What's the Tax Triangle and How to Find Out if Yours is Lopsided - 544

Summary

Your Money, Your Wealth #544: What's the Tax Triangle and How to Find Out if Yours is Lopsided

Hosts: Joe Anderson, CFP® (Joe)
Guest Co-Host: Mark Horner, CFP® (Mark)
Date: August 26, 2025

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Episode Overview

This lively episode focuses on the tax triangle—the distribution of savings across taxable, tax-deferred, and tax-free accounts—and what to do if your triangle is “lopsided.” Joe Anderson and guest CFP® Mark Horner field listener questions about balancing different types of accounts for retirement, examine whether part-time work is necessary in early retirement, and trade witty observations about real-life financial quandaries including deferred compensation and company stock. As always, the show delivers practical strategies alongside plenty of banter and humor.

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Key Discussion Points and Insights

1. Ray & Roy's Lopsided Tax Triangle (00:48–12:03)

Background:

• Listeners Ray and Roy from Central California describe their situation and ask about their heavily taxable-tilted holdings.
  • $2 million in savings
  • 85% in taxable accounts
  • 10% in tax-deferred accounts
  • 5% in Roth (tax-free)
  • Annual fixed income: $50,000 (likely a teacher pension), to increase by $20,000 (Social Security) when Roy turns 67
  • Target yearly spending: $96,000
  • Ages: 59 and 62
  • Concerns: Whether one should get a part-time job, how to “get on the Roth train,” and how to reduce taxes in retirement

The 'Tax Triangle' Issue

• Joe: “She is a little lopsided here... Do you have an idea of how they got such a lopsided tax triangle? It’s not even a tri, it’s an octagon or whatever.” (04:03)
• Mark: Speculates that a pension may have reduced the need for tax-deferred savings.
• Key point: The situation of mostly taxable (brokerage) assets is rare and presents both challenges and opportunities.

Do They Need a Part-Time Job?

• Joe: Math shows their portfolio easily covers their shortfall, even conservatively.
• Mark (with a humorous social angle): Suggests part-time work might not be needed for financial reasons, but jokes, “I think there’s risk that the fire pit joy could fall apart if they’re around each other seven days a week, 24/7...” (06:24)
• Joe: Recalls studies showing couples often have different visions of retirement, with men wanting to spend more time with their spouse and wives not ranking that as highly.

Is the Triangle a Problem?

• Joe: “Is your tax triangle lopsided? No, absolutely not. I would much rather have 85% of my wealth in a taxable account versus a tax deferred account. Ideally I would want everything into a Roth, but...” (08:49)
• Main benefit: Flexibility; can generate income at a 0% capital gains rate with effective planning.

Tax Efficiency and Reducing Liability

• Invest for maximum tax efficiency: Avoid unnecessary capital gains, structure assets for minimal annual taxes.
• Use standard deduction and capital gains exclusions.
• Tax loss harvesting, asset location, and modern portfolio management tools help keep taxes near zero.
• “If you do it right, there’s very, very little tax, if any.” (10:10)
• Roth conversions aren't a priority unless other tax planning is exhausted—if retiring with such a mix, they're likely to remain in the lowest brackets.

How to Move Funds to Roth / Roth Contributions

• With earned income (from a part-time job), could do direct Roth contributions up to the annual limit.
• Joe: “As long as there’s earned income...there’s different ways...whoever doesn’t like the podcast should go get a part time job.” (11:56)

Memorable Listener Note:

• “One of us is a huge fan of the podcast.” (03:25)
• Mark: “That’s definitely Roy.” (11:58)

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2. Elwood Blues: High-Flying Executive’s Retirement Plan (13:11–26:18)

Background:

• Listener “Elwood Blues” from Illinois, 57, looking to retire in 2–3 years.
  • $5M in brokerage accounts
  • $1.9M in IRAs
  • $575,000 in Roth
  • $400,000 in 457 plan
  • Deferred comp of $1.5M paid six months after retirement
  • Annual spending goal: $250,000–$300,000
  • No pension or debt; kids are independent

Do They Have Enough to Retire?

• Joe assesses the math: “Super tough one here. So $300,000. Yeah, you could retire. You have close to $10 million. 3% burn rate on $10 million is $300,000 plus tax, plus the cost of living. I think you’re good.” (18:47)
• Mark: Predicts Elwood is a “corporate executive for a public company in Chicago” given the numbers and plan structure. (17:22)

Deferred Compensation Plan Risks & Opportunities (19:34–24:44)

• Deferred comp is a recruitment/retention tool but comes with drawbacks:
  • Payments are fixed and fully taxable as ordinary income.
  • Funds are technically at risk if the company fails before payout.
  • Joe: “The longer the payment, the more risk that you’re taking on... you don’t see maybe, I don’t know if in our lifetimes we’ll see companies like GE anymore that were around for 100 years.” (22:08)
  • Mark: “The Lehman Brothers deferred comp plan probably didn’t work out too well.” (22:32)
• Tax impact: Deferred comp payments can crowd out other planning, e.g., Roth conversions, if income is high.
• Key planning strategies:
  • Carefully choose how to structure deferred comp payouts to balance tax brackets and company stability risk.
  • Check for concentrated company stock in brokerage/retirement accounts; consider charitable gifting and net unrealized appreciation strategies.

Company Stock and Tax Planning

• Discuss what to do with large positions of company stock, both for diversification and potential tax deals (charitable giving, NUA transitions).
• Joe: “...If that was the case, he could do net unrealized appreciation, take those dollars out, put those in a brokerage account, you pay tax on the basis... the basis is probably relatively low.” (25:09)

Listener Lifestyle Notes & Banter

• Cars: Ford F150 (“I think that lines up entirely with our ExxonMobil gas...manufacturing, getting your hands dirty kind of a job.” – Mark, 25:40)
• Beers: Lots of IPA drinkers among listeners.
• Friendly ribbing about favorite movies (Blues Brothers, Roadhouse) and Elwood’s possible motivations.

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Notable Quotes & Memorable Moments

• On Lopsided Accounts:

  “I would much rather have 85% of my wealth in a taxable account versus a tax deferred account. Ideally I would want everything into a Roth, but…”
  —Joe Anderson (08:49)

• On Retirement Harmony:

  “I think there’s risk that the fire pit joy could fall apart if they’re around each other seven days a week, 24/7... Maybe just out of the gate they should experience—one of them should have a part time job because absence makes the heart grow fonder.”
  —Mark Horner (06:24)

• On Listener Engagement:

  “One of us is a huge fan of the podcast.”
  —Ray & Roy’s email (03:25)

• On Deferred Compensation Risk:

  “The longer the payment, the more risk that you’re taking on in this deferred comp. It sits on the balance sheet of the company... If company goes under, sayonara.”
  —Joe Anderson (22:08)

• On Listener Profile Guess:

  “This shows up all the time—F150s, and bourbon old fashions.”
  —Joe Anderson (25:58)

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Timestamps of Important Segments

• Ray & Roy’s Case and Tax Triangle Discussion: 00:48–12:03
• Elwood Blues’ Retirement & Deferred Compensation Deep Dive: 13:11–26:18
• Important Tax Diversification Concepts, Roth Conversion Basics: 09:38–11:15, 19:34–24:44
• Banter on Relationships & Retirement Lifestyle: 06:24–08:25
• Deferred Comp Risks and Strategies: 19:34–24:44
• Listener Lifestyle Correspondence & Pop Culture References: Scattered throughout; esp. 14:44–17:18, 25:40–26:05

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Final Takeaways

• A lopsided tax triangle (lots in taxable or brokerage vs. tax-deferred or Roth) is not a problem if structured for tax efficiency—may be even better than high tax-deferred savings given the current tax codes.
• Utilizing Roth contributions and conversions makes sense only if there’s sufficient earned income or tax planning room.
• Deferred compensation is a useful but risky tool; payout strategy and company health matter greatly.
• Fun, humor, and clear analogies (plus a dash of movie references!) make complex retirement tax topics accessible and less intimidating for listeners.

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For more resources, retirement planning tools, or to get your own plan "spitballed," visit YourMoneyYourWealth.com.

Transcript

[A]

You've heard Joe and Big Al talk about the benefits of tax diversification in retirement. That is having money in tax deferred, tax free and taxable accounts. But what should you do if this tax triangle of yours is lopsided? Joe and our special guest co host, Mark Horner, cfp, spitball on this quandary for Ray and Roy in Central California today on youn Money, you, wealth podcast number 544. Plus, do Ray or Roy need to.

[B]

Get a part time job?

[A]

Also, Elwood Blues in Illinois would like.

[B]

To retire in two years, but is.

[A]

Willing to go for three more to make this retirement plan work. Joe and Mark, spitball on when Elwood can really put down that harmonica. I'm executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, cfp and sitting in for Big Al Clopine, CPA Mark Horner, cfp.

[C]

Ray and Roy, let's go here. Howdy, Joe, Al, Andy. I'm Ray and my husband's Roy. That's cute. Little Ray and Roy. We drive an old Toyota 4Runner when we're exploring off road and have recently purchased a Mazda Hybrid. For our daily trips to town, we like a little scotch or bourbon on the rocks. When the weekend hits, we enjoy looking at the stars around the fire pit. Oh, Ray and Roy, you are so lovely. Lovely, beautiful Central California is our home. Here are numbers that Andy asked for in her helpful video found on the Pure Financial website. You made a video?

[B]

I told you about this like six months ago. If you go to the Ask Joe and Big Al page, there's a video from me that explains to you how to get a good spitball. So obviously Ray and Roy have used it.

[C]

Very cool. I should go there.

[B]

You should get to know our website, Joe. Purefinancial.com, you'll love it.

[C]

You'd probably take a little gander at that, right?

[D]

Less time on Instagram.

[E]

Come on, buddy.

[C]

Oh, man. All right, let's see. We have $2 million saved for retirement. 85% in taxable accounts and 10% in tax deferred. 5% tax free. Wow, this is interesting. $2 million. Only 10% of that is in a retirement account. And everything's more or less in a brokerage.

[A]

Brokerage, yeah.

[C]

That's annual income.

[D]

That is unique.

[C]

Yep. Our fixed annual income will be $50,000 to start, and then after Roy reaches age 67, we'll have $20,000 more. We plan on retiring this summer at ages 59 and 62. We would like to spend $96,000 annually. Of course. Quick spitball please. Should one of us get a part time job. Number two, you may have noticed our tax triangle is a bit lopsided.

[E]

Yeah.

[C]

Yes, we did there, Ray and Roy. Is this a problem? We assume it is best to spend down the brokerage account first, correct? No, we want to get on the ROTH train. Can we best move funds from our taxable into Roth accounts? Will a teacher's pension or Social Security count as earned income tax? And finally, how can we reduce tax liability as we begin to spend down. One of us is a huge fan of the podcast.

[B]

That's my favorite line in the whole email. One of us is a huge fan.

[C]

For some reason, it is relaxing to hear how you guys make sense of random people's financial chaos in mathematical mumbo jumbo. Thanks for helping so many of us work towards financial peace. Aloha, Ray and Roy.

[B]

So Ray is just listening and hanging on to every word and dragging Roy along. And Roy is like, can you please not make me listen to these idiots?

[D]

Enough of these clowns.

[C]

Yeah, Roy, we gotta convert them. Okay, what do you think?

[B]

Convert into Ross.

[C]

She is a little lopsided here. What do you think? Okay, so what do you think? How did this happen? How do you think?

[D]

How did this happen?

[C]

Do you have an idea of what how they got such a lopsided tax triangle? It's not even a tri, it's an octagon or whatever.

[D]

I mean, what's it is an octagon? Maybe one of them being a teacher, they just figured, ah, the pension's gonna take care of me. I don't need to. I don't need to worry about. I don't need to worry about saving more into the. Into deferred accounts. I'll just save what we've got in the taxable accounts and the pension will be there for me.

[C]

So the $50,000 fixed income, is that Ray's teacher pension?

[D]

Do you think that's how I'm reading between the lines?

[C]

When they make money, 20,000 is going to be Roy's Social Security. So.

[B]

Yeah, it says when Roy reaches age 67, we'll have 20k more in Social Security. So it sounds like only Roy is going to be getting Social Security.

[C]

Well, I don't know. With the new Social Security law that.

[B]

Passed, that's what I was going to ask. Yeah. Is the Social Security Fairness act going to make it so that Ray actually has more money than she thinks?

[C]

Wow, look at you. Just throw out the exact tax the Social Security Fairness Act.

[B]

You were on vacation and Al and Susan Brandis just talked it out, learned everything.

[C]

Yeah, I call it, yeah, that new Social Security thing that came out in like you. Yeah, you mean the Social Security Fairness and Respect act of 2025.

[D]

Exactly. Passed on June 12th.

[B]

I learned from Big Al.

[C]

Okay, so all right, fixed income of $70,000. They want to spend 100, so they're going to be short $30,000. They have $2 million. They're looking pretty good even if they have to bridge the gap once all fixed income arrives. They need $30,000. They got two. Even if million, that's only 3% on a million. So the math works here. So let's talk about some other strategies. So spitball, should we get a part time job? Mark? I don't think they need a part time job.

[D]

Well, I kind of think that they do. I'm, I'm, I'm. Yeah. So I'm, I'm thinking that the time around the fire pits. So we like little scotch and bourbon on the rocks. And the weekend hits. Enjoy looking at the stars around the fire pit. I'm imagining that they've been doing their working thing, their working career for a little while and then the end of the week comes and then they reconnect around the fire pit and have a glorious time. I think there's risk that the fire pit joy could fall apart if they're around each other seven days a week, 24, seven that maybe just out of the gate they should experience. One of them should have a part time job because absence makes the heart grow fonder. But instead of being around each other too much, I would like to see them not for financial reasons, for harmony in central California reasons. One of them get a part time job.

[C]

Okay. No, I like yeah, there's a survey that was ran. You know, retirees and men and women have different visions of what retirement looks like. So they asked and there was couples. I forget the exact survey and when it was done, but I kind of know the punchline here. And so, you know, they asked the both spouses separately how do they want to spend their retirement and what does that look like? And so they asked the male and the male goes, you know, I really want to spend a lot more time with family. I want to spend more time with my wife. And you know, we want to travel, we want to do different things. And that was the number one thing for most males. And then they asked the wife and the female, it's like, okay, what do you want to do? And it was Spending more time with my husband. Well, didn't even make the top 10, you know. No.

[D]

Page three. Yeah, right.

[C]

And so you get the husband kind of like in, in the way, you know.

[E]

Right, right.

[C]

Hey honey, it's 10am can we go to the fire pit and have some scotch?

[D]

I don't, I don't think so.

[C]

She's like, what do you know? That's not the routine. That's going to be me when I retire. Honey, it's like 8:30, let's go. He's like, 8:30am all right, I'll see you in a few hours.

[D]

So the extra income of a part time job, I mean, that'd be nice gravy on top, but more for relationship reasons.

[C]

Is your tax triangle lopsided? No, absolutely not. I would much rather have 85% of my wealth in a taxable account versus a tax deferred account. Ideally I would want everything into a Roth, but. So you have almost a couple million dollars in a taxable account. The only thing that you have to be concerned with, or it's not even a concern, is how those dollars are invested. Because the interest in dividends and capital gains and everything else, all of that is going to spit out and it's going to end up on your tax return, which she's already realizing because she has those dollars. So you want to be a little bit more tax efficient with them. And then you could create a lot of income from those accounts at a 0% tax bracket.

[D]

Absolutely.

[C]

You're going to be in a very low bracket and you could do conversions with the 10% that you have, the $200,000 over time. Get everything then into a Roth and a brokerage account. I mean, I think you're sitting pretty.

[D]

Absolutely, absolutely. I thought exactly the same thing when she asked about how do we reduce our tax liability. I was not understanding why there's a tax liability problem. And I think you hit the nail on the head. My guess it's the investments are not structured the way that they should be.

[C]

Yep.

[D]

Or as efficiently as they should be.

[C]

Right, right, right, right. Because if you do it right, there's very, very little tax, if any.

[D]

There should be.

[E]

Yep.

[C]

So, you know, you could do tax loss harvesting maybe. Think about, I mean, the technology today in regards to investment structure in tax efficiency of these structures is crazy.

[D]

It is crazy.

[C]

So even though you have several million dollars in a non qualified account, you can almost always zero or close to zero the tax out just because of your standard deduction is X. And then the capital gains Rate as a married couple, it's pretty high. And that's a 0% cap gains rate. So yeah, I think it's just fine tuning that. You're going to be very little tax. How do I put more money into Roth? I don't know if you need to, if you do this right, because you'll probably be in the 0% tax bracket for life.

[D]

Right.

[C]

But I guess with Mark's suggestion, you have Roy continue to work. And if he works, then you can do, he can do Roth IRAs. You could do a spousal Roth IRA as long as there's earned income. So if you have earned income of $5,000, you can do a Roth contribution of $5,000. If you have higher income, you can go up to the IRA contribution limits and then both spouses can do Roth even though that one spouse is working. So I mean, that's one way. There's different ways.

[D]

And I don't want to pick on Roy. I would say whoever doesn't like the podcast should go get a part time job.

[C]

That's definitely Roy.

[D]

Yeah, definitely Roy.

[E]

Yeah.

[C]

Ray loves it.

[D]

You got him nailed.

[A]

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[C]

All right, here we go. We got a little Blues Brothers. Yeah, and I like the movie reference.

[B]

Yes, they know you, Joe. They know that that's gonna what's gonna get you. That's gonna get them on the air.

[C]

Elwood Blues.

[B]

Elwood, is sunglasses on? It's dark. We're being chased by the police.

[C]

Let's go. I got a pack of cigarettes. We got two packs of cigarettes and something. What's the line?

[D]

Two packs of cigarettes, a half a tank of gas. We're wearing sunglasses and it's day. And it's day. And it's night out. Yep, it's something like that.

[B]

Hit it. Yeah.

[E]

Hit it. Hit it.

[C]

Man, what a great movie.

[D]

That was fantastic.

[C]

They don't make movies.

[B]

Jeez, they're incredible.

[E]

Yeah.

[D]

No, they don't make new. They don't make movies like that anymore.

[C]

I mean, you had everyone in that movie. Aretha Franklin. What? Ray Charles.

[D]

Ray Charles.

[E]

Yep.

[B]

Johnny Hooker was in the first one, wasn't he?

[D]

John. John Lee Hooker. Yeah, he was.

[C]

All right. I discovered your show about six months ago, so. Of course, I still love it. Perfect month.

[B]

Seven.

[A]

They're done.

[C]

I thought, like three episodes. They just said, no. This stuff sucks. But thank you, Elwood, for hanging in there. It's an acquired taste. You might leave, but you'll come back and then you'll leave again. I Drive a 2023 F150 and my wife a 2022 Acura. I prefer IPA. A lot of IPA drinkers.

[B]

What's your drink of choice, Mark?

[D]

Oh, I'm not picky. I am not. I am. I am not picky. I would say the only thing that I will turn my nose up at consistently is Malort.

[E]

Okay.

[D]

Do you know that drink, Andy?

[B]

I've seen a sign in front of the bar down the street from the house that I used to live in in San Diego that said, bring your friends for the Malort. They will hate it. And I was like, okay. That's just. Okay, whatever.

[D]

I'm fairly certain it's distilled from wormwood which is about enough information than I need about the quality of the drink.

[B]

Got it. Okay. Anyway, back to Elwood.

[C]

Let's see. I prefer an ipa, not Hazy or Bourbon. All right. And my wife likes red wine. We are both 57, are looking to retire in the next couple of years. We spent about 250, $300,000 a year in today's dollars. We have $1.9 million in IRAs, $575,000 in the old Roth, 400,000 and 457 in 5 million. That's a big number there. 5 million. Yeah, it is a brokerage account. Oh, you get 5 million in a brokerage account and $1,900,000 in an IRA. He's got a. Let's see, let's play guess that occupation.

[B]

Well, read the next sentence, the next two sentences.

[C]

Saving about $300,000 yearly between IRA and brokerage. So if he's all right, no pension, but should have an additional deferred comp of another $1,500,000 paid six months after retirement. No debt, no adults, more or less on their own. I'm willing to work three years if needed. We would love a little spitball and always look forward to your podcasts as they are light hearted and entertaining. Thanks. From the Roadhouse. All right.

[D]

Is that a reference to the Blues Brothers?

[C]

That's where they were. That's where like John Candy, everybody was like sitting in the back with.

[D]

That was. That was like Uncle Bob's old country bunker or. No, the Roadhouse was at the. Was the last scene. The where the, the where they did the final performance. Or is this a reference to one of the greatest movies of all time?

[C]

Roadhouse? Yeah.

[D]

Roadhouse, yes.

[C]

Yeah, I don't know. That is one of the best movies of all time.

[E]

Man.

[D]

Godfather, Shawshank Redemption, Roadhouse.

[C]

All right, name that. Occupation. Mark Horner. What do you think?

[D]

This he, Elwood, is a corporate executive for a. I'm thinking a public company somewhere in Chicago.

[C]

Okay. Yeah, that's what he didn't. Yeah. All right. So yeah, he's. He's out of Chicago. Elwood, that's a great Chicago movie of all time. Yeah, I agree. He's got the deferred comp and he's got a ton of non quals. So those are RSU's, those are stock options. Those are. I bet he's worked there. He's 57. He's probably been there 20 some odd years.

[E]

Yep, Yep.

[D]

He came in in the management training program at. And he's a, he's a high flyer on the inside. On the inside track there.

[C]

So he's got what, 8 million bucks? He wants to spend a couple hundred thousand. So yeah, I think you're good, right? I think you're good. Let's kind of break this down. What's his question? He just wants a little spitball here. Just kind of figure out what is.

[D]

What is his question.

[C]

Andy, you got his question?

[B]

Yeah, he says we would love a spitball and always looking forward to your podcast. So, yeah, they just want to make sure that they're on track if they're able to spend 250 to $300,000 a year given their $7.875 million portfolio and their $1.5 million of deferred comp coming in. Are they good? I guess you answered it. The answer is yes. What kind of we looking at here?

[C]

Super tough one here. So $300,000. Yeah. You could retire. You have close to $10 million. 3% burn rate on $10 million is $300,000 plus tax, plus the cost of living. I think you're good. This is not even including any other fixed income sources such as your Social Security. That's going to come in whenever you claim that. So breaking this is what we would.

[B]

Call a brag maybe.

[C]

Well, I don't know. He's kind of pounding. He's pounding the table a little bit. He's kind of feeling good. Just wanted to hear confirmation if he. Of ExxonMobil or what's it.

[D]

Exactly, exactly, exactly. So right. In Elwood's defense, I mean, he's spending his time worrying about the next oil spill. Not, not, not in the financial planning business. So yeah, so he's, that's why he's leaning on, he's leaning on this ragtag group.

[C]

He's got $575,000 in Roth. So, yeah, again, I think the, the tax play on this is going to be all right. He has to take this $1.5 million in deferred comp. So for those of you keeping score, what deferred comp is, if you're an executive at one of these big, nice Fortune 50 firms, is that you could defer some of your compensation into a deferred comp plan, hence the name. The pros and cons to that is that it's all pre tax. In some cases you can pick the investment, some cases you can't, depending on the plan. So in like very big income years. So I would imagine Elwood would received options or he's exercising or maybe he got restricted stock. And so all of that is taxed at ordinary income. So he was like, well, here, maybe I can defer some other income to kind of help that tax burden in those years. The bad thing about deferred comp plan is that it's a fixed payment coming out and it's all ordinary income. So you have zero control of the taxes as it comes out. Second, it sits on the balance sheet of the company, you know.

[E]

Yep, yep. Yeah, yeah.

[D]

So, yeah, no, right, yeah, right. If company goes under, sayonara, deferred comp. I've seen some deferred comp plans that they might, you might have an option to spread out the payments to try to. So that you don't, you don't get a million 5 of income all in one, all in one year.

[C]

And yeah, for sure, yeah. But the downside of that is that you have to select what your payment's going to be the year before you defer. So Is it a 10 year deferment? Is it a 5 year deferment? Because it's. Or sometimes you can even go up to 15 years. But I don't know. God, I read something and it must have been on Instagram because the stat didn't seem real to me. It's like back in the day, companies lasted 60 years. Today companies last 15 years because there's mergers, acquisitions, there's consolidation depending on what field that you're in. The big stable companies as technology increases and things like that. You don't see maybe, I don't know if in our lifetimes we'll see companies like GE anymore that were around for 100 years.

[D]

Right, right, right, right.

[C]

So the longer the payment, the more risk that you're taking on in this deferred comp. So it's like, all right, well, I don't know how long this company's going to be. Or even large big companies like Kodak, right? We could go on and on. There's airlines, there's all sorts of different industries and companies that were at the pinnacle of their lifespan and you know, several years later they're no longer.

[D]

The Lehman Brothers deferred comp plan probably didn't work out too well.

[C]

No, Bears worked out pretty well though, I heard.

[B]

So is the point of a deferred comp plan for the companies that you're talking about? You know, the thing that you read on Instagram, you know, old Companies lasted for 60 years, now they're lasting for 15. Are they creating these deferred comp plans with the idea that in the case that we do go bust, we're not on the hook for that money, we can get the high quality talent without necessarily after paying them?

[C]

No, no, no, no. I don't think anyone goes into business looking to, you know, to set these plans up to go bust it to help their P and L. It's definitely a recruitment tool for high quality executives to say, you know, we have other benefits that maybe XYZ company doesn't have this, there's some cool tax plays that you can do. This is going to enhance and enrich your overall retirement and so on and so forth. So, you know, because the old rule of Thumb, I think it's true for probably 90% of Americans is that, you know, most people will be in a lower tax bracket in retirement unless you've saved a ton of money in tax deferred accounts or you have very large pensions and you've saved a ton of money in tax deferred accounts. So you know, the deferred comp. Let's say you're in the highest bracket, you can defer some of your compensation and then when that compensation comes back to you when you're retired, you know, in most cases you could be in a lower tax bracket. So there's that tax arbitrage. But in this guy's case, I don't know, you got $5 million of non qualified accounts. I would like to see how that's invested and how much interest and dividends is kicking off of that. You have a deferred comp payment, let's say it's over 10 years, that's $150,000. If it's over five, it's $300,000. That's all ordinary income. If tax rates go up, you could lose some more of that depending on when he wants to retire. It just kind of hurts some of the tax planning that you could do because if you're at $300,000 of fixed income in retirement, you're not going to be doing conversions.

[D]

So if we're at all right, that he's a high flying public company executive, also looking at what company stock might be sitting in that brokerage account with some sort of super low basis, maybe they're charitably inclined and there's a gifting opportun opportunity to do some gifting and pair that with getting more money into the Roth.

[C]

Yeah, he could have company stock in his 401 plan as well.

[E]

Yep.

[C]

And so if that was the case, you know, he could do net unrealized depreciation, take those dollars out, put those in a brokerage account, you pay tax on the basis. If he's been there for a while, the basis is probably relatively low, I'm guessing. I wonder if he drives a piece of cop car.

[B]

No. A Subaru Crosstrek.

[C]

No, he's not the Subaru guy, is he?

[D]

No, he's the F150 guy, right?

[B]

Yeah. Okay.

[C]

Yeah, F150. Okay. F150.

[E]

All right.

[D]

F150. I think that lines up entirely with our ExxonMobil gas. I think we're leaning towards some sort of manufacturing, getting your hands dirty kind of a job.

[C]

Oh, I think F150 is the most popular automobile of our listeners.

[D]

This. This shows up all the time.

[C]

F150s, F150 and bourbon old fashions.

[D]

And been listening for six months.

[C]

Yeah, yeah. And hazy IPAs.

[E]

Yeah, yeah.

[D]

And listening for six months.

[E]

Nothing.

[D]

Nothing beyond that.

[C]

Yeah, yeah.

[D]

Right, right.

[C]

Oh, cool. Very good. All right, well, thanks for the questions. Thanks for filling in, Mark. Wonderful job, buddy.

[D]

Ton of fun. Ton of fun, guys. Thanks for bearing with me my rookie debut.

[C]

All right, Andy, wonderful job as always. Aaron. Hey, great job. Are you still awake? Aaron Townsend, folks. Look at that.

[D]

Asleep at the desk.

[C]

He's just working those cameras. I don't think the camera moved once, so paying him overtime to all right, well, thank you all for listening. For Andy Last, Mark Horner, I'm Joe Anderson. Big Al will be back at some point. You might be enjoying his vacation too much. So, Mark, we might need to tap on you a lot more than you think. So have a good week, everyone.

[D]

You do the same.

[C]

We'll see you next week. Show Scott you'd money you wealth.

[A]

Big Al Clopine, CPA returns next week to talk with Joe about the provisions that might affect you in the one big beautiful bill. The fellows also debate the merits of Roth strategies other financial advisors are pushing, and they spitball on why IRA guru Ed Slott, cpa, is such a fan of permanent cash value life insurance. Big thanks to Mark Horner, cfp, for.

[B]

Joining us on YMYW this weekend.

[A]

Last look for more from Mark on the Pure Financial YouTube channel right now. Links in the episode description this fellow's good. He might need his own show. You have just a few days left to complete the 8th annual YMYW podcast survey. For your shot at a $100Amazon E gift card, click or tap the link in the episode description. Use the secret password YMYW to access the survey and tell us your opinions and experiences before 5pm Pacific Time on August 31, 2025. Only US residents are eligible to find participate in the giveaway, no purchase necessary survey and giveaway close and Amazon E Gift Card winner chosen at 5pm Pacific Time on August 31, 2025. You money, you wealth is presented by Pure Financial Advisors, a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.