Joe Thomas

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  Agent Joe Thomas answers your
questions about retirement plans.
Florida Agent # A263742

401ks and IRAs

  • How do I check to see if a broker or agent is Licensed in Florida?
    Florida Department of Financial Services

  • Should I convert my IRA to a Roth IRA?

    The Roth IRA & The Roth IRA Conversion

    If you're set on leaving your IRA in a Trust, then the best way to do that is to leave it as a ROTH IRA. Why? Because, the ROTH IRA is TAX FREE upon death to your named beneficiary and you can leave it to a Trust and pay no income tax and you'll have no Trust tax problems.

    How does the Roth Conversion work?

    The tax code simply allows you to pay all your taxes at once or over the number of years you choose. Keep in mind, you'll basically end up paying the same tax no matter what anyway, however, by converting this money it'll make available many good things for you and your family.

    If you have an IRA that you are taking your required minimum distributions from, then you reinvest that money in a taxable investment just to leave this money to your family, then a Roth conversion is for you. Of course there are other considerations that need to be discussed for each individual's unique situation.

    You need to realize that by converting, you're leaving a Tax Free investment instead of a Taxable one to your family and when you include the Stretch privilege, the numbers are astronomical. In the short run, you'll have taxes to pay, but in the long run, the Tax-Free build up can go on for generations with your name on it. That's right; Your Name will appear on that Stretch IRA forever. So, the people who receive it will see your name as long as they have it themselves. Your Kids or Grandkids will see your name for a long time after you leave your IRA to them. I know of no other investment that does this!

    Another benefit that most advisors aren't aware of is that once you convert your IRA to a Roth IRA, you will not have anymore required minimum distributions and you may even be able to reduce your Social Security taxes.

    If you take advantage of the Stretch IRA privileges and you convert your IRA to a Roth IRA, you're now taking advantage of the most beneficial tax codes that are available to you and your family.

  • What is a Stretch IRA?

    Most people, even some advisors, think that the Stretch IRA is something you have to buy; however, it's simply the ability due to tax code that allows you to choose a named beneficiary to receive your IRAs post-death distributions over the beneficiaries life expectancy per the IRS Single Life Expectancy table.

    A non-spouse beneficiary such as a Trust cannot have a Stretch IRA and you therefore lose the privilege. It must go to a human being for it to be a Stretch IRA. The benefits of this legal tax benefit are enormous and guess what, most advisors and financial institutions don't even offer this to their clients.

    I personally make sure that everyone of my clients uses this to their full advantage. In some cases, we even make the clients grand-kids the beneficiary so that the stretch is really used to its most powerful advantage.

    If you understand that this is the difference between leaving your kids a Tax Infested Time Bomb or a Million Bucks Tax Free, then you would only request the IRA Beneficiary forms and Advice that I personally use for my clientele.

    Example: If you left $1,000,000 in an IRA to a 1-year old Grandchild with a life expectancy of 81.6 years and if you invested this money at 8% compounded, your Grandchild will withdraw about $81,675,453 over the 81.6 years. And, if you converted this to a Roth IRA you would be leaving 100% Income & Estate TAX FREE!

    Too good to be true or you or your current advisors just don't know how this works?

    Well, I do! The $64,000 question is, does your IRA, 401k, 403b, or present Custodian allow for a Stretch IRA? Probably not! As unbelievable as it may sound, there are still some who don't! Simply call me and I'll provide you with a list of companies that offer this service to my clients.

  • Who’s Your IRA/401k Beneficiary?

    It sounds like a very simple thing to do, to update or change who your Beneficiaries are, but most people forget about this or think it's all taken care of by someone else.

    What do I mean by this? Well, most people go to their Bank or Financial Institution and they have the person that is helping them invest their money, help them with who their beneficiaries are.

    Most people simply want to answer the question and get on with all the paperwork and they simply pick the people they intend to leave the money to. But sometimes mistakes happen and the wrong beneficiary is made.

    For example, let's say that the person helping you suggests, because you don't know at that point who to elect as your beneficiary, to make your Will or Trust your beneficiary until you do decide. This could end up being very costly for your real beneficiaries.

    This person (the advisor) un-knowingly thinks that they are helping you, when in fact that mistake could possibly cost you as high as 80% estate and income tax for your real beneficiaries. Also, you might even end up disinheriting the people you intended the money to go to.

    Knowledge is King in respect to IRAs and knowing the rules is imperative in making a simple form become a major costly mistake. Most people & Advisors don't know that IRAs should almost never pass through a Will, or leaving your "Estate" as beneficiary because your IRA will become a Probated asset subject to estate claims and probate costs. Exactly the opposite of what you are trying to accomplish.

    Most people are unaware that if you leave "no" designated beneficiary for your IRA, that the Stretch IRA privilege is lost. We'll talk about this later and its importance.

    Another common mistake is to leave your Trust as your beneficiary because for an IRA the tax rate is calculated at Trust Tax Rates. These are the highest tax rates there are. Also, you cannot separate the accounts once a trust is named as beneficiary. We'll also talk about the benefits of separate IRA accounts for each named beneficiary and the benefits of doing this.

    Please remember this; there is no tax benefit that can be gained with a Trust that cannot be gained without one. You would only use this for certain situations such as non-tax reasons. Examples would be: the beneficiary is a minor, disabled, incompetent or unable to make decisions themselves, second marriages or creditor protection.

  • Comparison of Tax Rates: Trust Tax Rates vs. Individual Tax Rates:

    For 2007 Trust tax returns, income over $10,450 is Taxed at 35%.  Individuals would not reach a tax rate of 35% in 2007 until taxable income exceeded $349,700.

    You may not be aware that even though you went to the best attorney and he prepared the best Will & Trust, that your IRA, which may be one of your biggest assets, is still exposed to a possible 80% tax because they were unaware of this!

    You need to understand that an IRA bypasses the Will and your Trust because you have a named beneficiary. And you had better make sure you have updated your beneficiary forms or you may end up leaving it to the wrong person. If you have paid for all this legal work and you or your attorney forgets to change your beneficiary, the IRA is up for grabs.

    Multiple Beneficiaries

    Splitting IRAs with multiple beneficiaries can be done at anytime (before or after the IRA owner's death), but if the split is after 12/31 of the year after death, they will be stuck with using the age of the oldest beneficiary, or the shortest life expectancy.

    Simply put, you should have a separate IRA account for each named beneficiary if there is more than one. Why this is so important is because of the difference in ages and what each beneficiary may do with the IRA money left to them. Some may want the income, some may want the cash, some may want to do a rollover into their own IRA. If you have more than one beneficiary, you should have more than one IRA account set up for those beneficiaries to prevent problems.

    If you’d like more information on IRAs or 401ks, then call: Jupiter Joe 561-743-0999.

Reducing Your Taxes on Social Security Benefits? Can it really be done?

Let me start by telling you it can be done and is done everyday by a good percentage of my clients who take advantage of my 25 year expertise in the financial world. You have always heard “it’s not what you know, but who you know”. Well, in this case it’s both. Maybe your neighbor or your CPA (Accountant) or your current Advisor has told you “you can’t reduce these taxes”. Well, you can and if you allow me, I’ll show you how.

There are millions of Americans subject to this tax; in fact, 22% of Americans are affected by it. Guess what group of Americans are Exempt from this tax? Members of Congress! Seems fair, right? Wrong! You have every right as an American to seek out the Right Advice and try to curtail, reduce or possibly eliminate this tax from your tax return if you possibly can. There are some individuals who may be ineligible to do this due to their income. However, the benefits of my service will help them be more informed and better suited to reach their financial goals. The good news is that the fix is very simple, legal and in all cases beneficial to the individual seeking this advice. Without complicating things, the tax is based on Income and Income from all sources. Yes, even Municipal Tax Free Bonds.

 Those little slips of paper called 1099s are the culprits here; Every year you receive these in the mail just before you file your tax return. These guys are not your friends! Yes, it’s great you’re making interest on your investments, but if you only reinvest this money and plan on leaving this money to your beneficiaries, then you’re only hurting yourself.

You see, all the income you receive puts you in a higher tax bracket even if you don’t live off the income these investments are generating. You are taxed on this money and here lies the real problem.

What can you do to Reduce these Taxes?

My parents always told me “never put all your eggs in one basket” and this is still true in today’s world especially when calculating Social Security Taxes. Most of your 1099s are most likely coming from several sources, such as: IRA/401k (Required Minimum Distributions), Pensions, Dividends, Capital Gains, Mutual Funds, Tax Free Bonds, Money Markets, Savings, Checking and Certificates of Deposits. All of these investments generate a 1099 and as income they are then added to your Social Security Income up to 85% and then taxed.

If you could eliminate some of the larger 1099s, that would be a good start because this is where the problem lies; many so-called experts may tell you “you can’t do that” or “I don’t know about that”. Well, I do. It can be done. Most people only hear what they want to hear, the rich listen and yes, the rich get richer for that reason.

There are numerous tactics to start the process of reducing these taxes, let’s go a step further, it’s a game plan, a goal, it has to be something you want to accomplish and each person will be different. I strongly recommend that each person get an expert’s opinion on these ideas/concepts before they act on them as each individual will have unique goals and needs. For the most part, I am going to give you ideas/concepts that I have used and I am still using with my clients that have worked in their specific & unique ways to help them reduce Social Security Taxes.


If you have an investment such as a CD, Money Market, Savings Account, Checking Account, Mutual Fund, Tax Free Municipal Bonds and you’re not living off the interest they’re generating but instead reinvesting this in another taxable account, you’re chasing your own tail. You’re being taxed over and over again on this money and not setting it up for its real intent.

You need to know the purpose of this money. In other words, where is this money eventually going and what purpose will it serve. Remember, knowledge is King here. You must put intent on this money, give it a purpose or it will continue to be taxed over and over again. Also, depending on your age, family relationship and your purpose, I would invest any money that is in excess of living expenses into a Tax-Deferred Vehicle with a named beneficiary.

Annuities work very well in this situation because you can name one or as many beneficiaries as you like and the money goes directly to them. While the money is earning interest there will Not be any 1099s. In fact, you may never receive one unless you need money. All of the interest that is earned is not taxed until you need that money and therefore, you can reduce all of the taxes you normally would have paid on the other investments you have replaced with the annuity.

When you sit down to discuss annuities with me you’ll find out that setting aside an amount of money for emergency is a good thing, but how much is the question. I have clients who have $100,000 in their checking or savings account earning 1% interest and when I ask what it’s there for, they say “an emergency”. I usually ask “What emergency costs $100,000?”. We both laugh and then we discuss how much would be a realistic amount.

All this is thinking about what you want your money to do for you, putting your money to work for you. It’s thinking past making money, interest and taxes; It’s about knowing where, what, who and how you want it to end. Sometimes you just need someone there who can show you the right way to go.

Triple Compounding of Interest Here’s an example you may not have heard about before, especially from your bank, Triple Compounding of Interest. Albert Einstein was amazed at how money could multiply just by the power of compounding. He considered the compounding of money as one of the most amazing inventions of mankind.

The tax deferral of Annuities allows you to maximize the effects of Compounding by earning Interest three ways: Interest on Principal, Interest on Interest and Interest on the money you would have paid taxes on.

If you took a Dollar and you doubled it every year for 20 years at the end of 20 years you would have $754,974.72.

If you took that same Dollar and apply taxes of 28% each year at the end of 20 years you would have $51,353.37.

You can clearly see that the less taxes you pay, the better off you are, in fact, way better off. Recapping this concept, by simply repositioning some of your investments into a tax deferred annuity could have a dramatic impact on your taxable income while greatly increasing your overall wealth. (Now your money is working for you.)Your money grows faster, you pay less income tax, you have more control of your money and there is more money that goes to your family.

I am not going to get into the pros and cons of annuities at this time. However, I will explain my expert opinion here. Annuities were created by the rich for the rich and for the specific purpose that was and still is to reduce taxes while your money compounds. This certainly is done today as yesterday, but now for every social status. The reason most people get confused about them is that they know virtually nothing about them and some advisors confuse them even more.

I have many people tell me some really funny things about investing and life in general, but the best is when I hear them say,“Gold is a bad investment” or “Real Estate is a bad investment” or “Annuities are a bad investment” and I ask, “Why is that?”. They tell me that they had a friend, relative, neighbor or whomever that told them this. I usually ask a lot of questions about why this is because I’ve always learned from my clients. In most cases, this reference was given to them with an opinion from someone else and is not reality; advice is what it’s worth, good or bad.

Good Advisor, Bad Advice You may be perfectly happy with your current advisor and that’s wonderful, however they may not be the right advisor for you. I actually work with other advisors and their clients in helping them with this issue, if they are unfamiliar.

Since 2000, in my opinion, many advisors have given their clients some really Bad advice. Even when the market was dropping everyday advisors were telling their best clients to keep buying, “don’t worry it’ll come back, hold on everything will be fine, the market will come back”; It hasn’t and nobody knows when it will. I have a problem with advisors who say they know what’s going to happen when they clearly don’t. They don’t have a Crystal Ball and neither do I, but I do know how to keep your money safe, secure and earning a good rate of guaranteed interest.

Think about it, you’ve worked your entire life to save this money, 30, 40, maybe 50 years, and at your age of 65, 75, 80 and now a 30-year old with little assets is going to help you invest your money? There are many advisors advising you to buy the wrong products, mutual funds, stocks, bonds, variable annuities, REITS and other risky investments that benefit them more than you. When you look at the majority of advisors out there, they’re investing your money in investments that may suit their age brackets rather than yours.

You need to select an advisor who sees what you see for your money and your goals are met before you start, not wait 10 to 20 years to find out what happens then.

This testimonial is from one of my clients that were referred to me by another client who thought I could help them with their problem. These folks were invested in mutual funds, the market continued to drop and every time the client called to get their Advisors advice, they were told “it will go up, don’t worry”, but it never did go up and they took a significant loss of value on their accounts.

I helped them by immediately getting them out of the risk factor and invested them in a fixed income annuity to prevent further losses and provide them with an income. If I had not been recommended to these people they would probably have nothing left.

It’s how you look at things!

There was a very rich man and his wife staying at a very fancy hotel in Hollywood, California. He and his wife decided to have lunch; they stopped at the store, bought some apples, a piece of cheese, some crackers and a few drinks. They drove back to the hotel, sat on the porch of the hotel in an area with the best view overlooking the mountains and the beach. They sat there eating their lunch when their son in his thirties pulled up with his new shiny fire engine red Corvette. He flew up, flew out of the car and threw the valet his keys and said, “Park it, buddy”. After the valet parked his car, he went over to the parents sitting on the porch of the hotel and asked the parents, “Why are you sitting here at one of the fanciest hotels in Hollywood eating apples & cheese when your son is driving a brand new shiny red Corvette?”. The man answered, “You see, Sir, My son has a Millionaire for a father and I don’t!”.

New IRA Laws, The Stretch IRA

If you haven’t reviewed your Beneficiaries with your Advisor on your IRA you need to do so immediately. The Multi-Generational IRA, Payout IRA, Legacy IRA or the Stretch IRA are all new names given to the new laws which allows your money to last longer when leaving your IRA proceeds to your named beneficiary and therefore reducing taxes for them.

The old way before this new law took effect when distributions were paid out upon death, everything was set in stone and every rule had to be followed perfectly. Usually this would mean a large loss in the value of the IRA due to taxes, Federal & Estate, to your Beneficiary. You had to distribute the entire account in a lump sum or in a full annuitization.

You could have done this Stretch IRA technique before, however, you needed an Attorney to fill out the forms and one to interpret the forms so that it was all legal. The new way or the Stretch IRA way is simple. You simply pick your named beneficiary and they can pick a successor beneficiary to Stretch out the IRA proceeds over their mortality table.

Here are some key points to follow: You need to pick a company that allows you to do this and one that doesn’t charge a fee for doing so. Most companies with the exception of insurance companies are charging a fee or they aren’t able to help you at all. I have found most of the banks don’t know what you’re talking about if you ask their help. The Stretch IRA can be set up now or it can be set up later, just make sure the company allows for it. (We offer most of the large reputable companies that perform this as a service for our clients and we make the process extremely easy without charging a fee.)

Why would you do this? If you want your named beneficiary to receive this money without losing a large portion to Taxes, then the Stretch IRA is the way to go. It would allow you to pass along the most amount of money to your beneficiaries and allows you to spread the tax liability over years instead of all at once as before. Each succeeding beneficiary has the ability to name successor beneficiaries and therefore creating a legacy for your family & theirs.

I feel this is one of the most important changes in the tax code in years and you should take advantage if your plans are to reduce taxes for your family as well as leaving money for years to come. I want to emphasize that not all financial companies are providing this service free of charge and some are not capable of administering this type of IRA designation for you.

Again, knowing the law and what tax advantages the IRS has given you is extremely important here. This way you can leave your money to whomever you want while reducing taxes legally. If you haven’t reviewed your IRA’s beneficiary designation and what options are available, you’re just giving money away.


You need to look at your money more carefully and pick an advisor that’s looking out for your best interest and not their own. When you pick an investment, it’s most important that you look beyond the return on your investment and start looking at the return of your investment. Also having a purpose for that investment and having it accomplish what you want should be extremely important to you.

This information has been sent to you free of charge and should be used as an opinion nature only. Always consult the advice of an Attorney, Accountant, or Financial Advisor to obtain the answers to the specific questions you may have.

I want to remind you that everyone’s situation is different and the answers to these financial questions should be looked at individually as such. Please feel free to call me personally if you’d like to set an appointment or you would like any additional information on a topic in which you have an interest. I never charge a fee and I am compensated directly by the companies I represent. 

If you currently have an investment that is not performing well, you feel is too risky or you would like some real answers to specific questions about Reducing Social Security Taxes, call me we’ll sit down and discuss it. Thanks for your time. Joe Thomas 800-227-0595


*Disclosure: It is not our purpose to provide insurance, tax and or legal advice, and you should always consult with your CPA, Attorney, Financial Advisor, Insurance agent and or Family members as this information relates to your specific situation or needs. This information has been presented in a very General manor for illustrative & advertising purposes only, and your specific situation should be analyzed in detail with a professional Advisor, insurance agent and or legal/accounting professional.

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