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Three important questions when planning a secure retirement

01/28/2009 - Jim Lange's Top 3 lessons for planning a secure retirement

Listen They, like Jim Lange defined three major issues in planning a secure retirement, including the importance of the safe withdrawal rate, Roth IRA conversions, and Minimum Required Distributions for the shooting of 70 02.01.

Welcome to The Money Long Hour: Where Smart Money Talks. Hosted by Beth Bershok with expert advice from Jim Lange Pittsburgh based CPA Attorney and retirement and estate planning expert. Jim Lange is also the author of Retire Secure! Later, pay taxes. To learn more about his book, his Practice, Long Financial Group, and Jim Lange as a speaker for your next event, certainly on its website paytaxeslater.com. Now get ready for smart money talk.

Beth Bershok: We talk smart money and we will have some great information for the next hour. Listen, I must say that to help me, bring you this information because it comes from an incredible source'm excited. Jim, honestly, I would like to do on some of your credentials, but the list is so long that we be here for the next hour, if we were talking just about your credentials. So let's do the Cliffs Notes version. You are a CPA, You are a lawyer and how long you have practiced in Squirrel Hill?

Jim Lange: for 30 years.

Beth Bershok: 30 years and you have a national niche. A lot of people have come to you since Roth IRA and Roth IRA conversion information, information about the country and we will be getting. They are also an author and this was a really exciting week to this office, because the second edition of your book Retire Secure! pay taxes later will come out soon. It is really going to local Bookshops on 9 be in February, that's when you find it on the area bookstores. But, it is already very good reviews. Their first was a bestseller on Amazon.com, and the number one in many categories. The second edition, all you have to tell you about some of the testimonies that come from the second edition because it is amazing.

Jim Lange: Now we have been lucky. Charles Schwab, Larry King, Ed Slott Jane Bryant Quinn and over 60 other financial advisors.

Bershok Beth: Yeah, only about 60 more. You have something, and explain. You have just created this, the Roth IRA is and explain what the institute.

Jim Lange: I think Roth IRA Conversions going to be extremely beneficial, especially for the years 2009 and 2010, the huge year for high income earners. I thought the information was so critical I actually set up a separate company for consumers and advisors to educate some of the best Roth IRA conversion strategies.

Beth Bershok: So 2009 is a busy year for you. You have the book all this national spoken and we are launching the national radio show until 2009. I want to say before I what we'll get to meet in the next hour. We become so on issues of this hour, if you have a question Feel free to call the Studio Line have is 412-333-9385. I want to mention, we have a very large, the seminar will come in a few weeks to keep everything on Roths, and in the head, while that in the next Hours we will give you some information on how you can be a part of this. So I'm going to be a number, and we are always there for people who registered, but that's in a few weeks. Well, what we will cover today evening, in the last few months have just been brutally open financially and recently Everybody Got their year-end statements. I am sure that was not a happy day in most households and I think what has happened, many people take the attitude that it really is not simply what they can do. It is from their Control, but in fact it is not true, and you have Jim Lange together a whole list of strategies - one things that you can do to protect your retirement. Explain all that started this whole list.

Jim Lange: Well, first I want to believe there are certain things that you can not control. But there are things you control, and Jason Zweig of the Wall Street Journal can give me a call and he said he wanted an article about people who do what is approaching, or People who are already retired should do proactively to ensure their retirement. I put together a list and he actually an article about a few the items from the list based. But what I thought, that what we could, as not a startup by some of the things that I think are very critical, and then hone in one or two of which, I think that perhaps the most interesting for the audience.

Beth Bershok: Ok, so let's first go through the whole list. These are things you can do really proactive steps you can take right now.

Jim Lange: Right, one of the most important things I do not hear a lot People talk, but I would say it is a cornerstone of sound financial planning is the safe withdrawal rate. Now, what does the safe withdrawal rate, is, as much money as a percentage of your portfolio you can spend each year, and within a reasonable amount of certainty, never run out of money. So let's say for Conversations sake pick a nice round number - you have a $ 500,000 portfolio and can vary depending on the age and life expectancy. Let's actually a very, very conservative safe Decrease of 4% and we can talk about the details of how on safe withdrawal rates. But basically you could by 4% of the $ 500,000 U.S. and get Only $ 20,000 a year, so you really are a lot of income from this does not always. Thus, there are a lot of people who may already be a lot higher portfolio lost say 30% or 35% or even more in the recent downturn and some of them, they actually rethink what is a reasonable amount to spend. Now of course you can add social security when you can rent one, sometimes you even consider some of your real estate. But that is one thing that I people raise, is activated as they can spending an appropriate amount of money for their portfolio. Before the downturn, I really had a lot of customers, in fact, say I had the majority of my customers spending less than the safe withdrawal rate would encourage and would actually spend more money.

Bershok Beth: Really? It was too hard! Please take more! We have a lot of other things on the list though. We spend the first to the right resources is one of your strategies for what what you can do now to give you a secure retirement, and spend the right amounts first - to be honest, it is critical.

Jim Lange: Well, what that is, we want to assume for discussion's sake that you are retired. I'm going to simplify it - you have to spend two pots of money. Money that you already driving and money that you do not have paid. So, the money that you have to pay taxes on, it could be investment, it could save. The money that you would not have the tax paid to IRA, pension plans, 401 (k) 's, 403 (b)' s. In general, subject to exceptions, it is better, the money you have already paid, spend at the wheel. So that's important to spend the right money first. The other thing that some people should consider annuitizing, and I'm not talking about a tax deferred Pension, but an immediate pension, which similar to a pension plan, and get the insurance a sum of money, and they give you a stream of revenue for the rest of your life back. Of course, one of the things that a little more questionable now is the security of the insurance company. Something that we tend to be less used to take for granted hold, but now we can not. The other thing is probably my favorite area of the proactive measures that can humans, Roth IRA conversions.

Beth Bershok: And we go to get back because it is so much information to cover in the Roth IRA conversion - there's a ton of information on this. So let's Come Back To that one because we have so much to explain with the Roth IRA conversion. Let's talk through the rest of the strategies you go talking about when you were from Jason Wall Street Journal.

Jim Lange: One of the things that I think is always the safety of your money and even though I'm actually not just talk for investment purposes, but actually for the protection of creditors and IRA and pension plan money is safer than the money outside of retirement, but there are even different levels of security in old age. An ERISA plan like a 401 (k) plan is actually safer than an IRA. Many people have IRA and what I am, I suggested some customers who actually Perhaps some self-employment income even after retirement have is their own person starting a 401 (k) plan and then have a trustee-to-trustee transfer of money from an IRA a person their 401 (k), and has several advantages, but one of the most important is to protect depositors.

Beth Bershok: And this is a new strategy?

Jim Lange: This is a completely new strategy. This is actually one I came up and the benefits are a person 401 (k) over an IRA actually two-fold. One is the security of the creditors, the idea is, you get the ERISA protection. As an example, OJ Simpson, his money is protected, as it is in an ERISA plan. From Therefore, had they multi-million dollar judgments against him, they could not be money, because in an ERISA plan. Well, I am suggesting that a lot of listeners, if it contains some kind of self-employment income, and sometimes you can even self-employment income. Maybe you have some work to your Children when they are working to help you maybe on the golf course, maybe you do something where you a little bit of income. You create your own person 401 (K), you can your IRA in a person 401 (k) has the advantage to roll the better protection of creditors. The other thing is if you can die your heirs a Roth IRA conversion make an inherited 401 (k).

Beth Bershok: the we get, because this is a very cool strategy.

Jim Lange: Very cool.

Bershok Beth: I would also say that one person 401 (k) is that your new strategy in the book. It is in the second edition of Retire Secure! which is in the local Bookshops on 9 February, but that is completely covered in a chapter of the book. OK, after a person 401 (k) You have something called rebalancing.

Jim Lange: Right, probably a major rebalancing strategy and it is counter-intuitive because we say you just lost money on the exchange. Rebalancing would that be would depend on the portfolio allocation, actually you have more money in the stock market now. It is totally illogical, but the idea is that you can buy cheap and expensive sell, that is what means to achieve rebalancing.

Beth Bershok: Would you say, rebalancing is a way the old saying, do not put all your eggs in one to lay basket, is that a similar sort of thing?

Jim Lange: That's part of it but let's just say for conversation's sake, that you have Believers in 50% stocks and 50% bonds, and what you would be able to say at the beginning of the year. Now, your bonds will be much higher in terms of percentage than your stocks. So, rebalancing would be a fraction of the money you have in bonds and put it in the stock market, which really goes right against what most people should feel comfortable.

Beth Bershok: Now we have a few points on this list, we are in just one minute. But we want to take a break, it is the Long Money Hour: Where Smart Money Talks. And by the way, if you want to live in the studio check line is 412-333-9385.

Beth Bershok: Before we get back to the Long Money Hour: Where Smart Money Talks I wanted Jim Lange, you have a personal experience with this group. So if you are too quick to want to touch that because it went well.

Jim Lange: Well, I have some responsibility for the care of my mother, and when I learned about the group, I frankly find the Idea for my own mother and Pearl is go out to her, and my mother is not exactly the easiest person for this type of service. But they got on splendidly, and it is a true professional, their experience very obvious, and they are among themselves one step at a time. We are with a few adjustments in their homes now and she is now a ride to get into the JCC, so that they can exercise a few times a week.

Bershok Beth: Oh, that's excellent. Thus, their number 412-422-0400. The Long Money Hour: Where Smart Money Talks. I'm going to recapitulate the same in this, this was a list that Jim Lange started. Jim Lange Lange Lange Financial Group in Squirrel Hill. Do I have to point out that you The Wall Street Journal, 30 times? Did I mention that because that's pretty impressive. His 30th Time was in December and he was talking to Jason Zweig, the reporter. He came with this list of things you can proactively do now to protect your retirement and that is what we have so far: Covered safe withdrawal rate of spending, the right Annuitize funds initially, Roth IRA conversion that we go to get back, because this is a big issue, are a person 401 (k), rebalancing, and this brings us to increased FDIC limits on bank accounts.

Jim Lange: Right, one of the ideas for a lot of people interested in the safety of their capital, and they want money in CD's, and they want guarantees. Even if the accounts are now at $ 250,000, the number of insured is back in the down to 100,000 to $ 1 January 2010 go. So, what I think, a have done lot of people if they want additional security is actually change the name. think So In-Trust for the account of the FDIC guarantees which I think is a very good to maximize thing for many conservative investors.

Beth Bershok: Ok, and we are continuing contributions to the pension plans. How exactly would this work? You are about people who talk to themselves in retirement. What help do you think?

Jim Lange: Well, if you are technically you can not really retired. I speak again and again to the example, where some people quote from her day job after retirement may have some type of self-employment income, and they may have pension plan to contribute. But even if you're working, and that is really critical, a lot of people think, oh man, and the market is down, I do not want to help keep to plan my retirement. And I would say the exact opposite. Now is a good time to contribute to your retirement and again we are on the Roth 401 (k talk) and the Roth 403 (b) but in general the idea of all my clients and all over the years, the most solid ones and those who (with the exception of contractors), those the really the best have done, are people who regularly have money in their retirement years through good and bad, and I can not stress how important that is. So consistently that the money taken, preferably a maximum in your retirement.

Beth Bershok: Now the last piece before we return to Roth IRA conversions. We trust an IRA beneficiary designation review. How often should one do that?

Jim Lange: It might depend on what type of plan you have. With the Tall Cascading Beneficiary Plan ...

Bershok Beth: Oh, we have not even on that Touched! This is a great too! Ok.

Jim Lange: This is great. This is would I say the most flexible real estate planning and if it is already installed, the need to review and update your wills is not that often. By traditional plan, where you have decided in advance who gets what and it can work really bad. So these types of plans should be reviewed frequently quite be.

Beth Bershok: So, how would you know if you have one of these plans. How would you know?

Jim Lange: One of the problems is a lot of people do not know what they have, they literally do not. Well hopefully the lawyer actually a letter of explanation is in English, which in the will.

Beth Bershok: What type is important.

Jim Lange: Well, it actually is. One of the things that we are in our office that we actually a letter in English telling what people declared their will.

Beth Bershok: What I'm going to guess people know that it's pretty explanatory.

Jim Long, our letters are good, but I can not tell you how many news client I get. You do not know what is in their will, and many of them have and I call it the cruelest case at all - the money goes into a B Trust, before it goes to the surviving spouse. Thus, the customer comes in as the most important thing that you Jim Long, or is this actually to another lawyer, as I will not use the traditional need to do is, I want to take you to my wife. But what makes the Lawyer to do? To set up all these trusts that will save property taxes and what happens very often and not with the exemption can be up to a situation very often are where the surviving spouse instead of unlimited access to their money, they will have the money in mutual funds, where they can receive only the income and the right to Capital for health, care and support to penetrate. So the plan is much more flexible, and that is something that should be reviewed. As a rule, the Clients that we have, who we already have that long Cascading Beneficiary Plan is finished, the reviews tend to review a strategy, be a not we must repeat to verify. If on the other side, people arrive from other law firms or other situations, and they have the traditional plan, an amount often is not good for them then we will raise Lange's Cascading Beneficiary Plan for them.

Beth Bershok: But if they do not know what they have, they should probably check out at a glance that at some point. And you know what I have to throw the office number of 412-521-2732, that the plan Your long-term survivors received all of the flexibility that is extremely important.

Jim Lange: Yes. If you are in your language, basically, it is incomprehensible and talks about maximizing the amount required marital deduction and a few things that you do not really understand. What is in effect, that is the first that $ 3,500,000 Your assets is a trust that would have limited access, your surviving spouse go. So that is a terrible thing, just think about it. When the Man and woman live together, and together they have access to all of their money. If one of them dies and the estate is less than $ 3,500,000 with one of these traditional wish, you may actually be limited to the surviving spouse, to health, care and support and income.

Beth Bershok: And at this point there is nothing what you can do about it?

Jim Lange: Well, you can do something that is not 100% kosher, but yes that is correct. The trustee is legally bound to the terms confidence to meet.

Beth Bershok: This whole plan, Lange Cascading Beneficiary Plan ™ is also part of the book, it is also retired and Secure she explains it pretty clear in Retire Secure!. So really, if you get a look at this plan I would suggest an influence of the book. The new edition will be launched in February 9th. We will take a short break. When we get back we will get in the Roth IRA and Roth IRA conversion. It's The Money Long Hour: Where Smart Money Talks.

Beth Bershok: The Long Money Hour: Where Smart Money Talks. We practiced with Jim Lange, who was in Squirrel Hill for 30 years. Literally, although nationally renowned and he has to speak nationally for years. He is a CPA and an attorney and author of Retire Secure - second edition will not forget Coming Out on 9 February. We went through this list, Jim Lange, the strategies you put together, proactive steps you can take, because really, each for the last months of nervous. These are proactive steps you take to ensure that your pension will be able to secure. The Great One, it's your favorite? The Roth IRA conversion, I guess. The Roth IRA and Roth IRA conversion, we must take steps here. So the first thing is to explain what a Roth IRA. A lot People have a traditional IRA, but there is something called the Roth IRA. What is the difference?

Jim Lange: The difference is with a Roth IRA, you have tax-free Growth where, as with a traditional IRA, you have tax-deferred growth to meet. With a traditional IRA, 401 (k), 403 (b) - all these types of pension plans work Basically the same where you provide and / or your employer contribute to old age. You get a tax deduction for or see that other ways - you do not pay Income tax. The money grows tax-deferred is you have to pay any taxes when the money continues to grow and gather. But if you, or maybe even take your family Drawing from that are going then you need to, control, or even pay your heirs have to pay for taxes on the payments. With a Roth IRA, you do not get the Income tax deduction upfront, but the money grows tax-free income. The best way I like to think is to get to the Roth IRA, you actually, if the tax-free seed will and get to reap the tax free when used with the traditional IRA, you receive a deduction for the seeds and reap but you have to pay taxes.

Beth Bershok: Now there are, as we speak the income limit. It has up to now and we'll go get that, but some people who do not currently qualify.

Jim Lange: Well, that's right. If we are simplistic, for married persons, when combined with an income above $ 166,000 they make too much money to contribute to a Roth IRA. If you make less than that depending on your age too, you can either put $ 5,000 or $ 6,000 if you are 50 or older, you can get $ 6,000 for himself stand and put your spouse, so that this money goes into a pension plan. Now is a prerequisite, you must be at least as much income from it so pensioners can not in a relationship set Roth IRA in relation deserves to have made the new, fresh money, but of course, is the really exciting Roth IRA conversions will be.

Bershok Beth: Oh, I know you love it! Roth IRA conversions you love! We will in a second, but I just want back in exactly the Roth IRA for a second, because actually when we started this a decade ago at the head of Roth IRA really. I want to tell people that you back your experience with a Decade since the first major peer reviewed article on Roth IRA said it was in a publication called the tax and the reason why this is so special, because all these very, very picky CPA's from across the country are looking for, and she read it and said, "Yes that's right, that is a good analysis.

Jim Lange: In 1997, I usually fairly rules because I do with what is actually passed ignore proposed mixed. But in 1997, when they proposed changes had allowed that Roth IRA's even more importantly for my purposes, Roth IRA conversions, I knew that would be huge and I went to the AICPA and I said, I would like the peer-reviewed article on Roth IRA conversions, and they write honestly did not understand how powerful this was and how many IRA owners could tens of thousands and hundreds of thousands his heirs, even millions of dollars better off. So we ran the numbers and I am sometimes accused of a real fan Roth - am I really in Roth IRAs! and I would really , Which is more accurate to say that I'm number one runner and I like to do objective analysis, and if we compare the benefits of the Roth IRA conversions that I have in this article and updated since then in the sequel, it's just a tremendous value of the family. So that's what I'm in, I am most purchasing power for family members and this why the Roth IRA and Roth IRA conversions work so well because of the income tax-free growth.

Beth Bershok: But we can touch us on that for a second, because of how long this can actually grow income tax free? How many generations can you go?

Jim Lange: Well, it can actually run your life and go the life of the heir to the throne that you can name. So I'll just a personal example from my life. In 1988, our office suffered a fire, we were actually on to order a pizza, never had an office in front of a restaurant! So at the 16th February I was in the street, and I'll tell you, we have a lot less than $ 100,000 in This year, because the insurance will not get through until next year. We were under $ 100,000 which is a normal limitation on how much to convert to if allowed. Now dared we convert. So my wife and I were together at the time $ 250,000 in traditional pension plans. She's a smart lady, she has a master's degree in electrical engineering and although a little conservative, we went through the numbers and I showed her and she agreed, yes, we want to make a Roth IRA conversion. The original purpose of Roth IRA conversion for us was in a position to be income tax-free, that growth will have on $ 250,000 that we probably later, after we open up in retirement. Now it turns out, hopefully if things go well it could have enough money for us to live in comfort, without that money to go to. If this is the case, it is possible that instead of taking us out of the money and remember with Roth IRA and Roth IRA conversions, there is no minimum required distributions. The money could go for our daughter. Now is our Daughter was three years ago we had time, I think 42nd

Beth Bershok: So, now all just chalked that - it has only the math real quick.

Jim Lange: Anyway, our daughter could end up getting the money so that we could end with tax-free growth for our daughter's life, and if they up their lives in 80 or 90 years we can have the money years ago. Well, in the event that she has children and they do not need or want is a part of this money and this money to their children, we could at the end of 120 years of income tax-free growth.

Beth Bershok: This is unbelievable.

Jim Lange: Well, could not get all that for many years, because we have a bit of an older parent and we have a small child, but even if you're only a generation older one still often 50 years.

Beth Bershok: And the heirs do not have to pay taxes, they pay in advance?

Jim Lange: No, it is literally an income tax exempt dynasty. Not that many people really understand how powerful this is and in a few minutes I hope I in the ...

Beth Bershok: Oh do not worry, we will get the conversions.

Jim Long: ... to the Roth IRA conversions.

Bershok Beth: Yeah. It's The Money Long Hour: Where Smart Money Talks. This is Jim Lange, CPA, attorney and author of Retire Secure!, Practice in Squirrel Hill. I like to give a Studio Line for you because if you have questions we are looking forward to taking this 412-333-9385, if you have a question today Evening we here until 08.00 clock, so you can have phone 412-333-9385. Ok, I know your dying to do so. So let's go to the Roth IRA conversion and the big news is 2010.

Jim Lange: The big news is 2010 and the reason is that a lot of people, especially people who set last gross income of more than $ 100,000. So basically allows high income earners have never been, Roth IRA conversions do today. So I have friends who work for example with the very customers high-income and Roth IRA conversions are not even on the radar, they are not even thinking about it, it is not even something that is in their paradigm, and if they do not Wake will really miss her what could be a fabulous opportunity, because in 2010 all restrictions on the profits go away. So, regardless of your income you can use a Roth IRA and the conversion issue to convert and when to convert, how much is still something that people face, but the fact that the possibility of a Roth IRA must make change - the figures are staggering. For example, even if you say to convert a relatively small amount, $ 100,000, the customer even in 20 years, more than $ 40,000 better off with a bunch of assumptions that I will not be obtained. Your children can be better, perhaps even $ 1,000,000 and the Grand-children, several million dollars more could be next.

Beth Bershok: Are these in today's dollars?

Jim Lange: In today's dollars it is not quite as much. On the other hand, the grand-child feel better by $ 450,000 in today's dollars, if Grandma or Grandpa makes a $ 100,000 Roth IRA conversion, and for some people, may well over $ 100,000 have the numbers that are much longer. The other thing that's really powerful in the About the Roth IRA conversions, contrast to life insurance, life insurance could be great for your heirs, but in the meantime, you're the one paying the premiums. Roth IRA conversions are actually good for the people to them. Well, of course, there are limits, and it's not all work and you have to consider taking in tax brackets, and I do not say Roth IRA conversions that are a panacea and that everyone should be doing Roth IRA conversions. But I think that should virtually any IRA and retirement plan owners may see and examine, whether they are a good candidate for the Roth IRA conversion.

Beth Bershok: But let's just back on the modifications for a second. We talked about this one Minute, with the Roth, you must pay the taxes to the front. So, what if you do not have to pay the taxes before. I mean, let's say that you've always wanted want to do a Roth conversion, you never previously qualified, is the year 2010, the conversion to do, but you have to pay just not to the level of cash on the taxes. And what would you say?

Jim Lange: Well, it's actually relatively common. In certain professions and in fact I have a lot of customers have Sun The example would be, lets say you have a married couple, you may already know in the 40s or something similar, and they get hard-working people, and they have a mortgage, and they have car payments, they pay for their children's braces and they really pay for their children and their college hard for them to save money. But they are prudent sort of lads and ladies, and they set the plan up to retirement and the employer puts in. So today, now they are maybe 60, 70 or 80 years old. You have sometimes a lot of money in their retirement, but not very much money out of their pensions. They are not as good as a Roth IRA conversion candidates as people, money have both money and within and outside their retirement needs to make. It might even make sense, perhaps not, perhaps a small amount if you do not have the Pay money to the Treasury. It could actually end that there is no advantage at all

Beth Bershok: So really at a certain point, you have to do, has run the numbers. You have to see how much makes sense to convert if you should do it. It's all part of the plan, the Roth IRA conversion.

Jim Lange: I actually think that virtually every retirement plan and IRA owners should have a long-term IRA plan, even if you are working on. We do not even have the contribution mode, where you put lost money and you can now have a Roth 401 (k have). But I even think most people should have a long-term Roth IRA and Roth IRA conversion plan have.

Bershok Beth: I would like to give a number, because this is important. There is so much information about Roth IRA and Roth IRA conversions, and we will do a Seminar coming up on 14 February. We are currently booking for the so let me kick out the number. This number answers 24 / 7 so you really call this evening can and to get himself signed for the seminar. It's two seminars, 14 February - it's the same theme, so that you can attend either one. 9:30 to 11:30 Clock in the morning or 1.00 bis 03.00 clock clock in the afternoon. These are both Crown Plaza South, the hotel is directly across from South Hills Village. So, if you can use this number You register - it's free phone calls. Jim Long will all this information. At this point we are really only touching the surface, I'm seriously not long, because Jim register two hours Roth information in this seminar and this number is toll-free 1-800-748-1571, it is. Again, this comes up on 14 February, you must tell us if you go want the one or 13:00 a 09:30. But at least you'll have to get all this information with Jim Lange in person at this time. To register for the seminar 1-800-748-1571. We want to talk some more conversions Roth and we will do in a minute. The Long Money Hour: Where Smart Money Talks.

Beth Bershok: The Long Money Hour: Where Smart Money Talks and Jim Long, all kinds of advice are this evening on how to secure your retirement. One of these strategies includes Roth IRA conversions and we have a lot of other things that we want to cover. But I want to touch Jim Long, just for a minute or so on Roth IRA conversions, we talk about wow, how great it is, this is a great strategy, tax-free growth for generations. But there must be some kind of danger and we should to to touch that. What could possibly go wrong with a Roth conversion?

Jim Lange: Well, there actually are a few things that could go wrong. In fact, This actually happened last year. You can make a Roth IRA conversion and then decreases the underlying investments. So let's say for discussion sake of In 2008, the beginning of the year you have a $ 100,000 Roth IRA conversion and now, when we say $ 70,000 Roth IRA and you do not feel too good in it because you pay taxes on 100,000 $ Plan or a tax on a $ 100,000 and now it is paying only worth $ 70,000 or perhaps even less - that's not a wonderful feeling. The answer is, You can re-characterize or resolution of a Roth IRA conversion. So, what we do, we actually went through all the tax returns of all our customers a Roth IRA conversion in 2008 to reflect the will be informed and says Hey, you might consider undoing or re-characterization that conversion and have until 15 to October this year, after making that convert the changeover. So let's say for conversation's sake, you make a change in the year 2009 They would have until 15 October 2010, to make it back. So that's one thing to happen, that would go wrong, which is the investment tanks could. The other things that could possibly happen is that there could be a change in the tax laws. What would be really terrible for a change will be, it would be a bad decision to abolish the income tax.

Beth Bershok: Not really counting on that happening any time soon.

Jim Long: Probably not, but if we end up with a change to a valid Value Added or Sales Tax, so Roth IRA conversion would be a mistake in hindsight . Make Let me tell you something that I do not fear that a lot of other people's fear. A lot of people fear that they are going to change the law and they will say: Well, we decided that we are going to tax Roth IRA to say, after all, and many people, the villains in Washington - I remember, Social Security, we will never pay taxes and we are paying tax on our social security and how we can know that they do not do the same with the Roth IRA?

Beth Bershok: I actually I have heard

Jim Lange: This is a very legitimate objection and the answer is that it was never part of the Internal Revenue code that you never pay taxes on Social Security. The legal term is dicta which does not mean that legally enforceable language politicians use. On the other Hand, is actually with the Roth IRA and Roth IRA conversions, part of the Internal Revenue Code, that this money will grow tax-free, so I'm not really over something worries. Well, what do I think is a frequent change in the tax law? Do we think that going up in the next 5, 10, 20, 50 years tax rates or come down? When her up, which is really what I would expect it to be that the benefits of conversion to be even bigger than some of the figures I've talked about.

Beth Bershok: I want to about 2010, because we are talking about 2010, the income limits are exceeded disappear, and that is a huge opportunity for wealthy taxpayers are getting to ask a conversion. How long last? The year is 2010 and '11 and '12 and on and on and more? Is there a deadline?

Jim Lange: There is no deadline, but 2010 will be a good year for a few reasons. First you really on incomes in 2011 and to detect 2012, if you choose. So let's say you make a $ 100,000 conversion in 2010. If you want, you can make a choice to $ 50,000 in to detect 2011 and $ 50,000 in 2012. It is not part of the law that encourage this ability to a Roth IRA conversion. On the other side, I think if the government begins to recognize and realize how good can that be ...

Beth Bershok: Has no one noticed that yet?

Jim Long said: The people, well maybe Barack will change when he realizes that the people to create income tax-free dynasties. The reason why I do not think it will change between now and 2010 because here billions of dollars go to the IRS and Congress to come will have access to, and it's already on the books. So he would actually reverse and I can not see either Barack or Congress now say, no, we do not want all the money that we are planning to get in the form of taxes. We will it so we do not change get the money. So I think its going to be available for us.

Beth Bershok: Can you really see a time later down the road. Say, 2012, 2013, where they reconsider Roth IRA with the income limit?

Jim Lange: I think it is very possible that we're going to change in the future have, but here's the thing. If you are in the system now then I think that the money in the system, whether it is a Roth IRA or a Roth IRA conversion or (we do not have it yet) said the Roth 401 (k) that the money will be grandfathered.

Beth Bershok: So 2010 is really an exceptionally good year, as a transformation, but you'll definitely get in on it.

Jim Lange: It is and this is especially for people who have incomes over $ 100,000. The other thing that we has not touched on.

Bershok Beth: Uh-oh! What we did not cover?

Jim Lange: It may not be on your list, but I know that there are people in our audience, 70 and older.

Beth Bershok: We should touch us on this, no, we should really. This is brand new and this really going on. They will tell you, this is a great strategy.

Jim Lange know: Many of our viewers that the required minimum distributions that People who are 70 and a half and have to take over from suspended their IRA and retirement plans for 2009, which is a big deal. So, say for talks sake, that you are in a position where you were already taking money from the IRA. You do not even particularly need the money, but you have to take the money and pay taxes them. Well, very good news you do not have the money do not take this year for 2009, you have to pay no taxes. I suspect most people who say, thank you are, I adopt a low tax year. What I say is going for many retirees in this situation, if you think about you in the lowest tax bracket, that or that you will ever ever be in your life, because now the prices are relatively low, and next year and in the coming years you're going to your required minimum Distribution, would the income be allocated to have it. By 2009 a one-year opportunity, the lowest tax rates, you have probably ever been in, that I Spells good time to a Roth IRA conversion.

Beth Bershok: But that's not what they expect when they suspect the RMD.

Jim Lange: No, I actually think that was an unintended benefit for people who use it proactively. I do not have it in the literature or anywhere, with the exception of reporters and news seen sources that have quoted me.

Beth Bershok: Actually, reports have been calling you about it.

Jim Lange: Oh yes, now it's all over the place It is in most of the magazines.

Beth Bershok: Last week you had an interview with Money Magazine. Did you know that cover suspension RMD Roth IRA conversion?

Jim Lange: Yes, we have to Money Magazine, we are dealing with Business Week, we have it with the Wall Street Journal. It is all over the place now.

Beth Bershok: Well actually we should say Clock for the March issue of Money magazine, for that is, cover that the interview that you had last week was, and it should in the March issue look like this. Unintentional, but a huge bonus for 2009.

Jim Lange: But it requires you to do something proactive. If you just sit there and do nothing, so, you have a lower tax, but do not have the opportunity to make a Roth IRA conversion at a very low tax rate.

Beth Bershok: And all these things we are here, Jim, Jim Long talk with the Long Money Hour. This is not something I do not think you should try to do on his own is - need a consultant to see. One can say, ooh that sounds like a good idea, but I think you have to have someone take a look at it.

Jim Lange: I think you do and unfortunately sometimes after people go to my seminars, if they do not come in and see either themselves or someone in the office they sometimes do something, or they misunderstand and do something, something that is not the optimal. The advantage of literally hundreds of thousands of terms, millions of dollars is so enormous compared to the level time and the amount of money you would have to pay to get this know-how. It is generally not useful to someone who knows what she is doing in getting the IRA and the Roth IRA world.

Bershok Beth: I know you want about Roth 401 (k talk) 's too, and we will do that in just a second. But I want to enter the Phone number for the Roth seminar to register again, because this is the kind of information that Jim Long will be the Roth seminar. We will do that in the February 14 Crown Plaza, directly across from South Hills Village. Two decisions, you have two options for time. It will be the same seminary 9.30 bis 11.30 clock. Second in the afternoon is 01.00 clock at 3:00 and we invite all the free concert. You can actually tonight, that number is 24 / 7 to answer it is to call 1-800-748-1571, and get registered only ensure that you tell us what time you want to participate. 1-800-748-1571. When we come back we are on Roth 401 (k touch) 's, which is something relatively new. It's The Money Long Hour: Where Smart Money Talks.

Beth Bershok: The Long Money Hour: Where Smart Money Talks. Expert advice from Jim Long and this hour will fly by, right? We are up to nine minutes, that's all we have left! We want to do Roth 401 (k) provides' s. I want to Number, because this is the studio line and we literally only 9 minutes. So if you have a question here in the end we want to squeeze be happy to take it. 412-333-9385. But a different strategy, we talk all the time, Roth IRA, Roth IRA conversions. But there is something called the Roth 401 (k), which works in a similar fashion. Explain and that it is relatively new.

Jim Lange: It is relatively new and the Roth 401 (k) you actually need two things. You need to have earned income and Need for someone that a Roth 401 (k has to be working) component to their 401 (k). So let's just for discussion's sake that you are a company work and you have to say since the 401 (K) plan for many years. They are interested in the Roth IRA, you would like to have some money to grow tax-free. The Limitations on 401 (k) 's are now, you can $ 16,500 if you or even $ 22,000, if your 50 years or older. Sometimes it would be nice, $ 22,000 have to go into a Roth 401 (k). A) must obviously be in a position to make the contribution, that would be deducted from your salary. But B) You are the employer must plan to offer. And that is the biggest downturn or why do some people can not be there because their employer does not offer it. In our company we even have 10 people, participating in our pension plan. You can choose whether their money in a traditional, 401 (K) or a Roth 401 (k's). The other thing is that they adapt to mix and - they can do a bit of each. The employer's share is always the traditional 401 (k), but the workers' share is a selection of traditional or Roth. Now, what is also true for the 403 (b) world. If you are a member of the faculty of the university or perhaps a hospital worker, or are you working for a different kind of non-profit company, You have probably had access to plan a 403 (b) you may want if your institution or employer offers Roth 403 (b) reviewing the plan. I know the University of Pittsburgh have just added a Roth 403 (b) component.

Beth Bershok: And how long has the Roth 401 (k) and Roth 403 (b) was available?

Jim Lange: It was for a number of years are available, but when it first came out it was time well thought out so many people that we do not do better because they might be reversed, and now it has become permanent.

Beth Bershok: My most important issue on the Roth 403 (k), Roth 403 (b). We Know that there are limitations for the Roth IRA income to the same restrictions in place for the Roth 401 (k).

Jim Lange: No, it is actually no restrictions on the Roth 401 (k) or Roth 403 (b) so that you could have a $ 1,000,000.

Beth Bershok: Do you mean this seriously?

Jim Lange: Yes. So many rich people, which will be one of their entries into the world of Roth.

Beth Bershok: is the main component So, do you know that will not yet believe, We have a call from Detroit.

Jim Lange: From Detroit?

Beth Bershok: And it is a question about a conversion. Hello from Detroit, how will you?

Jim [CALLER:] I'm good thanks.

Beth Bershok: And what is your name?

Jim [CALLER]: Jim, too.

Beth Bershok: Ok Jim, too. What is your question about a change?

Jim [CALLER:] I'm paid in the fortunate position where we have a lot of cash for the taxes in a conversion.

Jim Lange: This is very unusual in Detroit.

Jim [CALLER]: Yeah. We would convert to approximately $ 400,000 in 2010 and I know how you convert it to push higher and higher tax brackets. Is there a bracket that would tell you is probably not worth doing, or perhaps only with second Thought about.

Jim Lange: Well, one of the things you without knowing more could be done about your situation, you do not need the entire operation what in 2010. One of the things I do not like is for an income taxpayers only significant in relation to the income tax bracket. For example, if you have a 15% tax bracket taxpayers You probably will not want to be a Roth IRA conversion where you pay the 25% must be given. And the other thing is to do well with long-term projections to get an idea of where you are likely to get. On the other hand, if you did it in 2010 you could distribute a $ 400,000 conversion. $ 200,000 in 2011 and recognized 2012th It might be desirable to plan a small remodeling and do it every year for a number years, depending on tax bracket and make your future tax bracket, and by the way, it sounds like a long-players were, the tax brackets have your children an impact on how much you convert.

Jim [CALLER]: OK, we're 43 and we are we always start in the 33% bracket, with and it would be between this and the next bar or two and perform a conversion. Would you say that again at the 33% bracket it's worth it?

Jim Lange: Well 33% of the bracket then it will be extremely attractive and 33% of the bracket for a 43-year-old - I love a Roth IRA conversion. So everything I just said probably not apply to you, because if the top bracket is 35% and you're a taxpayer and 33% depending on what you think will happen in your financial future if you plan to probably stay with 33% of taxpayers then it might make sense to have to do the conversion of the whole thing all in 2010, because boys I love the idea of converting $ 400,000 for a 43-year-old. You are large amounts simply go to get tax free growth, and in this position, which is not open all that different from the position that I mentioned for myself already. I think it's a great thing, you really are in a wonderful position in that you already in a high tax bracket so It would be a much tougher situation if They were in the 15% and 25% tax bracket then I am hopefully going to do to progressively smaller changes, but if you already do in the 33% the right way, it of course is the number of run, but from the top of my head I like the idea, a very significant transformation.

Beth Bershok: Hey Jim, I'm going to the office number to throw to you. You are obviously listening online KQV.com

Jim [CALLER]: Yes, I have the e-mail from Jim Long and I have as the next in that seminar.

Beth Bershok: Oh wow! From Detroit?

Jim [CALLER]: Yeah

Bershok Beth: Oh, that is excellent, we would be happy to have you. Hey, we're going to have wrap around it, because our hour is suddenly gone! I am going to the office line so if you have questions about something, if you have questions about the book or seminar, that our office is 412-521-2732. We already mentioned that Jim's office in Squirrel Hill, he has been there for almost 30 years. 412-521-2732 and the seminar was that Jim where it is coming up on 14th February. Thank you for Joining us - it is the length Money Hour: Where Smart Money Talks. Thanks for all the great info, Jim, and we keep you up to date on everything going. The Long Money Hour: Where Smart Money Talks.

Jim Long, JD / CPA is a nationally known IRA, 401 (k) and Roth IRA conversion Expert. Jim's bestselling book, Retire Secure! Pay taxes later in its second edition and glowing testimonies pleased by the industry's best including Ed Slott, Natalie Choate and Bob Keebler. Ordering information received, go to www.retiresecure.com. Here you'll see information about Jim Long, Retire Secure!, And Jim's Keynote speaker availability. You can also access our treasure chest radio show archives. Download the archives of the Long Money Hour: Where Smart Money Talks. About the Author

Jim Lange, JD/CPA is a nationally-recognized IRA and Roth IRA conversion expert and the best-selling author of Retire Secure! Pay Taxes Later. For more information on Jim Lange or if you are interested in hiring Jim as your next keynote speaker, visit http://www.retiresecure.com/speakertour.php.

Detroit Stimulus Mob - Rush Limbaugh