Hello, When I was a kid all I wanted to do was play basketball. I got lucky going into high school because I was as tall as I am today when I was in eighth grade. Back then being over six feet tall going into high school was tall. A problem came up for me when the other boys kept growing in ninth and tenth grades. My playing time was diminished on varsity, and to make matters worse I had lousy hand-eye coordination.

The only thing that kept me on the team was my willingness to intentionally foul the starters in our scrimmages. Our coach wanted the starters to be able to convert shots despite being fouled. My coordination hasn’t improved much over the years. It’s a good thing I sit at a desk most days! When Mallory and I were dating, I talked her into going to one of my friend’s weddings, and somehow, she got the idea that I could dance… She hasn’t let me live that omission of facts down. So, you may understand my reservations when Mallory told me she signed me and my six-year-old daughter up for the daddy-daughter dance at her dance studio…

Apparently most other dads are awkward dancers too, because there was more standing around while little girls ran around than anything else. It worked out perfectly, and all that mattered was Amelia had a great time! Walking out of the dance, she told me she was ready to do that again right now. I got a reprieve Saturday night by not having to dance too much. And a reprieve some savers can use to prevent having to take Required Minimum Distributions (RMDs) is to continue working for the company for which you have a 401(k). If you’re still working you don’t have to take an RMD. Laws have recently changed with the passage of the SECURE Act 2.0, and the RMD age has increased to 73 and in 2033 it will increase to 75. If you were already required to begin taking RMDs, you’ll need to continue.

From the Wall Street Journal, “But savers who keep working past their RMD age and participate in their employer’s workplace 401(k) plan are allowed to delay distributions from that plan provided they haven’t begun distributions from it. And two recent retirement laws expanded eligibility for contributing to a workplace plan to include part-time workers who complete three consecutive years of service with at least 500 hours of service each year—a threshold that falls to two consecutive years beginning in 2025.”   And the Journal is echoing an idea we’ve been advocating for. “Advisers suggest using the extended career years to either create a Roth IRA or to convert a traditional account to a Roth IRA—paying taxes in the process. Either way, building a Roth with late-career earnings affords savers much more flexibility to mix and match income from taxable and tax-sheltered pots of money when they do stop working.”   The bad news about deferring taxes is that eventually the bill will come due for you or your beneficiary, and what compounds this decision is our inability to know what the tax rate will be in the future when we are taking distributions.

Please remember that if we do not use our tax-deferred accounts in our lifetimes, our beneficiary will have ten years after our death to take distributions. The withdrawals will be taxed as ordinary income, just like our paycheck from work is taxed. This may mean an increased tax bill for those who inherit our tax-deferred dollars if they are earning income also.   These are just a few of the things to consider when navigating retirement. When we are comprehensively assisting our clients, we start with learning about their unique situation, what has worked well for them, and any pain points they may have.   From there we put together a complimentary financial analysis of their situation. It plots out where the person or couple is at, their goals and objectives, and their monthly income analysis presently and in the future. Then we suggest ways to optimize what they are doing if there are any.   We’d be happy to offer you a financial analysis like this. Is it worth taking an hour and a half to two hours of time to work on the funds you may have been saving for 25 to 40 or more years? Until next week, David C. Treece, Financial Planner

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Clients Excel, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through Creative One Wealth. Creative One Wealth and Clients Excel, LLC are not affiliated companies. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional for guidance before making any purchasing decisions. Clients Excel, LLC is not affiliated with or endorsed by the U.S. Government or any governmental agency. Clients Excel, LLC has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. Published on 02.07.2024.