Podcast Episode 239: Mailbag – Inheritance Money, Roth Conversions & Forced Retirement

Today’s Wisdom:

Today we’re opening up the mailbag for three financial questions many people will find helpful. Join us as we discuss the requirements for withdrawing inheritance money, why a Roth conversion might make sense, and how to prepare for a forced retirement.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.


What You’ll Learn:

A big part of what we do is answer questions. They come from both client and prospective clients, and we enjoy this part of business where we work to educate and inform people that come to us.

We also try to do this on our Money Wisdom podcast as well when people send in questions for us. Today we have three good ones that most people will benefit hearing about. Joel Johnson couldn’t make this episode but we’re excited to welcome our other partner, Eric Hogarth, CFP®, onto the show today to provide answers.

The first question asks about the requirements for withdrawing money out of an IRA that you inherited. If that IRA isn’t passed from your spouse, there are rules that you need to be aware of. It used to be that someone could pull money out of the account a little at a time over a long period of time. Now, the law is you have 10 years to drain that account. You can do it in any increments you choose, but it needs to be done in 10 years because the penalty is huge. Plus, you need to think about taxes when you begin withdrawing the money because it counts towards income.

The next question came in from someone that wants to know whether they should do a Roth conversion. The first thing to clarify is that Roth IRAs grow tax-free over time and are a powerful option for people saving for retirement. With that said, what do you need to know about a conversion?

Anyone, as of right now, can convert money into a Roth. You do that by taking money from a traditional IRA and move it into a Roth IRA. By doing so, you have to pay taxes on that money when you move it over. But the reason you consider it is to pay less over the long-term. It ultimately might not be in your best interest, but you should absolutely have the conversation with your advisor to find out.

The last scenario we cover on this show is forced retirement. One of our listeners said they feel new management could make changes and push them into an early retirement. For anyone that worries about this, there are steps you can take and we are very experienced in helping people through this life change.

Joel wrote a book about this and it goes in-depth on this decision and how to approach it financially. The key is to know whether you’re in a position that you’re able to retire before you’re faced with this decision. If a severance is coming your way, you need to know how that money is coming to you. Will it be all at once or over time in installments? That has a big impact on taxes.

We invite anyone who has questions about these financial topics or others to take advantage of our complimentary Money Map review, which you can take advantage of by contacting us.

[0:25] – Mailbag question on inheritance withdrawals

[1:57] – Question on Roth conversions

[4:50] – Question about preparing for forced retirement

[7:11] – Money Map retirement review is concise and simple

Thanks for listening to this episode. We’ll be back again next week for another show.


Final Thoughts:

“It’s going to make a lot of taxes go up for a lot of beneficiaries. Getting money is not a bad thing but keeping the money is the really important conversation.”

– Joel Johnson

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