How to Avoid a MAJOR Tax Bill

All right, come with me into the future for just a minute. It's the year 2033. You're standing at your kitchen counter. You're holding a letter from your custodian that has your IRA. Your first big RMDs are due. It just hit. Your taxable income is going to double. Your Medicare premiums are going to jump. Your accountant is going to quietly just say, yeah, that's just kind of how the system works. On the news, politicians argue about why this has even happened. Everyone says, well, we should have seen this coming. But what they really mean is we didn't act in time. The truth is no one ever feels like they're living in a pre shock era until the shock has already happened. Do you remember 1978? Let me take you back, because that's one of those shock periods. 1978 is memorable not just because of the music, although I thought it was some phenomenal music, and not the gas prices. Let's talk about the tax rates. So in 1978, the top federal income tax rate was 70%. Not 30, not 40, 77 0. Which meant if you earned enough money, the government kept 70 cents of every dollar over that amount. So imagine being 62 years old in 1978. You just retired. You saved for 40 years, kind of like you have now. And then overnight, your income gets sort of seized by the tax system. Not because the market crashed, but Congress changed the rules. And you know what? The west, the worst part, 1978, people never saw it coming. Here's the lie every generation tells themselves. This time it's going to be different. Well, it won't really get that bad again. We'll see it coming. I'll have time to act. They say that they said that same thing after World War II. Tax rates hit over 90%. They said it in the 80s, they said it again in the 90s, and they're saying it now. But government only has three ways to fund massive obligations. They cut benefits, they borrow endlessly, or they raise taxes. If you're an IRA millionaire and you're listening this, you've lived long enough to know what the answer typically is. History proves that. They always choose number two. And number three, they borrow endlessly and they raise taxes. And retirees, especially IRA millionaires, you're the easiest target because your retirement income is visible, it's traceable, and it's taxable. Look, here's the brutal truth. Once you start taking money out of your ira, you're going to be exposed. Every dollar you withdraw becomes taxable income. Every year that income grows. If the market just grows, and even if the market doesn't grow, the income that you have to take out grows because the factors, the multipliers change that are based on the IRS tax code. If that's not enough, then Social Security, perhaps for some of you, is going to be taxed at a greater percentage. Some, it won't matter. You're already being taxed on it. Medicare IRMAA surcharges are certainly going to change. Your required minimum distributions are going to be coming to you every year and they grow. You're going to be forced into potentially the widow trap or the widower tax trap. And a 10 year inherited IRA rule is now in force. It's not a tax bill. It's kind of a chain reaction that happens. And even, even if tax rates never go up, the system alone can destroy retirement efficiency. Right? So here's what sets Roth conversions apart from almost every other strategy. Tax rates don't even have to rise for Roth conversions to work. So at my firm, Q3 Advisors, if you followed our channel and you've been to our webinars or you've read any of my books, you know that we've accumulated projections of over $8 billion of lifetime tax avoidance for our clients. And that assumes no future tax increases. We use the same brackets, the same laws, the same system. Why? Because the danger is not in the rates, it's in the tax structure. And when we model it correctly, the math doesn't lie. Let me give you just a real quick, real life example that I use in the webinars all the time. And this is a real client scenario. I've adjusted a little bit to make sure that, you know, the people stay private information. But they were a couple in their mid-60s. They had about a million three collectively in IRA balances. Lifestyle income was pretty stable and they were, they had a comfortable retirement. They weren't what I would call wealthy people, but they were IRA millionaire next door kind of folks. And like most people, they assumed, well, we'll just take tax distributions as we need them. I want to let the money grow, tax deferred as long as I can. Man, if I had a nickel for every time I heard somebody say that, I'd have a lot of nickels. So we mapped out what was going to happen under current law, and here's what the numbers showed. Over their lifetimes, they would take roughly $3.4 million in RMDs using the projections they felt like were reasonable for rates of return and their life Life expectancy. And based on their personal situation, they would recognize about 2.2 million in taxable income from all the other sources. So Social Security, a small pension, that kind of thing. When they both passed, their heirs would inherit an IRA still large enough to trigger an estimated $890,000 in taxes for the kids. Total family taxes, parents plus heirs, came out to $2.3 million, all under today's tax code. No rate increases assumed. Now, here's what's changed. Instead of staying in a lower tax bracket because it was most comfortable or because that's what they could get their head around, they made a strategic decision. They chose to move into higher tax brackets. Now, strategically, while they had control, they executed a disciplined multi year Roth conversion strategy. And guess what the result was? They avoided approximately $1.8 million in lifetime taxes and inherited in taxes that their kids would pay. Same laws, same rates, assumed just a different strategy. This is what most people misunderstand. They, they weren't trying to predict the future. They were escaping a dependency on it. So most IRA millionaires pictured taxes like a straight line. I'll withdraw this much, pay this much tax, repeat, do it again, year after year after year. But real taxes don't behave that way. They behave kind of like a snowball. RMDs get bigger income stacks, higher Social Security taxes raise, Medicare premiums increase, maybe a spouse dies, tax brackets all of a sudden compress, and ultimately kids inherit a tax nightmare. Each domino hits the next. And when you look up and realize it's too late, there's no way to unwind it. And Roth conversions are the only lever that breaks the chain. Most investment strategies are dependent on markets. Roth conversions are different. They're structural. Once money is in a Roth, you have no RMDs, you have no income tax on withdrawals, you have no tax bomb for your kids, you have no forced distributions, you have no dependence on politicians. And for the first time, your retirement income becomes legislatively insulated, not predicted, not hoped for, protected. And the higher your income today and the bigger your IRA balances today, the more dramatic impact do doing Roth conversions is for you. So let's go back to 1978. The people that were hurt by the tax shock of 1978 weren't uneducated. They, they weren't reckless people. They were normal, intelligent Americans who assumed stability would continue, because so far it had. Now, if you take today's tax laws back to their circumstances, you have to say history punishes that assumption. And at Q3, we don't try to predict tax policy, we remove your dependence on it. And based on thousands of real plans and over $8 billion of projected tax avoidance for our clients, even if rates never increase, Roth conversions dramatically outperform in the real world of retirement. Because when the shock hits, when the next shock hits, the only people who are going to sleep well at night are the ones who are already prepared. I hope you'll take this info. Click through to maybe get more information from some of the webinars that we've done and take it to heart. Make some bold moves while you.