Retirement Planning - Redefined

What To Sell Before Retirement – YouTube’s Most Watched Retirement Video

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: info@pfgprivatewealth.com
 
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 everything we always say, "Just make sure you can afford to do it and it doesn't hurt your plan," because your kids have time to adapt, and the last thing we want for our clients, it's where it's like, "Hey, I need to go back to work or I need to do ... I can't now enjoy my retirement. I can't go on vacation because now I've basically been funding my children, at this point." I mean, there's certain things you have to assist with, and we get that, but we've also seen scenarios where we've had some clients that just continue to assist kids pay just unsecured debt for running up the credit card bill, and that's where it's a situation where you've got to weigh out what you're doing, but your kids can typically adapt, where, once you're at a certain age, it's hard to go back to work even if you have to. Just make sure take care of yourself first so you have the ability to help others.
 
Marc:
Well, you're right. Yeah. It's like the whole airplane thing, right? Make sure your mask is on before you try to help the others, kind of thing. I get it, right? As a parent, we all want to try to do something for them, but to your point, don't overextend yourself. Don't risk your own retirement, because you can't finance that, right? You can't finance retirement.
 
Nick:
Yeah, and not only that, but sometimes going to the well once is maybe one thing, and we can model it and show it, but we've also seen instances of, it's the third time, fourth time. John mentioned revolving debt, credit card debt, "Oh, they learned their lesson this time," et cetera, et cetera, and especially when that's-
 
Marc:
"They helped me once. Maybe they'll help me again." Yeah.
 
Nick:
Yeah, exactly. There's definitely some ... Unfortunately, sometimes the kids will take advantage of that.
 
Marc:
For sure. Yeah, good point. All right. Number three, expensive toys that become expensive burdens. I think we've all probably been there as you get closer to retirement, too. You're making more money, right, so you've got the boat, the RV, the classic car, something, right? At some point, maybe you don't own things. Things own you, as the saying goes. Thoughts?
 
John:
I'll say I feel like my house owns me right now so I can relate to some of this stuff. Yeah, here in Florida, we see this quite a bit with boats, where clients have boats, enjoy it. As they get into retirement, maybe early on, they're enjoying it, maintenance, all this stuff. Then it kind of turns into, "I'm not really going on the boat as much." What we normally do, even with our younger clients that still have it, we'll model selling it and offloading those expenses. That's a big one we see here, and then when COVID hit, kind of backtracking six years now, the whole RV craze, where we couldn't travel too much, and all of a sudden everyone started buying RVs.
 
Marc:
Yeah, that's a good point.
 
John:
I've seen a lot of RV sales lately, the last couple of years.
 
Marc:
Yeah, that's a great point. Travel trailers and the whatnot. Yeah.
 
Nick:
Yeah, and I'll say the thing with, especially with boats, tends to be all of the ancillary expenses related to it.
 
Marc:
Bust out another thousand, that's what it stands for.
 
Nick:
Yeah, yeah, but-
 
John:
I like that one.
 
Nick:
Especially here now, I mean, we've seen where even on a boat that's paid off, between fuel, dock fee, the power, regular annual maintenance, somebody might be running between 25 to 35,000 a year, and when they realize, when you factor in a safe withdrawal rate, hey, essentially you've got withdrawals from five to 600,000 dollars of your assets that are dedicated specifically to your boat. Do you love it that much? The reminder with people that it's not always all or nothing, where maybe it's like, "Hey, let's just have an exit plan." Say, "Hey, you've got five more years of this. Enjoy it, use it to its maximum, really look to have a great time with it, and if you end up after the third year just kind of really slowing down and not really using it as much, that's a sign for you to shift. You can always join a boat club and try that and not have to deal with the other maintenance related.
 
Marc:
That's a good point. Yeah, that's a good point. Well, we're talking about these things that they, again, this video is saying, "Hey, sell these things before you retire." I want to get to the last two here, guys. Number four, and this is interesting, the second car. Without a commute, now, again, you're thinking that the concept is you're in retirement at this point, right? Two cars sitting in the garage may be costing more than they're worth in insurance, maintenance, so on and so forth. Is it worth asking the question, John?
 
John:
Yeah, so in the video, I'll go from my own experience and plan the last 20 years, but in the video he talked about, hey, it worked out for some of his clients. I'll tell you, I see the reverse, where most, and I'd say most people, I think, like having the second car and the autonomy, doing their things.
 
Marc:
The freedom. Yeah.
 
John:
Yeah. We just had a meeting, Nick and I last week, where it said, "Hey, we have one car, but we want another one," and we were like, "Let's put it in the plan." It worked, and maybe to kind of find an in between, it's like, hey, you have your main car, and maybe you find kind of a used car that's good quality, safe, everything like that, but it's not as expensive as the other one. This one here, I would say more often than not, I think it's okay having the second car if you can afford it, unless someone really just doesn't drive. I'll pick on my parents here. My mom hates driving, but I'll tell you, she has her car, because if she wants to go to her sister's house, she's not waiting for my dad. I'll tell you that.
 
Marc:
Yeah, exactly. No, the freedom thing comes ... I mean, it's a huge piece of it, for sure. Nick, any thoughts there?
 
Nick:
Yeah, there's no way that I would tell somebody to sell a car and hang out. That's one of those things that I wouldn't touch. I mean, I've seen it where we've had some clients kind of make that decision maybe late 70s, early 80s, but really early on in retirement there's already a sense of purpose and autonomy, changes that are happening by shifting out of work and all that.
 
John:
People are together all day now.
 
Nick:
Yeah, yeah.
 
Marc:
Yeah. That's a good point. Yeah. "I've got to get in the car to get away from you." Yeah.
 
Nick:
Yeah. Yeah. Needing to escape, and that's not anything that's-
 
Marc:
I think, maybe depending on where you live, too, right, guys? I mean, in some places, if you can walk to everything you want to do, then great, but again, depending on where you live, I mean, here in North Carolina, where I live, no, there's no way. It's miles to get to anything, right?
 
Nick:
The other thing I would say, too, is maybe the one thing, one conversation that we have had with people is, where maybe it's a couple that's used to getting a new car every three years, each of them, and maybe shifting to kind of having the one car that's a little bit higher end, and then, second car, maybe just holding onto it longer or keeping the costs down over a longer period of time, something like that.
 
Marc:
That's a good point. Yeah.
 
Nick:
Can make a whole lot of sense.
 
Marc:
Well, Nick, you touched on the identity piece, and that was the fifth piece of this. This one can't be sold on eBay or gotten rid of, right? The argument is that clinging to that professional title or your sense of former self can hold you back from discovering what you want to do or be in retirement. I guess it just kind of, we'll wind it out like that. How do you guys help? Because that's probably the biggest challenge, right? How do you reframe and rebuild who you are, when you get to this new phase?
 
Nick:
Yeah, and I can kind of start with this one. We're big believers in the fact that people need purpose, and oftentimes throughout their, in theory, working age years or raising a family years, whatever it is, there's oftentimes the purpose needed, whether it's raising kids, whether it's being part of helping to raise grandkids, whether it's work and only work, if you didn't have kids. My wife and I, we don't have kids, and from the standpoint of our work and the things that we do, other things like volunteering and stuff like that, people need purpose, and shifting that mindset of, the outward perception of people showing value or acknowledging your value through things that you do shifts to be more internal, where you don't get sort of that automatic response that you might with a job or from your kids doing well in school, or different things like that. It can be a tough transition for people.
 
Marc:
Well, John, I guess I would ask you this final question. Maybe something for folks to ask themselves is, "Does this still serve my new life or my old one?" Right? When you get into retirement, when you're thinking about the questions that you've got to deal with, would you say that's a pretty good way of looking at that?
 
John:
Yeah, I do. I think it's kind of starting with, going back to the plan, you start with, "Hey, what are my goals? What am I trying to accomplish?" You can look at that from a personal time standpoint. "What are my priorities? What do I enjoy doing now? What are some of the bucket list things?" All comes down to just identifying what you want to focus on to maximize your retirement and what you guys like to do.
 
Marc:
Yeah. At the end of the day, right, you've got to ask yourselves those tough questions, right? "Does this still serve the life I want or the old life?" With 3.7 million people watching this video, that was for a good reason. It touched on something real. Retirement isn't just about what you've accumulated. Sometimes it's also about what you're willing to let go of. Right? We also kind of hit this phase now, and it's become very trendy as well., to declutter, but I think as you get older, you do kind of want to do some of that. You're kind of like, "I don't need all this junk anymore," and so you need to kind of think about some of those things when it comes to your financial life. Not just the monetary pieces, but also just the other factors and things that go into it. As always, if you've got questions, you need help on how to do that, because it's our first retirement most of the time, right?
 
Most of us don't retire more than once unless you're Favre or Brady or somebody like that. You've got to get it right the first time, so reach out to a team that helps people all the time get to and through retirement. Reach out to John and Nick and the team at pfgprivatewealth.com, that's pfgprivatewealth.com, and get started today with a consultation. Do a 15-minute chat by simply calling 813-286-7776, 813-286-7776, or go to pfgprivatewealth.com. That's going to do it this week for Retirement Planning Redefined. Don't forget to subscribe to us on Apple or Spotify or whatever podcasting app you enjoy. For John and Nick, I'm your host, Mark. We'll see you next time.
 

She Didn't Plan to Retire at 62. Here's How It Happened.

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: info@pfgprivatewealth.com
 
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 aspect of not touching their money, where taking Social Security at 62 is still touching your money. It's just kind of in a different way. So kind of laddering these things together and knowing that she had some money kind of set aside, we probably would have looked at potentially supplementing the income for a year, maybe two years with the money in the retirement account.
 
Letting the Social Security grow a little bit more, then kicking that in and then having the pension kick in where then that would give an opportunity to take a little pressure off the retirement funds, and stop withdrawals for a few years and let that grow back. Because not only does somebody lock in a lower amount when they take Social Security early, but now they just have less money for things like the cost of living adjustments to kind of compound on in the future and that sort of thing. The big takeaway of what we see here is the fact that there wasn't necessarily a retirement plan put together from a financial aspect.
 
Marc:
Right. I mean, she's 62. Even a little planning a couple of years ahead of time might have helped a lot, right?
 
Nick:
Yeah. Yeah. There definitely would have been an impact on what could have happened. And the thing that also happens when we have this sort of conversation, anytime anybody's going to make a substantial career change, like somebody like a teacher, for example, they have some of the best job security there is, and kind of being in the private world and shifting from being a teacher to the private world, it can be a little bit of a culture shock.
 
And just understanding that you can be let go and/or the dynamics in play can be substantially different. And so just that predisposition to what sort of field she was in probably didn't necessarily lock in the risk taking of uprooting, moving, and even how delaying that a couple of years could have had most likely a pretty substantial positive impact on the plan, and maybe freed her up to be able to not have to work part-time for longer or have all these other variables that she's not in control of.
 
Marc:
Yeah. And I think ultimately for me, like what I see on stuff like this is she figured out a lot of parts on her own, and that counts for something sure, but the difference is always like instead of doing it, reacting at that moment is doing a little bit of planning just goes a long way, right? I mean, you could still build one even in this situation, but ideally the sooner you can, the better. We're not talking necessarily 10 years out, although that'd be great too, but don't just wait until the last minute and then just react to stuff.
 
Nick:
Yeah. And the reality too is that in the short term, even though there's a lot of moving parts kind of in that range of losing the job and shifting to part-time and taking the Social Security, really where the pinch will be felt is 10 years down the road when inflation really starts to kick in, things are feeling more expensive.
 
Marc:
That's a good point. It feels that way now, right?
 
Nick:
Yeah. Yeah, for sure. And so it's like that thought process of like, well, hey, the increases I'm getting on my Social Security, and maybe for her a pension, aren't really keeping up with where things are going, maybe she didn't have the opportunity to work for very long at the gym even and can't find any other job and she's just now her lifestyle, her expenses, John mentioned the opportunity to be able to travel, do the things that she wants to do. Some of those things may have been taken away, and some extra more kind of detailed planning to ... Because those are the sorts of things that we would show as situations that could happen for somebody and making sure that there's contingency plans and plan B, plan C if, hey, if these things happen, where can we go? How can we adjust?
 
Marc:
Yeah. I mean, stress testing different scenarios is a huge part of going through the retirement planning process with an advisor so that you can ... I mean, she probably wasn't expecting to lose that administrative job and having to go to the gym job, right? So life always throws things at us, so you want to make sure you got a strategy and a plan in place before you pull the trigger and go moving, or retiring, or whatever the case is, especially if you're getting close to it, especially again, 60, 62, that kind of thing.
 
So as always, if you got questions, need some help, reach out to the guys. If her story sounds anything like something like you're facing or could be facing, make sure you take the action now and start talking with qualified professionals and see, just sit down, have a conversation. They're complimentary often. Most places do that, just to kind of see if they can help you out and if it's going to be a good fit. So reach out to the guys, have a 15-minute chat, pfgprivatewealth.com. That's pfgprivatewealth.com or call 813-286-7776. And that's going to do it this week for Retirement Planning Redefined for John and Nick. I'm your host, Mark. We'll see you next time here on the podcast. Don't forget to hit that subscribe button. We'll catch you later.

What Is The Mega Backdoor Roth?

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: info@pfgprivatewealth.com
 
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. There's not a huge percent of the population that has, number one, the ability to do this in the plan, but also the cashflow to do it.
 
Marc:
Gotcha.
 
Nick:
But for those that do, it can be a massive, massive edge on what they're trying to accomplish.
 
Marc:
Yeah. Well, especially with that aggregate number, right? So the rules, they're not as genus or generous, I should say, I guess as they are.
 
John:
Yeah, exactly. They won't let us take advantage of too much stuff. So basically it's like, hey, again, if the plan allows it, you can do more contribution, but it will be taxed when it comes out of the earnings portion of that.
 
Marc:
Okay. So to clarify, if I got this right based on Nick's example a second ago, that extra $37,000 gap, again, just to kind of recap, we had that we put in 24,500, the company did 10,500 for total of 35,000, 72 is the aggregate there. So left us with that $37,000 gap. So if I drop 37,000 of after tax into that gap, I'll get hit for taxes on all the compound interest of that growth when I pull it out, correct?
 
John:
Correct. Yes.
 
Marc:
Gotcha. Okay.
 
John:
Yeah. Which is the difference with the Roth where everything's tax-free.
 
Marc:
Yeah. So every dollar gets taxed.
 
John:
Every earning dollar gets taxed.
 
Marc:
Earning dollar. Okay. All right.
 
John:
Yeah.
 
Marc:
So this after tax contribution isn't the destination, it's just the first step, sounds like.
 
John:
Pretty much, yeah.
 
Marc:
Okay. All right. What else?
 
John:
So step two would be the actual conversion or the conversion or basically putting these funds into the Roth account, whether it's a Roth 401k or Roth IRA and we'll go over the two different ways you can do it. So that would be the next step is converting it or transferring it before there's any gains similar to what we discussed last week. Once there's gains in this after tax contribution and growth, now it's subject to taxes. So you want to do an immediate conversion or transfer to either to a Roth style bucket. I want to give an example of not converting immediately, what happens in that situation. So let’s say you do an after tax contribution of $10,000 dollars and you forget to convert it. And that $10,000 now grows to $15,000. So you have $10,000 is your cost basis, what you put into it and $5,000 is gained. So if you do the conversion after you have that gain of $5,000, your taxable income goes up by the taxable gain amount, which is the 5 grand. So you’re taxable income goes up by 5 grand, so you want to make sure you do the conversion immediately to avoid that additional tax hit from happening.
 
 
Marc:
Gotcha.
 
John:
And then once it's in that Roth bucket, basically everything is tax-free and tax-deferred, tax-free, and subject to the Roth rules.
 
Marc:
Yeah, the age rules and time rules, all that good stuff.
 
John:
Yeah.
 
Marc:
So John, can everyone do this?
 
John:
Yeah, so I'm going to give you the annoying answer of it depends, and it depends on if your 401 k has particular features to it. And one of those features are, does the 401 k allow for after tax non Roth 401 k contributions? Okay, so you have to check that, so that'd be a question to the plan administrator, HR, whoever handles it. So, if that is allowed, the next question is, can you do the conversion? And there's two ways you can do the conversion with with these 401 k plans. Option one is you do an in-service rollover and you roll the funds out to your Roth IRA, and it converts once it rolls out to your Roth IRA. Okay. Option two is you do an in-plan 401 k Roth conversion, so all the money stays within the plan.
 
Marc:
Gotcha.
 
John:
Okay, let's kind of review the in-service rollover strategy. So, while you're working, you're still employed, so that's where the in-service comes into play. What you would do is call up the provider and say, "Hey, I'd like to roll out these after-tax contribution funds to my Roth IRA. Again, outside of the plan you're rolling it out. So, when you do that, it creates the conversion when that happens. So, once it goes from the after-tax contribution in the 401 k goes to your Roth IRA. Now the funds grow as if it's a Roth IRA.
 
Marc:
Now it's Roth money, right? Okay,
 
John:
Correct. So that completes that transaction. So something to be aware of, and we talked about this last time when we talked about the back door Roth with the Roth IRA is the pro rata rule. When you do it this way, the pro rata rule applies. If you have pre-tax IRA, there's not to confuse everyone even more, but there's a formula involved. If you have pre-tax IRA money and you do the conversion this way, there is some type of formula. So, again, meet with the CPA, your financial advisor, if you're going to do this type of strategy while you have a pre-tax individual retirement account, IRA balance, okay,
 
Marc:
Geat, yeah, great disclosure there to make, make note of. So, good point there, John. What if your plan doesn't allow that?
 
John:
Yeah, so let's say you, your plan doesn't allow the in-service rollover, in-service withdrawal, whatever you want to call it, or you're not eligible to do it because you know certain plans you have to be above the age 59 and a half to do that. So, okay, recapping, your plan isn't - you're not eligible to take advantage of the in-service withdrawal slash rollover in your plan. The next thing you want to look at is, okay, does my plan allow for in-plan Roth conversions? So, that would be where everything stays within the 401 k hub, and what you're doing is you're converting the after-tax dollars right into the Roth 401 k funds. Okay, so it's pretty simple here. The money goes in after tax, and then you do the conversion within the plan, and now it shows up into your Roth 401 k balance. So, it doesn't create a taxable event, then doesn't create a taxable event, because well, let's backtrack. If you do the conversion immediately before there's any gains on the after-tax funds, it does not create a taxable event in that situation.
 
Marc:
Gotcha. Okay.
 
John:
All right. Okay. And something to note here, and I referenced the pro rata rule on if it goes to a Roth IRA within the 401 k, that pro rata rule does not apply. Okay, so that's a nice benefit of keeping it within the plan, is you don't have to worry about that formula if you have pre-tax balances.
 
Marc:
Gotcha. Okay, there's a lot to digest, for sure.
 
John:
It is. And actually, some plans I was just working with someone, and their plan actually had basically automatic conversions, so it was a feature where daily any money that hit the after-tax account would automatically convert to the Roth 401 k, so it basically could put on autopilot and not worry about it.
 
Marc:
Yeah, so it sounds like obviously these plan-specific features can provide possible green lights to do this, but you got to check that stuff.
 
John:
Yeah, exactly. And then, and just to clarify that pro rata rule, because it is confusing is if you do an implant conversion again, this is all within the 401 k plan. So you convert from after tax in the 401 k to Roth in the 401 k, and let's say you have a balance of $400,000 pre tax. The pro rata rule does not apply, you can convert it, not worry about, hey, how much do I have pre tax versus if you roll it out of the 401 k into a Roth IRA, the IRS will look into if you have any money in a pre-tax traditional IRA, and if you do, that's when the formula kicks in. Okay, so just, you know, that's an important caveat that I've seen people miss if they do conversions, and it's just important to, you know, talk to somebody, and before you execute these strategies.
 
 
Marc:
Okay. Yeah. So obviously there's a lot of nuance here, so there's a lot of things you got to be aware of. So making sure specific plan features have the green light, I guess, is one of the major steps to consider on this, Nick, right?
 
John:
One thing that we missed here, which is separate from the IRAs. So not to confuse everyone even more, when you do a conversion within a plan, there is no pro rata rule like the IRA. So it doesn't matter if you have 400,000 in your pre-tax 401 and you do a conversion, there's none of that formula there so you can do it and have no issue.
 
Marc:
Gotcha. And so circling back, Nick, you mentioned earlier, you got to check with the company, I guess, to make sure, again, we're talking about workplace plans here to make sure that they even have this green light to get this done.
 
Nick:
Yeah. Realistically, if somebody was trying to figure out the steps on navigating this, step one is contact your employer, HR department, and ask if the plan allows for non-Roth after tax contributions. That's step one. And then you kind of cascade down to the other parts or reach out to us and we can help walk you through it because all the details might make you want to cry.
 
Marc:
Right. Okay. All right. So let's say a ton of stuff here to think about, obviously a lot of stuff to process. So I guess, okay, here's a big question then. So you walk through the rules, some of the mechanics of whether you can do it. I guess the question, John, is should you? Just because you can do something as the saying goes doesn't mean you necessarily should.
 
John:
Yeah. So that really probably should be the starting point. So you don't have to go ask all these questions, see if you're eligible to come to find out, hey, I probably even shouldn't do this strategy. So if it goes back to planning, of course, can you afford to put a total of up to 72,000 potentially away into a 401 plan? If you can afford it and not have to worry about expenses and things like that, then now you should start considering it because this is a pretty risky strategy because you are locking up a lot of money subjecting it to all those IRS rules and penalties and things like that.
 
And then the other thing is, do you need the balance of having some more Roth funds, which I would say most people do where it's, do I need a good mix of pre-tax and after-tax stuff? Looking at tax brackets now versus in retirement and a lot of the other things that Nick has mentioned, he could probably jump in here and give a few more details of it.
 
Nick:
So I'll give a couple other ideal candidates as an example. So let's say that somebody is a person or a household, high-income earners, they're maxing out their 401k contributions. They don't have a lot of Roth money because their income is high enough where kids are grown, they're taking a hit from a tax perspective if they're not doing pre-tax contributions. And maybe they're saving a big chunk of money every month or every year into a non-retirement account, but they've also built up a decent balance in that account. And so they're looking for a way that they're not going to give up the deduction that they're getting up for their regular 401k contributions, but they want to develop some Roth funds and they make too much money. And so it's like, okay, check, check, check, here's a perfect place to do it. Another way, another circumstance that could make a whole lot of sense, inheritance.
 
So dependent upon the structure, if somebody inherits money from an IRA, from a non-spouse, they have 10 years to withdrawal and deplete that account. So as that money's coming out, maybe they're looking for a place to put money that can have some tax benefits for them longer term and they have more cashflow in those years of taking out those withdrawals, so that's a place that they can put it. Or somebody's double dipping on Social Security, they're still working and they're taking Social Security and they're looking for a way to deploy some of that money and put it into an account, that's another good opportunity.
 
Marc:
Gotcha.
 
Nick:
So those are all situations that could make a lot of sense and add a layer of strategy that somebody hadn't considered.
 
Marc:
So it sounds like obviously basic Roth conversions, there's some complexity there. You want to check with financial professional. The back door gets even more complicated. Then the mega backdoor gets even more complicated. So at the end of the day, to find out if this is the right strategy and fit for you, it's all about having a plan and running some numbers and getting some math put together to see what makes the most sense. Is that fair, John?
 
John:
It is, because even if you're a fit to be able to defer that amount of money, some of these rules really limit who can actually take advantage of it. Where we see it work quite a bit is solo 401k, someone owns their own company, it's just them and their spouse and they have a solo 401. Well, they can go to the provider and customize their 401 to allow this.
 
High earners at large companies where, again, don't want to get into the weeds of this, but there's 401 testing rules where it really affects smaller companies. When it's a large company, you don't see the rules affect some of those high earners because in small companies, there's testing and stuff like that. And again, it's more confusing stuff, but smaller companies, it is harder to take advantage of that if you are considered what the 401k Department of Labor considers a high earner. So great strategy if you can afford to do it and you have the flexibility with the 401k to allow you to do it's an excellent way to take advantage of the Roth benefits and maximize it.
 
Marc:
Gotcha. So at the end of the day, it comes down again to having a strategy that fits for your situation. So understanding if it's right for you, do you qualify? How do you do it? Making sure it's done properly is the important pieces of all of this. And that's why we talk often about the fact that growing and accumulating money is a little easier for DIYers to do that. A lot of us can kind of, with the technology and the resources today, can build our wealth. But it's the preservation and distribution stage, which is also known as retirement, that you certainly need some help with because the rules get very complicated. And sometimes when you pull one lever, it affects nine other things that you didn't even realize. So that's why you want to get that retirement plan redefined with John and Nick. Reach out to them at pfgprivatewealth.com. That's pfgprivatewealth.com.
 
And with that, we're going to do it for this week. So make sure you subscribe to us on Apple or Spotify so that you can check out new episodes when they come out. And of course, if you have questions around this, and you probably do, make sure you reach out to them and have a conversation. Guys, thanks for successfully blowing our brains out with this one because it's a lot of stuff to take, but it's important because a lot of these strategies out there don't get talked about as often. So good stuff. Thanks for breaking it down, John.
 
John:
Yeah, no problem. And I enjoy some of these deep dives, so look forward to doing some more of them.
 
Marc:
Yeah, for sure. Nick, thank you, my friend, for jumping in as well and helping out. It's definitely a lot to unpack for people. So I always appreciate you guys.
 
Nick:
Thanks, Marcus.
 
Marc:
And be sure to consult with your tax advisor. This can affect your federal tax rates and also state taxes if you have state income tax. We'll see you next time here on Retirement Planning Redefined with John and Nick.

Replay: Should You Gift Money While You’re Alive or Leave A Legacy?

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: info@pfgprivatewealth.com
 
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 distributions from your IRAs. Nick and I use this quite a bit. So when we're doing the fact-finding with clients, one of the main, not one of the main, but one of the questions we go through is, do you do any charitable gifting? And if they check that box, we'll typically find out what institutions and how much they're giving. And once someone hits RMD age, a great way to save on taxes is gifts directly from your IRA. So you could save quite a bit depending on how much someone's gifting. So example, we have someone that doesn't necessarily need their distribution from the IRA, and they were just taking money out of just cash flow, whether it was social security or pension, they were gifting it to their church. What we would typically do is say, "Hey, let's kind of switch this. Let's go to, let's pull out of the IRA." Let's just use number. Maybe it's 10 or 15 grand and we're going to go directly from the IRA to the charitable institution. In this example, it's a church, and you don't pay any taxes on that amount that came out.
 
Marc:
That's ideal, right? And Nick, thinking about how you, if you're a charitably minded person and talking about leaving a legacy, since this kind of rolls into this conversation, people often ask, "Well, which account should I use for what?" And John mentioned that earlier. So if you're thinking about leaving money to your kids and you've got money in a Roth, you might want to leave the kids that right? And then maybe QCD some money from the IRA over to the church, for example, because that's a tax benefit to everybody. Correct?
 
Nick:
Yeah, for sure. That makes sense. I would say to one kind of red flag, or at least something to be very aware of and had this conversation recently with a client is, while you're alive, if you're in a position to be able to gift and if you're in a position to be able to choose where you want to gift money from, avoid gifting from highly appreciated assets from the standpoint of let's say there's a property or there's a taxable brokerage account that maybe you've held 10 different stocks for 20 years and they have a substantial gain. If you gift that while alive, then the recipient, when they sell those is going to pay taxes on the gain versus if you gift it after you pass away, those investments will get a step-up in cost basis, which can save a significant amount of money from a tax perspective. So I would say where you gift from is absolutely, probably if this is something that's important to you, that's where the largest amount of strategy comes into play and doing it from the right place.
 
Marc:
Nick, any other things we missed as far as with the QCD or some of the numbers there?
 
Nick:
Yeah, one thing that we have run into is that some custodians, including the one that we use, Charles Schwab, they don't send out a specific tax document when somebody processes a qualified charitable distribution. So that's something that you want to keep records of and indicate that you've done that with your tax preparer. We've had a couple of clients where they were anticipating that they were going to receive a specific document that laid out exactly what they did, who it paid to, and that sort of thing and that was not the case. It shows the distribution via the 10-99, but they have to notify the tax preparer and usually provide some sort of documentation showing that they made that gift to a charity. So just from a best practice sort of standpoint, that's something to keep in mind.
 
Marc:
All right. All right. Good stuff guys. So as always, if you've got questions and concerns, need some help when it comes to any kind of the financial pieces, the X's and O's when it comes to retirement, you always want to check with qualified financial professionals who do this day in and day out. And John and Nick certainly do so if you need some help, reach out to them online at pfgprivatewealth.com. That's pfgprivatewealth.com and don't forget to subscribe to the podcast on Apple or Spotify or whatever podcasting app you enjoy using. You can reach out to the guys on the website. You can also call them at (813) 286-7776. And don't forget to tune in for new episodes as they come out. I appreciate the time guys. Thanks so much for being here and we'll catch you next time here on Retirement Planning, Redefined with John and Nick.
 
Get yourself a plan, get yourself a strategy. Reach out to John and Nick today at pfgprivatewealth.com, that's pfgprivatewealth.com, to get started on your situation or to tweak your situation and dive into that process with the guys. You can reach out to them at 813-286-7776. Or again, find them online at pfgprivatewealth.com. Don't forget to subscribe to us on the podcast on Apple or Spotify, or whatever platform you like using. We'll see you next time here on Retirement Planning Redefined with John and Nick.
 

What Is A Backdoor Roth IRA?

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: info@pfgprivatewealth.com
 
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.

2026 Money Updates You Can’t Ignore

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: info@pfgprivatewealth.com
 
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.

Common Retirement Myths And Why They’re Dangerous

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: info@pfgprivatewealth.com
 
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 Is Net Unrealized Appreciation (NUA)?

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: info@pfgprivatewealth.com
 
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.
 

2025 Year In Review: What Actually Mattered for Your Money

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: info@pfgprivatewealth.com
 
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 Beautiful Bill Myths Debunked

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: info@pfgprivatewealth.com
 
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." And I think people confuse the itemization and QCDs. And so I think there's a little bit different disinformation there and there is some above-the-line stuff. So just hit me with that one real quick.
 
John Teixeira:
So you can make the deductions with charitable gifting. And it's just recapping last episode, it's capped at 1,000 for single in 2,000 for couples. So you can get the standard deduction and go ahead and get these additional deductions for giving to charity without itemizing.
 
Speaker 1:
And I think for a lot of people, especially if you're making good money, they think, "Hey, I don't need the RMDs," especially for a lot of your client base. "I got to pull this RMD. I don't want to, but I have to. The government's making me. How can I maybe be charitably inclined but also be effective from a tax standpoint?" And that's where the confusion with the QCD comes in. Because you can satisfy that RMD by doing a QCD.
 
John Teixeira:
Yeah, these are... Yeah, thanks for clarifying.
 
Speaker 1:
Yeah.
 
John Teixeira:
Yeah. These are two separate things here. The QCD is its own strategy and definitely take advantage of that if you are not, it's a great way to do it. And just let's kind of recap that strategy, Although it's not part of the bill here, but what you want to do is have your... Once you're above the age of 70, you can take advantage of it and you want the check or distribution that's coming out of the retirement plan to go pre-tax, let's emphasize that pre-tax, go directly from the retirement account to the charitable institution. So it has to be check made payable to that institution. They don't need to get it directly. I have some clients that will get it mailed to their house as long as it's written out to that institution. And the example, they go to church and they feel good about actually handing the check in.
 
And full disclosure, when you're doing your taxes, I don't want to say all, but most financial institutions aren't basically telling the IRS what you did. When you do your taxes, you actually need to say, this is what you did. So the 1099 will kind of reflect a little bit of that, but you have to actually tell your CPA, "I did this." Because if you do not, you will not get that tax deduction.
 
Speaker 1:
Yeah, no, for sure. And that's why I wanted to ask you that because it does get confusion around what the tax law changes were with the above line charitable deductions or gift giving and the QCDs, so there was definitely some confusion there. So thanks for clearing that up. And again, that's the whole point, right? Anytime there's legislation, it always brings confusion. So having a good strategy, a good plan, and a good team in place to help you deal with this stuff because dealing with it every day is a lot easier than us who just only see the headlines and whatnot. So if you need some help, reach out to John and Nick, get onto the calendar at PFGPrivateWealth.com, that's PFGPrivateWealth.com and schedule some time for yourself today. And with that, guys, thanks so much for hanging out. I hope everybody has a great holiday season. Don't forget to subscribe to the podcast on Apple or Spotify or whatever podcasting app you enjoy. Retirement Planning - Redefined with John and Nick from PFG Private Wealth. We'll see you next time.