Play Episode 447 | Mailbag: Breaking up with your Advisor, I Bonds, 4% Rule, Accounts for Kids, Roth IRAs | Sean Mullaney

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Episode Guide

Episode Summary:

Breaking up with a financial advisor can be an emotional and complex process, especially when considering the transfer of existing investments to low-cost options. It involves understanding the correct procedures for various accounts, including traditional IRAs, Roth IRAs, and taxable brokerage accounts, as well as the potential tax implications associated with such transfers. The episode details essential steps such as initiating an ACAT (Automated Customer Account Transfer) and ensuring that transfers occur in-kind to minimize tax liabilities. Additionally, listeners learn about I Bonds, their taxation, and strategies related to their maturity, including when to sell and how to navigate the maturity process. The concept of the 4% rule is examined concerning financial independence, taking age and life expectancy into account when determining retirement savings needs. Practical insights and strategies are provided for both new and seasoned investors looking to optimize their financial futures.

Episode Timestamps

In this episode: financial advisor breakups, I bonds, the 4% rule, second generation FI, Roth IRAs, and the listener mailbag.

Breakups are hard, but breaking up with a financial advisor can be harder given the minutia that is often involved in doing so. It's good to have friends to lean on in times like this, which is exactly why we have the FI Tax Guy himself Sean Mullaney with us to help! Listen along as he and Brad dip back into the listener mailbag this week and discuss a myriad of topics submitted by YOU the listener!

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The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual.

Sean Mullaney:

Website: fitaxguy.com
Sean's Roth IRA Blog Post: How I Learned To Stop Worrying About The Roth IRA 5 Year Rules

Timestamps:

0:43 - Introduction/Breaking Up With Your Financial Advisor
15:13 - The Taxable Nature of Financial Breakups
22:11 - I Bonds
29:12 - The 4% Rule and Age
35:40 - Second Generation FI and Accounts
43:48 - Early Roth IRA Conversions
48:18 - Roth IRA's and 5-Year Rules
57:24 - Conclusion

Resources Mentioned In Today’s Episode:

Love love love

09/02/2020

Girl514

This is a great podcast. I’ve learned so much. My husband and I started the Dave Ramsey baby steps several years ago and got all debt paid off except house. Been saving but just felt like we needed to do more. Learned about FI and started listening to different podcast. Came across this one and I started back at the very beginning. Been listening everyday but haven’t caught up to the new episodes yet but I definitely will. I’m ready to hear them all so I can learn everything they have to say. Can’t get enough! This is gonna be life changing!
From A Dave Ramsey follower

05/18/2019

JuliaK330

I have followed the Dave Ramsey plan for a few years and he changed the way I live, budget, save and plan for expenses and the future. I just listened to your Dave Ramsey Episode- 005- and enjoyed the conversation and consideration of the baby steps in context of the ChooseFI community. I wanted to share some misconceptions that you had regarding the steps. Baby step 7 can feel like a let down- but you have to see it with the assumptions that the other steps are done. So at this point a person has finished paying off their house, has saved for kids college and has long been debt free with a full emergency account of 3-6 months of expenses. It is at that point that every last penny, the full power of their income can go to saving as much as possible well above the 15% recommended in step 4. The 15% is meant to be temporary to allow you to achieve other goals. Another misconception is that Dave recommends putting off giving- this is not the case. He advocates for giving in every step- even baby step 1- it is the first thing in the budget after income, even before saving. I appreciate the views you have provided and agree that you can take us beyond the Dave Ramsey baby steps to early retirement. I’m excited to keep listening! Thank you :)

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