Estimated read time: 6-7 minutes
Do you have an IRA or 401K?
We see families repeatedly making these same three mistakes over and over again. It costs them a small fortune. And yet these mistakes could have easily been avoided.
My name is Ryan Thacker, and I'm the co-founder of BOSS Retirement Solutions in Salt Lake City, with my brother Tyson. Over the past 15 years, we've had the opportunity to visit with thousands of families about planning for a successful retirement.
This is an open letter to the community where I was born and raised to help ensure you don't make the same mistakes.
It's frustrating to see so many Utah families repeat the same mistakes with their IRAs and 401Ks, which often causes them to lose tens of thousands – even hundreds of thousands of dollars – throughout retirement.
And no, I'm not talking about bad investment decisions.
What makes this situation even worse, is that many of these families have had trusted relationships with other financial advisors, CPAs, or tax professionals – who should have helped them prevent these mistakes in the first place.
So what are these three mistakes with your IRA and 401K?
Mistake 1: Not having a strategy to withdraw money from your IRA or 401K in retirement
Contributing money to your IRA or 401K is easy. But withdrawing this money in retirement is complicated.
Most people don't realize this, but there are many things connected to your IRA and 401K. For example, when you withdraw money from one of these accounts in retirement, you could needlessly trigger higher taxes not only with your tax-deferred account, but also with your Social Security benefits and other investment income. It could even double your Medicare premiums.
So you shouldn't withdraw $1 from your IRA or 401K until you consider the tax consequences on your other retirement savings and investments, Social Security income and your Medicare premiums.
If you simply make withdrawals without any rhyme or reason, you could needlessly overpay the government a lot of money in taxes. And they won't even thank you for it.
Mistake 2: Not planning for Required Minimum Distributions
Many good savers can go for years without touching the money in their IRAs or 401Ks in retirement.
But understand the IRS won't let you leave your money in your IRA or 401K forever.
When you reach age 73, the government forces you to start making withdrawals from your tax-deferred IRAs and 401Ks. These are called required minimum distributions, or RMDs.
These forced withdrawals happen whether you need the money or not – or whether the stock market is up or down. And you must continue to withdraw a specific percentage of this money every year until the account is 100% depleted, or you pass away – whichever comes first.
This may not seem like a big deal on the surface. But it is.
For some families these withdrawals add up to more taxable income than they earned when they were working. And if you haven't planned for these RMDs in advance, there's little you can do about writing more checks to the IRS.
Even worse, because these are required withdrawals, you may be forced to sell your investments during a downturn in the stock market, locking in investment losses and depleting your savings a lot faster than you thought possible.
Mistake 3: Missing huge potential tax savings by not converting your IRA or 401K into a Roth
Here's some good news. Fixing mistake 3 can go a long way towards eliminating mistakes 1 and 2.
A Roth conversion allows you to move money from a traditional, tax-deferred IRA or 401K to a tax-free Roth. This could turn into a windfall of tax savings in retirement.
When you convert your traditional IRA or 401K into a Roth, you do have to pay taxes on the money in this account the same tax year. This money can come from within your account or other savings.
If you believe that taxes will go up (like many economists and tax experts are predicting), you're potentially paying the taxes when they are "on sale' by converting to a Roth.
Once your money is converted to a Roth, all of the money becomes tax-free. All of your withdrawals are tax-free. Any future growth on your investments is tax-free. Plus, the money in your Roth is not subject to RMDs . So, you have much more freedom and flexibility over how and when you access that money.
The icing on the cake is that it's also easier to pass this money along to your spouse or children, without triggering a large tax burden.
Here's how BOSS could help you fix or avoid these mistakes
If all you do is have a strategy for these three things, you will be way ahead of 99% of other families. More importantly, your money could go a lot further in retirement.
If you want to make a six-figure difference to your retirement savings, you could either work a few more years and continue to speculate in the markets. Or you could implement a tax-saving strategy that could keep more of your hard-earned money in your pocket.
We can show you exactly how much money you could save in taxes when you retire, with a customized Retirement Tax-Savings Analysis. The better news… this analysis is free – even if you're not a client.
During this quick appointment, our advisor will gather some basic information from you. Next, they'll determine the tax-planning strategies that are best-suited for your specific situation. Then, they'll sit down and freely share these strategies with you, so you can see exactly how much money you could save.
This offering is especially beneficial for families who have saved at least $200,000 up to a few million for retirement.
To schedule your free, no-obligation B.O.S.S. Retirement Tax-Savings Analysis, text TAXES to 435-500-0665, or request your Retirement Tax-Savings Analysis online here.
All advisors at B.O.S.S. Retirement Solutions are held to a fiduciary standard. This means each advisor is legally required to put your financial needs before their own.
Tyson Thacker and Ryan Thacker are the CEO and President of B.O.S.S. Retirement Solutions. They are a five-time winner of Utah's Best of State Award and have six offices located throughout the Wasatch Front.
This is for illustrative purposes only, results may vary. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. BOSS submitted applications and paid application fees to be considered for the Utah Best of State for Retirement Planning awards. The award results were independently determined by the awarding organization's criteria (https://www.bestofstate.org/about.html) and the information BOSS provided in the applications. BOSS received the Utah Best of State award in 2019, 2020, 2021, 2022, and 2023. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials provided by Infinity Marketing Services.
