Podcast Summary: Your Money, Your Wealth — Episode 554

Title: Change of Roth Plans for the New Senior Tax Bonus? Tax-Loss Wins?
Date: November 4, 2025
Hosts: Joe Anderson, CFP® & Big Al Clopine, CPA
Description:
Joe and Big Al dissect the latest tax code wrinkles and spitball retirement planning questions with their signature blend of humor and technical savvy. This episode covers how the new temporary senior tax deduction impacts Roth conversion strategies, the real value of tax-loss harvesting, brokerage cost basis conundrums, and how to approach retirement (even in the face of health challenges).

Main Theme & Purpose

Main Theme:
The episode centers on new tax laws—especially the temporary "Senior Bonus Deduction"—and their implications for Roth conversions, tax-loss harvesting, and overall retirement planning. The hosts answer listener questions, clarify nuances in tax planning, and weigh strategies for maximizing after-tax wealth, particularly for retirees.

Key Discussion Points & Insights

1. The New Temporary Senior Bonus Tax Deduction and Roth Conversion Strategies

[00:56–07:25]

• Listener Question (Chris from Maple Grove, MN):
  How does the new $6,000 per person senior deduction, which phases out between $150,000–$250,000 taxable income for married couples, affect Roth conversion planning for retirees seeking to build tax-free legacy wealth for heirs and reduce RMDs?

• Rules and Math:

  • The Senior Bonus Deduction is a new, temporary deduction for those aged 65+ (2025–2028):
    "It's the senior bonus deduction... four years, $6,000 if you're 65 and older. Doesn't matter whether you itemize or not." — Big Al, [03:17]
  • Phase-out thresholds:
    • Single: $75,000–$175,000
    • Married: $150,000–$250,000
      "For every dollar of extra income, you would lose 6 cents on this deduction..." — Big Al, [03:39]
  • For every $1 over the start of the phase-out, you lose 6% of the deduction.

• Strategic Takeaways:

  • Try to keep taxable income below $150,000 (married) to maintain full deduction.
  • Impact is temporary; the deduction is only certain for 2025 & 2026 (due to lookback rules for IRMAA/Medicare premiums). "If you're trying to preserve the whole $6,000 deduction, you might want to stay under as a married, $150,000... but that's only going to help you for 2025 and 2026." — Big Al, [04:12]
  • Given the listener's situation (large Roth balance, modest RMDs coming up, strong pension/Social Security), excess conversions that push them above the deduction may not provide enough tax benefit to offset the lost deduction.

• Joe & Al’s Conclusion:
  Stay under the $150k threshold if possible and keep Roth conversions modest:
  "I would stay under the $150,000 as well... I think he's done already a phenomenal job of getting a lot of money over to the Roth IRA." — Joe, [06:53]

2. Cost Basis Lost in Mutual Fund Transfers

[07:40–09:21]

• Listener Question (Wendy Chicago, Chino Hills, CA):
  Did an in-kind mutual fund transfer to Vanguard, and cost basis info didn't transfer. Will this affect 1099 tax reporting?

• Big Al’s Guidance:

  • Contact Vanguard and provide your cost basis; they typically can update it.
  • If basis is missing, the 1099 may show only proceeds, and you must report cost basis yourself—"income taxes are on the honor system."
  • The IRS allows flexibility, but keeping good records is crucial.
    "At any rate... if it doesn't get in the brokerage company, you just enter it on the tax return yourself." — Big Al, [08:19]

3. Tax-Loss Harvesting: How Much Is Too Much?

[10:21–17:51]

• Listener Question (Terry from Salt Lake City):
  Broker has generated $60K in losses on a $1.1M account via tax-loss harvesting. Is there a point where there are too many losses? Am I missing opportunities?

• Discussion Points:

  • Strategic harvesting is beneficial as long as you remain invested:
    "You need to buy something very similar so you're still in the market... When the market comes back... you'll enjoy that increase. But in the meantime, you've created a tax loss." — Big Al, [12:06]
  • Losses aren't wasted—they carry forward indefinitely and offset future capital gains of any sort (even real estate).
  • You can also deduct $3,000/year against ordinary income if no gains are realized, but big losses are most valuable when future gains are expected.
  • A red flag only if the portfolio is constantly generating big losses in an up market, which could signal poor investment choices rather than effective tax management. "If they're harvesting a bunch of losses in UP markets, what's the investment strategy? You don't want to buy dogs to take advantage of taxes." — Joe, [13:51]

• Bottom Line:
  Loss carryforwards are valuable, especially for those with large taxable assets. Focus on good investing, then harvest losses as opportunities arise—but monitor the quality of investments to avoid the "tail wagging the dog."

4. Retirement Planning Amid Major Health Challenges

[18:48–32:45]

• Listener Question (Larry & Sally from Michigan):
  High income, high savings, many accounts, but facing a significant health challenge (incurable brain disease). Can they afford to bridge the Medicare gap, enjoy “bucket list” spending, and cover long-term care costs if necessary? How should they use their brokerage account to optimize ACA subsidies for healthcare prior to Medicare?

• Hosts’ Analysis:

  • With $2.8M–$3M in savings, 30% savings rate, and prudent spending, they have strong prospects even before Social Security kicks in.
  • Large after-tax (brokerage) assets allow flexible, tax-efficient income to maximize ACA healthcare subsidies.
    "They're not going to look that you have 400 different accounts... they're going to look at how much income is drawn... that lands on the 1040." — Joe, [27:18]
  • With careful spending and healthy asset allocation, their withdrawal rate (~3.5%) is sustainable.
  • The main risk is the cost of long-term care; they should run varied scenarios, but the financial outlook is sound. "I would retire if two years is the mark. Go on those bucket trips, have a blast. Because I think he's got a lot of really good things covered." — Joe, [32:09]
  • Emotional emphasis: Seize the opportunity for experience, given health uncertainty. "Drink that wine, drink that scotch. Have a great time." — Big Al, [32:21]

Notable Quotes & Memorable Moments

• On the Senior Deduction:
  "It's a deduction, not a credit... For every dollar of extra income, you would lose 6 cents on this deduction."
  — Big Al, [03:41]

• On the temporary nature of the deduction:
  "It's only going to help you for 2025 and 2026, unless they extend it... It's temporary."
  — Big Al, [04:12]

• On tax-loss harvesting:
  "When you've got these losses, they're capital losses. They can be used against any capital gain... These losses are pretty valuable."
  — Big Al, [15:56]

• On retirement amid illness:
  "Make sure you certainly enjoy the time you have. Hopefully it's a lot of time, but make sure you enjoy it as soon as you can."
  — Big Al, [29:54]

• Fun banter about account statements:
  "This guy loves mail... You place a transaction in any of these things, it just gets flooded."
  — Joe, [24:14]

• On the importance of the right investment strategy (regarding tax-loss harvesting):
  "You don't want to buy dogs to take advantage of taxes."
  — Joe, [13:51]

Timestamps for Key Segments

• [00:56] – Maple Grove, MN: Roth conversions & new senior deduction
• [03:17] – Explanation and phaseout math for senior deduction
• [07:40] – Handling missing cost basis after mutual fund transfer
• [10:21] – Salt Lake City: Evaluating the value and risks of tax-loss harvesting
• [15:56] – How capital losses can be used against future gains (including real estate)
• [18:48] – Michigan couple: Retirement analysis with health challenges, Medicare gap, ACA optimization
• [29:54] – The necessity of enjoying life amid health uncertainty
• [32:21] – Hosts urge: Enjoy the wine and scotch—you’ve earned it!

Tone and Style

Reflecting the podcast’s signature style, the hosts blend technical expertise with lighthearted conversation. The pace is brisk yet approachable, with humor about acronyms, nostalgia, and friendly teasing about “mail-lovers” and TV/movie trivia. Technical concepts are broken down with relatable analogies and clear examples, making the information digestible for listeners at all knowledge levels.

Summary Takeaways

• Temporary tax laws—like the new senior deduction—require a nimble approach to Roth conversion strategies.
• Tax-loss harvesting, when executed thoughtfully, remains a potent tool for wealthy retirees with large taxable accounts.
• Cost basis errors in transfers can be corrected; ultimately, it’s your recordkeeping (and integrity) that matters most.
• Retirement plan robustness depends on both the numbers and the lived experiences—especially when life’s uncertainties (like health) are at play.
• Direct, empathetic advice: Do the math, act prudently, but don’t forget to “double-fist” the Cabernet and scotch if that’s what makes retirement sweet.

For further personalized spitballing, visit: YourMoneyYourWealth.com