Transcript:

How are you assessing whether to make tax-deferred or after-tax style retirement savings contributions? In this video, we’re going to lay out some of the criteria to help you evaluate your retirement savings decisions. Hi, I’m Hunter Brockway with Boca Retirement Strategies, here to help set you up for a successful retirement while spending more money and avoiding being killed in taxes. Warning: we’re about to embark on a conversation with a lot of double negatives and “if this, then that” scenarios. I’m going to do my best to keep this video high elevation for you. Of course, I cannot provide specific individualized advice in a video such as this.

Ever since the dawn of time, if an option exists, someone has a differing opinion on said option. Today’s debate: to Roth or not to Roth. Your CPA says to defer and get a bigger refund this year; your friend brags she never has to pay taxes again. If you put your money in one account, you can’t just check a box and make a change in how that money is categorized. So what do you choose?

The first question I ask clients is, “Do you think rates will be higher in the future?” I can plot the calculator, but if you adamantly believe that taxes will drastically change in a different direction, I’m not going to build a plan that you wouldn’t stick to. That said, I will try to bully you into taking my advice if I feel it would otherwise be a detriment to your plan. As you think about this first question, remember, current rates are set to go up in 2026 as the TCJA sunsets.

Next, will you be in a higher or lower tax bracket in the future, regardless of rates? This may be a change in income from selling a business, retiring with a portfolio that produces less income, changing jobs. Will you have more or less tax deductions? Having a business, a mortgage, kids—those things offer tax deductions that may go away in retirement.

Next up on the list: What will your money be used for? Are you using it for charitable gifting? There’s no need to pay taxes on that money; it can go to charities through a QCD or donor advised fund tax-free. You can watch our video talking about donor advised funds and QCDs by clicking on the link on the screen or below in the description.

What are your legacy goals? When we pass away, most of the time, our children are in their highest earning years. If they inherit tax-deferred money from you, they must distribute and pay taxes on that money within 10 years. This could push them into higher tax brackets and make more of your hard-earned money go to Uncle Sam.

Do you foresee yourself making large withdrawals in retirement? Maybe you don’t have a need for substantial regular income, but if you are someone who envisions taking your entire family on a vacation, which may cost $30,000, it would be heck of a lot nicer to not have to also pay taxes on that one-time withdrawal. On a not so fun note, what if you have a medical emergency and need to take a withdrawal—a large sum of money plus pay taxes on that withdraw? Talk about salt in the wound. Roth withdrawals can help in avoiding Medicare and Social Security taxes. Remember, Social Security is always taxable, and Medicare IRMA brackets are waterfalls. This creates a tax torpedo event. You can check the description below for our videos on IRMA brackets and Social Security facts.

Moving up, how long will your money be growing tax-deferred? Deferring today may feel good, but if it grows for decades tax-deferred, Uncle Sam will be taking that much more in the future, plus possible tax bracket increases. You may want to consider biting the bullet and paying today.

Do you foresee any low-income years to convert tax-deferred dollars to Roth dollars, i.e., between retiring and claiming Social Security, between jobs, between selling businesses? Then you may want to defer now and convert later. Are you concerned about avoiding taking RMDs? Roths have no RMDs. Will you face other sources of taxable income in retirement and want to avoid compounding taxable income? Then a Roth may be for you.

Might you live and work in a state that has income tax but retire in a state with no income taxes? Then you may want to defer now and convert or pay later. We can do tax projections, and we can calculate until we’re blue in the face, and we do, but like other scenarios and retirement planning, at times the decision is more than math. Life happens, and things change. Maybe, whether fortunately or unfortunately, you come into a large sum of money, and it throws the plan you’re currently on out. Having a 10-year tax mark plan in place that helps you sleep at night is the goal.

Take action, evaluate this list, create a 10-year tax plan to include retirement contributions, withdrawals

, conversions, estimated tax payments, other sources of retirement income, residency, tax credits, and deductions. I’m Hunter Brockway, founder of Boca Retirement Strategies. If you’d like an individualized plan incorporating forward-looking tax strategies, you can book a no-cost, no-obligation call on our website at BocaRetirement.com or email us at contact@BocaRetirement.com. We are based in South Florida, Western Massachusetts, and work with clients scattered throughout the US. Enjoy your successful retirement, and thank you for watching. Bye.