When it comes to retirement planning, understanding tax-advantaged accounts like Roth IRAs, knowing how to select a trusted advisor, and making optimal income choices are key building blocks for long-term financial confidence. On this episode of the Retirement Made Easy podcast, I'm digging into the details of Roth IRAs, Roth conversions, navigating advisor relationships, and the complex art of Social Security timing.

With tax rules, income strategies, and advisor choices constantly evolving, continuous education and proactive planning are essential. If you're part of the 80% of Americans approaching retirement without a written plan, start the conversation, get informed, and take charge of your financial future—because retirement should be made easy for everyone.

You will want to hear this episode if you are interested in...

00:00 Understanding Roth IRAs and 401ks
05:38 Managing Roth IRA contributions
07:04 Understanding Roth IRA withdrawal rules
14:48 Managing inherited Roth IRA accounts
22:33 Choosing the right financial specialist
26:45 Advisory fee compensation explained
30:29 Deciding when to claim Social Security
40:44 Annuities and IRA considerations

What You Should Know about Roth IRAs & The Five-Year Rule

Roth IRAs allow you to grow investments tax-free and for the flexibility they offer when it comes to estate planning. However, many misunderstand the pivotal "five-year rule," which could lead to unexpected taxes or penalties at withdrawal time.

The five-year rule requires that your Roth IRA be funded for at least five tax years before you can begin withdrawing earnings without paying taxes. The clock doesn't start just when you open the account, but rather on January 1st of the year in which you make your first contribution. For anyone thinking of using a Roth in retirement, the guidance is clear: open and fund your account as soon as possible—even a modest amount can start that clock for future flexibility.

Timing and Tax Impacts of Roth Conversions

Roth conversions—moving money from a traditional IRA to a Roth and paying taxes now in exchange for future tax-free growth—are a powerful tool, but their intricacies often surprise investors.

If you perform a Roth conversion before age 59½, each conversion has its own five-year rule: you must wait five years—or until 59½, whichever comes later—before withdrawing converted amounts penalty-free. This prevents people from using conversions to skirt early-withdrawal rules. Additionally, taxes are due the year you convert, and if you withhold part of the conversion for taxes, you could face an early withdrawal penalty on the amount withheld. Ideally, pay conversion taxes from non-retirement funds to maximize your Roth's growth potential.

Choosing the Right Advisor

Selecting a retirement or financial planner can feel like a minefield but here are my tips for finding the right advisor for you:

Research credentials (e.g., Certified Financial Planner or fiduciary licensure).
Understand their compensation: whether it's hourly, commission-based (often tied to products), or a transparent advisory fee (25:02).
Use resources like BrokerCheck and Google reviews to vet their background and client satisfaction.

It's not just finding "an advisor"—it's finding the right fit for your needs and values.

Social Security Timing: No One-Size-Fits-All Answer

Determining when to claim Social Security is arguably one of retirement's trickiest decisions. There are lots of variables: health, life expectancy, marital status, income needs, and projected investment returns. There are a couple of general rules though, delaying Social Security increases your lifetime benefit if you live beyond average life expectancy. And claiming early (as soon as 62) may make sense for those with shorter life expectancies or immediate income needs.

You should also consider spousal benefits and survivor implications and analyze the impact of other taxable income on Social Security when you're planning when to claim. Running "what if" scenarios with a qualified planner can help you assess trade-offs and achieve peace of mind.

Resources & People Mentioned

3 Steps to Retirement Planning

Connect With Gregg Gonzalez

Email at: Gregg.gonzalez@lpl.com
Podcast: https://RetireStrongFA.com/Podcast
Website: https://RetireStrongFA.com/
Follow Gregg on LinkedIn
Follow Gregg on Facebook
Follow Gregg on YouTube

Subscribe to Retirement Made Easy On Apple Podcasts, Spotify, Google Podcasts

Clearing Up Roth IRA Confusion, Ep #209