This episode answers the question, “How do I do a Roth conversion, and what forms do I need to fill out with the IRS?”

David explains that there are three basic steps to convert your IRA to a Roth IRA.

Carrying out these three steps will likely take a few weeks – the process could be slightly shorter if everything is handled by the same financial institution.

Starting this process in December isn’t ideal because financial institutions are often overwhelmed with conversion requests.

If the conversion isn’t completed by December 31st, the Roth conversion window will close, and you won’t be able to reopen it for that tax year.

David discusses when and why 100% of your IRA conversion may not be taxable.

He also touches on the different forms you’ll need to fill out, including instances where you may want to use form 8606.

As David puts it, “Double taxation is something you should avoid at all costs.”

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

This episode is part of David McKnight’s interview with Mark Byelich, founder and owner of Attleboro Wealth Management.

David and Mark discuss why the money inside a Life Insurance Retirement Plan (LIRP) "bucket" is treated differently for tax purposes and benefits from low fees.

When it comes to life insurance, David recommends "having as little of it as the IRS requires, and stuffing as much money into it as the IRS allows."

Remember: not all Indexed Universal Life (IUL) policies are created equal.

Starting an IUL is like getting married – it only works if it’s 'til death do you part.

Mark and David touch on the so-called IUL deal-breakers.

David is firm in his view: for LIRPs and IULs, you must ensure a 0% loan is guaranteed in the contract.

David also shares one of the biggest reasons his clients tend to favor an IUL.

Mark Byelich highlights a significant risk that he and his team monitor closely.

David and Mark discuss participating and variable loans, as well as interest in arrears – and David explains why he’s recently taken a step back from a particular approach.

David is a fan of the COMDEX rating, and he explains why, along with one of the Achilles' heels of life insurance policies.

Mark recommends reviewing your financial plan annually.

David shares why they only do business with companies that conduct daily or weekly sweeps.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Mark Byelich

Genworth Cost of Long-Term Care

Dave Ramsey

Suze Orman

Moody’s

S&P

COMDEX rating

This episode looks at the recent IRS updates on the required minimum distributions due for 2024 and 2025.

David touches upon which accounts are and which aren’t subject to RMDs.

Historically, when someone missed their RMD, they had to pay a 50% penalty on whatever they were supposed to withdraw but did not…

David goes over what the new regulation for missing an RMD says.

David explains how SECURE Act 2.0 changed what was a popular policy in regards to RMDs and paying penalties.

To avoid confusion over penalties and various statutes of limitation, David recommends ensuring that you’re taking your RMDs at the appropriate time.

“If you consolidate all your IRAs into one account, it’s going to be a lot easier to make the correct RMD calculation,” says David.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Secure Act 2.0

Today’s episode addresses how to create multiple tax-free income streams that don’t show up on the IRS’s radar and that contribute to you being in the 0% tax bracket in retirement.

Having some money in a tax-deferred account, like an IRA or 401k, is the first way high-income earners can create tax-free wealth for retirement.

Contributing to your Roth 401k or Roth 403b, as well as leveraging a backdoor Roth, are a couple of additional ways to build tax-free wealth in retirement.

David touches upon what CPA and retirement expert Ed Slott calls “the single greatest tax benefit in the IRS tax code.”

David makes a comparison between Indexed Universal Life vs. a taxable brokerage account.

David believes that “the higher your tax bracket, the more it makes sense to reposition surplus savings from your taxable account to indexed universal life.”

Mentioned in this episode:
David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Ed Slott

David starts the conversation by explaining what IRMAA is, if you should be worried about it when doing a Roth conversion, and whether there are ways around it.

David defines the acronym IRMAA, Income-Related Monthly Adjusted Amount. This is an additional charge you could be required to pay on your Medicare Part B premiums.

As your income goes up in retirement, your Medicare Part B premium increases with it.

David explains why standard deductions do not apply when calculating IRMAA.

What is the link between IRMAA and doing Roth conversions? Roth conversions are construed as part of your annual income in the IRMAA calculation.

David explains why you could do a Roth conversion before ever getting on Medicare and still end up paying that increased premium.

The IRS has a two-year look-back period when doing IRMAA calculations. So if you did a Roth conversion at age 63, for example, that would be included in the IRMAA income calculation at age 65 when you finally get on Medicare.

If Roth conversions could potentially cause IRMAA, should you avoid them altogether?

According to David, the answer is no--and that's because of two reasons.

First, if you don't do a Roth conversion, you could risk growing and compounding your IRA or 401K to the point where RMDs at 73 are so large that you could get hit with IRMAA every year for the rest of your life.

Secondly, tax rates will go up in the future. So you certainly don't want to forego a Roth conversion, only to pay much higher taxes on your IRA or 401k distributions down the road.

According to David, if you get enough Roth conversions done by the time you reach 63, you could avoid IRMAA altogether. Why? Because distributions from Roth IRA are not included in the IRMAA income formula.

By doing a Roth conversion and taking the IRMAA hit in the short term, you could put yourself in a position where you avoid IRMAA for the rest of your life and stay off the IRS's radar when it comes to Social Security taxation.

Mentioned in this episode:
David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

This episode addresses Suze Orman’s epic IUL rant on her Women and Money podcast.

Suze Orman begged her audience not to do Index Universal Life insurance policies.

This very broad brush and no nuance approach of every financial guru is what David’s upcoming book The Guru Gap touches upon.

David explains why the generic approach financial gurus tend to have is leading people astray.

David brings up Orman’s advice to one of her listeners who has been investing $200/month into an IUL policy.

David recreated this listener’s exact policy through one of the top IUL carriers in the industry – he shares his findings.

Starting an IUL is like getting married: it only really works if you plan on keeping it until death do you part.

David goes over the reason why IUL should be the last bucket to turn to for liquidity in the early years.

These days, most IUL carriers these days allow you to receive your death benefits in advance for the purpose of paying for long-term care.

David believes that “an IUL can serve as a great volatility shield in retirement”.

A recent Ernst & Young study showed how people can dramatically increase their sustainable levels of income in retirement in the context of IULs.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Suze Orman’s Women and Money Podcast

Ernst & Young

David and Mark Byelich talk about why people don’t want to pay a tax before the IRS absolutely requires it of them.

David touches on the 2018 documentary The Power of Zero: The Tax Train is Coming.

Mark Byelich explains that the longer someone hasa tail of the overage in their IRA hanging out there, the more risk they have.

Mark discusses what happens in financial planning when people ease.

When it comes to people around the country, the initial tax payment is typically the thing that’s really hard to get over.

David shares what tends to occur when people get over the “shock” of paying that initial tax.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Mark Byelich

The Power of Zero: The Tax Train is Coming

Doug Orchard

George Shultz

Ed Slott