John, Thank you for this article! Way down in the comments you and William Perry discuss the options for a spouse who is named a beneficiary of their spouse's traditional IRA before they turn 59 1/2 (and in too many situations before the deceased spouse turned 59 1/2! Did you know that 59 is the average age someone becomes a widow/er? Isn't that insane?). I would love it if someone would write an article just on this issue? Would you? What you can and can't do before 59 1/2 always gets muddied by the assumption that most widow/ers are over 59 1/2 when actually about 50% are younger than 59 1/2! If you leave the IRA in an Inherited account CAN you take distributions until you are 60 and RETAIN the ability to roll the Inherited IRA into your own IRA at 60, preserving the optimal RMDs after 70? Is that a legal sequence? I believe that is what you and William discuss but boy would I love to see it discussed as it's own case so that it's as clear as a blue bird summer day!
Retire earlier and often so you can spend your money before IRMAA? All I know is I've seen older family members hoard assets out fear of taxes or running out of money only to die and then have to watch good and some bad people fight in the most horrible ways over the money. The disillusionment with the fights over money verses honoring and remembering the dead has "nearly" eliminated my fear of going broke. The money you are choosing to save on taxes; your heirs will spend on attorneys, cpas, and very selfish financial choices over your wishes and their family relationships after you die. Nearly guaranteed! Don't be afraid of taxes. Be afraid of leaving money on the table before your POA gets exercised.
Yes - There have been references that the easiest way for the new Fed Chair to deliver on Trump's desired low interest rates is to "refine" the definition of CPI? Hmmm. I've read this also helps the cost of debt which of course is becoming a very big deal; such that it might not mater who is in office. There has been such a huge retail push for TIPS ladders lately that that in and of itself gives me pause. Too often retail investors get the hard sale by the insiders, selling right before an asset has price issues. Between it's existing volatility and the wonder of American Financial engineering I just haven't been able to pull the trigger.
Yes, but if your itemizations (of which healthcare premiums are a big portion) eliminate your AGI such that you aren’t paying taxes or are in the lowest tax brackets; haven’t you realized a discount on the face value of you health care premiums? Isn’t this 1 reason Republicans did away with the credits? Some were double dipping?
Excellent information! And very tricky! One point, I’ve been thinking a lot about is the ACA cliff when younger than 65. If you can take itemized deductions is it still a hard cliff? Isn’t it a soft descent that depends on how much of your medical expenses, which includes premiums, you can deduct? Isn’t your personal itemization situation a big toggle switch in pre-65 years? We Americans are so healthcare expense adverse, I sometimes think we work harder to avoid paying for healthcare than staying healthy?
Mike, great post. And I fully agree that a Vanguard advisor provides one of the least biased cheap approaches to financial planning. But as a young widow and someone helping aging and passing parents well into their 80s I have worked with many institutions and professionals and family members over the past several years. The things I’ve heard, seen and experienced? Yuck! Bias is everywhere and entirely, 100% unavoidable! Bias is everywhere and is entirely 100% unavoidable! My most recent bias was from a Vanguard Advisor on my dad’s accounts. Their “model” does not consider my dad’s unmanaged cash bucket for his wife’s now late stage Alzheimer’s care. By not considering that bucket he wanted to create a taxable transaction to sell equity. Only about 35% of my dad’s total portfolio is left in equity when you include the unmanaged cash bucket but was reaching 55% in the managed portion of his portfolio. A tax event is not necessary or desirable at this time. An unbiased institution would recognize this but I still have to sit down with my dad today to help him approve a portfolio over-ride so that the tax event does not occur. I’m grateful for sufficient financial literacy to understand how the game is played and to know losing is unavoidable but hopefully everyone can keep enough to live well?
Won’t this trigger the pro-rata rule and become partly taxable if the participant has and will be maxing their non-taxable contributions? Or are 401k balances outside that tax rule? Would it be in their best interest to convert taxable contributions if they are in a high tax bracket?
Comments
John, Thank you for this article! Way down in the comments you and William Perry discuss the options for a spouse who is named a beneficiary of their spouse's traditional IRA before they turn 59 1/2 (and in too many situations before the deceased spouse turned 59 1/2! Did you know that 59 is the average age someone becomes a widow/er? Isn't that insane?). I would love it if someone would write an article just on this issue? Would you? What you can and can't do before 59 1/2 always gets muddied by the assumption that most widow/ers are over 59 1/2 when actually about 50% are younger than 59 1/2! If you leave the IRA in an Inherited account CAN you take distributions until you are 60 and RETAIN the ability to roll the Inherited IRA into your own IRA at 60, preserving the optimal RMDs after 70? Is that a legal sequence? I believe that is what you and William discuss but boy would I love to see it discussed as it's own case so that it's as clear as a blue bird summer day!
Post: Widow’s IRA Choice
Link to comment from September 15, 2026
Retire earlier and often so you can spend your money before IRMAA? All I know is I've seen older family members hoard assets out fear of taxes or running out of money only to die and then have to watch good and some bad people fight in the most horrible ways over the money. The disillusionment with the fights over money verses honoring and remembering the dead has "nearly" eliminated my fear of going broke. The money you are choosing to save on taxes; your heirs will spend on attorneys, cpas, and very selfish financial choices over your wishes and their family relationships after you die. Nearly guaranteed! Don't be afraid of taxes. Be afraid of leaving money on the table before your POA gets exercised.
Post: Risk and Taxes
Link to comment from August 11, 2026
Rob - What you are describing is interesting. Would you describe how your ladder was originally structured in 2017?
Post: Taking a Loss?
Link to comment from August 4, 2026
Exactly
Post: Taking a Loss?
Link to comment from August 4, 2026
Yes - There have been references that the easiest way for the new Fed Chair to deliver on Trump's desired low interest rates is to "refine" the definition of CPI? Hmmm. I've read this also helps the cost of debt which of course is becoming a very big deal; such that it might not mater who is in office. There has been such a huge retail push for TIPS ladders lately that that in and of itself gives me pause. Too often retail investors get the hard sale by the insiders, selling right before an asset has price issues. Between it's existing volatility and the wonder of American Financial engineering I just haven't been able to pull the trigger.
Post: Taking a Loss?
Link to comment from August 4, 2026
Yes, but if your itemizations (of which healthcare premiums are a big portion) eliminate your AGI such that you aren’t paying taxes or are in the lowest tax brackets; haven’t you realized a discount on the face value of you health care premiums? Isn’t this 1 reason Republicans did away with the credits? Some were double dipping?
Post: A $30,000 Mistake
Link to comment from July 4, 2026
Excellent post!! Thank you!!
Post: A Letter 40 Years Later: What Mrs. Dolezal Remembered
Link to comment from July 4, 2026
Excellent information! And very tricky! One point, I’ve been thinking a lot about is the ACA cliff when younger than 65. If you can take itemized deductions is it still a hard cliff? Isn’t it a soft descent that depends on how much of your medical expenses, which includes premiums, you can deduct? Isn’t your personal itemization situation a big toggle switch in pre-65 years? We Americans are so healthcare expense adverse, I sometimes think we work harder to avoid paying for healthcare than staying healthy?
Post: A $30,000 Mistake
Link to comment from July 4, 2026
Mike, great post. And I fully agree that a Vanguard advisor provides one of the least biased cheap approaches to financial planning. But as a young widow and someone helping aging and passing parents well into their 80s I have worked with many institutions and professionals and family members over the past several years. The things I’ve heard, seen and experienced? Yuck! Bias is everywhere and entirely, 100% unavoidable! Bias is everywhere and is entirely 100% unavoidable! My most recent bias was from a Vanguard Advisor on my dad’s accounts. Their “model” does not consider my dad’s unmanaged cash bucket for his wife’s now late stage Alzheimer’s care. By not considering that bucket he wanted to create a taxable transaction to sell equity. Only about 35% of my dad’s total portfolio is left in equity when you include the unmanaged cash bucket but was reaching 55% in the managed portion of his portfolio. A tax event is not necessary or desirable at this time. An unbiased institution would recognize this but I still have to sit down with my dad today to help him approve a portfolio over-ride so that the tax event does not occur. I’m grateful for sufficient financial literacy to understand how the game is played and to know losing is unavoidable but hopefully everyone can keep enough to live well?
Post: The Quiet Failure of Good Advice
Link to comment from June 6, 2026
Won’t this trigger the pro-rata rule and become partly taxable if the participant has and will be maxing their non-taxable contributions? Or are 401k balances outside that tax rule? Would it be in their best interest to convert taxable contributions if they are in a high tax bracket?
Post: Mega Backdoor Roth
Link to comment from June 6, 2026