Retirement Planning Class Materials – Fall 2017





During our Fall 2017 Retirement Planning Today class we had a number of questions, and discussed some material that was not included in the accompanying workbook.  Below, you will find the questions and answers from our two classes.  You will also find a PDF file of the slides that were included in our class presentation, but which are not included in the workbook.


Retirement Planning Today – Fall 2017 Bonus Slides


Can you transfer a 401(k) into an existing Inherited Traditional IRA – or should they be kept separate?

These accounts should be kept separate (unless you inherited an IRA as a spouse, and then re-registered the IRA as your own).  For non-spouse beneficiaries, if you have an existing Inherited IRA, this type of account will have its own set of rules, most importantly there will be required minimum distributions each year for that account.  You cannot comingle other assets with the inherited IRA.  See the following guide from Charles Schwab titlted ‘You’ve just inherited a retirement account, now what?


If you delay Social Security until age 70 and then begin your Required Minimum Distributions at age 70 ½ – there likely be will be an increase in taxable income in that year and beyond.  Are there any strategies to manage this bump in taxable income?

 For retirees who decide to delay Social Security until age 70, their benefit will increase 8% per year above their ‘Full Retirement Age’ Benefit.  In most cases, this provides important longevity protection by ‘locking in’ the highest possible Social Security income benefit – for life. 

As it also happens, age 70 ½ is when Required Minimum Distributions begin for retirees who have IRAs or Qualified Retirement Plans.  RMD’s are generally taxable as ordinary income.

So for some retirees, these two changes in income could result in an increased tax bill. Some strategies to mange this potential situation (always consult with your tax advisor first):

  • Consider IRA Qualified Charitable Distributions with some or all of your IRA RMD. Certain qualified distributions can be excluded from your taxable income. 
  • Consider Roth IRA conversions before age 70 ½ in order to reduce the size of future IRA RMDs.
  • Consider beginning IRA distributions before age 70 ½ in order to reduce the size of future RMDs.
  • If you have a health savings account, consider a one-time rollover contribution from your IRA into the HSA (annual limit may apply) before age 65.
  • If you have appreciated employer stock in a retirement plan, consider taking advantage of Net Unrealized Appreciation (which could potentially reduce the size of your future RMDs)


What are some examples of when to typically do a Roth conversion?

 Most often, the best times to do Roth IRA conversions are when there is a reduction in income (i.e. year of retirement or ‘gap years’ after retirement but before Social Security).  If your fundamental assumption is that your current tax rate is lower than what it will be in the future (when you might need Roth IRA distributions for income) then building Roth assets through  Roth Conversions may make sense. See the graphic below from financial writer Michael Kitces who shares this thought in a great graphic format.

                           ©Michael Kitces (full article here)

Other important considerations for Roth Conversions are time (the longer the time for the Roth Conversion to grow the better) and estate planning (if you want to leave potentially tax free Roth assets to your non-charitable heirs).