Ed Slott Advice - any good?

[rescueme]

He isn't a salesperson, he is a CPA who has become the expert on IRAs. PBS specials by experts are nothing more than infomercials for the presenter and fund-raisers for the station. The fund-raising part is what the tv station wants you to focus on.

Go to the library, check out one of his books -- they will provide you with much more info than a 90 minute informercial.

-- Rita

I would agree. His presence is there to primarily support PBS but offer those that have an interest to get more info via a contribution.

DW/me support our local PBS (without getting anything for it ) by sending in a check every so often.

As far as I'm concerned, I'd rather listen to him rather than the guy from Rich/Poor Dad ...

I've read Ed's books and they do make sense for certain folks (including whole life insurance) for those that are doing long term (e.g. generational) planning.

IMHO, they are not geared to current "single lifespan" techniques, but for somebody such as DW/me (who have a disabled son) find value in his suggestions...

 

[Finance Dave]

DW and I will have current taxe rate at 33% today and will wait to convert at at up to the 15% rate based on taxes rates today once ERd. Which we hope is soon. Another big consideration is lost the opportunity cost due to time value of money on the tax paid upfront when deciding to convert to a Roth.

Good strategy, and thus your tax rate will be LOWER in FIRE, and therefore you gain a larger benefit by using a deduction TODAY.

 

[ripper1]

Ed believes tax rates will be sunstantially higher in the future, and will stay high for a long time. Given our govt's current course of action, he is right to think that..........



He is referring to the proceeds going to beneficiaries tax free. He is BIG on Roth IRAs because you can create tax-free income for tour heirs........

Paying higher taxes in the future is speculative and it depends on brackets. Also given our governments course of action who says they won't change their minds on the ROTH.

 

[Big Game James]

I also saw the KOCE piece and I also have at least 1 if not 2 of his books.. What kinda got me on this KOCE bit was his whole dive into life insurance and how it's the best tax exempt tool to come around this side of the moon - if you notice he is pitching for another insurance company on there which is cool ya know - make money and brand yourself as your raising money for a tv station.. I just thought it was weird because Dave Ramsey and Suze Orman say the exact opposite.. maybe later I'll see if there's a clip or something on You tube and post it up in here and we can break it down.. =) honestly after hearing the last two talk about term and invest the rest for so long that was the only consideration I'd make but after hearing Ed pitch the whole and universal life without calling them by name really makes me wonder - at the same time he was pitching for another life ins company so who really knows..

 

[pfleming]

I also saw the KOCE piece and I also have at least 1 if not 2 of his books.. What kinda got me on this KOCE bit was his whole dive into life insurance and how it's the best tax exempt tool to come around this side of the moon - if you notice he is pitching for another insurance company on there which is cool ya know - make money and brand yourself as your raising money for a tv station.. I just thought it was weird because Dave Ramsey and Suze Orman say the exact opposite.. maybe later I'll see if there's a clip or something on You tube and post it up in here and we can break it down.. =) honestly after hearing the last two talk about term and invest the rest for so long that was the only consideration I'd make but after hearing Ed pitch the whole and universal life without calling them by name really makes me wonder - at the same time he was pitching for another life ins company so who really knows..

Some of the tax exempt part of this comes from the fact that "someone else" is paying the premiums. I can't speak to exactly what his approach was, but the Crummey Trust (think I spelled that right) or something similar in concept can allow a tremendous amount of tax free money to your heirs. Using the Crummey, you transfer funds to a trust benefiting your heirs. They are free to withdraw the funds for a short period of time, this is the part that makes the money "not yours", but if they don't the trust continues to pay life insurance premiums and they receive the proceeds at death. Has to be done, right, check with counsel, etc.

Another very interesting idea that I have developed in speaking with friends of mine follows the Thai model a little:
Transfer most of your assets to your children "early on" in life, even pre-retirement. Your children support you by providing "fair market rent" on "their home" that you live in, they pay your living expenses via an allowance (from your own funds previously transferred to them) and if all you have is SS besides, they get to claim you on their taxes. Takes a tremendous amount of trust and belief in your kids and maybe a lot of education too - I'm not sure I'm ready for this model.

 

[FinanceDude]

Paying higher taxes in the future is speculative and it depends on brackets. Also given our governments course of action who says they won't change their minds on the ROTH.

We'll see on higher taxes.......

One of the hardest things to do is undo legislation that creates retirement instruments. If the Roth "goes away", it will be grandfathered for all those who have one. Much like the ridiculous argument that 401Ks are going away, which was much ado about nothing. Pretty hard to go after Roth IRAS when MOST people aren't doing them anyway. Kind of like back in 1998, when you got 4 years to convert your IRA to Roth, and only 23% of ALL eligible people did it? That didn;t work well for Count Taxula........

 

[Big Game James]

Some of the tax exempt part of this comes from the fact that "someone else" is paying the premiums. I can't speak to exactly what his approach was, but the Crummey Trust (think I spelled that right) or something similar in concept can allow a tremendous amount of tax free money to your heirs. Using the Crummey, you transfer funds to a trust benefiting your heirs. They are free to withdraw the funds for a short period of time, this is the part that makes the money "not yours", but if they don't the trust continues to pay life insurance premiums and they receive the proceeds at death. Has to be done, right, check with counsel, etc.

Another very interesting idea that I have developed in speaking with friends of mine follows the Thai model a little:
Transfer most of your assets to your children "early on" in life, even pre-retirement. Your children support you by providing "fair market rent" on "their home" that you live in, they pay your living expenses via an allowance (from your own funds previously transferred to them) and if all you have is SS besides, they get to claim you on their taxes. Takes a tremendous amount of trust and belief in your kids and maybe a lot of education too - I'm not sure I'm ready for this model.

I just saw this!!!! Thanks!!! I'll definitely look into it.. Let me see if I can find that video on you tube as I'd like for the other forum members to see and and I'm curious as to what we can all get out of it.. =)

 

[Big Game James]

I'll start a new thread on this.. =)

 

[MooreBonds]

I have been warned so many times NOT to buy whole life.

As others have hinted at, what Ed is saying is for the top 2% of the financial world (who would benefit from economies of scale by buying a large whole life insurance policy, and can afford to allocate a small percentage of a multi million dollar estate to help offset estate taxes)...while what Dave and Suze are referring to (term insurance only) is for the remaining 98%, who would never need the advantages of whole life that Ed is referring to, much less be able to afford wasting away that money in commissions and fees that could be better used to make ends meet.

There are many parallel examples: in general, never take antibiotics just for a runny nose, as your body will do just fine killing off the germs on its own in 3 days....but if you really could benefit from the antibiotics because you have antibiotic-resistant staph, then use a superantibiotic drug that will kill just about anything.

Don't waste your money buying a pickup truck with all wheel drive and 500HP if you never stray off the paved roads and only drive yourself to and from work...but if you're a lumberjack hauling 10,000 lb tree trunks, then go for it.

etc., etc.

 

[heyyou]

Years ago, someone, perhaps Slott, advocated making 4-5-6 separate Roth conversions early each year, then late in the year, recharacterizing all of them except for the one that performed the best. Each conversion was of an amount that suited your tax bracket limit. Yes, over convert by several multiples, then recharacterize before the tax was due.

Just too complicated for me then and not that greedy now.

 

[73ss454]

Years ago, someone, perhaps Slott, advocated making 4-5-6 separate Roth conversions early each year, then late in the year, recharacterizing all of them except for the one that performed the best. Each conversion was of an amount that suited your tax bracket limit. Yes, over convert by several multiples, then recharacterize before the tax was due.

Sounds too much like work.

 

[clifp]

I listened to him for the first time tonight on a PBS pledge drive, he also struck me a as a salesman. Albeit a smart and knowledgeable salesman.. $150 is more than a normal give to PBS. I don't have kids and more likely than not my estate will escape taxes so the mult igeneration info isn't very useful to me. It sound like the consensus is to find one of his books in the library.

I did the whole multiple ROTHs and the recharacterized them trick a few years ago. It immediately triggered an IRS flag and had to provide a additional paperwork. There is also the nagging doubt that you screwed up when the IRS tells you that owe $10K+ in taxes and penalities.

Once was enough now I just convert a small amount to my ROTH most years.

 

[73ss454]

Heck Clif, if you're not worried about the next generation, Ed is the last one to listen to. I'm sure that most of his happy customers are dead. He doesn't seem to make much money for the living.