In Mathew 16, Jesus confronted the Pharisees and Sadducees when they tried to test Him, saying that they knew how to interpret a red sky but couldn’t interpret the signs of the times. This week, Hans and Robby talk about the fear and confusion of retirement taxes. People tend to worry when their tax return is smaller than expected, while in reality, this is no cause for fear because the tax rates holistically have gone down. It’s important to know the difference between retirement policy and politics so you can plan financially and live well. Hans recently participated in a webinar with IRA expert Ed Slott and discussed the S.E.C.U.R.E. Act that recently passed in the House of Representatives. Hans says it’s crucial for financial planners to pay attention to new tax rates and plan ahead for their clients’ best interests. A single person can have an income up to $40,000 and a couple can file jointly with an income up to $78,950 to qualify for a 12% income tax. The next bracket allows a joint income up to $168,400 and a single income up to $84,200 for a 22% income tax. Robby talks about how a lot of families will find themselves in those brackets, and, instead of being afraid, should save and think about the future. You can generate more income by converting traditional IRAs or 401ks to a Roth IRA. This will allow you to pay taxes on the money going into the Roth in the spring and take advantage of the 12%, 22%, and 24% brackets. Robby says it wasn’t that long ago when the tax rate was 30% or 34%, and right now, with the low rates, there’s an opportunity to save and manage your money shrewdly. Most people had a pension and savings to prepare for retirement 30 years ago. Now pensions are less common and 401ks, tax deferred savings plans, and IRAs are popular. These accounts give the impression of big balances, but that money hasn’t been taxed yet. Because of this, there’s not as much money in those accounts as people assume. Converting this money to a Roth over several years will minimize your taxes at a lower rate. Even though you are increasing your current taxes, you’ll be saving money down the line and creating a stable retirement income. Up next, Hans and Robby talk about the S.E.C.U.R.E. Act currently being processed in the Senate. The S.E.C.U.R.E. Act stands for Setting Every Community Up for Retirement Enhancement Act 2019. The bill is intended to help people better prepare for retirement by getting them to use their IRAs. Because of this, the S.E.C.U.R.E. Act has changed the policy concerning beneficiaries. If a spouse is named beneficiary, they’ll inherit the money in an IRA with no change. But if children are named beneficiaries, they can only stretch IRA taxes over ten years instead of their life span. Hans says if the goal is to leave as much money as possible to your heir, you should meet with a retirement advisor to help minimize potential taxes. It could be that life insurance is a better alternative to an IRA. The point is, tax bracket management is the key to secure retirement planning. 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 email@example.com or calling 919-535-8261. Learn more at CardinalGuide.com.