Jason and Alex commiserate with the audience on the resurgence of COVID-19 cases across the country. In a world that seems to be changing rapidly they bring the conversation back to focusing on what we can control, taxes and insurance being the focus of today’s show. They start by addressing insurance because many investors are asking about principal protection and alternative asset classes. While annuities do provide principal protection and guaranteed income for life, they explore the various issues that surround them. Jason reminds listeners that one of the things that makes him most frustrated with annuities is the people that sell them and how they fail to disclose their compensation. They also tend to not fully explain how investors miss out on the power of the markets and forego liquidity of their money by purchasing annuities.

Alex reminds listeners of his learning experience being in the annuity only industry 15 years ago and how important it is to have a process based financial planning approach to identify whether an annuity makes sense or not. If it does, the financial plan is so helpful in making the initial recommendation and in reinforcing the decision when reviewing and monitoring the plan over time. This process is missing with many annuity salespeople which is highly problematic. The show shifts to the CARES Act next. Jason and Alex speak about the provision where 2020 Required Minimum Distributions, or RMD, has been waived. This presents a significant opportunity for listeners who are 72 or older and have RMD. You do not have to take RMD this year. If you already took it you can roller it back into your IRA. You can also convert the amount into a Roth IRA if you are ok with the tax. Unfortunately, the devil is in the details with IRAs and the CARES Act. The Act also changed Inherited IRAs by shortening the length of RMDs for Inherited IRAs to 10 years. This is a far cry from the previous term of the beneficiary’s life expectancy, which in some cases could be 50 years or more. Jason and Alex go on to explore these tax planning pros and cons and the need for many to see if there are any opportunities to do some tax planning.

In this show you will learn about: 

  • The pros and cons of annuities
  • The importance of using a financial planning process to determine if you could benefit from an annuity or an alternative investment
  • Tax planning strategies under the CARES Act, especially for those over 72 years old
  • Whether 2020 is the year to do a Roth conversion