Roth Conversion Secrets: Maximizing Your Retirement Savings feat. Craig Wear

Hello, future billionaires. Welcome back to another episode. Today we have a really fun guest, Craig Weir, and we're talking all about Roth conversions. So this is something I'm sure you've heard of and maybe have mixed opinions on it, but Craig has a, just a wealth of knowledge. He used to be a CFP, I think for 20 or 30 years. He was a financial planner. He was in the traditional financial system, and he kind of left that a little while ago and then just went specifically into this, this niche and has found some really cool ways to save investors money. So he calls them the IRA millionaires and those that have, you know, $1 million plus in their IRAs. This is something you need to be listening to and hear because he, he says he has saved over $850 million in taxes for his clients. So definitely a cool conversation, something I think is very relevant for a lot of our listeners. Hope you enjoy it. And I always appreciate your feedback and reviews and sharing this, this podcast with your friends and family. Thanks so much. This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and interview successful investors. Looking for passive investments done for you? With Aspen Funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, we do all the work for you, making sure your money is working hard for you in alternative investments. In fact, our team invests alongside you in every deal, so our interests are aligned. We focus on macro-driven alternative investments so your portfolio is best positioned for this economic environment. Get started and download your free economic report today. We are joined by Craig Weir. And very excited to have this conversation. So Craig has created expertise in Roth conversions and through his company and his program and his, all the secrets he teaches his clients, he has collectively saved, they're estimating at least $850 million in taxes over the past several years. So that's a big number. And that's something that a lot of people would love to do less of, which is pay taxes. And Right as we're sitting here recording this episode, it's about a week before you got to pay the piper. So Craig has written a few books, one called Paying the Piper. Look at that little nugget there. And Roth Conversion Secrets is his latest book and teaching people how to do these conversions. So this is something I'm very interested in and I know our listeners are going to get a lot of value out of. So, Craig, welcome to the show.

Hey, man, I'm glad to be here. I've been looking forward to getting to visit with you. So thanks for having me on. Hopefully we'll be able to disseminate some good info for folks.

Oh, I know we will. And before we dive into it, you know, give, give a little bit of background on you and color. I think it's, it's kind of fun. You got to give the nugget that you're kind of living the nomadic lifestyle in your RV. I just think that's, that's so fun. Talk a little bit about, about that.

Well, yeah, we're homeless and jobless, as I like to say, right? Yeah. No, I kind of had the traditional Oh, independent financial advisor experience for 35 years and sold that practice actually about 6 years ago to a guy that was kind of number 2 seat. And just thought we would just kind of go off into the sunset. We bought this great big bus, decided to sell the house and most of our belongings and, you know, retirement at 55, it wasn't all it was cut out to be, right? It was, went out and did some things and realized I need to get back to work. So I had this little outline of a book in my mind that of principles that we've used with clients for probably a decade. And I thought, well, heck, let's just do something with that. And that's kind of the seed that started all kinds of stuff. We, you know, we wrote the book, then we did a few little ads and all of a sudden it blew up and now we got this big staff and CFPs all over the country that are helping people and it's, it's, it's, it's been a tiger by the tail, man. It's been a lot of fun.

That's awesome.

That's so cool. So these are, these are kind of tactics and tools that you use when you were a financial advisor, but now you've kind of created a system and a program that other financial advisors are leveraging for their clients. So talk a little bit about how you've set up your business now.

Well, you know, for the most part, we just go direct to the consumer. We do have a wholesale network that we're developing of other advisors and CPAs because we found that We've kind of developed a specialty niche, you know, and you guys have been around the financial industry long enough to realize that there aren't many of us that have specialized. Most everybody is really kind of a generalist and they'll do whatever they, whatever the client really needs them to do. So I like to draw off kind of an analogy of we're, we're just very specialized. We do one thing, we do it really well. We believe we do it better than anybody else in the nation does it. But we're just really good at helping people really maximize or optimize their retirement assets and minimize the amount of taxes that they pay off of those for the rest of their life. So that's kind of our deal. We have a— it's technically, we have to be a registered investment advisor to be able to offer advice in those areas, but we don't sell products. We don't produce products. We don't want to manage people's money. We just want to help them with good old-fashioned blocking and tackling.

That's great. So you got, you got one, one tool in the tool chest, but it's a really good tool.

You're really good at using it.

Yeah.

It's worked really well for us. You know, it's, it worked really well and, you know, our clients are seeing some really great results and, um, we're just, we're, we're having a lot of fun educating people that there's a right way to get Roth, to do Roth conversions. And then there's, every other one that really leaves, I mean, easily leaves $1 million at the doorstep of the IRS. You know, our typical demographic that we write that we believe really can benefit from Roth conversions are what I call an IRA millionaire. So there are the men and women that have worked for quite a long time. They save really well and they wake up one day and they don't have, some of them don't even have a clue what is about to happen to them once they start withdrawing money out of those accounts. We just try to help them to see it a little bit more clearly.

So take a step back and kind of help explain the framework of, you know, the retirement landscape. So for those that maybe are less familiar with what a Roth IRA is and how it compares to a traditional IRA, 401, just lay the landscape a little bit and then talk a little bit about the problems you see. To your point of people don't realize some of these RMDs, they don't realize some of these other issues down the road. That they're not really ready for and are actually leaving a lot on the table. So just kind of set the stage for us here.

Yeah. So that's a really good question. So, you know, in the IRA, most people work a lifetime and they do the typical 401, or if they're a teacher, a 403 plan, it's whatever the company retirement plan is. They put their money away, the company puts some matching in there, they leave it alone, and they wake up one day and and they got a million bucks in there or more, and they're going, wow, this is great. And a lot of them don't really need that money. We found that a lot of people know, there certainly are a lot of folks out there that they need it immediately and they start withdrawing money and a significant amount of money out of it. And they're probably not good candidates for Roth conversions, but the people that we visit with are folks that they have other income. They got a pension, they got Social Security, and they're just not going to need that need the IRA for anything other than just the big stuff in life. The problem is at some point you have to, as you said, you got to pay the piper. And that happens anytime you reach into that IRA and you pull it out, you got taxes to pay. And if you don't need it and you end up to age 72 or 3 or 5, you know, with this new law, depending on how old you are is when you have to, when you're forced to take it out. So when that happens and you have those required minimum distributions, Now, all of a sudden you have to have it. You have to take it and it's all taxable. So the problem that it creates is, let's say you got a million bucks when you retire and you leave it alone and you get to 73 years old and that $1 million becomes $2 million. This is like, this is the classic story. This was Mr., my Mr. Leonard story. This is the first guy that came into me with this problem. He retired from the oil company at age 60, at 72, he came into me, as we say in the South, madder than a wet hen, because now he had had to take $80,000 out of taxable income per year. Per year. That was his first year. And he's like, okay, I get it, but I don't need the money. I said, well, Mr. Lynn, I'm sorry, but that's kind of the deal you made. Now it's just time to pay the piper. That's all I knew as a financial advisor. Right.

So just to fill in one, one little gap here, and this is, again, this is super basic, but that's kind of where I'm at with this whole world. So the, the, the reason the person all through their career contributed to a traditional IRA or 401 program was to get a tax deduction, right? So they reduced their taxable income by that amount, plus to get the return based on the employer's match. And there's really not much time and energy spent on what vehicles that money's invested in. But all of a sudden at the end of the, at the end of the day, you've got this big pile. It's grown to $2 million. And now the pay the piper piece is, well, you didn't, you got a tax deduction all those years. Now it's time to start taxing you as you pull that money out. Is that correct?

That's right. Yeah, that's right. And all of a sudden that's the first domino though, Jim, because the next domino is for a lot of people that now causes 85% of their Social Security to be taxed. And in addition to that, now they go to a new, what's called an IRMAA bracket where, you know, Medicare Part B and Part D are income-based premiums. It's now all of a sudden, instead of $167 a month, they're at $500 a month for each one of them. You know that, you know, that story.

Now we're close to $700 each. And I'm, you know, looking forward to getting on Medicare. It's like, oh, this is going to be great. This stuff is cheap. And it, Covers almost everything. I didn't know that much about IRMAA. Well, I'm in my best, I'm at 66 years old. I'm in my best earning years ever. So I'm just getting hosed big time.

But anyway, go ahead. Well, so the way, but the way that comes full cycle for people who've got these massive IRAs out there is that the only, I mean, to your point, Jim, what they did right was they saved taxes their whole life. So the, I like to tell people, look, That's a great habit. You did great at it. You probably saved taxes at a higher marginal bracket during your life than it's going to cost you to do what we're talking about on a marginal basis, because tax rates today are at 50-year lows. So the only way to accomplish that is you have to take control over when you pay the taxes. You have to determine, you have to decide on your terms. What rate you're going to pay, what tax rates you're going to pay, and you got to get after it. And you do that by converting money from the IRA to a Roth IRA. And some people think, well, I make, I make too much money. I can't make a contribution. Right. But we're not talking about a contribution. We're talking about a conversion. And the IRS today says you can convert unlimited dollar amount every year you want to from your IRA to your Roth IRA, as long as you're willing to pay the tax. And that one last little sentence is what keeps most people from accomplishing millions of dollars of tax avoidance over their life is because they still are in the mindset of avoiding the tax. There comes a point in time in your life where you have to transition your tactic and you have to choose to pay tax now so that you don't pay an incredible amount of tax later when the RMDs start coming out. That makes sense. That kind of fill in some gaps.

Yeah. And just to kind of add a couple, a little bit more color. So just for those that are less familiar with some of the verbiage. So you have your traditional 401 and that's to your point, tax deferral. So you're getting a tax deduction now, but you're deferring when you actually have to pay the piper till, uh, till down the road. And then a Roth, you, uh, basically can grow tax-free. So if you're contributing to a Roth forever, You're contributing to a Roth. You have a set amount that you can contribute every year and you don't get a tax deduction for doing that in the year you contribute. But down the road, if that, as that grows, that's tax-free. What you're saying is maybe you're too high of an income earner because there's limits on how much you can convert or contribute to a Roth, but you can convert an unlimited amount into Roth from a traditional. So talk a little bit about some of the mechanics, maybe use some, just some simple numbers so we can just get a grasp, you know, while we're listening here. To understand the impact of this, right? So you're making the point, hey, you can kind of just put your head in the sand and wait till you're required to pay these required minimum distributions, and now it's time to pay the tax bill. Or you can be a little more proactive with it, plan on how much taxes you're going to pay based on— you kind of time it too. I'm assuming there's some, probably some unique ways to time it if your income fluctuates year by year, right? And so there's different ways you can manipulated this, but talk a little bit of just some kind of some, a case study or something.

Okay. So, wow. I could, we could be here for like hours on case studies, right?

But simple one that so—

would understand. Yeah. So here's the basics. So, and I'm coming out of memory, so let's just, you know, gimme a little bit of grace on the numbers, but I, I had a, a couple clients. I use this in some of our webinars. These people had about $1.5 million. They're in their mid-60s. They just retired. So Jim, they were about your age. They'd finally hung it up at about $1.5 million between them and two 401 accounts. And let's assume they said, we're going to earn about 6% a year for the rest of our life on average out of our investments. Let's just pick that number, right? That the number is, it's not irrelevant, but for what our point is, it's not That big of a deal.

I'll just, I'll just throw in, they need to come see us if that's really their goal. But anyway, go with this.

You'd be surprised. You'd be surprised how many people will tell me 4 or 5 or 6% is all they've been getting. So we need to have them come see you. Yeah. So they'll, they'll do the, they'll have the $1.5 million and they're in their mid-60s. And they said to me, look, we can live off our Social Security. We don't need any of the money out of the IRA. We're going to leave it alone.

Cool.

So they're living off of Social Security of, we'll call it $80,000 a year. That money at 65 is going to continue to grow tax-deferred. And they're, they're living large. They're only got, they only have their Social Security. By the time they have their standard deductions, they are paying hardly any tax. They just retired. They're thinking life is great. It's, it's phenomenal. It's good. We got all this money. Let's go have some fun. But the projections show that if they do that, What's going to happen is when they, when they start taking required minimum distributions—

can you explain that real quick, Craig, just for those that don't know what RMDs are?

So the IRS says you can leave it deferred as long as you want to until you reach a certain age. And we want to make sure we get our cut before you die. And in fact, they published this table and it's a standard table that has this percentage of an amount that you have to distribute each year. And the way that table works is they assume that every year you get older, you're one year closer to dying. And so they want a little bit more money each year. So the percentage of how much you have to take out goes up each year. So you start at a good number is around 4% of whatever the balance is the year before is what you have to pull out the first year.

But with the magic age, is that a set age when you have to start taking the distribution?

Well, they, with the new SECURE Act 2.0, it changed, but it could be either age 72, 73. Or for folks that are listening that are 64 and under, it's age 75 for them. Okay. So let's say it's 4% the first year and rein me in if I get off track here on the question, but if they got $2 million sitting there down the road and it's a 4% number the first year, they got to pull out $80,000. Well, this particular couple, by the time they had to take their first RMD, it was just a little bit south. Of $100,000 is what they had to take. But remember, they told me two sentences before, they can live just fine off of their Social Security. So the, so the real, the, the magic question then is, what would you do this year if another $100,000 came into your tax return? Choke is the answer, right? Well, remember next year, as long as your accounts don't crash, You have to take out more than the prior year and then again more. So it's like every 5 years that amount increases by about 25%. So we looked at their situation. We did some basic financial planning on them and we discovered that their total cumulative required minimum distributions over both of their lifetimes was going to be in excess of $3 $1,500,000 of taxable income on $1,500,000 in IRAs. That was going to generate X amount of tax because now all of a sudden the $100,000 caused their $80,000 of Social Security to be taxed at 85%. So now 85% of their Social Security is fully taxable and it's added to the required minimum distribution of $100,000. So they went from zero taxable income the year before RMDs to now $185,000 minus their standard deduction the very next year. That begin to paint a picture of how big the problem is.

Yeah, absolutely. And if you think about, I mean, I'm sure you probably have some great charts in your presentations. You do. But the law of compounding, right? Once you get to bigger numbers, you know, if you're only earning 4, 5, 6%, that's one thing. If you're earning 10 to 15%, which is very reasonable, you're compounding bigger and bigger numbers. So if you all of a sudden have to stop that and you're paying out, you know, your principal balance, you're required to, you kind of put a big wrench in the whole compounding equation, right? So it's not only just the taxable, but now it's the growth side of this. And so I'm probably stealing the punchline here, but if you kind of go back and do the Roth here, yeah. Tell us what that scenario looks like in that. With that client?

Yeah, well, you know, part of what we've done is we've developed proprietary software where we go in and we look at every, every option possible. Most people think they should stop doing the conversions at the top of their current tax bracket, which if they're, if they're what we call the IRA millionaire, that's a recipe for disaster. They won't even know it. They think they're doing great, but they're going to end up probably putting more money in tax out the door than if they accelerated it like what we teach. We go look at every tax bracket possible and shades of gray in between to try to find what is the optimal strategy for this family to do two things: avoid the most amount of tax legally over their lifetime and have the highest amount of net worth. A lot of people believe that by paying the tax upfront, they're going to have a lower net worth. And this podcast is not time to do that. It's, that's a false paradigm. They will not. All they will do is kick the can down the road and they'll just have a greater contingent tax liability for their heirs or their spouse to give to Uncle Sam later. Well, this couple, we found that, we found that optimal tax bracket for them. And for them, it meant we needed to take them up 2 full tax brackets of taxable income each year.

Now think about that through the conversion mechanism.

Yeah. You do that by taking more at the conversion.

Is that, that's a taxable event. That's right.

Yeah, that's right. That's a, that's a good piece of missing information. So when you decide to convert, you're saying, I volunteer to have more taxable income because it's going to help me and it's going to be better for me later. So now that becomes taxable income and now all the same problems exist. Your Medicare is more, your Social Security is taxed more, but for them it was a 7-year journey. And at the end of the 7 years, Jim, guess what happens to their Medicare premium? Right down to the minimum for the rest of their life. What happens to the taxability of their Social Security? Right down to zero again for the rest of their life. Now, of course, people may have large pensions and things that are going to make that not possible for them. But in total, these people were able to avoid about $1,300,000 of taxes during their life. And they put their heirs in a position of avoiding $890,000 of taxes when mom and dad left them whatever they were, whatever they were done with. That's just basic financial planning projections that we came up with.

Right. That last piece, is that because of the exemption from estate tax?

Oh, it's because, that's because a Roth IRA is never taxable to you or to your heirs.

Okay. So you could pass that on.

Okay.

Wow.

Okay. Now, so imagine, imagine if your people, if your listeners invest in your programs, we're able to get the kinds of returns that you guys do. And imagine if that was tax-free forever.

Just keep going.

Yeah.

It keeps compounding. So instead of leaving the kids with a million-dollar tax bill, they're going to leave them with this enormous amount of wealth that's totally free of any tax. And it's just a much more efficient way to invest in almost anything, but especially in things that create a really nice rate of return.

Now that's assuming that you're below the gift tax exemption limit, right? I mean, this still, this, that, those appreciated values of that Roth account, that's going to pass on to the heirs, that, that's going to be valued. That's going to be, that's going to be worth something. It's going to have a numeric value. Does that count against your estate tax gift exemption?

Oh, for sure. That's right.

Okay.

All right.

Absolutely. Yeah.

It's still $26 billion or more. That you're going to be passing on to your estate. You're not going to get around being taxed.

Okay.

I just wanted to make sure it wasn't outside of the boundaries of that. Yeah.

No, you're still going to have the inheritance tax on it. But think about if, if all of us had had parents who passed on to us a few million dollars in a Roth IRA, that's a whole lot better position than many of my clients who are settling the estates of their parents. And now they're having to deplete those estates to pay the taxes on what they inherited.

Right.

Wow.

Yeah. This, I'm assuming they're, you know, the side-by-side scenarios, not only are they paying less taxes and avoiding estate taxes to their heirs, but they're also probably passing on a lot more, right? Because you're not required to pull this money out and slow down the compound growth.

It's free to grow untethered once they've paid the Piper early, right?

So that's right.

Yeah.

And you know, a lot of the clients that we have are people that are, that have a real strong charitable intent also. So they know that during their life, they're going to make charitable contributions to their church or some 501 organization. If they have the right set of circumstances, let's say they've got $1 million sitting out in a brokerage account someplace, and they know they're going to give money over their lifetime. You can use what's called a donor advised fund, right? You can go put $500,000 that you're going to give away anyway. That becomes an immediate tax deduction of $500,000 that you can you can convert $500,000 outta your IRA that year and it costs you much tax.

Yep.

And now all that money is sitting over there in the donor advised fund and you save this enormous amount of tax. There's just, I mean, I, as you can tell, I get a little bit excited about this.

That's awesome.

Because of the impact it makes in people's lives. It's good stewardship.

The only thing I'm thinking is I think you're ticking a bunch of people off that are watching that are like probably in the middle of that. Liquidation of an estate, the tax— sorry folks, but there's always tomorrow. You know, there's no—

yeah, that's right. You know, we're fortunate in that we've, you know, we've put the time in and we've had the at-bats to really, we believe, really understand this. And we developed tools that allow us to prove that these concepts are not what we believe and they're not just ideas we have and they're not opinions we have. There's so many, CPAs and financial advisors, and that's not me against other financial advisors. That's just me saying our industry does not do a good job of getting people really educated about this. But, you know, our average client has got $1.5 million to $2.5 million in IRA assets. They're in their mid-60s, and our average client is going to save $3.2 million of taxes by getting the right Roth conversion strategy, whether we help them or anybody else does, if they get it right, there's this massive amount of tax capability there. They're also going to save $80,000 to $100,000 in Medicare premiums. And that's, Jim, that goes back to the comment where once they get the conversion process finished, boom, now the premiums go down to the minimums again for the rest of their life or whatever the lowest can be for them, right? If they got other income and they're making a lot of money, for a long time off of investments or whatever, there's nothing anybody can do about that. But for most people out there, they're going to save a lot of money in that regard too. The challenge in all this, guys, is not does the concept work? The challenge isn't that they have the, that this is going to have an impact in their retirement. The people we're talking to are people that are going to have their retirement's going to be just fine. Whether they do the Roth conversions or not. We're talking about, to your word, Jim, it's really good stewardship. It's really, how do I utilize the things that our government has given us to do legally to create the most benefit for myself, my family, and the causes and the people that I care about the most? Now, if the people you care about the most is the federal government, do nothing. Oh yeah. Love those things. They're going to be a great inheritor of your money.

Yeah. Talk about good stewards, huh?

Yeah.

Right, right. Yeah. I feel like the biggest challenge here honestly is just the counter-intuitiveness of choosing to pay taxes, right? Because you're taught and your natural inclination is to want to avoid, avoid, avoid. But to your point, you're not getting out of it, right? And eventually it's going to, be an issue. And if you can be proactive about it and plan out, you know, that's probably the bigger issue is convincing people that this is the right thing to do. Like, what are the things you have? Obviously Roth conversion secrets. What other secrets can you tell us without giving away the whole book that obviously we'll talk about at the end here that you're going to give away to our listeners? But you know, what are the things you find is just, you know, the kind of secrets in doing this?

You know, we have a lot of people who connect with us that have questions. You know, they push back on my premise and we get a lot of, we get several CPAs who call in. We got the engineers that got all the spreadsheets and they love doing their own math and they do their numbers and God bless them. I mean, we love to take questions from them. For that group of people, I mean, most of the people that are probably listening in on these podcasts are folks that they value the input of other people who've already kind of been through the woods and they want They want professional input. And, but there's the others out there that love to do their own stuff and that's great. So here's my biggest tidbit to those people. You have blinders probably on the spreadsheets that you've created. You have built-in things that you don't even, you're not even aware of. You haven't even done the math on a 32% tax bracket. You haven't done the math on a 35% tax bracket. You haven't done the math on what if I did $1 million this year and $1 million next year. You don't, or you want to limit yourself. Your spreadsheet is built on, I can't go to the next, I'll only go to this Social Security, Medicare threshold. I won't go to this one. And I'll tell you that, that tax paradise happens when you go beyond what your self-limiting beliefs are. You only get the big benefits when you assume that you know nothing about this and you just have to do the math on everything possible, then you find incredible things can happen for you. But when you listen to the media, when you listen to most of the financial professionals who aren't educated about this, and we're— the more you get to know me, you'll realize I'm not the sharpest tack in the box. We just do one thing really, really well. So we don't profess to have any greater acumen than anybody else. We've just done the math. And the beauty happens in Roth conversions when you cast off the restraints that are thrown on you by the media and by the typical financial industry mantra. And you go explore for yourself what's best for you.

It sounds like it's like most things in life when, you know, you could talk yourself out of it using generalities, but when you drill down and get specific and start running the numbers in different scenarios. It's like, that's, it's mathematics at the end of the day, right? It's based on some assumptions, a set of assumptions. Then you change the assumptions, say, what if this, and you run the mathematics again. And, and, and you, you know, so it's, it's a, it sounds like it's probably a very personalized custom, custom thing for each individual. Am I right about that? And in terms of like when to make these conversions, I can see that being a pretty elegant decision every year, you know?

Yeah, it is. And of course, you know, that's why I had to go spend a whole lot of money developing software that helped make those elegant decisions for people. It's very unique and it's very specific. You have to, you have to first of all answer the question, how much of my total should I convert? Then you have to answer the question, how much every year of that should I convert? And what is the optimal tax bracket that I should do that at so that I get those two things, the maximum tax avoidance and the highest amount of net worth. And what throws most people is when they realize that they have to dig into their pocket and pay some taxes sooner than what they're used to doing. But that's where the beauty starts to happen. Yeah.

It feels counterintuitive to go to have maximum tax avoidance when you're paying taxes. Right. So it's, but you're looking over a long period of time, you know, this is what you will pay, you know, based on pretty basic math assumptions, you know, but if If you do it now, you know, it's, you're going to save a lot of that.

And if you have an opportunity, you know, to make a large contribution or set up that donor advised fund, something you're planning to do anyway, well, hey, coordinate that with, you know, okay, we're going to convert that amount and wash that, you know, wash that deduction or let that deduction wash that tax away anyway. It just, you know, it's kind of, hey, let me ask you a question, Craig. Is there any, noise out there threatening to terminate the conversion factor, or is that, is that even on the table anywhere? Because it seems like most anything that's good these days is on the chopping block.

Is that— actually, no, to the contrary, Jim. I mean, SECURE Act 2.0 actually had several provisions in it that really gave a head nod to Roth 401s and Roth conversions. They've strengthened the Roth account. They've made it to where they're encouraging employers to do matching contributions to Roths. They've done it to where you can, I mean, you can, if your company has a Roth 401, you can put like $26,000 into that account every year. So there are actually, to the contrary, there's a lot of things going on legislatively that have proven this is not going to go away tomorrow. This, they, I mean, think about it. What does the government need more than anything right now? Revenue. Where do they get revenue from? Income taxes. So what, what they're encouraging is for people to get these conversions done because it, it opens the coffers. It brings the money in. Well, my attitude is, hey, if it's their law and it saved my client a couple million bucks, baby, let's roll.

Let's take advantage of it. Yeah, that makes sense. Yeah. Maybe a little short-sighted in it because they're, uh, keep printing all this money and need to compensate on the other side of it. I have a couple kind of specific questions. So kind of two ends of the spectrum. So for someone that's younger, you know, kind of my age, who's planning on working for, you know, a long time, does it make sense? You know, I mean, like a few more years, but does it make sense to, you know, if I have a 401 or traditional IRA to convert now, or should I continue to defer, defer, defer? Until kind of that, you know, later age bracket and then convert. Is there any, you know, what's kind of your perspective there? Obviously they're speaking generalities, so I'm not holding you to tax advice, but just how do you think about that for someone that's younger?

Convert now. Convert as fast as you can and as much as you can and never put another dime into a tax-deferred account unless somebody else is putting another dime with you.

And what's your rationale behind that?

I've just done the math. You take that compound, you pay a little bit of tax today on your seed and you let that grow forever, totally tax-free, and you continue to fund that seed with more tax-free money.

Whew.

I mean, yeah.

Let me ask you this, Ben. Where do you think tax rates are going to be 10 years from now or 15 years from now? Are they going to be lower than today or higher?

Yeah, great question. Probably higher. So converting is probably a call option on higher tax rates down the road, right?

Yeah. And then you can go invest in atypical ways to get atypical types of returns and benefits in a way that we're talking about. We're talking about generational types of wealth that you can create. And you're talking about, I mean, imagine being an old guy like Jim and I sitting here with millions of dollars sitting that's totally tax-free forever. You want to go do something good for humanity, you stroke a check. You don't have to worry about the taxes. You want to pay for your grandkids' education, you stroke a check. You don't have to worry about the taxes. You want to buy something nice for your family or for your, or a second home, you stroke a check. You don't have to worry about— I can't tell you how many of my clients over the years before I discovered this would not buy the new pickup truck, the second home, the vacation for the entire family, because when it came down to me making the distribution from their IRA to pay for it, I asked them, how do you want to handle the taxes? And they bought.

Wow.

Yeah. And so at your age, dude, man.

So going back to Ben's, so look back to Ben's young age, that sort of thing. So the seemingly huge value of getting a deduction against what to Ben seems probably right now it is a high marginal tax bracket that is The benefit there, it's a real benefit, but compared to the benefit of untethered growth and compounded growth of a lower amount of— let, okay, I'm going to take some of your seed from you right now, but then you can plant that in the most fertile soil and let it just go hog wild for the rest of your life and beyond. And it'll never get taxed again. To me, I mean, just even intuitively, that seems like a way bigger driver of value than getting the tax deduction. Cause darn it, I'm in a 37% tax bracket. You know, it is counterintuitive. It really seems like, you know, the thing to do would be to go the traditional when you're in your high tax earning years. But actually the earning capacity of that capital left, you know, unhindered for decades is wildly more significant than that short-term.

Yeah. And if all you do is leave the money tax-deferred, I mean, let's, let's go fast forward now, Ben. Let's say that you're 65 years old and you got $4 million in your IRA.

It will happen fast, Ben. I'm telling you.

Amen, brother. It happens. You blink an eye, right? So let's say you do really well and you got $4 million sitting in that IRA. You open up that statement and you see $4 million and you're about to retire. Does the concept of the, does the concept of how much of that belongs to Uncle Sam even occur to you?

No. Yeah, exactly.

Today it doesn't, but it will then.

Uh-huh.

It will then because that $4 million is not all your money. Maybe it comes in a wrapper with your name on it.

Yeah.

But if tax rates are just the same that they are right now, a million and a half of that is a contingent liability that you built up for Uncle Sam when you could have paid the tax on the front end and you maybe have a lower balance, but it's all your money.

Yep.

Makes sense. The math will work out. The math will work out.

I love that. On the other side of the spectrum, so say you have someone that is listening to this episode, they're already into their RMDs. They have all traditionals. Does it still make sense for them to do this? Or do you, once you kind of hit the RMD thresholds, does that lock you in? You can't do conversions or just, at a high level, is there still like options for people that are at that stage?

So there's a couple of questions and I won't go too far in the weeds, but let, let's say they're, we do a lot of conversions for people well into their 70s, but they normally begin early in their 70s or in their 60s. But if they're, if you're 75-ish, then it's worth doing the conversions if it's important to you to leave your heirs in a position where they're not going to be saddled with a big tax once you pass the money on to them. But if you're 72 or 73 and your spouse is the same age, there probably still is some significant benefits to you during your lifetime to do the conversions. If you're 72 or 73 and you've started conversions, but your spouse is a few years younger, you have to realize that you're planning for both of you and she probably is going to outlive you. If you're a guy listening to this and you're 73 and you had your first RMD, and let's say you're married to a woman who's 65 years old, they normally outlive us. I have my own theories about that, but they're going to outlive us and they're going to get the money. So you're planning for her as well. So I can't say that age is the only determiner unless you're 75-ish. And I can't tell you that it's exactly 75, but in the math we've done somewhere around 74, 75, you're not ever going to get back the benefit of the tax you paid. You're just paying it forward for your heirs.

Yeah. Yeah, that makes sense. And to your point, again, this is a very personalized discussion, right? Because you can talk generally, but it's got— you got to look at all the factors going in. So Greg, this is, this is awesome. And yeah, I'm going to go convert right now. So everything like that, but You gotta calibrate. You gotta calibrate here. So you did a little special, a little gift for our listeners here. So just clarify if I'm wrong here, but you have a book that you've written on Amazon. It runs for what, $20? And, but you're going to give us kind of the option to just pay for shipping and for our listeners, or just explain what you got going on here for us.

Yeah. Now we created a special, just kind of a website page for your listeners that you can put down in your show notes that it's Um, they can just go and we're just going to give them the book and it's a free download. It's a full color PDF. They don't have to wait on shipping. They don't have to pay shipping. They just download it. They read the book, they get the info they want. And it's just my way of saying, look, guys, go do this. Whether it's us helping you or somebody else that really can demonstrate they know what the heck they're doing. You have to get this done. We got tax rates changing in a few years. I just can't tell you how important enough that this is to not procrastinate on it. And so if a free book is what it takes to get you interested and inspired, then hey, free book on me, everybody party down.

Right. All right. Awesome. So we'll put that in the show notes for all those that like to read and want a little bit more on this. And Craig, just really appreciate you coming on and sharing, sharing some of the secrets. And I'm sure you've got more in the book that we didn't even cover. So, oh yeah, for anyone that's, that's intrigued, definitely, definitely dig into this and really appreciate you coming on, Craig.

Yes, I know.

Thank you, sir.

Well, just a final thing, cuz people may be thinking, hey, this guy's living on the road, so you're not running away from anybody here with 3-letter agencies or anything like that. This was a, this was a matter of choice.

You converted. Yeah, I did for sure. Yeah. The, it's a lifestyle choice, man. I mean, you know, we used to go into our little gated subdivision down the, down the driveway with the gate on it, close the garage door and only go to church and get to talk to people. And now we're just out, you know, enjoying life, having a great time, seeing America and meeting some really, some really cool people. Awesome.

That's awesome.

And to my knowledge, to my knowledge, nobody's looking for me, but I haven't been to the post office lately to look on the wall.

A little hard to get ahold of you, so.

That's right. So thank you guys. I appreciate the opportunity to kind of share this stuff and I hope that your, uh, the folks that listen into your podcast, I hope they take advantage of the free offer and Um, it'll be of some help to 'em, I hope.

Yes, I'm sure they will. So thank you so much.

You bet. Have a great time, guys. Thank you.