Is The IRS Living in Your Head Rent Free?: Shootin’ It Straight With Stan

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Welcome to Shooting it Straight with

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Stan. I'm your host Stan the Annuity

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Man, America's annuity agent, licensed

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in all 50 states in Puerto Rico, the

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founder of CGO contractual guarantees

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only, where we only look at the

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contractual guarantees of the policy.

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Um, life insurance companies issue

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annuities, their contracts, so we only

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look at the contractual guarantees.

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Pretty simple, but um, not many people

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do that. We do that and we are very

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proud of that. Um, so when you talk to

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us, we're only going to talk about

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what's going to happen in the policy.

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Today's topic is a little different and

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it um it comes from just a lot of

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conversations I've been having recently

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and where people are fixated for some

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reason. Um and the topic is don't let

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the IRS live in your head rentree.

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I'm going to pause there because I want

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you to think about it.

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I would say at this point, I don't know

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the percentage, I'm saying 20 to 30% of

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my calls that I'm on, people are fixated

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with how much they're going to pay in

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taxes. They're fixated with the IRS

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rules. They're fixated with with what

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might happen in the future. Now, I

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understand I understand the concern and

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I understand that we all want to pay

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taxes. That's the patriotic thing to do.

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But we want to pay as the the least

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amount of taxes as we can legally.

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But what I'm seeing is a complete

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obsession to the wrong side. I mean,

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it's just going too far where people are

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scrimping and saving and doing without

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and not traveling and not living life in

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order to not pay more taxes, in order to

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not go into that tax bracket where they

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don't want to go and they pay a little

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bit more. And they live their life doing

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that. And if that's you, I need you to

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listen to me because you need to stop.

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Let me give you the reality of of the

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story when it comes to taxation and the

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IRS. And you know this, but I'm going to

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repeat it anyway. We're now at 39

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trillion in counting in debt. We do. We

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have almost a trillion in dollars in

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interest that has to be paid to service

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that debt. There's a lot of people that

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say 39's just the tip of the iceberg.

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It's more like a hundred trillion when

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you add it all up. Regardless, what I'm

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trying to get to is if you think taxes

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are high now, you've seen nothing.

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They're going to be higher. I don't know

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if you've seen recent news articles. I

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think Seattle has a has a millionaire

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tax. They're going to, you know, an

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extra 9%. We all know California has a

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very high tax. We all know that people

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from um that live in in in New York are

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getting taxed. And I know that the the

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governor is now wanting them to come

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back to New York after running them off

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with the high taxes. I'm not going to

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I'm not political. I'm contractual. I I

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only look at contractual guarantees.

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Democrat, Republican, Libertarian, I

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could care less. Okay? Um and you should

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too, by the way. And the reason I say

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that is think of the dumbest person you

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know, you've ever met in your life. A

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person that was so dumb and annoying

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that when they spoke, you lost IQ points

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just listening to them. We all know that

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person. Guess what? That person's vote

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just null just nullified yours.

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Okay? But I don't want you to be running

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spreadsheets and and trying to make

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sure, well, we're gonna we're not going

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to go on that trip and we're not going

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to go out to that really nice restaurant

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and we're not going to spend money like

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we should because we got to stay in this

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tax bracket, Martha. And trust me,

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Martha's calling BS on that. She is. My

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wife would call BS on that. Does she

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like paying taxes? No. But she likes

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going to see the grandkids and the kids

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and traveling, buying nice shoes.

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Somehow

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the IRS

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forces too many people to make bad

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decisions. Let me give you an example.

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I'm not against Roth IAS at all. If you

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have one, great. Would I buy would I do

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with that and convert to Roth? No, I

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would not. Just because I do not trust

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the government to change the rules. Now,

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I'm sure they'd grandfather you in. It's

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all good. But I remember when they said,

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"We're never going to tax social

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security." I remember that. Remember

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that? Yeah. Guess what? They're taxing

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it. It would not surprise me if they

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changed the rules on Roth IAS and said,

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"Well, yeah, um it's still taxfree, but

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um uh but only for these three things.

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They've got to find the revenue

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somewhere." There's over 20% of the

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households in the country that have Roth

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IAS.

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That's not a huge voting block, but it's

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enough people that they can go

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confiscate or figure out a way to tax

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that money. I I read a story today where

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people that are leaving high tax states

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for low tax states. The high tax states

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are trying to figure out a way to claw

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back some of that money and tax you for

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moving. Kind of like a moving tax.

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You say, "Well, Stan, this is all crazy

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that this can't continue." Yes, it can.

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I said a long time ago when I was with

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Dean Witter, so you know how long that

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was. There was gonna there was going to

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be a fork in the road moment with this

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country that more people that didn't

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have a any money would vote for the

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people's money that did have money. And

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right now over 50% of the people the

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public

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their net worth is in their right front

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pocket of their jeans.

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They've tried whatever it just hadn't

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worked. 60% or more of senior citizens

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have less than $10,000 to their name.

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We've already seen some politicians say,

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you know, we need to tax the rich. Their

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definition of rich is starting to get

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lower and lower and lower to include you

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and me.

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They're even floating things like

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unrealized capital gains taxes. Hey

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Stan, what is that? That means like if

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you bought your house for $100,000 30

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years ago and it's now worth $900,000

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for whatever reason, they're floating

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the idea of taxing those gains even

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though you haven't sold it. That kind of

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happens now with farmers and and big

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farmers in Iowa and those types of

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states. Nebraska, they have to sell

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their farm and ranch to pay the taxes.

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I'm going in this huge circle to put

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some foundation in place to encourage

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you to not have the IRS live in your

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head rentree. People say, "Well, I'm

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going to do Roth. I'm going to convert

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everything to Roth and it's all going to

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be taxable." Okay, great.

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Have you factored in how much frontend

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taxes you're paying and how long it's

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going to take to make up for all the

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taxes you paid on the front end if they

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don't change the rules? Have you

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factored that in? Have you run that

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number? I'm hoping you I hope you have

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because don't don't just sit there and

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go, "Well, I'm going to convert it, then

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it's all going to be taxfree." All

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right, Chester, but what was the number?

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What's that calculation? How long is it

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going to take to break even?

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If it's a legacy play, I get it. But the

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point is, have you run that number?

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Are you making decisions in your life

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based upon taxes?

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People always say to me, Stan, should I

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buy a QAC qualified longevity annuity t

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contract? Because that two that 210,000

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time of the taping, that's the limit

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that that and that's going to go up. But

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that amount is not used

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to calculate your required minimum

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distribution. So there's a potential

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there, Stan, for me to pay less in

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taxes. Got a call the other day said,

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should I buy a QAC for the tax savings?

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Here's my answer. Do you need income

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ever? Guy said, no, I don't. then you

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don't need to buy QAC.

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I mean, QAS are lifetime income pension

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products. And yes, they do have some

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some uh a tax part of it that you can

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save potential tax savings on your RMDs.

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Give you an example. If you had a

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$500,000 IRA, you could buy a $210,000

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QAC and when you go take RMDs, you're

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only taking it on the 290. 500US 210 is

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290.

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But do you need income?

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If the answer is no, then you don't need

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a CQAC. QACs are great. You should you

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should buy a CQAC for to attach your

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spouse for lifetime income. You should

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buy it when you need lifetime income or

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more income to live chapter two of your

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life. But the lead should not be saving

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taxes.

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Okay.

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Now, there are some ways to legitimately

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have tax-free income. AAA municipal

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bonds federally tax exempt. That's

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great. That's fantastic. Good luck

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finding them. Back in the day when I was

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at Morgan Stanley managing those with my

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partners um you could find them but now

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that you know I don't even think they go

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to market anymore. The hedge funds and

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the private equity groups just buy it

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all up.

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Yes, you can put a lifetime income

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stream annuity in inside of a Roth IRA

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and that's taxfree income. But once

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again, what's the break even point of

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all the taxes that you've paid?

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People bring up all the time Irma and

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all these new things that the

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government's coming. I'm going to I'm

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not going to go through all that all the

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details of Irma and that tax and the

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qualifications and where you need to be.

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But if if that's consuming your life,

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you need to check your life. [snorts]

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My new saying is

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eventually we're going to all go full

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circle. We're going to end up drooling

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on ourselves and crapping our pants,

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right, Zeke? Okay, Zeke, we don't need

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that to happen now. But the point is,

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we're eventually going to get there. So

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why not enjoy your money now? Why not

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enjoy your money now? Are tax rates

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going up? You bet your butt they are.

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They're going up and there's nothing

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that you can do about it. There's

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nothing that I can do about it. There's

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not enough voters that can do something

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about it. Eventually, somebody's going

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to figure out when they stand up on that

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stump and call you and me the evil rich,

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it's going to be a winner for them

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politically, and they're coming for it.

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And you say, "Well, that's not fair,

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Stan. Life's not fair.

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Life's not fair. IRS is not fair. Tax

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rates aren't fair. Politicians aren't

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fair.

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Okay. So, those are the cards that's

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been dealt. What are we going to do

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about it? We're going to go live our

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life. We're going to put guarantees in

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place to go live our life. We're going

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to put guarantees in place for our

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spouse and our beneficiaries so we can

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go live our life. Are we going to get

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obsessed with the stock market? No. Are

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we going to get obsessed with taxes? No.

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Now, is it fair that big corporations

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and and and you know, billionaires and

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whatever have, you know, law firms that

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figure out how they don't pay taxes? I

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don't know. Probably not. But they're

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paying a lot to the lawyers. They got to

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pay somebody.

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Do annuitities have some good tax

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provisions inside of them? Yeah. If you

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use a nonirra account and you buy mas

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that in that uh that interest that

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you're going to earn contractually is

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going to grow and compound tax deferred.

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If you buy a within a nonirra an

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immediate annuity a vast majority of

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that income is going to be not taxable

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because you're getting your uh return of

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principal plus interest. The interest is

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taxable. The return of principal isn't

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in a nonirra setting.

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I mean that's good, right?

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My wife says it the best. She said

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there's we all have scars of scarcity.

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And scars of scarcity means that we all

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remember when we didn't have money and

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when we were panicking that we didn't

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have money. And we got to remember a lot

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of people in this country are that's

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where they're at now. Bless their

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hearts. Seriously, my heart goes out to

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them. We all have those scars of

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scarcity. I had a client the other name

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the other day. His name is Jamie. Um,

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and he he said, "We kind of need to

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learn how to spend again, him and his

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wife." Because they had made all this

11:32
money in their business, and they still

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lived like poppers. They still lived

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like they didn't have a dime. I know

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what you're saying. Well, stand Warren

11:40
Buffett still lives in the same house in

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Omaha, Nebraska. Whatever. Don't care.

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I'm assuming he lives pretty well, but

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he's a hamburger every day. Whatever.

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He's happy with that. If you're happy

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with that, fine. But I'd check with your

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spouse to see if they're still happy

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scrimping and saving or they just going

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along with it. I'll give you an example.

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And this is a personal one. My father

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passed away seven years ago. If you ever

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read the book The Great Santini by Pat

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Conroy or saw that movie, that's my dad.

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He was a tough dude. Okay? My mom was

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the compliant southerner wife. Did

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whatever he wanted, went wherever he

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wanted, ate at whatever cheap ass

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restaurant they wanted. He died seven

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years ago. And I looked at my my mom. I

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got her set up, you know, where

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everything's kind of turnkey. And I

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looked at her and I said, "Mom,

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I've looked at the money. You you can

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spend $250 a day, okay? Every day. And

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if you don't spend $250 today, it rolls

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to the next day. So if you don't spend

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any today, then tomorrow you got to

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spend $500. You'll never run out of

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money." And for the first year, I don't

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think she believed me. And then she

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calls me a year later and she goes, she

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goes, "Stan, the accounts are up. You we

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just have them in CDs and they're up."

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And I said, "Mom, you got to spend more

12:53
money." So what is my mom doing now?

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She's doing what I want you to do. She's

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been she's okay. She's 86. Okay. She

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walks six miles a day. She's been This

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year she's been to New York, Hawaii,

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Chicago, Cuba, and some other place.

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My dad would never do that. My mom goes

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to goes to um ethnic restaurants. Let's

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just put it like that. My dad would

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never do that. You know, my mom my mom

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has a mjito every now and again. My dad

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would never do that.

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My mom's not letting the IRS live in her

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head rentree. Yeah. She calls me. I

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don't I can't believe the tax. Shut up,

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Mom. Respectfully, go live your life.

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And I'm trying to do that with myself.

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Okay. I'm trying to deal with that with

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my family and my wife. My wife's

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probably, "You're not doing enough."

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Okay, that's fine. But I am trying. All

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right.

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It's funny, and I'll kind of close with

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this. I've been doing this a very long

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time, and I find myself with these

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videos

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talking to myself a little bit and

13:59
talking to you and making sure that

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you're listening to me and realizing

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that a lot of you, as I always say,

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you've won the game. So, why are you

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still playing?

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Or to really get you, there's no U-Hauls

14:11
behind herses or fly first class or your

14:14
kids will. But you've already won the

14:16
game. You've already threaded the

14:18
needle. You've already scrimped and

14:19
saved. You've already made it.

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Enjoy it. You can't take it with you.

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The IRS is going to be the IRS. They're

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going to tax us. They're coming. It's

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There's nothing we can do. Just do the

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best you can. Pay your taxes. Be a good

14:35
patriot. a good citizen, but go live

14:39
your life.

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Go live your life. I'll close with one

14:43
thing. If you're going to get tax

14:46
advice, get it from someone who is who's

14:49
gotten their certification to give you

14:51
that advice. That would be a a CFP if

14:53
they've passed specific things. That

14:55
would be a CPA and that would be a tax

14:58
lawyer.

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agents, advisors, raas, brokers should

15:02
not give tax advice and they can't

15:05
legally give tax advice and they're on

15:07
the hook if they give tax advice.

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So, if you really want to go down that

15:12
rabbit hole and make sure you're dotting

15:13
all your eyes and crossing all your

15:15
tees, hire someone who's qualified to

15:18
give the tax advice and understands tax

15:21
law and will sign off on your return so

15:24
you don't get in trouble.

15:26
All right? So, do not let the IRS live

15:30
in your head. Rentree, and you know what

15:32
I'm talking about. My name is Stan the

15:34
Annuity Man.