David starts the conversation by explaining what IRMAA is, if you should be worried about it when doing a Roth conversion, and whether there are ways around it.

David defines the acronym IRMAA, Income-Related Monthly Adjusted Amount. This is an additional charge you could be required to pay on your Medicare Part B premiums.

As your income goes up in retirement, your Medicare Part B premium increases with it.

David explains why standard deductions do not apply when calculating IRMAA.

What is the link between IRMAA and doing Roth conversions? Roth conversions are construed as part of your annual income in the IRMAA calculation.

David explains why you could do a Roth conversion before ever getting on Medicare and still end up paying that increased premium.

The IRS has a two-year look-back period when doing IRMAA calculations. So if you did a Roth conversion at age 63, for example, that would be included in the IRMAA income calculation at age 65 when you finally get on Medicare.

If Roth conversions could potentially cause IRMAA, should you avoid them altogether?

According to David, the answer is no--and that's because of two reasons.

First, if you don't do a Roth conversion, you could risk growing and compounding your IRA or 401K to the point where RMDs at 73 are so large that you could get hit with IRMAA every year for the rest of your life.

Secondly, tax rates will go up in the future. So you certainly don't want to forego a Roth conversion, only to pay much higher taxes on your IRA or 401k distributions down the road.

According to David, if you get enough Roth conversions done by the time you reach 63, you could avoid IRMAA altogether. Why? Because distributions from Roth IRA are not included in the IRMAA income formula.

By doing a Roth conversion and taking the IRMAA hit in the short term, you could put yourself in a position where you avoid IRMAA for the rest of your life and stay off the IRS's radar when it comes to Social Security taxation.

Mentioned in this episode:
David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

This episode addresses Suze Orman’s epic IUL rant on her Women and Money podcast.

Suze Orman begged her audience not to do Index Universal Life insurance policies.

This very broad brush and no nuance approach of every financial guru is what David’s upcoming book The Guru Gap touches upon.

David explains why the generic approach financial gurus tend to have is leading people astray.

David brings up Orman’s advice to one of her listeners who has been investing $200/month into an IUL policy.

David recreated this listener’s exact policy through one of the top IUL carriers in the industry – he shares his findings.

Starting an IUL is like getting married: it only really works if you plan on keeping it until death do you part.

David goes over the reason why IUL should be the last bucket to turn to for liquidity in the early years.

These days, most IUL carriers these days allow you to receive your death benefits in advance for the purpose of paying for long-term care.

David believes that “an IUL can serve as a great volatility shield in retirement”.

A recent Ernst & Young study showed how people can dramatically increase their sustainable levels of income in retirement in the context of IULs.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Suze Orman’s Women and Money Podcast

Ernst & Young

David and Mark Byelich talk about why people don’t want to pay a tax before the IRS absolutely requires it of them.

David touches on the 2018 documentary The Power of Zero: The Tax Train is Coming.

Mark Byelich explains that the longer someone hasa tail of the overage in their IRA hanging out there, the more risk they have.

Mark discusses what happens in financial planning when people ease.

When it comes to people around the country, the initial tax payment is typically the thing that’s really hard to get over.

David shares what tends to occur when people get over the “shock” of paying that initial tax.

Mentioned in this episode:

David’s upcoming book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Mark Byelich

The Power of Zero: The Tax Train is Coming

Doug Orchard

George Shultz

Ed Slott