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And your owner distribution is taxed at the capital gains rate? Or at your income tax rate?
Amazing thank you for this
I liked the presentation a lot. Very good pacing and clear presentation of what can be a confusing topic. My only question is what are the other 2 sets of distribution rules? At about 8:08 you mentioned there were 3 but I think only the first was covered. Thanks!
Legendary content. Thanks man!
Managing retirement income gaps can be tricky, but strategies like 'retirement guard rails' offer flexibility. It's interesting how different accounts play a role. Speaking of which, have you heard about platforms like My Digital Money? They're reshaping retirement planning with innovative options that might surprise you, especially if you're looking into tax-advantaged investments.
One of the best kept strategies!
I have a C-Corp and a 401 (k) Plan that is the main shareholder of the C-Corp (ROBS). Can the 401 (k) Plan qualify for QSBS?
Ummm... How the hell is $1500 income a deduction? I thought it is an expense that is deductible?
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can we take out w2 differently amount every month? thanks!
No, you have the SS taxation calculation wrong. Married with $37,500 of provisional income exceeds the $32,000 threshold by $5,500. That $5,500 is multiplied by 50% to arrive at only $2,750 as taxable social security. Simply put, the 50% and 85% are simply factors in the equation to compute taxable SS. Ultimately, taxable SS will range from a low of 0% to a high of 85%. Let’s raise their SS to $50,000 while keeping the pension at $20,000. Their provisional income climbs to $45,000 which exceeds $44,000 by $1,000. The taxable SS calculation will be the sum of $12,000 @ 50% plus $1,000 @ 85% for a total of $6,850 taxable SS. That gets compared to their maximum taxable SS of 85% of $50,000 or $42,500. Since $6,850 is less than $42,500, the taxable SS will be $6,850 in this example. Their taxable income will be $26,850 and they will owe $0 in tax since that falls below their standard deduction.
All the SS calculators ASSUME that the program will be there for your entire life. That is a BIG assumption given that the program will go insolvent in less than a decade. Sure congress will add a few pennies to it at election time, but there is NO plan or intent to fully fund SS. The only fixes congress proposes are more benefits cuts and increases to the eligibility age. How can you promise more benefits in the future (by waiting to 70) if the program is constantly cut? Promises of more money in the future never materialize in business, government, or anywhere else. I am "A bird in the hand is worth two in the bush" guy. I'm taking SS now at 62 before SS is SS in name only.
Thanks for detailed explanation. 👍
You're welcome!
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Well put, the break even point is an important factor… Another critical factor in whether to take Ss now or to wait, is the survivor benefit. For my wife and I, we probably have good enough cash flow between 67 and 70, but waiting till 70 gives us almost $1000 more per month for which ever of us has to continue on in life. Sad to even talk this way, but it’s reality!
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Can you be a LLC taxed as C corp and qualify?
I believe the business needs to be an actual corporation to qualify.
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Great video! You don't say it outright, but it seems like you're implying that with a SEP IRA, if you as the employer match up to 10% of your own income, then you have to do the same for all of your employees-but that this is NOT the case for a SIMPLE IRA. That you can have different matching rules for yourself than you do for employees. Is that correct? If so, to what type of companies does this apply? The IRS website says pretty clearly you can't do that if you're a Schedule C filer, but maybe you can if you're an S-Corp?
Almost correct. With the SEP-IRA if you as the employer contribute 10% of your compensation to your account, you're compelled to contribute 10% of your eligible employees' compensation as well. The SIMPLE IRA contribution requirements are difference. Once the business adopts the plan it's agreeing to one of two compensation arrangements. The company will either A) match employee contributions up to 3% of their comp, or B) contribute 2% of the eligible employees' comp regardless of their own contributions. The employer contribution arrangement needs to be the same for all participants though - both employees and owners. You can contribute up to $16,000 of your compensation to the plan for yourself, plus another $3500 if you're 50 or older. The business contributes to all accounts based on whichever option you chose. Any business with fewer than 100 employees making $5000 or more can adopt a SIMPLE IRA. The only restriction is that you can't have another retirement simultaneously in place. C corps can use them, as well as tax exempt entities and self employed people. (Although they don't make much sense for self employed people).
I am self-employed and I have no employees. I disagree with you when you say the simple IRA does not make sense for self-employed people. For me it makes perfect sense as a self-employed person because it’s going to lower my tax bracket. As of 2024 I can put aside $17,000 Annually plus in my case an extra 3500 because I’m over 50, for the first year as a catch up. Then I can pay myself about maybe $50,000 for the year. And then the rest will be what the IRS is taxing me on. Dramatically lowers my tax bracket.
Thank you for this content. My mother was sold multiple annuities despite being a teacher who had vested in a state pension. Over 15 years in one of them and a net return of ~2%. Not annualized--2% appreciation in total.
Oof. Sorry to hear that.
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Thank you for the great explanation!
Glad it was helpful.
Well explained. I am 6 months away from the point where my annuity decision has to be made. I thought I was locked in for life because my advisor never said anything about these options come the end of my wait period. Now I’m nervous she’ll try to convince me to get out of it and into yet another policy. These contracts are so complicated. I don’t want more worries about locking into another policy. Good to know that once I agree to take annuity payments I’m locked in. So any possible cancellation of my current policy better give me 100 percent clarity that a new strategy benefits me. And only me.
Took way too long to get to the facts. I had to stop at 16 minutes.
Thank you, very straight forward and informative.
Take it at 66. There is no guarantee that you will see 70.
My full retirement age is 67. I’m considering Taking SSI when I turn 64. I’m also a disabled vet andI currently collecting disability from the VA. What do you see as the pros and cons?
Mmmm maybe you should draw as soon as possible- because your not promised tomorrow- plus that money 💰 can work for you now instead of later
Draw as soon as possible? So that would be age 62. The average 62-year-old male lives to be age 81. The average 62-year-old female lives to be age 84. (Source: Any of those Actuarial Life Tables, one of which is on the SS website.) This is longer than the above-mentioned break-even age. For women, it's a full five years longer! if you wait until age 67 to collect, the monthly benefit amount you will receive is 42.86% more than the amount you would have received at age 62. (This is true for everyone, regardless of their actual benefit amount.) Okay, so that percentage is not large enough for you. That's fine. I get it. No problem. But how high would that percentage have to be before you _would_ delay and take benefits later? 50%? 60%? More? Or, of course, flip the question around. The percentage deducted for taking benefits early is a full 30%. You're apparently fine with that. "Tomorrow is not promised to you." Again, no problem. But what if the amount deducted were 40%? Or 50% deducted? Is your attitude and decision the same? Start taking it as soon as possible? You HAVE to consider the percentage increase you receive by waiting, AND you HAVE to consider the time frame involved. Those two factors must be factored into your decision. I'm curious where you draw the line. Obviously, of the amount deducted was 90% and yet you only had to wait six months before you could receive all 100%, you'd most likely wait. So you can't just say draw it as soon as possible. At some point that would not be wise. To many, it's not wise as it is. The percentages say they will live far past the break-even point, and upon doing so, will begin to leave money on the table. Cheers.
Thanks, Three Oaks Wealth; your content is top-notch and the ultimate value-add.
Thank you, David!
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Thank you....
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Thank you for this video. I now understand that S Corp pay taxes on profits. Therefore even if I leave the profits in the account or take it out i already paid taxes on the profits. What matters is if i take out more than my basis.
I got my $200,000 forgiven after consoliated under SAVE IDR repayment one time adjustment plan. Still have balance to pay off. But now i can be qualified fir mortgage. Debt to income ratio improved. SAVE is life saver.😊
No tax owed on forgiven loan amount as long as you consolidate before April 30.
Thank you! The extra money ($100k in your example) is still taxed, but only as income tax, right? Not taxed by social security, medicare etc?
Correct
This applies to a business owner that offers it to employees, even if the employees choose not to participate at all? The business owner can still max it out? And what if the business is a DE LLC?
Yes, correct. You may have requirements to offer the plan to employees - the eligibility requirements will be spelled out in your plan document. If the employees choose not to participate you can still max out your own contributions.
Get out in the free look period…..Period.
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Grant is cutting-edge about knowledge of important financial planning topics; thanks very much!
Thank YOU!
If you don't have a DB pension, a lifetime payout annuity can make sense. Once you live long enough, it does make sense. Some people don't want to be heavily in equities in old age and just want a guaranteed payout. "If you invest prudently you'll be fine......" that's a big IF. How about a horrible bear market hits in the middle of retirement, like the Great Recession, and your stocks lose 50% or more in value? Whereas with an annuity, that doesn't matter, your payout is guaranteed.
It is certainly a big if, and bearing 100% of the investment risk isn't the right strategy for everyone. That being said, financial markets have found a way to recover from bad markets every single time it's happened. Not just in the last 100 years. Every single time. Recessions and bear markets are inevitable. So is the rebound in a properly diversified portfolio.
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❤
If anyone can do this, them why are people charging $20k to get this???
Doing this properly takes a lot of skill, expertise, and experience. Setting up a trust incorrectly can negate all the trust's benefits, result in more taxes owed, and potentially put you at legal risk. Yes, anyone can set these things up. But unless you're comfortable taking those risks it makes sense for non-experts to pay the $20k. If the value of the strategy exceeds that amount, of course.
We are not living longer @threeoakswealth this generation is projected to live SHORTER lives than the preceding one. Think about that
Not compared to when Social Security was created. Life expectancy in the U.S. in 1950 was about 68 years old from birth. Today it's closer to 79.
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