- i don't want you to have horror stories. i want you to have happy stories. the safest way to double your money: fold it over and put it in your pocket. male announcer: uncle sam is borrowing trillions of dollars... - our government is broke. announcer: putting every u.s. taxpayer further into debt. - iras and 401(k)s are loaded with taxes. announcer: and who will pay back those trillions of dollars of debt? you and your family will through ever-higher taxes, putting all your dreams of retirement at risk. - leverage the tax code. you don't have to be an expert, but you have to know enough to know if your advisor is an expert. announcer: ed slott, america's ira expert, is a leading authority on taxation and retirement savings and will show you how to lower your taxes now and forever.

here's ed slott. - okay. thank you. thank you. thank you very much. thank you. welcome, everyone. great to be back with you to show you how to lower your taxes now and forever. did you ever hear the saying, "less is more"? well, that's especially true when it comes to taxes and especially on the taxes you'll pay on your retirement savings, which, for many of you, may be your largest single asset, the one you worked for the longest. i'm talking about your 401(k)s, your 403(b)s, your iras, or other retirement savings. this is the money that's at the mercy of the tax man, because these funds have not yet been taxed. the less you pay, the more you keep. but to pay less and get more, you have to have a plan. the tax man has a plan. do you? if you don't have a plan, you get the government plan. that's been my message for over 20 years,

and it has not changed. in fact, it's even more important than ever before, because in case you haven't noticed, all the things i warned about are now happening, like higher taxes, and it's going to get worse. i want you to pay less so you can have more, more, more, more money for you to enjoy now, more for your retirement, more for your loved ones, and more of it... all: tax free! [applause] - so if you're interested in getting more and paying less-- anybody interested in getting more and paying less? all: yes. - let's get started. first, just so you know, i don't sell any financial products. i don't sell any stocks, bonds, funds, insurance, annuities. i'm a tax advisor. and it's all about the taxes. it's how much you keep that counts. it's the taxes that will determine how much you keep and how much goes to the government.

you need an exit strategy. if you have the bulk of your savings in tax-deferred accounts, like 401(k)s, 403(b)s, and iras, this means that future taxes will be the single biggest factor in determining how much of that wealth you actually keep. you need to know the tax code. but the tax code is tough to navigate and grows more complex every time congress meets. in fact, look at this recent quote in usa today. you'll like this. but you have to know it to create your plan so you don't get the government plan. well, that doesn't sound fair. life isn't fair. as johnny carson once said, "if life were fair, elvis would be alive, and all the impersonators would be dead."

i'm not antitax or antigovernment. i'm a consumer advocate. and there's no reason to pay too much or too soon because you didn't know what to do. i'm proud to be an american paying taxes, but i could be just as proud for half the money. how about you? taxes can only increase at this point. the government is going broke, and it's only going to get worse. even the fed chairman says so. look at this recent quote about higher taxes. he says: so the government's financial problems have become our problems. so who pays? we do. because our tax system is a penalty on savers, a penalty on everyone who did everything right and played by the rules. so the big message is that you and your loved ones have to protect your retirement savings from taxes

and have to avoid making costly tax mistakes that often cannot be fixed. so first, you have to know the difference between tax deferred and tax free. tax free is better. write that down. tax free means you'll never pay tax on it. tax deferred means you won't pay tax on it now, but you will pay tax on it later. that's why you need to create a plan to move your money from accounts that are forever taxed to accounts that are never taxed. you need to start turning taxable money into tax-free money to protect that money from coming increases. some of those increases are already here. here's a story from a client of mine from years ago. a couple of teachers, a married couple-- imagine this--they worked their whole lives, and they had built up $1 million in their retirement accounts, about $1/2 million each. they came to see me back in 1998

when the roth ira first came out. and i told them about this, moving from forever taxed to never taxed, and they took the plunge. they converted $1 million to a roth ira. well, they came to see me recently. that $1 million since has tripled in value. they have over $3 million in a roth ira, all tax free forever. i only wish this on you. but anybody who has a plan can have some version of this. so the first question: i understand i need to create a plan, but i already have a financial advisor. isn't this taken care of? i already have a cpa. isn't that taken care of? i already have an attorney, did my will. so isn't all of this really already taken care of? no! that's why i'm here. because iras and other tax-deferred retirement savings, they're different. they require specialized knowledge,

and essential parts of the plan are often missed. i call them the black hole of estate planning, iras and tax-deferred retirement accounts. why do i call them the black hole of estate planning? because iras pass by contract. they're different than other assets. they pass by beneficiary form, not by will. some people say, "well, i had the attorney, did a great will." but it's missing maybe your largest single asset. iras have required minimum distributions. they have complex tax rules for distributions both during life and after death. other assets are not like that. think about it. let's say you inherit your mom's home. there's no rule that the first year, the kitchen has to come out; the second year, the bathroom has to come out; the third year, the dining room has to come out. but iras do have these kind of rules. and ira distributions can incur high taxes and penalties. in fact, iras are highly taxed

upon death and withdrawal, and they can be subject to double taxes, both income and estate taxes, and state versions of those taxes. so iras are different. you don't get favorable capital gain rates either. the list goes on and on, but they're different. but probably the biggest difference is that the person you name as the beneficiary on your ira beneficiary form determines the ultimate future value of this account. so you need to know that your advisors are aware of these rules, especially the importance of the beneficiary form for your retirement savings. check beneficiary forms for all of your retirement accounts. this is for everyone who has a retirement plan, whether you're young or old, married or single, widowed, divorced. it doesn't matter if you have a lot or a little. in fact, the less you have, the more important it is to protect what you have.

it doesn't matter if you're at or near retirement or you're just starting to save. you want to make sure your life savings go where you want it to go and get the biggest tax advantages. now, i say this in every show, in every program, in every seminar, in every advisor training program. i feel like a broken record. oh, you know what i mean. 'cause if i say that to kids, they say, "what's that?" but i have to keep saying it, because it's an epidemic. it's still a problem. it's so bad that the u.s. supreme court recently took up a beneficiary form case. can you believe it? well, in this case, a guy worked for a company for over 30 years. he had saved $402,000 in his 401(k) there, and along the way, he got divorced. well, as part of the divorce agreement, his wife, now ex-wife, signed away her rights to the $402,000.

it was supposed to go to his daughter. well, guess what. he died. they didn't check the beneficiary form. they never took the ex-wife off the beneficiary form. so now this worked its way up to the supreme court, took eight years. they all agreed, nine-nothing, unanimous opinion, "you pay the ex-wife, 'cause she's named on the beneficiary form." the u.s. supreme court ruled, the beneficiary form trumps all, trumps that written agreement, other wills, trusts. i don't want this to happen to you. are your beneficiary forms current? if you're single, widowed, divorced, this is even more important, because you don't have the legal protections married couples have, also true for unmarried couples and same-sex couples. have your beneficiary forms been updated? are they current for what i call life events? a birth, a death, a marriage, a divorce, you had a new grandchild. where are your ira beneficiary forms? do you even have a clue? do you know how many retirement accounts you have?

look, i don't wish anything bad on anybody here, but if something were to happen to you today, would your family know where to go to put their hands on this information? yes, no? probably not. "so where do you find this critical information?" you might be asking. well, go back to your financial advisor or whatever financial institution, wherever your ira money is invested. and then you might find something even more shocking. they don't have it either! so the question i get is, "should i look for old beneficiary forms?" no! these things can be changed anytime, updated, changed. you can create new ones. you can even change the beneficiary anytime you want. i had trouble convincing an 80-year-old client of mine of this a long time ago, and i finally convinced him. he says, "you mean you can change the beneficiaries anytime you want?" and i said, "yes."

he says, "this is great. i call this my 'ira leverage.'" i said, "what are you talking about?" he said, "well, i just turned 80. "we had a big party. "two kids didn't show. they're out." this is what i mean. you need your plan, not the government plan. have you named both primary and contingent beneficiaries? you know, the wrong beneficiary can get the money, and the tax could be owed sooner. do you have more than one beneficiary? speaking of beneficiaries, very common, people have three kids to name. did you list who gets what, the allocation by a fraction, a share, a percentage, or the word "equally" if that's applicable? do the percentages even add up to 100%? i've seen cases where they haven't. are your beneficiaries people? i'm not asking what you think of your beneficiaries. i'm asking if they're human beings. it's very important to name people as beneficiaries,

'cause only human beings have a life expectancy. and one of the big benefits in the tax code is something called the "stretch ira." and if you name a person with a life expectancy on the ira beneficiary form, that person--it could be your child or grandchild-- can stretch distributions over their life, 50, 60, 80 years, even, for a grandchild. that's the power of the stretch ira, what i call that parlay of wealth. that's the power, but you have to do it right. and they have to be named on the ira beneficiary form. okay, let's say you did all of that. is that it? are you done? no! you're never done planning. you have to keep refining, fixing up and updating when things change. think back. when you bought your home, did it have linoleum floors and shag carpeting? so you updated.

or not. make it a habit to continually update your plan, because things change. technology changes. think of this as financial technology. do you know that people spend more time updating their cell phones, ipods, and other gadgets and novelty items, more time doing that than they do updating a plan that affects their entire financial future? which will ultimately determine how many of these gadgets you and your family will be able to afford. the beneficiary form is the estate plan for what may be your largest single asset and could be subject to the largest amount of taxes and family problems if mistakes are made. you need to do this so your life savings go where you want them to. things change. you move around. and when you move-- think about when you move, back to moving the houses. think about what you do. you sold your house, and you're moving. what do you do first? you pick out every single item in the house.

you wrap it carefully in bubble wrap and padding and tape it. then you select a reputable mover, and then you insure all your items. for what? it's mostly junk. it's worthless to anybody but you. what are you doing to protect the most important move of your life when you move your retirement money, which is worth a heck of a lot more than your junk? iras and 401(k)s are loaded with taxes. they need to be moved very carefully. how would you move a beehive? very carefully, 'cause you don't want to get stung. same thing with this. you usually only have one chance to do it right. your retirement savings is like an eggshell. you break it, it's over. there's no second chances. mistakes are financially fatal. you can lose 30, 40 years of savings, gone up in smoke with one mistake.

there's two ways to move retirement money. i describe them as the good, the bad, and the ugly. but that's three ways. no, two ways. one's good. one's bad and ugly. i'm talking about the difference between trustee-to-trustee transfers and something called 60-day rollovers. trustee-to-trustee transfers is the good way. 60-day rollovers, bad and ugly. trustee-to-trustee transfers means you don't touch the money. they're also called direct rollovers or direct transfers. it means you don't touch the money. it goes right from your 401(k) to your ira or ira to ira or even to a roth ira. but you never touch the money. that's the way to move retirement money so you don't run into problems, as opposed to doing a 60-day rollover, where you actually take the money out, take possession of the money, and you have 60 days to get it,

say, to an ira or to a roth. and you're saying, "well, that sounds easy. that sounds like a lot of time." this is where all the mistakes are. most times, people mess this up, and you end up paying tax on all this money. you worked 30 years. now one wrong move, it's all taxable at one time. here's a story. i had a client come in for their taxes years ago, 85-year-old woman. doing her taxes, i see she had an $800,000 ira. she got a 1099. and it looked like she took it all out, which she did. i said, "you took out $800,000? you're gonna pay tax on this." she says, "no, i took it out, and i did a rollover." but it never got there. well, now she has a tax on $800,000. i don't want you to have these horror stories. here are some rollover mistakes to avoid. one is the 60-day rollover rule i just told you about. the other is the once-per-year ira rollover rule. again, if you do a 60-day rollover from ira to ira,

you can only do that once every 365 days. some people don't know that, and they'll move it-- even if you move it a second time, all taxable. can't be fixed. older people, i find, do two things every day. they go to the doctor, and they check cd rates. am i wrong? so i had this client years ago. he had saved $1 million in his ira. and like most people, he went to the doctor, checked cd rates, and he noticed the bank across the street was paying almost 1/10 of a percent higher than where he had his money. so, of course, he rolled it over. well, this went on and on and on. i didn't know about any of this. when do i find-- when he comes in for his taxes. i see he's done this 20 times throughout the year. here's what i said to him, "i've got some good news and some bad news. "the good news is, "i've done some calculating on this $1 million,

"and i think you're up almost $12 interest. "the bad news is, the whole $1 million is taxable "'cause you can only make one of these moves a year, ira to ira." you want to move around a lot? do a trustee-to-trustee transfer. it avoids the problem. and the third problem is the 20% mandatory withholding tax. if you do a rollover, if you withdraw money from a company retirement plan, they're required to withhold 20% in taxes. that can be a problem. all of these problems are avoided if you do trustee-to-trustee transfers. it avoids all of these mistakes. don't make these mistakes, and you'll have more, more, more, more money for you to enjoy now, more for your retirement, more for your loved ones, and more of it... all: tax free! [applause] - thank you.

thank you. that sounds great. coming up, i'll review my take-it-or-leave-it approach to the retirement plan options you need to choose from when you leave your company. this decision is critical, and you only get one crack at it. then i'll answer the question that everyone is asking: "should i convert my ira to a roth ira?" but first, please go to your phone and call this station with a generous pledge of support. thank you. thank you. - ed slott, you've done it again. hi, i'm laura savini, and this, of course, is ed slott. and with his brand-new show-- this is your third show. - that's right. - and you--i'm telling you, you've hit a nerve in america. everybody is responding to this advice you have. and i think it's because it's unbiased. you are offering us wonderful advice that touches everyone. - well, taxes touch everyone. let's face it. the single biggest factor that can separate you from your money

is going to be taxes. it's not fees or expenses. it's a big chunk, especially most people that have savings have it in iras, 401(k)s. those accounts are loaded with taxes. so you need what i call an exit strategy. it's the way you take the money out that will determine how much you keep and how much goes to the government. but you have to have a plan, because if you don't have a plan, you get the government plan. and i don't want that to happen to anybody. - but and i have a plan. i have a plan for you, actually. what i'm gonna do is recommend to you to make a call right now to this station. you can use that number on your screen. you can pledge online, and we've got some great thank-you gifts for you that are going to complement and supplement the information you're finding here from ed slott. there is so much more information here. let's start at the level of $50. if you can make a gift to this public television station of $50, we're going to send you this critical program. it's lower your taxes with ed slott, now & forever. and that's on dvd. and believe me, you are going to want

to watch this over and over. i was doing it. as i've been watching this show to prepare, i was hearing something. and i was so involved in taking notes. i was rewinding, if you say that on a dvd, going back, watching it again. you are going to find this a great tool. but if you think this is good, just wait. the ultimate collection: we have that for you if you join us, support us with a gift of $150. you're going to get ed slott's ultimate collection. - whoa, what is all that stuff? - i know! can you believe it? a life's work. - look at that. - it's a comprehensive, easy-to-use package that's going to help you learn the secrets of paying less taxes now and forever. and who doesn't want to lower their taxes? the ultimate collection contains ed's critically acclaimed book parlay your ira into a family fortune. and that has an exclusive bonus chapter that's only for the viewers of public television. i think that's so generous of you to do that. there's a 100-page tax planning guide, the brand-new ask ed slott cd, which answers 25 of your most important questions, the comprehensive six-dvd library.

and wait, there's more: two all-new just-published special reports. and these are--you're going to learn more about this in the next part-- the seven deadly roth conversion traps and navigating the looming health care taxes. oh, my goodness. you put a lot of stuff into that. - i put everything in. you know, this is no kind of thing where you get this, and you need to get these other things. i'm all in. everything's in here. that's why i called it the ultimate collection. and just so you know, i don't sell any stocks, bonds, funds, insurance, annuities. that's why you can rely on this information. i'm here to raise money for this public television station. so i need you to make that call. i've put it all in for a gift of $150. think about it. all my life's work for over 25 years, but i want you to have it. i'm glad i'm giving the store away, because i want you to lower your taxes now and forever. the ultimate collection includes so many pieces i have to almost go through my list. you know what would happen? as i was preparing the information--

"oh, i think they need to know that. "oh, i think they need to know that. oh, i think they need to know that," and all of a sudden, this list got so long. that's why we ended up with six dvds, a cd that's great to get you into it called 25 questions. i've seen a lot of you around in public television all over the country, including this station. and i've heard all your most pressing questions. well, i put the answers to those questions in one cd i called answers to your most frequently asked questions, 25 of them. that's what it's called. but then i added more, more, more, 'cause that's my theme. there's over 40 questions there. chances are, any one of them could be a critical piece of information for your plan. i want you to have your plan so you don't get the government plan. there's only one way to do it. pick up the phone right now and make that call. i'm here to support public television, to help them raise money. this is unbiased information. it's the only place you're going to get it. that's why i brought it to public television. there are other financial stations,

but they always have something to sell. i don't sell anything. i don't sell any stocks, bonds, funds, insurance, annuities. i'm giving you objective, independent, unbiased advice that you can rely on, and it's correct. $150 gift, make that call. you'll get it all. i want to help you keep more of your hard-earned money. now we're getting ready to go back to the show. our operators are standing by. you can call during the program if you'd like. we'll be here to take those calls. but as we go back, tell me what we're going to see next. - oh, this is great. this is the question everyone is asking. "should i convert my ira to a roth ira?" and you're not getting the right answers. i know, because you tell me that, 'cause you don't know, "is the guy selling me something?" here's the truth: i give you the three questions to ask in any roth conversion evaluation. you go through those three questions. it'll find your way to the error-- find your way-- you'll find your way to the answer. also, i talk about big mistakes your beneficiaries will make. you know, sometimes you do everything right, and they mess it up at the end.

and when i say "mess it up," they'll lose the account to taxes, unnecessary and excessive taxes. that's what i call horror stories. pick up the phone. make that call. support public television. this is your public television station. i'm here to help raise money. that's why i'm all in. i threw it all in. you saw that screen, the ultimate collection for a gift of only $150. - it's going to be so helpful to this station and to you. so make the call. let's go back to the show and learn about those roth iras and have a few laughs, if you can believe it. he's funny. announcer: welcome back to lower your taxes! now & forever with ed slott. [applause] - thank you. thank you. thank you, everyone. well, i've told you how to get more, more, more and pay less, less, less in taxes now and forever. i've also made an impassioned plea to check your beneficiary forms, the key to keeping more of your money in the family

for as long as possible. i've also told you about the big difference between tax deferred and tax free. tax free is better. i also showed you how critical it is to move your retirement money the right way. do trustee-to-trustee transfers and avoid costly rollover mistakes when moving your retirement funds. this is your exit strategy. if you ever want to enjoy, spend, or even pass on your retirement funds, they will have to be moved. now you're ready for the big move. are you ready? all: yes! - here's what to do with your company retirement money when you leave your job. this is whether you're retiring or you lost your job. either way, this may be the biggest financial decision you will ever make, because it affects the money you worked for your entire working life. remember, this money has not yet been taxed. the decisions you make now will determine when you will pay taxes,

how much you will pay in taxes now, and how much you will pay later. well, i'll choose just later. does that sound better? yeah, i'll just pay later. that sounds easy, but taxes are going up, and later may cost you more, and i want to lower your taxes now and forever. that's how you end up with more, more, more, more money for you to enjoy now, more for your retirement, more for your loved ones-- ready-- and more of it... all: tax free! - now you're getting the hang of it. doesn't that sound great? so how do you decide? you have two choices when you leave your company: take it or leave it. sounds threatening, but those are the two choices. either you take control, which i like, or you leave your money in the company plan and let them decide your financial future. generally, the best option is to do an ira rollover and take control of your money when you need it most. with an ira rollover, you always have access to your money

without having to ask anyone. iras have no withdrawal restrictions. you control the taxes you pay on ira withdrawals. and with an ira, you get to work with your own financial advisor. you'll generally receive better service and more personal attention from your own financial advisor than from some inexperienced phone operator at the firm that the company plan has been outsourced to. now, i know they're not phone operators. after two weeks on the job, they're retirement plan specialists. another two weeks, vice president. another two weeks, ceo, then jail. it's a cycle they go through. this is where you're gonna leave your life savings? remember, this is your life savings. why on earth would you leave that at the old company? no one there cares about it as much as you. so the bottom line is, you want to take control of your retirement money, either with an ira rollover or a roth ira conversion,

which leads us to the big question that everyone is asking: "should i convert my ira to a roth ira?" how many are thinking about that? a roth conversion is when you move your traditional ira funds or 401(k) funds to a roth ira. you have to pay the tax on the conversion. but you're paying it at today's rates rather than unknown what i think will be higher future rates. you're really buying the tax rate now and locking it in. has anybody here ever invested in the stock-- the ticker symbol is fitr. anybody invest in that? no. i'm glad nobody raised their hands. you know why? 'cause it doesn't exist. i just made it up. so i'd hate to have somebody say, "oh, yeah, been invested in it for years, making millions." it doesn't exist. don't even write it down. i made it up. "fitr" stands for "future income tax rate."

if the future income tax rate were a stock on a chart, i'd buy all i can, because that's going up. that's a sure thing. what i'm telling you is, taxes are a sure thing. you know, even henny youngman knew that years ago. he said, "i'm putting all my money in taxes, the only thing sure to go up." the roth is great if you don't want to worry about paying taxes later in retirement, when you need the money the most. that's the last time you want to have to pay what could be 50% or 60% tax rates when you don't have income coming in. you're in retirement. you're the most vulnerable. roth iras remove the uncertainty of what future tax rates might be. but once you pay the tax, the account grows tax free, income tax free, forever. and the best part is, you never have to take those annoying required minimum distributions during your lifetime. with a roth ira, there are no required minimum distributions

during your life, and the roth ira funds pass income tax free to your beneficiaries. and then the beneficiaries, your roth beneficiaries, can stretch those distributions-- remember, if they're named on the roth ira beneficiary form, they can stretch it over their lifetimes. so the only thing that's better than a stretch ira is a tax-free stretch roth ira, where they'll never pay taxes for 30, 40, 50 years. another good thing about roth iras is, it comes with do-overs. not many tax provisions come with second chances or do-overs, but this one does. in fact, it's called a roth recharacterization. you can undo it. if you do a roth conversion, you have until october 15th of the year after the conversion to change your mind for any reason at all. maybe the investment didn't do well. so what? you can change your mind. it's like getting to bet on a horse after the race is over.

who wouldn't sign up for that? and even after that, after certain time limitations, if you want to reconvert, you can do that. also, everyone qualifies for a roth conversion now. there used to be income limitations on who can convert. everyone that has an eligible rollover distribution from a 401(k) or an ira is eligible to convert. some people ask me, "isn't that limitation just gone for 2010?" no. that income limitation is repealed permanently. so everyone qualifies all the way out-- or until congress meets again but supposedly right now, all the way out. i think there's two groups that a roth conversion is best for, if i had to pick two groups it's a real slam dunk for, for estate planning and for young people. for estate planning, it's a huge planning advantage if you don't need the money and have the money to pay the tax. remember, with estate planning, you're not doing it for you.

you're doing it-- you're paying the tax now so your loved ones, your beneficiaries, can enjoy it tax free for the rest of their lives. now go to the other group, young people. the power in the roth is the compounding over time. the more time, the more it will grow tax free. the best way i've found to flush the issues out is to ask these three questions when you're considering a roth conversion, but you have to ask the right questions. the right questions are critical if you want the right answers. that reminds me-- asking the right questions, i'm talking about-- of an old scene from a pink panther movie. remember chief inspector jacques clouseau? he goes up to a guy with a dog. he says, "does your dog bite?" he say, "no, my dog does not bite." so he goes to pet the nice little doggy, and it bites him and rips his arm out, and the blood is gushing. he says, "i thought your dog doesn't bite." "that's not my dog."

you have to ask the right questions. so here are the right questions for a roth conversion. it boils down to three questions: when, what, and where? when will you need the money? what do you think future tax rates will be? and where are you gonna get the money to pay the tax? when will you need the money? if you don't need the money, then you're not converting for yourself. and remember, it's not based on age. it's need. because some people come up and say, "well, i'm 80. am i too old to convert?" it's not age. it's need. for example, if you need the money, it's not worth it. i would say, if you're in your mid-70s or older, it doesn't pay to convert if you're doing it for yourself, because the cost of paying the taxes now isn't worth the benefit in your lifetime, given your life expectancy, to do it. but you could be 100 years old, and you say, "i don't need the money. it's not for me." then it pays to do it. hat age, you're not doing it for yourself. you're doing it for the next generation.

and if you believe like i do that taxes are going up, it really pays. so it comes down to what future tax rates will be compared to the current tax rates. remember tax-free income in retirement. you want tax-free income in retirement, keeping taxable income low even when taxes increase. it's likely that income tax rates will increase in future years, making tax-free roth income more valuable then. and for those at the top tax brackets, roth--roth conversions right now will be even more valuable. that's because new taxes are gonna be kicking in from the health care laws that will start kicking in in 2013. also higher trust tax rates, too, for some trusts. if you've named a trust as an ira beneficiary, you might want to think roth now. future taxes on a roth conversion, given all that i'm talking about, could exceed 40%, 50% and climb higher. and that's only federal taxes. add state taxes, and before you know it, uncle sam's getting more than you.

so if you think future tax rates are going to get higher, it may pay to buy off the tax man now. then the last question: where? where will you get the money to pay the tax? do you have money to pay the conversion tax? it's best not to use the money you planned to convert, because it would diminish the ultimate value. so where do you find money? look at your other assets. how many are dead assets and can't be leveraged? look for those kind of assets. if they're not doing anything for you anyway, use those assets to pay the conversion tax. well, what if you don't-- you just don't have money to do the conversion? then don't do it. you shouldn't go broke converting. really. but most people don't realize that you don't have to convert the entire ira to a roth, not an all-or-nothing. you can do partial conversions. but when all the chips are in and you answered all the questions, it comes down to this, and this is the question i get at every program i've ever done on roths.

i call it "the big roth ira question." and you may be thinking it too. "can i trust the government..." i didn't finish yet. let me finish before you react. "can i trust the government to keep its word that roth distributions will be tax free forever?" - no. - no. - [laughs] i think you're probably okay with-- nobody knows what the future will bring, but for a couple of reasons, i think roths will be around. one reason: it would be political suicide for these guys to go back on their word. they're all still there, the guys who voted for it, and they would be seen as reneging on their promise of tax-free income. in addition, remember, our government is broke. roth iras bring in money. they need money. so i think, for that alone,

you're going to see the roth ira around for a long time. so look, it's up to you. take all this information in. but i think it's more likely that future rates will get higher than they'll ever take the roth away. so now maybe you're ready for the plunge to do a roth conversion, but wait. you want to look at the side effects. what happens when you do a roth conversion? you know, roth conversions set other things in motion. every action has consequences, and taxes are no different. i call these things "side effects," 'cause that's what the drug companies call them. you know what the drug companies do. they make up a disease that you didn't know you had, like restless leg syndrome. you see that commercial enough, your leg starts going. but lucky for you, they've got a pill for that. the problem is, there are side effects.

you won't be able to hear again. you won't be able to see again. you won't be able to go to the bathroom. you're gonna have a heart attack and die, but your leg will stop. that's what i mean by side effects. well, with roth conversions, it's not quite that drastic, but there are some things you need to be aware of. when you do a roth conversion, new roth accounts need new beneficiary forms. remember, you're opening a new account. you need new beneficiary forms. also, when you convert to a roth, remember, you're adding taxable income. you're gonna have a spike in income. and those years that you have a spike in income, you're going to lose other tax benefits that are based on income. you may start to lose your deductions, your credits, your exemptions. social security can become taxable. medicare part "b" premiums, they can go up. so you have to look at all these other things, and if those things bother you, think about this.

if you don't convert, that means you're leaving your money in your ira, and at 70 1/2, some portion of those things are gonna happen anyway 'cause you'll be subject to required distributions. so instead of just being angry for the two years or one or two years you have a spike in income, if you don't convert, you'll be angry every year. so you may want to look at the long-term big picture. and look at things that you generally won't see on a tax return. think about financial aid. do you have somebody approaching college? the last thing you want is to put roth conversion income in a return, spike the income, then that's the return you show to get financial aid. you don't want to put the two on the same return. so you have to watch other things. that's what i mean by the side effects. all right, now you know what to do. but do your beneficiaries know what to do? it's important, because we just went through all this planning. let's say you did everything right, and there are people that do. but the big mistakes-- you know when i see the big mistakes?

is after you die and the beneficiaries mess it all up. well, you don't want them blowing it. you don't want them triggering unnecessary taxes. it reminds me of an old quote by machiavelli. he said, "a son can bear with composure "the death of his father, but the loss of his inheritance might drive him to despair." you know what i mean. the biggest, i guess, most fatal mistake for a beneficiary is the rule that says a non-spouse beneficiary-- and that's your son, anybody but your spouse, daughter, grandchild, friend. a non-spouse beneficiary cannot do a rollover. a non-spouse beneficiary can only move inherited funds via a trustee-to-trustee transfer. so what does that mean in english? it means they have to do it just right. as soon as the money comes out, it's all taxable. a mistake can't be fixed. so they've got to do it just right. once the money's exposed, it's over. here's an analogy that might explain this better.

i don't want to sound like old grandpa moses again, but back in the day, they had cameras. and in these cameras was something called film. you're looking at me, some of the young people. it was a brown tape-y substance. and you put this in the back of the camera, and then you took your pictures. and then after you were done taking your pictures, you took the film out and brought it to a camera store, and in six months, you had your pictures. it was fantastic. but if while you were taking these pictures, you opened the back of the camera, what happened to this film? [imitates explosion] exposed. the whole roll, gone. same thing with an inherited ira. the minute that comes out, it's over. and it can't be fixed. i see horror stories all the time. i don't want you to have horror stories. i want you to have happy stories.

i want you to get your plan so you don't get the government plan. i want to lower your taxes now and forever. here's a horror story. i don't want this to happen to you, but these are things that i see. guy calls me up. it's at tax time. that's when i get most of these calls. i don't even know the guy, but apparently, his mother left him, his brother, and his sister-- she died-- a $300,000 ira, so $100,000 each for the kids, one ira. and they went to see their financial advisor and said, "we want to go our own ways." they're adults. they were in their early 30s. and, you know, "we want to split it up to inherited iras for ourselves." so the financial advisor cut them checks each for $100,000 each. [audience groans] well, it was over right there. exposed. but he didn't know it. until when? he went to his accountant. that's where he called me from. and he said-- his accountant said, "what did you do? you got a tax on $100,000." he said, "no, we just split up an inherited ira."

his accountant said, "no, you don't get it. "you don't have an inherited ira. "you're not getting the stretch over 50 years. it's all taxable." so he had called me to confirm it. if he had done it right, he could have stretched it-- the three kids in their early 30s could have stretched this out over 50 years. they would have ended up with well over $2.4 million. that's over $800,000 each at much lower tax rates, 'cause it would have been split over 50 years, spread over 50 years, compared to $100,000 each they got now at higher rates. this is someone who ended up with way less, less, less. and this mistake cannot be fixed. i don't want this to happen to you. remember what i want for you. i want more, more, more, more money for you to enjoy now, more for your retirement, more for your loved ones, and more of it... all: tax free! - [chuckles] [applause] thank you.

now, coming up, i'll steer you clear of the latest financial scams so that your planning pays off. also, i'll share a few more ways to lower your taxes now and forever. and most important, i'll show you how to put your plan into action now so that you don't get the government plan later. but first, i want you to go to the phones and make a generous pledge of support to this public television station so they can have more, more, more too. thank you. [applause] thank you. - i want more, more, more. i want more of ed slott. this is terrific, ed. hi, i'm laura savini. this, of course, is ed slott. and we are learning so much. i can't tell you how many times i've read articles or looked at magazines or watched these financial shows and i say, "tax-deferred, tax-free," my head starts swimming. i don't know what's going on. but ed explains it all so well.

and we are learning, and we're getting a couple chuckles out of it too. i love that story he just did about the film in the camera. yes, i remember film in a camera. but we are learning, and we are going to continue learning. there's more to come. let me tell you something. if you get the dvd of this show, which we're going to offer to you when you call and support this station at $50, you are going to have the opportunity to look at this show again, to rewind, take another look, hear those terms again. look at the graphics on the screen. learn this. this is the most important thing you can learn for your family. so i encourage you to do that at that $50 level if you can. $150 gift: check this out. we're calling this the ultimate collection. ed slott has put so much time into putting this together. look at all the pieces that are in here. it starts off with, of course, his book, which is called parlay your ira into a family fortune. now, we also are including in that a bonus chapter that was prepared just for public television viewers. it's an unbelievable 100-page tax planning guide.

then you get the new ask ed slott cd, which answers 25 of your most important questions, because i know as i'm listening, i'm coming up with questions. and he meets so many people, so he knows the questions that we are going to have. he knows exactly what we need to know. so he put it all into this terrific cd for you. now let me go back to my list, 'cause i don't want to miss anything here. there's a comprehensive six-dvd library of so many different topics that ed slott wants to share with you. and then there are these two special reports: one on roth conversions, and then the other one is all about the new health care policies and how you can navigate the taxes that are gonna relate to that. this is a very important package. all of those materials will come your way when you make that gift to this station at $150. so in addition to the ultimate collection, you're going to get the programs here that make a difference. so whether it's sesame street or nova or the cooking shows, whatever it is you're watching, it continues because of your call. that's how it works. so i encourage you to make the call right now.

and ed, i mean, it's just amazing how you're able to make this information interesting, helpful. i mean, how long did it take you to do the ultimate collection? - an ultimate amount of time. i'll tell you that. - i'm sure. - i've thrown everything in here, because i want you to have more money for you to enjoy now, more for your retirement, more for your loved ones and, most important, more of it tax-free. remember, my message in all my shows-- you know, my message hasn't changed. in fact, it's more important now than ever before. a lot of the things i've talked about in past programs, they have already happened, or they're happening now. it's the taxes. the taxes are the single biggest factor that can separate you from your retirement money. and i believe, for most people, they're going up. you're going to get the government plan unless you get your own plan. why is it that way? well, our government's broke. they're in trouble. and guess what. when our government has problems, they become our problems.

and our tax system, unfortunately, is a penalty on savers, people like you and me that did everything right. we played by the rules. and now we've built up life savings, and we're prime targets for the tax hits. but it doesn't have to be that way. that's why i bring you everything i know. i believe in education, lifelong learning. that's why i brought this to public television. now i'm here to ask you to pick up the phone and make that call. support public television. this is your public television station. make that call. get my ultimate collection for a gift of only $150. - all right, i got to interrupt you here, ed, because there's one i want to bring out one of the gifts that's in there. this is my favorite one in your collection. ten questions to ask your financial advisor. - oh, that's great. - yeah, because we don't know what questions to ask. that's the thing that gets me. i don't know how i know if my guy is good, but you laid it out for us. - it's not a matter of good or bad. here's the key: do they have specialized knowledge

in this area? in other words, accountants, attorneys, financial advisors-- financial advisors in particular. you might be happy they made you a lot of money. i want to help you keep it. the average financial advisor doesn't have the specialized knowledge, this kind of education, to help you keep your money. so how do you know if your advisor has this? i tell you in my book parlay your ira into a family fortune and on the bonus dvd, and i actually give you a test. you're going to see it, matter of fact, in the next segment coming up. i give you a few of those questions. now, laura, you might say-- how do you know if it's even the right question or if he's giving you or she's giving you the right answer? guess what. i put in b.s. detectors. i really did. you're gonna see it on the next segment of the show, you're gonna love this, and it'll empower you. that's what i'm about: empowering, educating you. but to get it all, you have to make that call.

that's the real reason i'm here. that's why i threw everything in. there's nothing missing. everything i know for 25 years for a gift of $150. you know, i have to laugh. $150 for my life's work. you can't get bad advice for that kind of money. - hey, forget bad advice. this guy is the expert's expert, and that's why he's here on public television. now, let me just share something with you, okay? the wall street journal says, "best source of ira advice: ed slott." don't blush, 'cause i'm gonna do more here, okay? usa today says-- - embarrass away. - it says-- and i quote-- "it would be tough to find anyone who knows more about iras that cpa slott." now, you know what i like about that? i don't know anything about iras. i don't. i don't get it. and i blindly trust people. but we don't have to do that anymore because public television is there and gives you the information you need, and the reason we went with ed slott on public television is because he doesn't sell anything.

he doesn't sell insurance. - let me stop you there, because people watching might say, "what's the gimmick?" you know, i'm literally here to raise money for public television. i'm asking you to call this station and make that call. it's true. i don't sell any stocks, bonds, funds, insurance, annuities. this is the only place. that's why i brought this program to public television. it's the home of lifelong learning. it's about education. the more you know, the more of your money you keep. that's the bottom line. get my ultimate collection. so you can demand more from your financial advisor. i even show you how to find financial advisors, accountants, and attorneys who have the specialized knowledge so you can end up with-- guess what. more money for you to enjoy now, more for your retirement, more for your loved ones, and more of it tax-free. so you get my six-dvd library, which includes the dvd of the program you're watching, and you'll notice, especially in the next segment, i hit a bunch of topics--

sort of like an approach where i hit a little bit of everything. and you're going to see, now, that's just the tip of the iceberg. in a lot of these other dvds, i get more into that, but you've got to make that call to get the ultimate collection. so it has the six-dvd library, which is the dvd of this program, the dvd seven critical items to check on your beneficiary form; 25 retirement terms you need to know. you know, we throw around terms, and some people don't know what that means. i give them to you here in the dvd, where i explain it to you. also, the top ten strategies-- my personal top ten strategies to lower your taxes now and forever. and these are on dvds, so it's very easy to put it on, listen to it, get the information. - you know, one of the things when i was watching your show, i was learning things, and i actually heard somebody say, "i'm thinking of going over to a roth ira." and i said, "well, what about the three questions?" and i ran through the three questions, and i'm so darn proud of myself. well, now you're going to learn more about all of this

when you get the ultimate collection. but the question i have for you-- - you know, i'm not even finished. i'm still going through my list of what's in the ultimate collection. i can't get through it. do we have time to get through it? i'm still on all the dvds. no, we didn't even get past the six dvds. so i have my top ten strategies, and then bonus encore dvds: ten questions to ask your financial advisor; ten financial disasters you can avoid. my cd with my answers to your 25 most frequently asked questions. people like you i see all over the country, but i believe in more, more, more, so there's not 25 questions. that's what the package says. it's 40 questions. there's a lot of information here. please, make that call. i threw it all in because i want you to want this so much, you'll support public television, you'll get the ultimate collection, you'll get it all, and you'll be helping this public television station. i'm on a mission to match consumers with confident financial advisors. i want you to be educated so you demand more from your financial advisors.

and when you're educated, you just end up keeping more of your money. remember, our government is broke. they need the taxes. they're going to get it from you. they can't get it from the big guys. they get away with everything. but there are breaks we can all take advantage of, and that's what i want you to have. my ultimate collection is filled with this information. make that call. you get it all. - absolutely. we'll send the whole collection out to you when you make that call at the $150 level. and remember, that's a gift we're giving you. - oh, wait. i forgot something again! - well, can you believe this? - more, more, more. - what more can you put in this package? - it sounds like one of those routines, but, no, every time i look, in 2013, there are big health care taxes that are going to hit many people. i have a special report on that. that's also part of this package. so you have so much information, but the planning has to be done now. you know, my message hasn't changed. it's always been about the taxes, but the methods have, and the opportunities have, and the urgency has.

you have to make that call, get this information. it's mission critical right now. - now we're getting ready to go back to the show. i hope you'll continue making your phone calls. we'll be here. we'll have our operators here. they are so busy right now, by the way. - good. - oh, yeah. they're really ringing up those phones. but now we're coming to the final part of the show. what else are you gonna be telling us about? - oh, i'll be talking about financial scams you need to avoid. you might be saying, "oh, i'm too smart for that." the ones i talk about here are ones that very sophisticated, very wealthy people fell for. i don't want you to lose your money here. and remember, this is for everyone, every age. people say, "well, isn't it only for rich people?" you want to know something? the less you have, the more important it is to protect what you have. is how you how to keep more of what you've earned. - and we want you to protect what you have here in this public television station. you do that with a simple call, and we will send you your great thank-you gift, so call the number on your screen or pledge online. do that now, and now back to ed slott. announcer: welcome back to lower your taxes!

now & forever with ed slott. [applause] - thank you. thank you. thanks. welcome back. welcome back. well, i've showed you the importance of planning now for future tax increases, avoiding costly mistakes, making the right retirement choices, and whether you should convert to a roth ira. you've learned what to do right. now i want to make sure you keep your hard-earned money and not lose it to scam artists. then i'll share some more ways to lower your taxes now and forever. i'll also address the most critical issues to discuss with your loved ones right now so that everyone wins, exce the taxan. i'm tafi n't fall so that everyone wins, fotax savings scams. ani knt yo'm too smart for thi"

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