Jim and Chris are joined by Jake Turner to discuss listener emails in this special tax related episode covering Roth conversions after RMD age, balancing Roth versus Traditional IRA contributions, HSA versus Roth contributions, IRA reporting questions, filing deceased tax returns, and a listener PSA on tax planning software.

(11:30) A listener asks whether converting to a Roth makes sense at age 75 while currently in the 12% bracket and taking RMDs, and whether recent tax law changes create a strategy opportunity.

(20:20) George wonders whether his 30-something children should continue using Roth contributions exclusively or begin balancing with Traditional IRA contributions as their wages increase, and asks what percentage split between Traditional and Roth accounts looks reasonable in retirement.

(48:45) The guys discuss whether covering medical expenses from an HSA and contributing to a Roth IRA, or leaving the HSA intact and paying medical bills out of pocket will result in greater retirement spending flexibility.

(57:00) Jim, Chris, and Jake address whether a spouse who retired during the year is considered covered by a workplace plan, how to answer prior nondeductible IRA contribution questions, and whether Form 8606 is required after making and converting a small IRA contribution in the same year.

(1:10:30) George asks how to handle the direct deposit of a refund on a deceased final 1040, including whether to use the estate bank account with an EIN or the decedent’s existing account, and whether a paper check remains an option.

(1:15:30) A listener PSA introduces Catalyst Tax Insights, a free tool to run “what if” scenarios and estimate taxes owed without using full tax software.

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If you would rather not listen to the guys’ banter about Jacob’s upcoming move to Iowa, Jim’s garden planning, and a listener correction about the word “imbibe” you can skip ahead to (33:30).

Chris’s Summary
Jim and I are joined by Jacob Vonloh as we discuss using Buffered ETFs prompted by a Morningstar article titled “Buffer ETFs Are Not for Everyone.” We explain how defined outcome ETFs use options to provide an explicit amount of loss protection over a given period while limiting potential gains, and we outline why these products are generally suboptimal for long-term investors. We then connect this to investment positioning, focusing on risk capacity, distribution planning, and why dollars assigned to delay-period Minimum Dignity Floor and Go-Go spending may require a degree of principal protection.

Jim’s “Pithy” Summary
Chris and I are joined by Jacob Vonloh as we take a listener-submitted Morningstar article—“Buffer ETFs are not for Everyone”—and use it to kick off what is going to be a series on principal protection. Morningstar does a very good job in this article laying out what it likes about buffered products, and it also makes some excellent points on where these types of products would fit and where they don’t fit. They’re not for everybody, but they could be of interest in certain cases, in a certain application, and we’re going to share how we use them.

What I want to do in this series is broaden the conversation. Buffered ETFs are just one type of principal protected product. There are multiple tools in that category, and we’re going to walk through where they fit into distribution planning. As you transition from accumulation into what I call the Venn diagram phase, and ultimately into distribution, you have to stop thinking of your portfolio as one big portfolio and start thinking in terms of smaller portfolios—investment positions—based on assigned spending. Dollars earmarked for a legacy position can be invested aggressively. Dollars earmarked for immediate spending—like the Go-Go reserve or the reserve for your MDF—need a degree of principal protection. This ties directly into the Secure Retirement Income Process and the See Through Portfolio and how we navigate asset positioning in retirement.

Show Notes: Morningstar Buffered ETFs article

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Jim and Chris discuss listener emails on Medicare Part B decisions for retirees abroad, Social Security survivor benefit surprises, inherited Roth IRA distribution rules, and balancing Treasuries versus annuities when “safety” is more emotional than mathematical.

(6:45) A listener asks about situations where it might make sense to skip Medicare Part B, including retirees living abroad with strong foreign coverage and people who move to the U.S. later in life and must pay for Parts A and B.

(33:30) George asks why some widows and widowers don’t end up receiving the full benefit their spouse was receiving, even when the surviving spouse’s payment increases after the death.

(52:30) The guys respond to a question about whether an inherited Roth IRA requires annual distributions when the original owner was old enough to have RMDs, or whether the beneficiary can wait until year 10.

(1:11:00) Jim and Chris revisit the annuities versus Treasuries discussion through the lens of fear and peace of mind, including why someone might emotionally trust Treasuries more than insurer guarantees even if the math favors SPIAs.

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