We have been doing Finishing Well for a year! Thanks for joining us on this journey!
This week, Hans and Robby discuss IRA’s. The original idea behind money is that it is supposed to serve as a servant, for your family and for the kingdom; is your money doing this?
We can show love through our money. Just like in Matthew 25:18, God will reward those who bring back more and chastise those who dig a hole in the ground and hide their money.
IRAs were not created to accumulate money and leave it all to your children. They were created to replace the pension, which allows the postponement of taxes. There are rules and laws limiting how long you can postpone though, which comes in the form of RMDs, or required minimum distributions. There is only one way to get money out of an IRA (which is not a Roth) and not pay taxes: a QCD.
QCDs, or Qualified Charitable Distributions, are a direct transfer of IRA money to a charity, such as a Church, which satisfy RMD requirements and are tax-free. There is a max of $100,000 per year per person, but this strategy can be used with much less money.
Hans then tells a story about a client he met 5 years ago when he was turning 65. The client, John, came to Hans for a Medicare supplement, but Hans immediately began helping him plan for his required minimum distributions, which start at 70 ½. At this time, Hans set him up with an annuity funded by IRA money. He put in $170,000, and now it is worth about $213,000. While this might not seem like a great return, during these 5 years, John was guaranteed that he would never lose money. He also has guaranteed payments for life. Now, his wife and him are taking annuity payments and donating $5,000/year. This money satisfies his RMD but he does not have to take taxes out.
This annuity also has the added benefit of long term care coverage. If John or his wife needed this care, their yearly payment would double for up to 5 years to cover the cost of this care.
This can be a complicated process, do not try this at home. If everything is not in line in regards to the IRS, there could be consequences, including extra taxes.
Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on CardinalGuide.com for free!
You can contact Hans and Cardinal by emailing firstname.lastname@example.org or calling 919-535-8261. Learn more at CardinalGuide.com.