gotcha.   Nick: Yeah. And in general, a lot of the podcasts that we do are focused on broader base impacts a lot of people. This is definitely a niche sort of strategy. Th

You’ve worked hard, saved well, and now you’re thinking about giving back—maybe to your kids, your grandkids, or a cause you care about. But should you wait and pass that wealth on later, or give while you’re still around to enjoy the impact? Let’s talk about how to make that decision with confidence.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.     Marc: Welcome in once again to another edition of Retirement Planning, Redefined with John and Nick, and we're going to talk about gifting money while you're alive or leaving a legacy. You work hard, you saved well, so let's talk about how to gift and leave a legacy.   Welcome into the podcast everybody. Thanks for hanging out with John and Nick and myself as we talk about these topics this week. And guys, it's gifting, right? So I want to go over some basics here. It seems like there's been a trend the last couple of years for people to enjoy their retirement legacy with the family versus the old way of you pass and you'll leave a check, right? Here's your inheritance, we're gone, that kind of thing. So let's talk about that a little bit this week on the show and just kind of see what you guys are seeing in your neck of the woods. How you doing this week, Nick?   Nick: Good, good. How about yourself?   Marc: Doing pretty good's. How's the wedding action coming?   Nick: Planning's moving along.   Marc: Nice.   Nick: Did some, hopefully we got the food picked out, so trying to check off all the big things, so.   Marc: That's important. Got to have that good food going on for sure. Well, good. Kudos. Good. Glad to hear that. And John, my friend, how are you this week?   John: I'm good. I'm good. Summer just started for the kids, so getting used to waking up in the morning and they're hanging out with me as I'm getting ready for work-   Marc: And they're ready to go.   John: Versus me just dropping them off. Yeah.   Marc: That's right.   John: It's a lot of fun.   Marc: There you go. Are you guys seeing this trend that I talked about, not necessarily a new trend. It's been going on for a number of years now, but I think where people just want to maybe enjoy some experiences with their loved ones while they're still here versus just leaving that check, so to speak? Are you guys seeing that in your practice as well?   Nick: Yeah, I'd say so. We've had, what are we on now? A 14, 15 year bull run from the standpoint of people have kind of exceeded what their perspective on goals was for the money that they might have in retirement and, so especially I would say, at least from what I've seen, the vacation side of things is kind of the biggest thing that people have been doing where they'll do a large family vacation and pay for the kids and their families to go so that they can all enjoy that together.   Marc: Yeah, that's very cool. And we'll talk about some of the numbers and things in just a few minutes, but John, I'll kick this over to you. I'd say the first step probably still should be, make sure you are covered first, right? We all want to leave and do things for our kids and loved ones, but don't sacrifice your own retirement in order just to do that. Is that a fair place to start?   John: That is 100% where you should start. The last thing you want to do is start gifting and spending money on a vacation, and then you look at it and you're like, "Oh man, I don't have enough money to live anymore." So first thing we do in this situation where it comes up with clients is like most things we say, we look at the plan and we will stress test it and look at different scenarios to make sure, hey, if this were to happen, how does your plan react to it? So we'll throw out some scenarios out there, whether it's healthcare, inflation, social security, things like that. And if the plan looks solid, we will typically give somewhat of a green light of, we think you should budget X amount for this. Or we can also look at scenarios where Nick talked about vacation, but we've seen some others where it's like, "Hey, I want to help my son, daughter with a home purchase." And with the way prices are going now, it's very difficult for first time homeowners to be buying houses. So we've seen a lot of people basically lending, not giving money to their kids for buying homes. So we will put that in the plan and say, "Hey, what does your plan look like if you were to give X amount for a down payment?"   Marc: Gotcha. Okay. And we'll talk about some of those numbers and ways to do that here in a few minutes. So I would say if step number one, as John pointed out is make sure you are covered. The next step number two is maybe just kind of clarify your motivation. He kind of touched on that a little bit, but why are you giving, I mean, again, we all love our kids. We want to help, but what's the purpose? Is that an important kind of factor to decide through?   Nick: Yeah, I've had some recent conversations where maybe there's specific topics like, okay, we're off conversions, and because somebody has read or seen an article or something like that, the thought process is, all right, well let's go ahead and let's convert all of our qualified money to Roth accounts and leave the money to them. And a tricky thing with that can be, as an example, is maybe their kids are not in the same sort of economic space as they are and they're not going to ever make nearly the same amount of money. Them taking a hit right away from a tax perspective maybe doesn't make sense, so try to take them back to the initial point in, Hey, what's your motivation? What are you trying to do? What's most important to you? Is it making sure that your plan is structured well to protect you first and then start to do some giving while you're alive? Or is it more focused on you want to give after you pass away and let's structure your assets accordingly?   So just so many things, making sure that you fully understand what your objectives are because it can be a little bit of the shiny new thing or a shiny new strategy that weren't familiar with at first or initially, and then once you go through and evaluate it in more detail, maybe it doesn't make a whole lot of sense. But yeah, really understanding how account types work, what your goals are and really what your focus is really important.   Marc: And of course, working with a financial professional is going to help you identify that because often we're not going to know what the account types and the rules and the taxation things are going to be, so that's why you want to turn to the pros on that. So let's get into some of the numbers a little bit, guys, because I actually want to point out a couple of things that based on what you've said so far, and just kind of ask you some clarifying questions on that. But let's start with understanding the gifting rules. So John, what's some of the numbers that we need to know if we just want to gift money in general?   John: So you want to look at what is the gifting amount before you trigger having to file a gift tax return or putting that on your return that you gifted money. So this number changes from year to year typically, and in 2025, it's $19,000 per person. So example, let's say you have a mother, father, and they want to gift to a child. They can each give $19,000 apiece.   Marc: So married couples 38 grand, right?   John: Yes. So that's a good starting point. And then if you have grandkids involved or whatever, you can start gifting to that. So it's $19,000 per person per year without triggering the gift tax filing.   Marc: And that's hefty. Now I'm sure somebody listens going, "I love my kids, but I ain't giving them 38 grand."   John: Again, everyone's situation's different.   Marc: And you can do that. And it doesn't matter if it doesn't have to be family either, right? This could be anybody, right? You can give 19,000.   John: It can be anybody. Yeah. If you want to just find a random person in the street, you're more than welcome to-   Marc: Your favorite podcast host. I mean, podcast hosts need love too, so I'm just saying.   John: Yeah. So that's definitely the starting point. If you're going to be gifting money to any particular individual. If you want to help out with tuition and medical expenses, as long as it's paid directly towards those institutions, you don't have to file any type of gift tax return.   Marc: Now, I wanted to ask you about that because a minute ago you guys were talking about helping with school. Now you can't gift the money and pay the loan, right? It's not paying the student loan, it's paying the tuition. There is a difference there, correct?   Nick: Yeah. And you want to pay it directly to the institution.   Marc: Gotcha. Okay. That's important to know too, right? I'm sure from a tax standpoint as well. All right. What about QCDs, John? Can we do that in that arena as well? If you want to do some gifting?   John: Yeah. So let's explain what that is. So it's qualified charitable distr

This week, we're breaking down the Backdoor Roth IRA: the legal workaround that high earners use to get their money into a Roth and let it grow tax-free forever. We'll walk you through exactly how it works, who it's for, the one sneaky tax trap you need to watch out for, and whether it's actually worth the extra steps. If you've ever been told you earn too much for a Roth, this episode is for you.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

What’s new in 2026 for retirees & pre-retirees? From Social Security and Medicare to tax breaks and retirement contributions, this year brings several updates that could quietly impact your cash flow, taxes, and savings strategy. Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

There’s no shortage of financial advice out there, and unfortunately, not all of it is good. Some of the most damaging retirement mistakes don’t come from reckless behavior, but from ideas that sound reasonable and get repeated often enough to feel true. Today, we’re busting some of the most common retirement planning myths and explaining why believing them can quietly derail an otherwise solid plan.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

This episode takes a deep dive into Net Unrealized Appreciation (NUA), a little-known tax strategy that could significantly reduce taxes on company stock held inside a 401(k). John and Nick explain how NUA works, who it’s best suited for, and the key rules and timing considerations that can make or break the strategy. If you’ve accumulated employer stock and want to be more tax-efficient heading into retirement, this conversation will help you decide whether NUA deserves a closer look.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

A lot happened in 2025… Big political swings, stubborn inflation, new tax rules, and even a historic government shutdown. But what actually matters for your financial life? Today, we’re breaking down the year’s biggest headlines and what they may mean for your plan moving forward.    Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Big tax law changes always bring big rumors. But before you assume Social Security is now tax-free or that you’re getting a $40K deduction just for breathing, let’s set the record straight on what this new bill didn’t actually do.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Speaker 1: The big tax law changes always bring rumors, so before you get too hyped up or worried about anything, we thought we'd have a little fun and debunk some of the Big Beautiful Bill myths this week on the podcast. Let's get into it.   Hey everybody, welcome into Retirement Planning - Redefined with John and Nick from PFG Private Wealth. And one more time, we thought we would revisit the Big Beautiful Bill, the OBBBA conversation. I like saying OBBBA, it's just fun. The One Big Beautiful Bill Act. Guys, just kind of hopefully maybe dispel some of these things, continue to have questions all throughout the year as we're closing out the year we're just trying to knock down some of those worries or some of those fears that people still have. So let's set the record straight a little bit. We'll have some fun with this. You guys can be myth busters on this episode, if you will. John, what's going on my friend? How are you?   John Teixeira: Not too much. Just wondering if Nick gave my phone number to a list because all of a sudden today I'm getting bombarded with, "Do you need a driveway cleaned?" And some random stuff. So I think I'm getting punked.   Speaker 1: Oh man, it's that time of the year. It seems like spam calls have gone just through the roof for the last couple of months, so I don't know.   Nick  McDevitt: My hypothesis on that is I feel like businesses are slowing down and they're kind of going back to their-   Speaker 1: They're getting creative too.   Nick  McDevitt: Yeah, they're going back to their list client lists or different marketing tools. I feel like I've gotten re-added or added to a hundred new email lists in the last three weeks. So it's interesting.   Speaker 1: Yeah, it's a weird thing. And the text thing and the email, it's like they have so much access to you. Constantly getting stuff and of course the phones are always listening, so you just get all this weird stuff. But I'm with you, John, same thing. Would you like to sell your house?   John Teixeira: No. Nick complained about it a couple of weeks ago and I was like, "I'm not getting too much." And all of a sudden I think he's like, "Well, if I got to deal with it, John's got it too." So.   Speaker 1: Either that or your phone was listening and said, "Oh, you're not getting it? We'll get one, then. Here it goes."   John Teixeira: It could be that one too.   Speaker 1: All right, let's jump into a few myths. We'll have some fun here. Myth number one, Nick, Social Security is no longer taxed.   Nick  McDevitt: Kind of for some. So just like most things, there's nuance to it. If your income falls within the threshold of where single or married filing jointly and singles, I think the 75,000 married filing jointly is the 150, then you actually get a $6,000 tax credit to help offset taxes that you may owe on your social security income. But it's not something that line item wise is gone. So for most people, up to 85% of their social security income is includeable in their overall taxable income. So this is a way that that amount can get reduced dependent upon the overall situation.   Speaker 1: So technically no, they did not remove social security tax, but they're for certain brackets in certain age groups for a couple of years, you can definitely reap a benefit. So do that. But yeah, it didn't go away unfortunately. Myth number two, John, the new tax law means tax cuts for everybody.   John Teixeira: Unfortunately not for everybody. Like we talked about in the last episode, the senior citizen tax deduction above the age of 65 is those single will get six, joint will get 12, but that's not even for everyone above 65. Well, because if you income level's too high, you also don't qualify. So not for everybody. And then even the SALT deduction, which Nick went into last episode as well, if your state doesn't have income tax, certain situations work for you, certain situations, and everyone's a case-by-case scenario here. So not for everybody. Some people might not see any tax benefits from this, but some people might see quite a bit.   Speaker 1: Okay. All right. Nick, myth number three, the tax brackets are permanent, so I'm groovy. We're going to stay in this low tax bracket forever.   Nick  McDevitt: Yeah, it'd be nice if things work that way, but as we know when it comes to taxes or really anything involving government or legislation, we can count on there being change at some point in the future. So although if people read through documents and they see, hey, this adjustment in brackets is now permanent, that's just kind of referring back to when they were originally reduced. There was a sunset provision that it had to get renewed at a period of time in the future. And so that's what happened is it was essentially renewed and locked into place, but a new president or a new Congress can adjust that and change that in the future. And based upon debt and all that kind of stuff, were of the opinion that at a certain point in time there will definitely be some changes. And the reality is that most likely they will be higher taxes.   Speaker 1: Yeah, they changed their mind as the wind blows and what they do with it. Right? So, all right, myth number four, John, we didn't really talk about the estate tax too much on that prior episode where we talked about some things, but they actually raised it up a tick, made it a nice even number. So it's a $15 million estate tax exemption, which means estate planning doesn't much matter anymore because most people aren't going to get to that level. What's your thoughts?   John Teixeira: Yeah, so it's nice they made it a nice even number, just like when they changed the RMDH from a 70 and a half to a nice even number there. So we like simplicity here. But yeah, it doesn't mean estate tax planning doesn't matter anymore because certain states do have their own estate tax themselves. We live in Florida here.   Speaker 1: Good point.   John Teixeira: So we don't have to worry about that. But depending on the state you live in, important to understand what those estate taxes are.   Speaker 1: Yeah, that's a federal estate. Yeah, that's a great point. Yep.   John Teixeira: Yep. So that's the federal level there, 15 million. So yeah, just make sure you understand where it is. And just because the exemption went up doesn't mean you don't need estate planning because we've come across some people that definitely needed to structure their assets correctly to make sure that Uncle Sam doesn't get all of it and also it goes to the right places. So.   Speaker 1: Yeah, it's much more than just the tax is a good estate plan, so definitely you want to have the other pieces covered as well. So just because the number's high doesn't mean you don't need an estate plan. And you don't have to be a Rockefeller to need estate plan. A lot of people kind of surprised by the fact of what an estate plan can do for them. Just average everyday folks, it can still be very beneficial. So something to certainly consider.   Nick, we talked a little bit about the car loan interest on that prior one, but so I googled basically just common misconceptions about this, and that's how I'm wording these based on how some of these questions came up. So it's like, "Car loan interest is now fully deductible," and that's how with the internet and everything, that's how things get run amok. People think, "Oh, no, no, I totally saw that. Car loan interest is fully deductible. So great, I'm going to go out and buy a car and be able to write off the interest." But that's not the whole story.   Nick  McDevitt: For sure. There are definitely... So there's a cap as far as the amount that can be deducted, it's about $10,000. From a deductibility standpoint, it is a temporary thing and there are certain thresholds from the perspective of income can't exceed a hundred thousand. And then the rules about the final assembly being the US for the vehicle. So it's not a blanket something that, just like anything else when it comes to rules and laws, especially on taxes, the devil's in the details and you want to make sure you have a full understanding of what it looks like. And on top of that, the reality is that a tax deduction is not usually a reason to spend money if you don't need something. So that's kind of like the famous last words of, "Yeah, but there's a tax deduction." But also if there's a cash flow issue, then it may not make sense. So just like anything else, you want to be smart about the decision.   Speaker 1: Yeah. And I'll take this last one, John for a little bit. Myth number six, it was really around the itemizing. "I can skip itemizing and still get deductions for charity giving." An

Today, John and Nick dive into the Big Beautiful Bill and what its changes mean for retirees and pre-retirees as the year winds down. They break down updates to tax brackets, standard and senior deductions, SALT caps, and Roth conversion strategies, while sharing tips on avoiding common pitfalls. Plus, they touch on credits and deductions like charitable giving, auto loans, and solar panels to help listeners make the most of these changes.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Speaker 1: This week on Retirement Planning Redefined, still a lot of questions out there about the Big Beautiful Bill and what happened earlier this year and some of those changes. So, we thought we would talk about that and touch on that as the year is winding down here on the podcast. So, stick around. Let's get into it. Hey, everybody. Welcome into Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com.   Guys, I know it's been around for a couple of months now, half a year or whatever, but still a lot of questions and things going on with the Big Beautiful Bill changes, especially as it affects retirees and pre-retirees. So, we thought we would dive back in and have a conversation on some of this and just maybe touch on some of the things you guys are still hearing a few months later and see if we can break this down a little bit for folks and help them out. John, how are you doing this week?   John: Hey, I'm doing all right. Just getting ready for Thanksgiving here and just looking for some downtime right now.   Speaker 1: Yeah, it's right here upon us. Nick, you're double whammy. You got Thanksgiving and then you got a wedding right after that. So, congratulations and happy holidays.   Nick: Thanks. Yeah, it's going to be a busy end of the year.   Speaker 1: Yeah, for sure. Well, speaking of, let's get into our topic here because there's lot of stuff that's happening and changes and whatnot. So, let's just dive into some of the things and break some things down. The big piece obviously was that the tax brackets that we were under the TCJA since 2017 got extended. All year, we were wondering if that was going to happen as the year was winding down. This stuff was going to wrap up at the end of this year, but they extended it and they made it permanent. So, talk to me about that, whoever wants to take this. That's interesting language and confusion for some people, but what's your thoughts on the tax brackets being extended?   John: Yeah, so the tax brackets from 2017 now remain in place where they were set to expire. So, they're as permanent as I guess you could be when it comes to tax brackets-   Speaker 1: To Washington.   John: ... to Congress. Yeah, exactly. So, obviously, Congress can make some changes at some point, but for right now, this is where we are. For retirees, important to take a look at historically where tax brackets have been and if you really pay attention where in some pretty low tax brackets if you look throughout time. So, now could be advantageous to some people to really develop some strategies to take advantage of this low tax bracket period for themselves because permanent doesn't mean too permanent as we just discussed. Depending on what happens, the next administration, things could not become permanent.   Speaker 1: So I mean, one of the things Roth conversions has been really on the radar for many people for the last number of years because to your point of the historical tax lows, so now you do have some time to Roth over time for at least a couple more years anyway, until what, '28 or '29 potentially.   John: Yeah, so Roth conversions is definitely something we implement for clients, and while this is going to be in place for the next few years. Maybe we get a little bit more aggressive and I think we're going to touch on it a little bit more in the podcast. We'll talk about some of the pitfalls to avoid with that because there are some new deductions that you want to remain below.   Speaker 1: Yeah, yeah, for sure. Well, Nick, let's have you just jump in and tackle some of that. So, talk to me about some of the deductions, the standard stuff, some of these other pieces that they locked into place and some things we might want to know and think about.   Nick: So for people that aren't familiar with the jargon when it comes to the tax or they don't prepare themselves, essentially people have two options. They can either use the standard deduction, which is what the majority of W-2 earners do especially or they can itemize. So, the reason that people would itemize historically is they would have enough expenses maybe through a business, maybe through interest from a mortgage or kids or different things that would allow them to itemize and there'd be a benefit to them from a tax perspective.   But when this was originally put into place and the standard deduction was increased, it really shifted it to people being able to just, for the most part, use the standard deduction, which previously about $29,500 for joint, $14,600 for single, and the updated number is going to be $31,500 for joint and then $15,750 for single. So, it's bumped up a little bit. Years ago, it was lower, and so there would be a lot of people that would get caught between the standard and the itemized, but it is a benefit for quite a bit of people.   Speaker 1: Yeah. I mean, there's some decent numbers here we're talking about. When you take the standard deductions, it's going to be hard to get there, but you could really make a big dent. We'll talk about some of the add-on deductions as well here in a second. Does the SALT cap change a lot of things for you guys in Florida? I'm not sure versus other states like New York or California, New Jersey, and I guess maybe to clarify, John, what is the SALT cap and can you break that down a little bit?   John: So I'll punt this to Nick. He just actually did this with a client. So, he can give a personal story, which is probably better than me.   Nick: Yeah. So, the SALT cap is really state and local tax. It is or historically has been much more relevant in states that have higher property tax and/or state income tax. So, a lot of the northeast states, really just a lot of states in general. Here in Florida, we don't necessarily run into this a ton, however, we do have quite a few clients that do the snowbird thing.   Speaker 1: Yeah, sure.   Nick: So they have to incorporate taxes in other states and that thing. So, the reality is that it had previously been a benefit for people that were paying a large state income and/or property taxes. They could use it to offset the tax that they paid against their federal income. I guess when the legislation was changed, I think it was like 2017, 2018, they had reduced that SALT cap to $10,000. So, that really had an impact from the perspective of especially high income earners in states that had those different taxes that were applicable. It did cause a decently effective increase in taxes for them.   So, with the good old lobbying that's done, they went ahead and increased that from the $10,000 that's been in place for the last five, six years to $40,000 cap for incomes below $500,000. So, although we don't see it here, we have recently had some clients moving into homes that do have pretty significant property taxes. Although they're not paying state income tax, the level of the property taxes where they've gotten with the run-up in real estate around this area, it has become a little bit more relevant than it was previously.   Speaker 1: And so that could make a difference. So, again, you want to make sure that of all these changes that are potentially there, you're talking with your financial professional and your CPAs and working together on making sure that you're being as effective as possible. So, John, you punted that one back over to Nick. I'll give you this one, the senior deduction. There was a lot of talk, obviously, a lot of campaigning on just getting rid of taxes on social security. They did their bartering and their deals and they came up with this senior citizen deduction. I mean, it's not bad for a number of years. It's like you're not paying social security taxes, but it's a little confusing for folks. So, can you break down some of the data on that?   John: Yeah, so it was initially discussed as, "Hey, we're going to eliminate social security tax." This has come up a little bit with some clients asking, "Hey, did they get rid of it?" And the answer is, your social security still is taxed, but if you're above the age of 65, you do get what they call a senior citizen deduction. That's $6,000 per person, $12,000 married filing jointly, and there are some income limits to it. The single is $75,000 and the joint is $150,000. So, I would say over the last few months, we have been doing quite a bit of planning to make sure people stay below these thresholds to maximize the deduction and when we're doing our projections f

Well, you’re retired. Now what? Some people subscribe to the “first year rule” which says that the majority of your best retirement months will all take place in the first year of retirement. So how can you be strategic during that first year and set the tone in the right way, both emotionally and financially?   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Marc Killian: Well, you're retired. Now what? Some people subscribe to the first year rule, which says that the majority of your best retirement months will take place in that first year. So how can we be strategic during the first year and set the tone the right way, both emotionally and financially? Let's talk about it this week here on Retirement Planning Redefined.   Hey everybody, welcome in once again to another edition of the podcast with John and Nick from PFG Private Wealth, as we talk about the five must do categories in year one, or things at least to be thinking about when we get to that first year of retirement. John and Nick have helped many families get to and through retirement, so it's a good conversation for us to have and get some insight from the fellows this week. If you need some help, go to pfgprivatewealth.com. That's pfgprivatewealth.com. Nick, what's going on, buddy? How are you?   Nick: Good, good. Just staying busy. Can't believe it's already almost October, so time flies.   Marc Killian: Yeah. By the time we drop this, it might be closer to November, so time definitely flies for sure. John, my friend, how are you doing? Are you hanging in there with the family?   John: Yeah, doing well, doing well. Family's good, the girls are getting back into gymnastics, I'm trying to get them into basketball, so having some fun.   Marc Killian: Okay, nice.   John: Got some solar panels put up on the house before the tax credit goes away, and I'm excited to try those out, I'll keep you posted.   Marc Killian: Nice. Yeah, look at that, being efficient. So share some of that information with the listeners out there in case they want to, because that's a great point, the tax credit may be going away, I think pretty soon, so maybe something worthwhile.   John: Yes, end of the year.   Marc Killian: Yeah. Well, let's get into this first year conversation, guys. We'll start with some financial, then we'll transition to the more touchy-feely side of things, although it's not that touchy-feely, it's just important stuff to think about. But I guess you've got to learn how to adapt, that's going to be probably the overarching theme, that first year is a heck of a gear change from the working life to the retired life, so learn how to adjust financially, I suppose. John, you want to start?   John: Yeah. So the first few years, I'd have to say, are typically the most difficult for retirees to adjust. I just had a meeting actually yesterday, and the person did a great job saving, actually had a pension, good retirement accounts, and there was this fear of how much should I be spending, what should I be doing? So it was that one month, two month shock of, all right, how do I get a paycheck and what should I be doing with my time? So it's important to take a look at what was on your bucket list, what do you want to accomplish, and like we say with anything, and I know Nick's going to jump into this a little bit more, what's your strategy for income moving forward?   Nick: Yeah. Especially the first year, clients tend to break into A or B as far as the structure of how they like income. So for example, we'll go through the exercise, get the expenses on paper, go through the plan so we've got a pretty good idea of what the expenses are going to look like, and then create their distribution schedule for the first year. And some people like to look at the numbers and say, let's just say that their number works out to them needing income from their investments at 8,000 a month, so some of them, and it's interesting because you kind of see the mindset, some of them will start to say, "All right, well, hey, we built in a bunch of buffers in there, I want to make sure we're not spending too much money, so let's start at 6,000 a month and let's see how that plays out over the first year."   And so, one of the first questions that John and I will ask them is, "Will that prevent you from having any fun or doing any of the things that you want to do?" And if it will, then we'll oftentimes suggest that they do the 8,000, and then let's review it at the end of the year and see, hey, did savings go up, did savings go down over that period of time?   Marc Killian: Yeah, that makes sense, because people will often say, "Hey, let me retire on less just so I can make the numbers work," and then it's like, well, maybe you should try that for a few months too, maybe even while you're still working.   Nick: Yeah. We really look at that first year as the test period, and even to the extent a suggestion that we'll make is, especially if they've got maybe multiple credit cards they've used for different things, "Hey, consolidate the house down to one card, you can have the same account for both of you, put all your expenses on there so it's easy for us to track. We'll do a data dump at the end of the year, seeing where the money's actually going." And then, all we've got to do is we look at, all right, the total withdrawals that we took, did the savings go up or did it go down? And we look at the report on that credit card, and then we can mirror the expenses moving forward on that, and we use that as a test drive.   Others would say, "Hey, no, I feel very comfortable, I'll still do the things that you want to do. As long as you're okay with me sending you an email and saying, 'Hey, we need 10,000 for a trip,' I'd rather manage the day-to-day expenses coming from that lower amount. And then, if we need bigger chunks to come out for different specific reasons, then we'll just message you and have you send the money."   Marc Killian: Yeah, that's a great point. So that first two pieces, really, these five things we're talking about is you've got to learn how to adapt, learn how to adjust financially to that gear change, and then establish that income plan with that withdrawal strategy so that you're giving yourself the salary really is what I'm hearing, Nick. So some people... Because I was talking with somebody not too long ago about this and they were like, "My wife is super frugal, and so she's scared in that first year to spend anything." And I talked to them a little later on, and it was like, "Yeah, after seeing the salary come in from the nest egg every two weeks or once a month or whatever it was, after a couple of months, she got comfortable."   "Okay, well, now we can roll, now I feel better about spending."   So that's a great point on how to just watch that over that first year.   All right. So then, John, then I guess the next piece would be to maybe start to shift a little bit and start thinking about the purpose. Again, we talk about this being a gear shift in that first year, you're working, you've got your job, you've got your career, many people are all about who they are at work, so what are you retiring to? What is your purpose in retirement? That's a struggle for folks.   John: It is, it is, because you're trying to figure out, where do I fit now?   Marc Killian: Who am I now, kind of thing?   John: Yeah. I can tell you where my parents fit, they fit watching my kids, which they tend to enjoy, so that's where some grandparents are.   Marc Killian: That's where many are, sure, yeah.   John: [inaudible 00:06:27] conversations that Nick and I have, it's like, "Hey, I'm going to spend some time with the grandkids and take them on vacations and watch them," so that's perfectly fine and that's where some people do find where they want to start going.   We have others where they look at the first 10 years of retirement as these are the years we're going to go travel and do the things we really want to do while we're healthy enough to do it, whether it's go sightseeing, go to national parks, you're going to have more energy, you can go hiking, you can do things like that, so that could be the purpose is just enjoying the next five to 10 years of really doing some physical activity vacations. Then we have some others that will join some charities that they had an affinity towards, but now they have more time to volunteer and dedicate some time to or build something or just some hobbies. I think Nick, in our classes, does a great job of talking about some different activities people can get into and some resources of now what, what do you do now when it's not time to go to work anymore?   Marc Killian: Right, yep.   John: I'd say the most important thing is just building a routine, so you have a purpose, you have things to do, so you're not just sitting around watching the news all day, driving yourself crazy, because I'll tell you, I think I spent... One time, I wasn't feeling too well, so I had to ta

Medicare isn’t always as free as you think. In this episode, we'll explain IRMAA—the income-based surcharge that can raise your premiums and shrink your Social Security check. Learn what triggers it, who’s most at risk, and a few smart planning moves to help keep more money in your pocket.   Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: [email protected]   Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.   Episode Transcript Think Medicare is free once you hit 65. Well, not quite. If your income's too high, there's a hidden surcharge that can quietly shrink your social security check by thousands a year. It's called IRMAA, and we're going to talk about that today here on Retirement Planning Redefined. Hey everybody, welcome into the podcast. Thanks for hanging out with John and Nick and myself as we talk, investing, finance and retirement. And guys, we're going to talk about Aunt Irmaa this week instead of Uncle Sam. Seems like there's these two relatives that got their hand in your pocket. I've always been taught to call IRMAA, the Aunt Irmaa that comes by and pinches your cheeks really hard instead of the cool one that gives you candy when you're a kid. So we're going to talk about IRMAA, and what it is and why it exists and all that good stuff this week. How you doing, John?   John: I'm doing all right. How are you?   Speaker 1: Hanging in there. Doing pretty good. Looking forward to chatting with you guys about this, learning a little bit about what is IRMAA and what does it do to us. And Nick, my friend, how are you?   Nick: Pretty good. Staying busy in the red zone for wedding planning and all that kind of stuff. And we are in football season so-   Speaker 1: There you go.   Nick: ... I've had to adjust my sleep schedule a little bit.   Speaker 1: Exactly. So between planning and football, you're burning the candle at both ends.   John: Monday is a little slower for Nick-   Speaker 1: Little slower. Gotcha.   John: ... the last three weeks, especially with the Bills, how good they look.   Speaker 1: Yeah, for sure. Yeah, my Lions look pretty good on Monday night this pastime.   Nick: You sure do.   Speaker 1: Yeah. Well, let's get into the conversation a little bit, guys. What is IRMAA and why does it exist? Whoever wants to start?   Nick: All right, I'll go ahead and start. So essentially IRMAA is an acronym that refers to essentially an income related monthly adjustment for the cost of Medicare part B and D. So essentially back in '03, as the plans both Medicare and social security continually get reevaluated due to the pressure that they're under from the standpoint of expenses and flows in, they decided to put this into place where to kind of tier it where people that were earning income currently, so if you're single earning income greater than 106,000 or married filing jointly earning income greater than 212,000, the premiums for part B start to go up. So this is something that we've dealt with quite a bit with clients.   It's based upon modified adjusted gross income, which nobody knows what that means, but it is a term that everybody's heard or most people have heard. As a reminder part A, there is no premium charge as long as you worked you or your spouse or former spouse work 40 quarters. This applies to the part B and part D. And it's not a penalty from the perspective of how they look at it. It's not like you're doing something wrong. It's more along the lines of almost just like tax brackets where lower income, lower bracket, the same thing on this, lower income, lower premium.   Speaker 1: Gotcha. Yeah. And that interesting piece that catches people is that it's a two year ago look back. So they're going to adjust it based on what you made two years back. So as you move into retirement, that could feel a little... You're like, wait a minute, why is this going up? But they're looking at maybe the last couple of years.   Nick: Yeah, for sure, and there is a form that people can fill out. We oftentimes help people fill them out. I think we've done it twice in the last two weeks where you can basically contest it. So especially if you've just retired and you were previously high income and they look back those two years, you can let them know that, "Hey, moving forward, this is going to be my income, it's going to be reduced."   Speaker 1: Gotcha.   Nick: Explain why, and oftentimes you can get it amended moving forward.   Speaker 1: Okay. And John, so hit us with some numbers here. So who's at risk paying the most? Obviously, there's some data in here and Nick explained that the more you make, but what's some of those guidelines?   John: Yeah. So just looking at the base levels here, single father who's modified adjusted gross income is over 106,000. Then they're going to be at risk of basically, we know it's not a penalty, but basically paying more for part B.   Speaker 1: Right.   John: And if you're married filing jointly, it's over 212,000. And the more you make, there's different phases of it where you might pay $74 and then it'll go up a little bit more as the modified adjusted gross income is up.   Speaker 1: Yeah, we'll talk about that here in just a second. So obviously it's not hard to get to 212 for a lot of couples, so this could impact a lot of people obviously.   John: Yeah, so no, we do see this coming up quite a bit lately, and where we see it is when someone hits RMD age, where if they've been sending so much money into pre-tax buckets and all of a sudden it's, hey, you have a 50, $60,000 RMD, you have two social securities, and with the cost of living adjustments the last five or six years, some of these social security payments are getting pretty large compared to what they were about six or seven years ago, with the run-up in the market, these are getting really large. So that's where we start to really see it come into play is high income earners have been saving a lot into their pre-tax accounts, and all of a sudden, it's time to pull out of those. You can be forced into this.   Speaker 1: Gotcha. Yeah.   Nick: A couple other areas I would say too is if there's a situation where for whatever reason there's one spouse and a married filing jointly situation where one spouse is still working, other spouse is retired, and we've seen people, especially if they do it before they come and speak with us where they look and see like, "Oh, I should only pay the one 70 a month for part B," and not realizing that there is this test and the retired spouse goes on Medicare instead of going on their spouse that's still working's plan, health plan and not realizing that the income is going to take them over the threshold and they're going to pay more on part B than they would have if they were just a part of the plan at the work. And then...   Speaker 1: It's kind of sizable too, right? I mean, you're talking-   Nick: Oh, yeah.   Speaker 1: ... it could be some big chunks of money here.   Nick: Yeah, for sure. I mean, especially if you get to... So single 167 to 200K is almost an additional $300 a month for part B and 57 on part D. So that's another $4,000 a year on an expense aside. Married filing jointly at that same amount, 334 to 400, and we'll see issues like this too, where maybe there's a small business owner or self-employed or maybe them in one or two employees and their premiums, they had been running through the business and they attempted to switch over to Medicare at 65 and/or fed some issues with people almost being, not necessarily forced, but almost forced that way with their policies when they are over the age of 65, if it's a small or a one person individual plan and not realizing that, again, that their premiums are going to be substantially higher than they expected. So it definitely happens more than people realize.   Speaker 1: Yeah. Well, John, you talked about what triggers it, a lot of the times being RMDs, people moving into that. What are some other things that might trigger IRMAA?   John: Yeah. So what we've seen in the past where people run into trouble, and this is where if you listen to our podcast, we always talk about being able to prepare for unexpected events and having a balance. But let's say someone has most of their money in pre-tax and their dream home comes up and they really want to buy it and they got to jump through some hoops to potentially get it. They can afford it, but the majority of the money is in the pre-tax account and they got to pull it out, maybe a down payment or whatever it might be that could put your income up more than you expected. The unforeseen medical expenses where all of a sudden things are going along great, and emergency happens, you need to pull 20, 30 grand out to cover some medical expenses. That happened. I mean, oddly enough, I just had someone I think have to pull out almost 40, 50 grand for dental expenses unexpectedly, which as everyone knows typically not covered by any type of insurance, even if you have dental insurance, it's not covering that-   Speaker 1: Right. Right.