WEBVTT NOTE This file was generated by Descript 00:00:05.040 --> 00:00:07.180 Intoduction: Welcome to the fiscal firehouse, a podcast 00:00:07.189 --> 00:00:10.010 dedicated to promoting financial literacy to firefighters. 00:00:10.190 --> 00:00:13.890 I'm your cohost, John Beatty, executive board member of local 1309, 00:00:14.160 --> 00:00:18.580 a lieutenant, and also a certified financial planner with me, I have the 00:00:18.580 --> 00:00:22.309 other cohost of the fiscal firehouse, Louie Borrella, executive board member 00:00:22.309 --> 00:00:26.860 of local 1309 ambulance driver, and want to be financial expert together. 00:00:26.860 --> 00:00:29.590 John and I hope to bring clarity to the world of personal finance, 00:00:29.599 --> 00:00:31.369 specifically relating to firefighters. 00:00:31.860 --> 00:00:33.340 Firefighting is a difficult job. 00:00:33.739 --> 00:00:35.830 Making sound financial decisions shouldn't be. 00:00:36.210 --> 00:00:38.940 In today's episode of the Fiscal Firehouse, John and Louie 00:00:38.940 --> 00:00:42.570 will discuss their favorite retirement vehicle, the 457 plan. 00:00:43.100 --> 00:00:46.310 John and Louie will also discuss strategies to implement that will 00:00:46.320 --> 00:00:48.530 better prepare you for retirement. 00:00:48.970 --> 00:00:53.060 Without further interruption, let's go to local 1309 Studios and the 00:00:53.060 --> 00:00:55.110 recording of the Fiscal Firehouse. 00:00:58.233 --> 00:01:02.053 Jon: welcome back to another episode of the Fiscal Firehouse. 00:01:02.463 --> 00:01:06.823 I'm one of your co hosts, John Beatty, with me in local 1309 Studios. 00:01:07.053 --> 00:01:10.813 I have my other brother from another mother, Louis Barela. 00:01:10.833 --> 00:01:11.403 Louie: Howdy, howdy. 00:01:11.733 --> 00:01:13.943 Jon: I was going to do another intro for you, Louis. 00:01:13.943 --> 00:01:16.633 It was going to be Louis, go blue, Barela. 00:01:17.143 --> 00:01:17.523 Go 00:01:17.593 --> 00:01:18.983 Louie: hard to go blue right now. 00:01:18.993 --> 00:01:20.233 It's so hard to go blue. 00:01:20.273 --> 00:01:24.173 Jon: for those of you that don't know Louis outside of the confines of West 00:01:24.173 --> 00:01:28.003 Metro, Louie's a diehard Michigander fan. 00:01:28.163 --> 00:01:29.423 I mean, he went to Michigan. 00:01:29.903 --> 00:01:32.343 He actually just got back from the Oregon game. 00:01:32.793 --> 00:01:34.823 Him and brother Norwood were out there. 00:01:35.013 --> 00:01:39.613 and Reed brother Norwood is a Oregon duck and, do their crushing 00:01:39.738 --> 00:01:40.418 Louie: Oh my gosh. 00:01:40.468 --> 00:01:41.578 Number one team in the country. 00:01:41.608 --> 00:01:41.858 By 00:01:42.163 --> 00:01:44.763 Jon: By far, they are like lights out. 00:01:45.058 --> 00:01:46.068 Louie: No weaknesses. 00:01:46.118 --> 00:01:46.728 They look good. 00:01:47.058 --> 00:01:48.418 We had a great time in Michigan. 00:01:48.418 --> 00:01:48.898 It was awesome. 00:01:48.898 --> 00:01:51.038 It's my first time back in like seven years. 00:01:51.568 --> 00:01:52.448 Reed had a great time. 00:01:52.448 --> 00:01:53.168 I had a good time. 00:01:53.473 --> 00:01:54.683 Jon: Reid had a great time. 00:01:55.018 --> 00:01:57.468 Louie: time, but we got to walk around the campus. 00:01:57.468 --> 00:02:00.358 We got to look at my old business school, which is a new business school. 00:02:00.358 --> 00:02:01.448 Now it looks fantastic. 00:02:01.448 --> 00:02:03.258 Did not did not look like that when I was there. 00:02:03.678 --> 00:02:05.128 We went to my old frat house. 00:02:05.353 --> 00:02:09.623 and played beer pong with a couple of, I don't know, 20 year 00:02:09.623 --> 00:02:11.743 old dudes or 21, probably 21. 00:02:12.138 --> 00:02:12.568 Jon: uh huh, 00:02:12.618 --> 00:02:16.598 Louie: they just crushed us, of course, but it was as disgusting as it ever was. 00:02:16.598 --> 00:02:19.018 I can't believe I'd lived in that house for three years. 00:02:19.348 --> 00:02:21.268 I am like the van Wilder. 00:02:21.548 --> 00:02:23.068 I could still go back if I had a hairline, 00:02:23.448 --> 00:02:25.528 Jon: You know, and I could still go back to school. 00:02:25.818 --> 00:02:30.608 I, I love school every bit of it and highly encourage that experience. 00:02:30.608 --> 00:02:34.028 there's nothing that will replace that I never asked you how you actually ended up 00:02:34.188 --> 00:02:36.608 picking michigan or did michigan pick you? 00:02:36.988 --> 00:02:41.408 Louie: So I, you know, I, I was lucky enough to have a full ride scholarship 00:02:41.518 --> 00:02:43.678 to school that I wanted to go to. 00:02:44.218 --> 00:02:46.698 So I narrowed it down to a few, like I was looking at Texas. 00:02:47.048 --> 00:02:48.878 and I was really interested in business at the time. 00:02:48.878 --> 00:02:51.188 I didn't know what that meant, but I felt like business. 00:02:51.208 --> 00:02:52.288 I want to do business. 00:02:52.288 --> 00:02:53.318 It just sounds cool. 00:02:53.318 --> 00:02:53.558 Yeah. 00:02:53.558 --> 00:02:54.718 Let's make some money. 00:02:54.893 --> 00:02:55.643 Jon: some numbers. 00:02:56.298 --> 00:03:01.388 Louie: So, when I was in the application process, this was in 2000 and I guess 00:03:01.398 --> 00:03:05.868 three, in high school, Michigan was ranked the number one business school in 00:03:05.868 --> 00:03:07.338 the country by the wall street journal. 00:03:07.368 --> 00:03:08.928 And that had made headlines. 00:03:09.478 --> 00:03:11.598 And when I saw that combined with like the. 00:03:11.878 --> 00:03:14.758 Football history, you know, everything from the winged helmets 00:03:14.758 --> 00:03:16.138 to the big house and all that stuff. 00:03:16.138 --> 00:03:17.748 I was like, that would be a cool place to go. 00:03:17.958 --> 00:03:19.208 Didn't really think about the cold. 00:03:19.238 --> 00:03:21.828 Didn't really think about the winters in Michigan that might've 00:03:21.828 --> 00:03:23.348 made me choose another place. 00:03:23.748 --> 00:03:25.348 But, I was just like, that'd be really cool. 00:03:25.348 --> 00:03:25.678 So. 00:03:26.528 --> 00:03:29.068 Decided to go there for the business school primarily, 00:03:29.438 --> 00:03:31.918 Jon: did you do a visit before you attended or did you just go 00:03:32.118 --> 00:03:33.108 Louie: You know 00:03:33.108 --> 00:03:35.258 Jon: in and be like, this is what, this is where I'm meant to be. 00:03:35.328 --> 00:03:38.858 Louie: I did do a visit but it was like the only out of state place that I visited 00:03:39.028 --> 00:03:42.208 didn't have time or resources to go to like texas or some of those other places 00:03:42.348 --> 00:03:44.178 So I was like, I think I like michigan. 00:03:44.178 --> 00:03:44.698 This is it. 00:03:44.728 --> 00:03:48.468 Let's go had a great time there, but man, the winters are cold. 00:03:48.588 --> 00:03:49.788 I I don't I miss the falls. 00:03:49.788 --> 00:03:50.888 I do not miss the winters Yeah 00:03:51.128 --> 00:03:53.908 Jon: And you know, me being a Midwestern or growing up in 00:03:53.988 --> 00:03:54.408 Louie: Oh yeah. 00:03:54.408 --> 00:03:54.908 You're used, 00:03:55.078 --> 00:03:57.928 Jon: people just don't understand, like, if you've lived in Colorado 00:03:57.928 --> 00:04:01.878 your whole life, like you just think the sun is out 300 days a year in 00:04:01.888 --> 00:04:03.618 the majority of our country, it's not 00:04:03.678 --> 00:04:04.288 Louie: it is not. 00:04:04.768 --> 00:04:06.818 Well, and the other thing you don't, the other thing you don't realize is you're 00:04:06.818 --> 00:04:08.558 like, Oh, it's going to be 50 degrees. 00:04:08.568 --> 00:04:12.068 So for someone who's from Colorado, they hear 50 degrees and they think of 50 00:04:12.068 --> 00:04:13.248 and sunny, Oh, it's going to be great. 00:04:13.248 --> 00:04:14.308 Like I don't even need a jacket. 00:04:14.308 --> 00:04:14.578 Right. 00:04:15.048 --> 00:04:16.718 But 50 degrees in the Midwest. 00:04:17.003 --> 00:04:18.723 With the humidity, with the wind, 00:04:18.798 --> 00:04:19.548 Jon: bone chilling 00:04:19.573 --> 00:04:21.663 Louie: bone chilling, like you will be freezing. 00:04:21.663 --> 00:04:25.183 You're like, why don't I have more layers on for 50 degree weather? 00:04:25.313 --> 00:04:27.213 So 50 degrees is not the same everywhere. 00:04:27.513 --> 00:04:30.403 And same thing with obviously at like 32 degrees or 10 degrees. 00:04:30.403 --> 00:04:32.293 So, but no, we had a great time. 00:04:32.503 --> 00:04:33.193 Jon: that story. 00:04:33.303 --> 00:04:33.883 I love that. 00:04:33.903 --> 00:04:35.423 I'll have to have a readout. 00:04:35.443 --> 00:04:39.643 So I went to, I, I matriculated for a couple of years at, Madison at Wisconsin 00:04:39.673 --> 00:04:40.623 Louie: on Wisconsin 00:04:40.813 --> 00:04:41.823 Jon: camp Randall. 00:04:41.853 --> 00:04:42.733 And, same thing. 00:04:42.733 --> 00:04:45.953 We'll maybe have to get the three of us out for another big 10 trip. 00:04:46.123 --> 00:04:46.873 Cause those are so much 00:04:46.873 --> 00:04:47.013 Louie: it. 00:04:47.303 --> 00:04:50.783 And let's, and we're going to go to, Oregon in two years. 00:04:50.963 --> 00:04:52.393 Michigan is playing at Oregon. 00:04:52.413 --> 00:04:54.933 So, hopefully Michigan can right the ship and we can, go down 00:04:54.933 --> 00:04:56.333 there and return their favor. 00:04:56.513 --> 00:04:56.833 Awesome. 00:04:56.993 --> 00:04:57.683 Jon: I love that. 00:04:57.683 --> 00:04:59.253 Well, dude, hats off to you. 00:04:59.253 --> 00:05:02.633 That's a huge, a huge accomplishment to really have a full ride to 00:05:02.833 --> 00:05:04.693 pretty much your school of choice. 00:05:04.703 --> 00:05:06.598 And, you know, we have had been having a lot of fun. 00:05:06.598 --> 00:05:09.908 Feedback, from the, from the listeners, so to speak on college 00:05:09.908 --> 00:05:11.468 funding and college education. 00:05:11.478 --> 00:05:14.678 And, we will do a segue, an episode directly, tied to that. 00:05:14.678 --> 00:05:17.158 Cause not every kid is going to have that opportunity. 00:05:17.158 --> 00:05:19.378 so we want to make sure that we're planning for our families and our 00:05:19.378 --> 00:05:22.518 kiddos and, and, you know, offering the help that, if it's within 00:05:22.518 --> 00:05:24.128 our financial house to do that. 00:05:24.128 --> 00:05:26.658 So that's something, I've definitely, we've heard some feedback on 00:05:26.658 --> 00:05:30.018 and it's, we've got a long list, man, that whiteboard is getting 00:05:30.018 --> 00:05:33.098 full with a lot of things, that, the listeners want to hear too. 00:05:33.563 --> 00:05:35.413 Louie: And I want to thank the listeners for, you know, 00:05:35.413 --> 00:05:36.983 we, we get a lot of in person. 00:05:36.983 --> 00:05:38.843 We were just talking about this before we started recording. 00:05:38.843 --> 00:05:42.993 We get a lot of in person comments and people telling us what they 00:05:42.993 --> 00:05:44.343 really like or what they want to hear. 00:05:44.373 --> 00:05:45.053 That's awesome. 00:05:45.073 --> 00:05:49.803 We also get a lot of questions submitted to the askfiscalfirehouseatgmail. 00:05:50.823 --> 00:05:52.853 com address, just with questions. 00:05:53.013 --> 00:05:55.753 You know, feedback, suggestions, episode ideas. 00:05:56.173 --> 00:05:57.743 And so we're not ignoring those. 00:05:57.743 --> 00:06:01.693 We're not putting those, you know, away and, and not addressing them. 00:06:01.963 --> 00:06:02.903 We're kind of just waiting. 00:06:02.913 --> 00:06:05.263 We're waiting so that we can either have an episode where we 00:06:05.263 --> 00:06:09.803 discuss a listener questions or where we can kind of build them in. 00:06:10.128 --> 00:06:12.888 To the agendas that we're kind of talking about through the episodes. 00:06:12.888 --> 00:06:14.838 So we're, we're taking those seriously. 00:06:15.118 --> 00:06:15.788 We'll go through them. 00:06:15.788 --> 00:06:18.458 We just appreciate your guys feedback and all the wonderful 00:06:18.468 --> 00:06:21.548 things you've said and all the, all the good critical feedback too. 00:06:21.578 --> 00:06:22.238 We want it all. 00:06:22.248 --> 00:06:25.538 We, I think we get better every episode when we get those kind of. 00:06:26.318 --> 00:06:27.078 That kind of feedback, 00:06:27.158 --> 00:06:28.258 Jon: dude, a hundred percent. 00:06:28.318 --> 00:06:30.668 And, yeah, it definitely keeps us motivated. 00:06:30.678 --> 00:06:33.678 anytime that we feel like you could even have the slightest of impact 00:06:33.678 --> 00:06:37.518 on someone in a, in a positive way, it, it, it keeps us moving. 00:06:37.518 --> 00:06:38.688 So we are super excited. 00:06:38.688 --> 00:06:42.238 And this is really, this is kind of the granddaddy of them all podcast. 00:06:42.238 --> 00:06:44.798 I guess, if you will, we're going to talk about the old four 57. 00:06:45.448 --> 00:06:48.973 Louie: The only thing cooler than a 3 57 is a 4 57 00:06:50.188 --> 00:06:51.238 Jon: That's that's right. 00:06:51.368 --> 00:06:57.388 That's that is some nerdy nerdy fight finance jokes but this is the one that 00:06:57.408 --> 00:07:03.008 it is just like the Golden ticket if you will to in my opinion financial freedom 00:07:03.228 --> 00:07:07.718 in financial options really moving forward And you never want to give just 00:07:07.718 --> 00:07:11.508 complete blanket advice to anyone without knowing their personal circumstances 00:07:11.878 --> 00:07:15.658 But this is one that I mean, you know Overarchingly if anyone gave me like 00:07:15.658 --> 00:07:19.738 you can give one piece of advice to any firefighters out there Like how can you 00:07:19.738 --> 00:07:21.728 set yourself up for success in the future? 00:07:22.198 --> 00:07:25.728 It would be to fund your 457 hands down if that's the only advice I could ever 00:07:25.728 --> 00:07:31.168 get that was my last breath I could give to someone It would be like Use this 457 00:07:31.428 --> 00:07:34.888 to all its advantages and in this episode We're going to talk about those advantages 00:07:34.888 --> 00:07:37.868 and how it's structured and everything else like this But this is really one 00:07:37.868 --> 00:07:39.448 that's applicable to all firefighters. 00:07:39.448 --> 00:07:44.738 I don't know Of a fire department that doesn't offer their members a 457. 00:07:44.748 --> 00:07:45.198 So 00:07:45.413 --> 00:07:49.443 Louie: One and John, you've been around for a while now in all your years of 00:07:49.713 --> 00:07:53.303 seeing people retire and seeing, you know, dealing with active retirees. 00:07:53.323 --> 00:07:57.713 Have you ever had one retiree come and tell you, man, I really regret 00:07:57.753 --> 00:08:00.853 that I contributed to a four 57. 00:08:00.873 --> 00:08:02.653 I wish I didn't put money in a forfeit. 00:08:02.683 --> 00:08:03.413 Has that ever happened? 00:08:03.523 --> 00:08:05.623 Jon: Yeah, man, I just have, so much money in there. 00:08:05.623 --> 00:08:06.823 I don't even know what to do with it all. 00:08:06.823 --> 00:08:09.883 I, you know, I've never once received that. 00:08:09.883 --> 00:08:10.903 It's always the contrary. 00:08:10.903 --> 00:08:14.398 It's like, man, I, I just wish I would've known more, or I wish I would. 00:08:14.698 --> 00:08:18.458 been able to put more money away and there was a lot of almost more regret, 00:08:18.638 --> 00:08:22.158 that they just didn't fund it to the capacity that could have been funded to. 00:08:22.398 --> 00:08:25.328 And there was different, different, you know, lifestyle circumstances. 00:08:25.338 --> 00:08:29.368 But, yeah, no, overarchingly everyone is like, this is what actually allowed me. 00:08:29.448 --> 00:08:32.748 To get out of here when I wanted to get out of here, and without name and 00:08:32.748 --> 00:08:36.128 names, you know, just a little case study, it's just at the training center. 00:08:36.128 --> 00:08:40.628 And we had a member come through and they're getting ready to retire next year. 00:08:40.808 --> 00:08:44.518 this is the first of my knowledge, at least for our membership where someone 00:08:44.528 --> 00:08:49.048 is using the rule of 80 and they will basically be, they got hired at 20. 00:08:49.493 --> 00:08:50.913 They got 30 years of service. 00:08:50.953 --> 00:08:52.953 So they're 50 years old and they're gonna have 30 years of service. 00:08:52.963 --> 00:08:56.393 So they're gonna meet that rule of 80 We'll talk about the rule of 80 more 00:08:56.613 --> 00:08:59.673 when we get into the pension episode but really they're the first one 00:08:59.673 --> 00:09:03.353 that i've seen, be able to reach the rule of 80 At that young of an age. 00:09:03.753 --> 00:09:06.793 And, you know, their whole plan is they're going to end up deferring 00:09:06.803 --> 00:09:08.303 their retirement for some years. 00:09:08.573 --> 00:09:12.303 They're going to live off of their four 57 monies, for the next couple of years. 00:09:12.503 --> 00:09:15.263 and they're talking about traveling around the country and even going 00:09:15.273 --> 00:09:17.573 international, they homeschool their kids. 00:09:17.603 --> 00:09:20.923 And I can't tell you, like, I must, I must've looked like the joker 00:09:20.963 --> 00:09:22.703 because of the smile on my face. 00:09:23.083 --> 00:09:26.193 And I just want, I just wish that was available for all of our 00:09:26.248 --> 00:09:26.588 Louie: everyone. 00:09:26.638 --> 00:09:26.828 Yeah. 00:09:26.828 --> 00:09:27.108 We want 00:09:27.143 --> 00:09:27.673 Jon: have that. 00:09:27.918 --> 00:09:30.118 Option and whether or not you take that option. 00:09:30.188 --> 00:09:32.988 That's totally on you and your circumstances in your family 00:09:32.988 --> 00:09:38.668 circumstances, but to be able to make that move at that age, man, I want to, speak 00:09:38.668 --> 00:09:42.318 from the mountaintops and just preach just like how cool of an opportunity that 00:09:42.623 --> 00:09:43.563 Louie: well, and that's why we're here. 00:09:43.693 --> 00:09:44.823 That's, that's why we're here. 00:09:44.823 --> 00:09:49.133 So yeah, you said it like in the, in the one, two punch of retirement, like that, 00:09:49.173 --> 00:09:52.463 that jab, I guess would be the pension, which we'll talk to in another episode. 00:09:52.463 --> 00:09:54.433 But this is the, this is the cross. 00:09:54.433 --> 00:09:56.593 This is the overhand cross is the four 57. 00:09:56.593 --> 00:09:59.473 And maybe we'll, you know, eventually we'll talk about the, the uppercut, 00:09:59.483 --> 00:10:01.083 which will be the IRA talking about that 00:10:01.133 --> 00:10:02.253 Jon: that's, that's a, yeah. 00:10:02.253 --> 00:10:04.368 The, the Evander Holy field. 00:10:04.368 --> 00:10:04.818 Yeah, 00:10:05.143 --> 00:10:07.963 Louie: but, but in the retirement, like the four 57, this is 00:10:07.963 --> 00:10:09.623 a huge way of getting you. 00:10:09.918 --> 00:10:14.238 where you need to be Retiring when you want to retire and making sure 00:10:14.238 --> 00:10:18.358 that you are okay in retirement With that reduced pension amount that 00:10:18.358 --> 00:10:20.918 you'll receive when you retire, so 00:10:21.303 --> 00:10:22.043 Jon: Let's kick it off. 00:10:22.073 --> 00:10:26.703 Let's let's talk about what so and that the other thing is and you know The 00:10:26.703 --> 00:10:30.723 thing that's frustrating from like a an educational standpoint is I think, 00:10:30.823 --> 00:10:35.803 financial media and people in finance or literature They like to make this 00:10:35.803 --> 00:10:38.943 stuff really complicated with all the and the fire service is equally as 00:10:38.943 --> 00:10:43.073 guilty The medical community is equally as guilty as acronyms and all these 00:10:43.073 --> 00:10:47.698 other things 457s 401a is K's 403 B's. 00:10:47.748 --> 00:10:50.738 I mean, it's just like alphabet soup as Louie likes to call it. 00:10:51.008 --> 00:10:53.948 so we're going to help, demystify some of these terminology as well. 00:10:53.948 --> 00:10:58.058 And just so you can talk on a, on a normal level and be able to, explain 00:10:58.058 --> 00:11:00.668 it to, to even someone that's not interested in this stuff at all. 00:11:00.668 --> 00:11:03.018 And that's really our goal here at the fiscal firehouse. 00:11:03.028 --> 00:11:07.018 So let's start with just the basics of, what is a four 57 plan? 00:11:07.038 --> 00:11:08.498 Louie, you want to just kind of kick it off 00:11:08.523 --> 00:11:08.733 Louie: And just 00:11:08.808 --> 00:11:11.708 Jon: give a little, overview of what the four 57 is. 00:11:11.793 --> 00:11:12.123 Louie: yeah. 00:11:12.258 --> 00:11:12.478 Yep. 00:11:12.878 --> 00:11:13.078 Absolutely. 00:11:13.078 --> 00:11:19.023 So the 4 57 is a tax advantaged, employee sponsored retirement plan, and that's just 00:11:19.023 --> 00:11:23.313 a really full way of saying that it is a. 00:11:23.698 --> 00:11:26.618 Retirement plan that you can contribute out of your paycheck. 00:11:26.988 --> 00:11:31.878 Your employer has to allow it You know have this plan sponsor the plan and 00:11:31.888 --> 00:11:38.178 allow you to Put money from your paycheck directly into the plan it can with 457s. 00:11:38.188 --> 00:11:41.453 They can be either Governmental or non governmental? 00:11:41.453 --> 00:11:44.263 And even the non governmental is more like a quasi governmental 00:11:44.298 --> 00:11:46.108 Jon: yeah it's like non profit stuff yep 00:11:46.173 --> 00:11:46.963 Louie: Non profit. 00:11:47.233 --> 00:11:50.613 but basically it allows you to contribute money from your paycheck on either a pre 00:11:50.613 --> 00:11:55.593 tax, also called a traditional basis, or a post tax, often called a Roth basis. 00:11:55.903 --> 00:11:58.123 We'll talk more about that in a, in a minute or so. 00:11:58.433 --> 00:12:02.353 but In just to simplify it, because a lot of people know this term, 00:12:02.373 --> 00:12:04.323 it's very similar to a 401k. 00:12:04.333 --> 00:12:08.923 So if you go to a regular, if you have a corporate job or a regular job with 00:12:08.923 --> 00:12:15.653 a big company, you often have access to a 401k while this is the governmental 00:12:15.833 --> 00:12:16.453 Jon: or 00:12:16.728 --> 00:12:19.088 Louie: Nonprofit version of a 401k. 00:12:19.098 --> 00:12:22.428 In fact, it's so similar that the contribution limits 00:12:22.428 --> 00:12:23.468 are very often the same. 00:12:23.468 --> 00:12:24.998 They're almost always the same. 00:12:25.278 --> 00:12:27.088 the rules are also very similar. 00:12:27.378 --> 00:12:29.748 I would actually say that 457s are a little better. 00:12:29.748 --> 00:12:31.818 And we'll talk about some of those advantages, but. 00:12:32.398 --> 00:12:35.308 Just to, just to get you guys in the right mindset, you can think of the 00:12:35.308 --> 00:12:38.298 four 57 as our version of a 401k. 00:12:38.848 --> 00:12:43.098 there's some confusion though, when we talk about four 50 sevens or, or, or Roth 00:12:43.108 --> 00:12:47.098 four 50 sevens, a lot of people will, kind of get confused and think that they're, 00:12:47.128 --> 00:12:49.598 we're talking about IRAs or Roth IRAs. 00:12:49.628 --> 00:12:50.908 And that is completely separate. 00:12:50.928 --> 00:12:52.918 That is not tied to your employer. 00:12:53.318 --> 00:12:57.218 Your IRA is a great, it's a great tool, but it's completely different. 00:12:57.258 --> 00:12:59.098 So for the purpose of this podcast, we're. 00:12:59.513 --> 00:13:03.443 Talking about the the employer sponsored four 57 plan, whether 00:13:03.443 --> 00:13:06.943 that's Roth or traditional, we're talking about just the four 57 here. 00:13:07.393 --> 00:13:08.143 Anything to add, John? 00:13:08.168 --> 00:13:10.708 Jon: No, I think that's a really nice summary of it. 00:13:10.718 --> 00:13:13.618 And yeah, so if you just think of it in its most simplest forms 00:13:13.918 --> 00:13:16.858 is we're gonna have the bucket The bucket is the 457 plan. 00:13:16.858 --> 00:13:19.858 That's the big that's the top number if you will And then you have two little 00:13:19.858 --> 00:13:23.118 branches off of that and then you can either have the pretext or like louis 00:13:23.118 --> 00:13:27.298 said the traditional Or you can have the raw The Roth or the after tax. 00:13:27.558 --> 00:13:29.938 And we'll talk a little bit about, why you might want to choose one of 00:13:29.938 --> 00:13:34.018 those, here in the future, but yeah, four 57, it's kind of one or the other. 00:13:34.268 --> 00:13:38.208 And the other thing I should mention, because it is an employer sponsored plan. 00:13:38.538 --> 00:13:42.458 we have listeners out here that, your employer might not offer the Roth option. 00:13:42.828 --> 00:13:47.258 Just just so you know, in fact west metro listeners will will know this Well 00:13:47.258 --> 00:13:52.408 as we've only started offering the roth 457 for the last year So this is kind of 00:13:52.408 --> 00:13:57.048 new to us and our members and being able to to have this opportunity But there 00:13:57.048 --> 00:13:59.758 may be some listeners in here that are like, okay, cool They're going to their 00:13:59.768 --> 00:14:01.918 hr department and be like, okay, cool. 00:14:01.918 --> 00:14:04.458 I want to do a roth 457 They're like we don't do that here. 00:14:04.468 --> 00:14:07.318 So it really is up to the employer to offer that they 00:14:07.318 --> 00:14:08.578 don't have to there's nothing 00:14:08.823 --> 00:14:11.413 Louie: John, I want to give you some props on that because that you're right. 00:14:11.423 --> 00:14:14.583 That wasn't an option that we had until just a couple of years ago. 00:14:14.583 --> 00:14:17.063 And that was something that you pushed hard for working in the 00:14:17.063 --> 00:14:20.143 benefits SBT to make sure that we got that option working with HR. 00:14:20.433 --> 00:14:21.483 I know we had to make some. 00:14:21.813 --> 00:14:24.313 Concessions in order to get that totally worth it though. 00:14:24.333 --> 00:14:27.783 I mean the Roth 457 is a wonderful plan and we're going to talk about 00:14:27.783 --> 00:14:31.733 why in just a minute, but thank you for doing all the work to get us that 00:14:31.733 --> 00:14:33.293 plan because that is a cool plan. 00:14:33.293 --> 00:14:36.413 And I know there's a lot of guys that are now contributing to that that love it. 00:14:36.453 --> 00:14:36.743 Jon: Yep. 00:14:36.763 --> 00:14:39.843 the thanks should all be given to our HR department administration for 00:14:39.843 --> 00:14:41.303 allowing us the opportunity to do that. 00:14:41.303 --> 00:14:43.843 Cause ultimately they are the employer and they, they can kind of 00:14:43.863 --> 00:14:45.063 give the green light on that or not. 00:14:45.073 --> 00:14:48.913 And this is also a conversation and impetus for those of, The listeners 00:14:48.913 --> 00:14:51.933 out here that are not affiliated with West Metro, other union leaders and 00:14:51.933 --> 00:14:54.293 stuff, this is something that you could bring to your department as well. 00:14:54.293 --> 00:14:56.953 If you don't have the Roth and it's, you know, talking to our 00:14:56.953 --> 00:14:59.313 folks, there's there's some payroll adjustments and some other 00:14:59.313 --> 00:15:00.863 administrative tasks that go with it. 00:15:01.173 --> 00:15:03.243 but I think it's an argument that there are a lot of places 00:15:03.243 --> 00:15:04.293 that are offering this as well. 00:15:04.293 --> 00:15:07.343 So if you kind of best practices, from an employer standpoint, 00:15:07.353 --> 00:15:10.083 retention, recruitment, all these other things, it's just another 00:15:10.083 --> 00:15:11.243 layer that you can have on there. 00:15:11.243 --> 00:15:14.608 That's like, we really are giving you guys, Best in practice is what's 00:15:14.608 --> 00:15:16.168 available as far as, benefits. 00:15:16.178 --> 00:15:17.778 So just wanted to highlight that. 00:15:17.918 --> 00:15:18.428 Louie: Appreciate it. 00:15:18.428 --> 00:15:21.648 And, and John, you mentioned, so, you know, you might not have the Roth IRA 00:15:21.648 --> 00:15:23.958 depending on, or I'm sorry, the Roth 457. 00:15:23.968 --> 00:15:25.078 See, I heard, here I go. 00:15:25.298 --> 00:15:27.408 You might not have the Roth 457 option. 00:15:27.698 --> 00:15:29.558 You probably will have a traditional option. 00:15:29.568 --> 00:15:30.818 That's the more popular option. 00:15:31.198 --> 00:15:34.108 can you talk to us a little bit about, in addition to that option, you 00:15:34.108 --> 00:15:36.818 generally have an option for providers. 00:15:37.148 --> 00:15:37.588 Jon: Yes. 00:15:37.628 --> 00:15:41.688 Yeah, so depending on where you work, and we'll be a little bit specific here, so 00:15:41.688 --> 00:15:43.123 we will, we will preface this with that. 00:15:43.213 --> 00:15:44.243 This is here at West Metro. 00:15:44.243 --> 00:15:48.423 This is what our members have the option for is we've got two different providers. 00:15:48.443 --> 00:15:52.973 We've got Fidelity and we've also got a Mission Square, which used to be, it's 00:15:52.983 --> 00:15:57.413 rebranded, it used to be ICMA and now they've rebranded and it's Mission Square. 00:15:57.413 --> 00:16:00.373 So those are, what is often thought of as custodians. 00:16:00.383 --> 00:16:03.733 So those are the people that actually hold the money, if you will, in the plan. 00:16:03.973 --> 00:16:06.343 so you really do have, those two different options. 00:16:06.343 --> 00:16:08.683 So depending on where you work, you may just have one. 00:16:08.983 --> 00:16:11.163 Or you may have three, it really just depends. 00:16:11.163 --> 00:16:13.583 So that's something that you're going to want to drill down into 00:16:13.583 --> 00:16:16.523 your benefits package, and reach out to your HR departments if 00:16:16.523 --> 00:16:17.913 you're curious or questioning. 00:16:18.153 --> 00:16:21.783 so this is something, and honestly, we used to have another provider, nationwide, 00:16:21.983 --> 00:16:25.693 but because we didn't have a lot of uptake and, and participation in that, it kind of 00:16:25.693 --> 00:16:29.983 just, they were like, this is not worth it because it caused them money to administer 00:16:29.983 --> 00:16:32.213 a plan as well, the providers themselves. 00:16:32.213 --> 00:16:34.523 So from like an accounting standpoint and everything else, 00:16:34.523 --> 00:16:35.283 it just didn't make sense. 00:16:35.283 --> 00:16:36.813 So we've narrowed it down to. 00:16:36.873 --> 00:16:42.193 two different plan providers, and that is, Fidelity and Mission Square. 00:16:42.193 --> 00:16:42.503 So, 00:16:43.118 --> 00:16:44.918 Louie: And John, I gotta, I gotta ask you this question. 00:16:44.928 --> 00:16:47.518 We're not, just to preface this, we're not sponsored. 00:16:47.548 --> 00:16:48.718 We're not, we're not pushing. 00:16:48.718 --> 00:16:51.028 We're not going to say that we are endorsing anything. 00:16:51.028 --> 00:16:55.938 This is not even a, what the West Metro department podcast, this is just a, two 00:16:55.938 --> 00:16:57.528 guys from the union having a conversation. 00:16:58.118 --> 00:17:00.158 But I get this question a lot and I'm sure you do too. 00:17:00.618 --> 00:17:02.428 If you're a new guy or you're someone who's just thinking about 00:17:02.428 --> 00:17:05.038 opening a 457, who do you go with? 00:17:05.078 --> 00:17:05.758 Who do you open it 00:17:05.880 --> 00:17:06.828 Jon: you go with? 00:17:06.828 --> 00:17:10.948 So, there's, there's definitely some different preferences on both of those. 00:17:11.268 --> 00:17:13.148 the biggest thing is, fidelity. 00:17:13.148 --> 00:17:17.188 I will say they are, they have more options and more options. 00:17:17.188 --> 00:17:18.018 What I mean by that. 00:17:18.213 --> 00:17:21.213 And Louie and I can get in some of some of the discussions about what 00:17:21.223 --> 00:17:22.973 some of your investment options are. 00:17:23.243 --> 00:17:26.113 but really what I mean by more investment options is they have 00:17:26.113 --> 00:17:27.853 what's called a brokerage link. 00:17:28.153 --> 00:17:31.453 so that is something that you can actually get full access to 00:17:31.473 --> 00:17:35.903 basically the whole stock market and not just a couple of, investments 00:17:35.903 --> 00:17:37.438 that they have, that the plan has. 00:17:37.438 --> 00:17:38.548 Selected for you. 00:17:38.868 --> 00:17:43.458 So that is one thing that, you know, as a planner, something that I'm very, in favor 00:17:43.458 --> 00:17:48.708 of is having options and opportunities and the more diversification you can have 00:17:48.708 --> 00:17:52.418 in that is just something that I think, you should be, you should be mindful of. 00:17:52.468 --> 00:17:56.548 The other thing that's kind of nice from just a, keeping everything in house is 00:17:56.598 --> 00:18:01.913 FPPA and Fidelity are, they're not one in the same, but they, they FPPA uses 00:18:01.913 --> 00:18:05.243 Fidelity as their custodian of choice when it comes to all this other stuff. 00:18:05.243 --> 00:18:08.103 So when you're looking through all your statements, Louis, we were just talking 00:18:08.103 --> 00:18:12.053 about, you know, off air beforehand, trying to consolidate that stuff and have 00:18:12.053 --> 00:18:14.773 it under one custodian is so much easier. 00:18:15.033 --> 00:18:17.713 You don't have to worry about a login accesses. 00:18:17.713 --> 00:18:18.983 You don't have to worry about passwords. 00:18:18.983 --> 00:18:22.583 You don't have to worry about forgetting to submit something or tracking something. 00:18:22.623 --> 00:18:24.738 I mean, All the research really tells you. 00:18:24.738 --> 00:18:27.738 And if you meet with an advisor or someone that's giving you some financial 00:18:27.738 --> 00:18:32.508 advice, or they are managing your money, they almost always recommend bringing 00:18:32.558 --> 00:18:35.768 it into one house and then they can just manage it from that aspect of it. 00:18:35.768 --> 00:18:38.708 Cause if you've got a, if you've been with a lot of different employers and 00:18:38.708 --> 00:18:42.368 had different 401k plans or different IRAs throughout your life, it can 00:18:42.368 --> 00:18:45.998 just be, you don't want to be confused about all those things about where are 00:18:46.008 --> 00:18:47.778 all my accounts and the accesses to 00:18:47.833 --> 00:18:50.743 Louie: or even like even the security risk of having numerous logins and 00:18:50.753 --> 00:18:52.823 numerous passwords at different places. 00:18:53.093 --> 00:18:54.453 I mean, that is definitely. 00:18:54.833 --> 00:18:57.543 Onerous in order to kind of manage and track all those things. 00:18:57.543 --> 00:19:00.953 So yeah, and I I agree with you So I I like fidelity. 00:19:00.973 --> 00:19:02.383 I think fidelity is a great company. 00:19:02.423 --> 00:19:08.353 I think they're one of the like the gold standards of financial investment houses 00:19:08.683 --> 00:19:13.103 they're really good whether you just want a regular taxable brokerage with them or 00:19:13.113 --> 00:19:16.983 You want your ira there or whatever they can do it all and like you said they have 00:19:17.023 --> 00:19:20.218 a ton of A ton of options and because they offer a ton of options and because 00:19:20.218 --> 00:19:25.578 they service so many investors, their costs are generally very competitive. 00:19:25.598 --> 00:19:31.178 So they're, they're on par or even below Vanguard and Schwab and some of these 00:19:31.178 --> 00:19:34.318 other what are called discount brokers. 00:19:34.598 --> 00:19:36.848 they're very, very competitive with them and they're able to 00:19:36.848 --> 00:19:39.043 provide you with really good 00:19:39.243 --> 00:19:39.723 Jon: um, 00:19:40.063 --> 00:19:42.633 Louie: really good value for your investments. 00:19:42.693 --> 00:19:45.903 Jon: and really comprehensive service or, or just their platform. 00:19:45.903 --> 00:19:48.903 You know, whether you're talking about, you know, the 4 57 plan in 00:19:48.903 --> 00:19:53.283 this case, or you have a a an IRA or if you open up a brokerage account 00:19:53.283 --> 00:19:55.023 or you have a 5 29 plan for you. 00:19:55.023 --> 00:19:56.433 I mean, it's just like they really do. 00:19:56.593 --> 00:19:57.243 Louie: They do it all. 00:19:57.333 --> 00:19:57.473 They 00:19:57.573 --> 00:19:58.693 Jon: of a one stop shopping. 00:19:58.973 --> 00:20:02.883 but Louie did make a good point and, you know, kudos to him and really what 00:20:02.883 --> 00:20:07.623 got him involved in the benefits SPT from West Metro is, you know, he came 00:20:07.623 --> 00:20:12.203 in here as a new guy and was like, Hey, this whole mission square thing, 00:20:12.273 --> 00:20:16.293 or ICMA at that time, they were like, dude, these costs are through the roof. 00:20:16.313 --> 00:20:17.383 What are you guys doing here? 00:20:17.423 --> 00:20:19.193 Like, this is not, this is criminal. 00:20:19.243 --> 00:20:20.733 Like we shouldn't, we shouldn't be allowing 00:20:20.828 --> 00:20:23.308 Louie: put it in a spreadsheet and I was like, we can't do this. 00:20:23.308 --> 00:20:27.878 Like if I would have had these, this, my investments put over here and ICMA at the 00:20:27.878 --> 00:20:32.118 time, it would have been exponentially more over the course of my career. 00:20:32.118 --> 00:20:34.938 So that's actually what got me into, to union service. 00:20:34.938 --> 00:20:36.968 Anyway, I know we kind of, John and I briefly talked about how 00:20:36.968 --> 00:20:40.373 we got involved in the union, but that was like the, Impetus for me. 00:20:40.373 --> 00:20:43.703 I think I went to read a Norwood and was like, Hey, I see something here 00:20:43.703 --> 00:20:46.303 that I feel like we can do better on and we can fix, how do I do it? 00:20:46.813 --> 00:20:49.603 And he was like, let me tell you about the benefits SPT. 00:20:49.683 --> 00:20:51.713 Let's get you involved at the, with union stuff. 00:20:51.733 --> 00:20:56.153 And that just kind of naturally flowed into me becoming more involved with 00:20:56.163 --> 00:20:57.828 the union, because that was my way to. 00:20:57.968 --> 00:20:59.648 Actually help make a change. 00:20:59.948 --> 00:21:04.408 So, and, and to their credit, you know, mission square now has, has reduced 00:21:04.408 --> 00:21:06.938 their fees on, on a lot of funds. 00:21:06.938 --> 00:21:10.458 And they've even brought in some Vanguard funds for their target date retirement. 00:21:10.898 --> 00:21:12.368 and that has made a huge difference. 00:21:12.378 --> 00:21:13.568 So if you are with. 00:21:14.388 --> 00:21:17.678 and then you're like, I've been with them, my RHS is with them and 00:21:17.718 --> 00:21:18.888 this is just where I want to stay. 00:21:18.928 --> 00:21:19.498 That's okay. 00:21:19.498 --> 00:21:23.538 We can, you know, you can choose some options there that are, really 00:21:23.538 --> 00:21:26.568 good, cheaper options for your funds that are not going to just kind 00:21:26.568 --> 00:21:28.128 of eat away your expense ratios. 00:21:28.148 --> 00:21:30.938 Don't have to be off the roof with mission square either. 00:21:31.178 --> 00:21:31.938 So huge, 00:21:32.133 --> 00:21:33.253 Jon: huge shout out to you. 00:21:33.253 --> 00:21:37.383 And, and once again, that's something from, you know, listeners outside of West 00:21:37.383 --> 00:21:41.143 Metro and you're involved at all in the benefits package of the organization. 00:21:41.413 --> 00:21:42.933 This is just something that you should look at. 00:21:42.983 --> 00:21:46.153 and if you've got questions like, you know, Louie and I, like, we were 00:21:46.173 --> 00:21:49.783 obviously very passionate about this, but if you send me something about 00:21:49.783 --> 00:21:53.498 like, Fees specifically in your plan providers and be like, does this seem 00:21:53.498 --> 00:21:55.608 like this is totally outside of the realm? 00:21:55.608 --> 00:21:59.968 Like I'll give you my honest opinion, so we were actually able to negotiate some 00:21:59.968 --> 00:22:02.198 lower fees, with those plan providers. 00:22:02.218 --> 00:22:05.298 and now I would say, as far as from a cost perspective, they're 00:22:05.298 --> 00:22:07.108 definitely on equal playing fields. 00:22:07.148 --> 00:22:10.118 So maybe we should talk about, this might be a good opportunity. 00:22:10.118 --> 00:22:11.358 So we're talking about costs. 00:22:11.758 --> 00:22:16.058 So if a member is evaluating costs, what, what would you tell them? 00:22:16.058 --> 00:22:18.698 How would you tell them to go ahead and do some research or 00:22:18.748 --> 00:22:19.518 what are you talking about? 00:22:19.518 --> 00:22:19.988 Costs? 00:22:19.988 --> 00:22:20.398 Yeah, 00:22:20.473 --> 00:22:22.113 Louie: that's a great, that's a great idea, John. 00:22:22.123 --> 00:22:25.883 There's when it comes to cost for these employer sponsored 00:22:25.943 --> 00:22:29.553 retirement plans, companies can charge you in a couple of ways. 00:22:29.583 --> 00:22:34.393 There's often, like a quarterly or a monthly account service fee. 00:22:34.483 --> 00:22:36.783 So it's an administrative fee or an account service fee. 00:22:36.783 --> 00:22:38.153 You'll hear it called different things. 00:22:38.443 --> 00:22:39.953 but that can generally be a flat rate. 00:22:39.983 --> 00:22:42.773 It could be like a 10 a month rate or 10 a week. 00:22:42.913 --> 00:22:47.373 quarter rate, or it could be a percentage of your assets, often very 00:22:47.473 --> 00:22:49.893 low percentage for good companies. 00:22:49.893 --> 00:22:55.083 Like they'll charge a very low amount, but it covers their overhead as it relates 00:22:55.083 --> 00:22:56.853 to being able to administer the plan. 00:22:57.543 --> 00:23:03.278 And then the other way, and probably the, I would say very often the Bigger way 00:23:03.428 --> 00:23:09.138 that companies charge fees is by expense ratios and expense ratios are charged 00:23:09.168 --> 00:23:11.168 on the funds that you are invested in. 00:23:11.508 --> 00:23:18.208 So if you have a fund that charges a 1%, expense ratio, that means that. 00:23:18.568 --> 00:23:26.298 Every year, 1 percent of your money in that fund is collected as a fee 00:23:26.408 --> 00:23:28.938 that you pay to the fund provider. 00:23:29.508 --> 00:23:34.438 there There are a lot of range of fees of expense ratios. 00:23:34.708 --> 00:23:39.198 and so what I try to tell people when I'm giving them, you know, suggestions 00:23:39.208 --> 00:23:43.478 for how they're going to, invest their money is pay attention to those expense 00:23:43.478 --> 00:23:45.298 ratios because those can eat away. 00:23:45.298 --> 00:23:48.428 If you have a 1 percent expense ratio across the board, you 00:23:48.428 --> 00:23:51.988 will end up with dramatically less money than if you had a 0. 00:23:52.058 --> 00:23:54.878 05 percent expense ratios. 00:23:55.158 --> 00:23:57.918 So we haven't got to talk about, You know, my, my favorite 00:23:57.918 --> 00:23:59.848 child, which is index funds. 00:23:59.848 --> 00:24:01.298 We really haven't talked too much about that. 00:24:01.298 --> 00:24:04.358 We probably will in a little bit, but the, one of the beautiful things 00:24:04.358 --> 00:24:08.408 about index funds is not just that you get a really good return consistent 00:24:08.428 --> 00:24:12.758 with the market, but you also pay very little for those index funds. 00:24:12.988 --> 00:24:15.688 Whereas if you have an actively managed fund, now all of a sudden 00:24:15.688 --> 00:24:17.188 you are paying somewhere like 0. 00:24:17.218 --> 00:24:18.692 5, 0. 00:24:18.692 --> 00:24:19.220 7, 0. 00:24:19.220 --> 00:24:19.748 8, 1%. 00:24:19.748 --> 00:24:23.318 So you're going to probably Not be able to beat the market. 00:24:23.328 --> 00:24:26.848 You're probably going to perform worse than the index fund, but even if you 00:24:26.848 --> 00:24:31.618 performed as good as the index fund or a little better, those expense 00:24:31.618 --> 00:24:34.878 ratios are going to eat into your returns and make it so that you have 00:24:34.878 --> 00:24:36.298 less when you eventually retire. 00:24:36.454 --> 00:24:36.729 Jon: retire. 00:24:36.729 --> 00:24:39.768 And that's really, and that's the name of the game here is we're going 00:24:39.768 --> 00:24:42.998 to try to control what we can control and we can't control the market. 00:24:42.998 --> 00:24:45.508 No, anyone that tells you, they can tell you what the market's going to do. 00:24:45.758 --> 00:24:46.668 They're selling snake oil. 00:24:46.678 --> 00:24:49.058 Cause no one knows, no one knows what tomorrow will bring. 00:24:49.428 --> 00:24:51.963 so that is the, one of those things, like when we were talking enough, The 00:24:51.963 --> 00:24:54.383 four 57, and we're talking about costs. 00:24:54.383 --> 00:24:56.793 And then furthermore, we'll talk about taxes here in a little bit. 00:24:56.993 --> 00:24:59.733 Like, these are the things that you can control, at least based on what 00:24:59.733 --> 00:25:01.523 the government will allow right now. 00:25:01.523 --> 00:25:03.903 So definitely wanted to talk a little bit about costs. 00:25:03.943 --> 00:25:06.383 Cause that's some of those things that kind of gets lost in translation. 00:25:06.683 --> 00:25:10.713 So it will be very easy when you get into your four 57 plan, you know, 00:25:10.713 --> 00:25:13.893 whether that's here at West Metro or any other listeners, they, there 00:25:13.923 --> 00:25:17.673 is a certain requirement that each, that each plan provider has to give 00:25:17.683 --> 00:25:19.033 you a certain amount of options. 00:25:19.033 --> 00:25:21.403 They can't just give you like one option and be like, Take it or leave 00:25:21.403 --> 00:25:25.573 it like there is, based on some risk tolerance and some other rules, they, 00:25:25.583 --> 00:25:28.883 they do need to require a certain type of fund and a certain amount of funds. 00:25:29.033 --> 00:25:31.593 So one of the things that Louie specifically mentioned 00:25:31.643 --> 00:25:33.183 is the expense ratio. 00:25:33.183 --> 00:25:36.068 So when I think about costs, that's generally what I, Try to 00:25:36.078 --> 00:25:39.298 advise people of is if you're just trying to compare apples to apples, 00:25:39.578 --> 00:25:41.008 like that's the best comparison. 00:25:41.278 --> 00:25:44.548 Some of these other like administrative fees, like quite frankly, we 00:25:44.548 --> 00:25:45.558 just can't get around those. 00:25:45.558 --> 00:25:47.788 Like that is just what it costs to administer the plan. 00:25:48.058 --> 00:25:49.208 We just kind of have to eat those. 00:25:49.408 --> 00:25:53.418 And honestly, most plan providers are aware of administrative fees and that's 00:25:53.418 --> 00:25:57.188 a business and they're trying to be very competitive with the other providers. 00:25:57.358 --> 00:26:00.808 But really when you're looking at, at fees, look at that expense ratio. 00:26:00.808 --> 00:26:03.318 So it's something as simple as you can click on a fund. 00:26:04.028 --> 00:26:07.738 And typically it'll be presented at a certain in a certain manner It'll 00:26:07.738 --> 00:26:11.018 typically give you like the fund performance, you know year to date 00:26:11.028 --> 00:26:14.778 over three years over five years And then it will also give you something 00:26:14.778 --> 00:26:19.558 that might be abbreviated as exp Or it might just say expense ratio and that 00:26:19.558 --> 00:26:24.118 will typically be a percentage So, you know some of these depending on what 00:26:24.118 --> 00:26:29.443 type of investment you are can be as low as like Louis said which is 0. 00:26:29.443 --> 00:26:29.553 01 or 0. 00:26:29.553 --> 00:26:34.523 02 percent and they can be all the way up to I've seen some What was the most 00:26:34.523 --> 00:26:41.143 egregious one I saw it was like a global real estate investment fund and it was 00:26:41.143 --> 00:26:42.513 something like two and a half percent 00:26:43.753 --> 00:26:45.693 Louie: through a, through one of our four 57 00:26:45.713 --> 00:26:50.013 Jon: No, this was this was not in one of our And one of our options, from the West 00:26:50.013 --> 00:26:53.543 Metro people, no, this wasn't something else that was completely egregious. 00:26:53.543 --> 00:26:54.483 And I'm just like, wow. 00:26:54.483 --> 00:26:58.303 So it really, it really does make a difference, you know, year over year. 00:26:58.303 --> 00:26:59.963 And when you're compounding all that stuff, so just 00:27:00.128 --> 00:27:01.058 Louie: and a half percent, you said, 00:27:01.523 --> 00:27:03.573 Jon: something, something to be mindful of. 00:27:03.613 --> 00:27:04.733 So just pay attention to that. 00:27:04.813 --> 00:27:07.803 And really, and you should be able to go into, if you got multiple 00:27:07.803 --> 00:27:12.613 providers, you should be able to, have access to the plans to see, compare 00:27:12.613 --> 00:27:16.363 and contrast and, you know, case in point, what is very common is something 00:27:16.373 --> 00:27:18.853 like an S and P 500 index fund. 00:27:19.203 --> 00:27:20.423 You know, that's very common. 00:27:20.423 --> 00:27:23.833 Like if you read anything right now, that's almost what everyone associates 00:27:23.973 --> 00:27:26.973 a benchmark with right now is 500. 00:27:27.003 --> 00:27:28.113 So if you look at one. 00:27:28.563 --> 00:27:32.773 Plan provider, let's say it's Fidelity and they're 02, you should also be able 00:27:32.773 --> 00:27:35.983 to go to Mission Square and they will also have something that's similar to 00:27:35.983 --> 00:27:40.183 an SMP 500 and those costs should be very close and if they're agreeing, if 00:27:40.183 --> 00:27:44.103 they're, you know, 10, basis points apart. 00:27:44.398 --> 00:27:48.028 Well, I'm gonna go with the, with the provider that's got a lower cost and 00:27:48.028 --> 00:27:52.028 really, you know, to Louie's point that we, from West Metro's perspective, it 00:27:52.028 --> 00:27:55.278 is basically apples and apples from Fidelity to Mission Square on costs. 00:27:55.318 --> 00:27:56.468 Like they really have come down 00:27:56.533 --> 00:27:57.153 Louie: come down a lot. 00:27:57.378 --> 00:27:58.518 Jon: So just something to be mindful 00:27:58.563 --> 00:28:01.528 Louie: And, and, and just to kind of add onto that, The last thing 00:28:01.528 --> 00:28:04.598 I'll say about costs is that, I'll just, this is to give you an example. 00:28:04.598 --> 00:28:06.748 John brought up the S and P 500. 00:28:07.118 --> 00:28:10.458 if a member, let's just, just, just make a little example here. 00:28:10.458 --> 00:28:15.968 If a member were to contribute a 10, 000 into an S and P 500 with no expense ratio, 00:28:15.998 --> 00:28:17.658 let's just say they had no expense ratio. 00:28:17.658 --> 00:28:22.038 It was a free S and P 500 fund, over the course of that 40 years, at the end 00:28:22.038 --> 00:28:28.238 of the 40 years, $10,000 a year, would give that member about $850,000 in their 00:28:28.238 --> 00:28:30.368 retirement account at the end of 40 years. 00:28:30.578 --> 00:28:30.608 Okay. 00:28:30.608 --> 00:28:32.378 And that's just based off of historical numbers? 00:28:32.528 --> 00:28:32.588 Yeah. 00:28:32.798 --> 00:28:36.698 If that same member invested into a fund that had the same performance 00:28:36.698 --> 00:28:38.738 of the s and p 500, which as we know. 00:28:39.013 --> 00:28:39.973 is very unlikely. 00:28:39.973 --> 00:28:43.333 You're probably going to underperform, but let's say it was able to match the same 00:28:43.333 --> 00:28:45.643 returns, but they charged a 2 percent fee. 00:28:45.663 --> 00:28:47.373 So John, you were talking about that two and a half percent fee. 00:28:47.373 --> 00:28:48.863 Let's just say it's a 2 percent fee. 00:28:49.733 --> 00:28:53.333 If that member, if another member invested in that fund, same returns, but 00:28:53.333 --> 00:28:59.273 with a 2 percent fee, they would, they would have lost about half or 50 percent 00:28:59.633 --> 00:29:05.203 of their investment that they would have with the S and P 500 fee or fund. 00:29:05.693 --> 00:29:08.423 So basically they would go to. 00:29:08.793 --> 00:29:11.373 About 380, 000. 00:29:11.573 --> 00:29:12.743 Jon: so more than half, more 00:29:12.748 --> 00:29:13.138 Louie: than half. 00:29:13.148 --> 00:29:13.338 So you're 00:29:13.463 --> 00:29:14.423 Jon: than half's getting, 00:29:14.478 --> 00:29:16.338 Louie: getting eroded because of a 2 percent fee. 00:29:16.338 --> 00:29:19.208 So you hear 2 percent and you're like, oh, that's, that's not that big. 00:29:19.208 --> 00:29:19.428 Right. 00:29:19.468 --> 00:29:20.078 It's huge. 00:29:20.108 --> 00:29:24.618 Over time, you've eroded your returns from about 850, 000 to about. 00:29:24.673 --> 00:29:26.163 380, 000. 00:29:26.413 --> 00:29:31.843 So that's why we're, that's why John and I are so passionate about cutting, fees 00:29:31.843 --> 00:29:36.433 and cutting expense ratios, because that's more money in your pocket when you retire. 00:29:36.433 --> 00:29:37.963 And that's what we want you guys to have. 00:29:37.964 --> 00:29:42.528 Jon: I think is important for people to understand, like those fees, they kick in 00:29:42.528 --> 00:29:43.878 every year, whether you made money or not. 00:29:43.948 --> 00:29:46.518 So if you lost money, they're still collecting money, you know? 00:29:46.518 --> 00:29:48.168 So it's not just like, Oh, you did really good. 00:29:48.168 --> 00:29:49.248 We're going to take a fee off of this. 00:29:49.258 --> 00:29:50.708 They take it regardless. 00:29:50.708 --> 00:29:51.028 So. 00:29:51.158 --> 00:29:52.588 I think that's a really good point. 00:29:52.868 --> 00:29:55.448 so just so, the West Metro peeps know. 00:29:55.658 --> 00:30:01.058 so if you open up a 457 and you just tell, you just elect how much money you 00:30:01.058 --> 00:30:04.958 want contributed in each paycheck, the default, if you don't actually select 00:30:04.968 --> 00:30:09.658 an investment, the plan provider has done is they basically take whatever 00:30:09.658 --> 00:30:13.668 is considered like your normal retirement age and I think for us, 00:30:13.668 --> 00:30:15.668 I think it's 55 if i'm not mistaken. 00:30:15.738 --> 00:30:19.198 they're gonna look at your age And they're gonna basically do the math 00:30:19.208 --> 00:30:22.928 backwards So if you're 30, they're basically gonna say like, okay, 00:30:22.958 --> 00:30:24.748 we anticipate that in 25 years. 00:30:24.748 --> 00:30:29.208 You'll probably be retired They are going to look at what is called a target date 00:30:29.238 --> 00:30:33.398 retirement fund, and they're going to match that target date with the closest, 00:30:33.438 --> 00:30:35.788 most approximate to you turning 55. 00:30:36.268 --> 00:30:40.378 Typically the way that target date funds work is I've seen it different 00:30:40.378 --> 00:30:42.648 ways, but most of the time they're like on five year intervals. 00:30:42.698 --> 00:30:48.508 they'll do like 2030 2035 2040 All that year is basically saying is that is the 00:30:48.508 --> 00:30:53.498 anticipated year in which you know, you're gonna retire So the way that target date 00:30:53.508 --> 00:30:57.288 funds work is and honestly for a lot of people This is a very effective kind 00:30:57.288 --> 00:31:02.468 of hands off like the fact that this is the selected option I'm, really happy 00:31:02.468 --> 00:31:04.278 about because before this happened. 00:31:04.348 --> 00:31:05.358 Do you know what it was? 00:31:05.558 --> 00:31:07.698 Louie: I don't, please don't tell me it was like a, either a bond 00:31:07.918 --> 00:31:08.848 Jon: Is a money market fund 00:31:09.194 --> 00:31:09.999 Louie: And a 00:31:10.073 --> 00:31:13.333 Jon: a money market fund for everyone, if you've never really heard about 00:31:13.333 --> 00:31:16.423 that, basically that's more or less like what a savings account is 00:31:16.423 --> 00:31:17.623 going to bear, like the interest. 00:31:17.833 --> 00:31:21.133 And we know, besides the last couple of years, 10 years ago, a savings 00:31:21.133 --> 00:31:22.783 account offered you almost nothing. 00:31:22.783 --> 00:31:26.963 So unfortunately we had members that, that, Didn't really 00:31:26.993 --> 00:31:29.123 elect an investment option. 00:31:29.353 --> 00:31:33.893 So the default was a money market and they put, 15 years worth of contributions 00:31:33.893 --> 00:31:36.643 and they're four 57 and basically didn't 00:31:36.673 --> 00:31:37.333 Louie: got nothing. 00:31:37.553 --> 00:31:38.443 Jon: didn't gain anything. 00:31:38.453 --> 00:31:41.713 check with your department, your plan provider on what the default is, but 00:31:41.713 --> 00:31:45.603 they will place you into a target date fund that closest represents what they 00:31:45.603 --> 00:31:47.703 think is your typical retirement age. 00:31:47.913 --> 00:31:50.803 So once again, getting back to the target date fund is it is 00:31:50.823 --> 00:31:55.983 automatically by the fund design is going to make you more conservative. 00:31:56.098 --> 00:31:57.638 As you get closer to retirement. 00:31:57.788 --> 00:32:01.468 So typically what that means is the younger you are, the more time you have, 00:32:01.478 --> 00:32:05.698 your time horizon, you're going to be more invested in stocks, or you also might 00:32:05.698 --> 00:32:09.948 hear it, called equities, which typically will give you more growth long term, 00:32:10.178 --> 00:32:14.228 but they're also more volatile just by the nature of the risk reward premiums. 00:32:14.538 --> 00:32:19.568 as you get closer towards retirement, that fund automatically is going to, once 00:32:19.568 --> 00:32:21.718 again, by design become more conservative. 00:32:21.958 --> 00:32:24.658 So you are going to hold more safe. 00:32:24.963 --> 00:32:26.373 Assets safer assets. 00:32:26.443 --> 00:32:28.273 So bonds and fixed income. 00:32:28.273 --> 00:32:30.623 If you've ever heard of something called rebalancing, that's 00:32:30.623 --> 00:32:31.713 basically what it's doing. 00:32:31.723 --> 00:32:35.623 It's making you as you get closer to retirement It's making you more 00:32:35.623 --> 00:32:39.913 conservative because once again, if you don't have time to make up if you lost a 00:32:39.913 --> 00:32:43.113 bunch of money they don't want you to all of a sudden be behind the eight ball and 00:32:43.113 --> 00:32:44.643 be like, oh man I was super aggressive. 00:32:44.863 --> 00:32:50.623 I was 100 in stocks and now I'm a year away from retirement and i've lost 40 00:32:50.623 --> 00:32:55.753 And we've seen that happen Saw that happen in 2007 2008 around here and and 00:32:55.753 --> 00:32:58.603 our folks weren't the only people in there They were just super aggressive. 00:32:58.923 --> 00:33:01.543 They didn't really take that whole, risk tolerance that whole, 00:33:01.583 --> 00:33:06.053 risk reward thing And so I love the target date fund for that. 00:33:06.073 --> 00:33:07.483 It by design does that 00:33:07.523 --> 00:33:07.863 Louie: Yeah. 00:33:07.883 --> 00:33:11.213 So, yeah, John, add onto that a little bit, as you get closer to retirement, 00:33:11.543 --> 00:33:16.093 that fund by itself, without you doing anything, will sell off your 00:33:16.093 --> 00:33:20.863 stock funds, your stock index funds, and it'll buy more bond funds. 00:33:20.933 --> 00:33:25.903 And that kind of smooths out your ride and it makes it less volatile. 00:33:26.203 --> 00:33:28.163 When there's ups and downs in the market. 00:33:28.603 --> 00:33:32.683 So by the time you retire, if you, you know, if you retire and if you have 00:33:32.683 --> 00:33:37.823 a 2030 fund and you retire in 2030, you're probably going to hold somewhere 00:33:37.823 --> 00:33:42.543 around 60 percent of that target date fund will be in stocks or stock funds. 00:33:42.993 --> 00:33:45.773 And the other 40 percent will be in bond funds. 00:33:46.373 --> 00:33:49.453 I think that's what it shoots for when you retire good funds though, for 00:33:49.483 --> 00:33:51.853 people that are hands off and like, look, I want to set it and forget it. 00:33:51.853 --> 00:33:53.093 And I don't want to have to do anything. 00:33:53.573 --> 00:33:55.063 It's a great option now. 00:33:55.063 --> 00:33:58.753 It's they're conservative versus what a lot of people recommend a lot of like 00:33:58.993 --> 00:34:02.243 CFPs would recommend at that point so you're You're not going to have the same 00:34:02.243 --> 00:34:06.583 return as you would if you had just an s& p 500 index fund or a total stock 00:34:06.583 --> 00:34:10.423 market Index fund but that's okay like that's that's the benefit that you get 00:34:10.423 --> 00:34:14.063 from it is not that you're getting the same return as an S& P 500 index fund. 00:34:14.323 --> 00:34:17.123 It's that you don't have to keep playing with it and fiddling with it. 00:34:17.313 --> 00:34:20.543 Whereas if you have an S& P 500 fund, yeah, you're getting a great return. 00:34:20.553 --> 00:34:22.813 You're paying rock bottom fees, awesome things. 00:34:22.823 --> 00:34:25.713 Those are both things that I'm very passionate about, as you know, but what 00:34:25.713 --> 00:34:29.153 that means is that as I get closer to retirement, I got to go in there and 00:34:29.153 --> 00:34:34.433 manually sell off some of those, some of that index fund and buy more bond funds 00:34:34.433 --> 00:34:38.633 so that I'm not a year out of retirement and And totally 100 percent invested in 00:34:38.643 --> 00:34:41.953 the S& P 500 and then the stock market goes down by 30 percent and I'm like, 00:34:41.963 --> 00:34:43.703 ooh, I don't know if I could retire now. 00:34:43.933 --> 00:34:44.523 So, 00:34:44.928 --> 00:34:48.448 Jon: definitely way more work from the, the members aspect of it, from the 00:34:48.448 --> 00:34:51.738 management of that, and kind of just, you know, looking through that whole thing. 00:34:51.738 --> 00:34:54.978 So, and the other, the only other plug I will make on the, on the target date. 00:34:54.978 --> 00:34:59.148 And I, I hope with more, competition, and just the awareness of, of the target 00:34:59.148 --> 00:35:03.578 date funds as costs go down, they are more expensive, you know, typically a lot 00:35:03.578 --> 00:35:07.958 of the, the, target date funds, you'll find them at, Like 60 basis points. 00:35:08.118 --> 00:35:08.768 So that's like 0. 00:35:08.768 --> 00:35:14.158 6%, which is, considerably more expensive than a lot of the index funds. 00:35:14.158 --> 00:35:17.398 So that's my other thing is if you're paying that kind for a long time, that 00:35:17.398 --> 00:35:19.158 can add up in, in some of the fees. 00:35:19.158 --> 00:35:21.158 when you're talking about investment selection though, 00:35:21.188 --> 00:35:22.328 this is something we can't. 00:35:22.533 --> 00:35:26.773 We can't give any advice on from a podcast standpoint because it is so 00:35:26.803 --> 00:35:30.743 individualistic i'm more than happy to share what I do louie same thing, but 00:35:30.743 --> 00:35:34.903 this is for our circumstances and our circumstances are unique to ourselves 00:35:35.133 --> 00:35:38.483 so we're not going to give you any more as far as investment selections. 00:35:38.483 --> 00:35:43.143 It's just being mindful of costs Kind of what a fund is what an index fund 00:35:43.153 --> 00:35:47.913 is what a bond fund is what a target date fund is so we're gonna Spend some 00:35:47.913 --> 00:35:50.908 more time in another episode, because I'm sure there's a lot of questions 00:35:50.908 --> 00:35:53.668 that people will get from this, we just wanted to talk about what a lot of the 00:35:53.668 --> 00:35:57.898 common options are, whether it's here at West Metro or, other organizations, 00:35:58.058 --> 00:35:59.438 you're going to have some options. 00:35:59.743 --> 00:35:59.973 Louie: Yep. 00:36:00.348 --> 00:36:00.988 Jon: Anything more? 00:36:01.018 --> 00:36:02.368 I think that's pretty good. 00:36:02.618 --> 00:36:03.008 All right. 00:36:03.228 --> 00:36:08.478 So let's talk about, how much the, good old IRS is going to let us contribute to 00:36:08.478 --> 00:36:11.168 these, golden ticket plans, if you will. 00:36:11.228 --> 00:36:14.838 so starting, and this is updated, the IRS just released their guidance. 00:36:15.058 --> 00:36:18.725 so you can contribute up to, 23, 000. 00:36:18.885 --> 00:36:21.485 500 in 2025. 00:36:21.765 --> 00:36:24.555 there is something that is called a catch up contribution. 00:36:24.805 --> 00:36:31.185 So this is if you are, 50 years or older, you can add an additional 7, 500. 00:36:31.185 --> 00:36:32.085 So what is that? 00:36:32.195 --> 00:36:34.045 So that would be 31, 000. 00:36:34.075 --> 00:36:37.935 Basically you could contribute, if you're over the age of, 50. 00:36:38.145 --> 00:36:39.565 So that's something that's a lot of money. 00:36:39.680 --> 00:36:42.810 Louie: Yeah, that's a great amount of investment every year 00:36:42.850 --> 00:36:43.860 if you were able to do that. 00:36:43.970 --> 00:36:44.220 Jon: Yep. 00:36:44.230 --> 00:36:45.920 That is a tremendous amount of money. 00:36:45.920 --> 00:36:50.540 So that's something that, if you have, the ability, to contribute, like, you know, 00:36:50.540 --> 00:36:54.540 we've got some people that are brand new and they are maxing out their four 57s. 00:36:54.920 --> 00:36:56.800 I don't know, honestly, I don't know how they're doing it. 00:36:56.800 --> 00:36:59.700 If they're living in a van down by the river, or if they're 00:36:59.700 --> 00:37:01.570 just very, frugal in certain, in 00:37:01.620 --> 00:37:04.590 some circumstances, and they're, you know, maybe working a bunch of 00:37:04.600 --> 00:37:07.920 overtime or whatever, and they're just funneling all this money in there. 00:37:07.920 --> 00:37:08.960 So hats off 00:37:08.980 --> 00:37:11.690 Louie: Can you imagine if, if all the firefighters just started 00:37:11.770 --> 00:37:15.300 maxing out of, 457 on day one. 00:37:15.310 --> 00:37:17.120 Like that is nuts. 00:37:17.145 --> 00:37:17.455 Jon: right? 00:37:17.465 --> 00:37:19.015 That is super incredible. 00:37:19.025 --> 00:37:23.775 So we just wanted to highlight what some of the contribution Limits are and I 00:37:23.775 --> 00:37:29.345 will also say that there is something new This is something that the secure 2. 00:37:29.345 --> 00:37:30.395 0 took effect. 00:37:30.905 --> 00:37:36.025 So starting next year So in 2025, they are going to allow what are 00:37:36.025 --> 00:37:38.535 called super Catch up limits. 00:37:38.775 --> 00:37:46.655 so what that is going to be for the, 457 plan, that's going to be 11, 250. 00:37:46.925 --> 00:37:52.745 So if you, are, between the ages of 60 and 63, this is something that you 00:37:52.795 --> 00:37:54.445 could potentially be eligible for. 00:37:54.685 --> 00:37:55.725 I will preface it. 00:37:56.030 --> 00:37:59.440 for West Metro, this will not be in effect for 2025. 00:37:59.760 --> 00:38:01.340 I talked with our HR department. 00:38:01.360 --> 00:38:04.860 they're still working through some, some design changes with the plan. 00:38:04.880 --> 00:38:08.040 and they just don't have the availability to offer this 00:38:08.070 --> 00:38:09.610 for our members for next year. 00:38:09.730 --> 00:38:10.680 Once again, this is a, a, a. 00:38:10.740 --> 00:38:12.270 an employee sponsored plan. 00:38:12.270 --> 00:38:15.450 So they have, certain rights as far as what they're going to, what they're 00:38:15.450 --> 00:38:17.600 going to allow and what they're not, I know they are planning on this 00:38:17.600 --> 00:38:20.210 for 2026, this will be something. 00:38:20.210 --> 00:38:23.720 So if you're, one of the, salty members out there, we'll just call them. 00:38:23.720 --> 00:38:23.970 Right. 00:38:24.230 --> 00:38:27.240 And you're between the ages of 60 and 63, there is an additional 00:38:27.500 --> 00:38:29.340 special ketchup contribution. 00:38:29.540 --> 00:38:32.590 but that won't take effect for West Metro members, for at least another year, 00:38:32.590 --> 00:38:35.830 but, Once again, if you're listening out there affiliated with a different 00:38:35.830 --> 00:38:39.460 agency, this might be something that you have the option for for 2025. 00:38:39.490 --> 00:38:42.610 That's just a new rule change, but just wanted to highlight that because 00:38:42.620 --> 00:38:44.720 that is something that is new. 00:38:44.860 --> 00:38:44.950 Yeah, 00:38:45.040 --> 00:38:50.025 Louie: and and 20, you know, 23, 500 is Plenty. 00:38:50.035 --> 00:38:53.655 I mean, you can, put a lot of money in there for a lot of people. 00:38:53.685 --> 00:38:56.385 And then we can talk about, you know, IRA contributions if you 00:38:56.385 --> 00:39:00.215 needed to save more, but just know that if you're able to max out your. 00:39:00.740 --> 00:39:03.860 You're 4 57, especially you were saying John, younger guys maxing it out. 00:39:03.860 --> 00:39:05.360 I just did a calculation real quick. 00:39:05.720 --> 00:39:08.870 If you were to max it out, if you put it all in a total stock market index fund. 00:39:08.900 --> 00:39:08.990 Mm-Hmm. 00:39:09.230 --> 00:39:12.350 since day one when you worked here, you worked here for 30 years, 00:39:12.590 --> 00:39:19.430 contributing $23,500, you would have $2.2 million in that retirement account. 00:39:19.670 --> 00:39:19.730 Yeah. 00:39:20.060 --> 00:39:23.420 At the end when you retired, like wow, that would be a sweet 00:39:23.515 --> 00:39:24.395 Jon: top of the pension 00:39:24.410 --> 00:39:24.950 Louie: Yeah. 00:39:25.010 --> 00:39:25.280 Yeah. 00:39:25.280 --> 00:39:27.620 That's the cherry on the pension cake. 00:39:27.980 --> 00:39:32.270 And that's, I mean, that's enough to withdraw like 88, 000 a year without 00:39:32.270 --> 00:39:34.260 ever outliving that pile of money. 00:39:34.270 --> 00:39:38.500 So, if you're motivated to be a multi millionaire and have 2. 00:39:38.500 --> 00:39:41.760 2 million in investments, start putting 23, 500 into 00:39:41.760 --> 00:39:43.730 your 457 and that's, that's it. 00:39:43.884 --> 00:39:47.990 Jon: and we know, realistically, for the majority of our, our members, 00:39:47.990 --> 00:39:51.702 that's just not financially going to be feasible, and we don't, You know, 00:39:52.122 --> 00:39:52.982 that's just one of those things. 00:39:52.982 --> 00:39:57.292 If you do have the availability to it, maybe you're, you have a spouse and 00:39:57.292 --> 00:40:00.202 you have another income or whatever your circumstances are, it's just a 00:40:00.202 --> 00:40:01.692 really good idea if you can fund that. 00:40:01.692 --> 00:40:06.592 So basically we're, we're just advocating for funding that as much as, as you 00:40:06.592 --> 00:40:10.542 can, without obviously sacrificing any other, you know, security issues. 00:40:10.622 --> 00:40:13.412 and, you're, you're not going to be disappointed in that. 00:40:13.742 --> 00:40:14.122 Louie: Yeah, 00:40:14.337 --> 00:40:17.527 Jon: The, and the last thing I will mention, and I don't see it on our, 00:40:17.567 --> 00:40:21.797 our show notes here is the, so there is something, within the four 57 00:40:21.797 --> 00:40:26.917 plan that is very unique, and that is a, basically a special provision, 00:40:27.097 --> 00:40:29.067 the three year special provision. 00:40:29.367 --> 00:40:33.827 So basically when you are three years from retirement, the plan 00:40:33.837 --> 00:40:35.582 will allow you to basically do. 00:40:35.582 --> 00:40:38.382 Double the amount that you could put in in each year. 00:40:38.612 --> 00:40:43.842 So for right now, if it's for 2025, but that's going to be 23, 500, you 00:40:43.842 --> 00:40:44.912 could actually put in, what is that? 00:40:44.922 --> 00:40:47.072 47, 000. 00:40:47.072 --> 00:40:50.992 You could put into that plan as just a special ketchup contribution. 00:40:51.152 --> 00:40:54.032 it's something that's very unique to the four 57 plan. 00:40:54.242 --> 00:40:55.052 It's very unique. 00:40:55.087 --> 00:40:57.137 to public safety, providers as well. 00:40:57.137 --> 00:41:00.667 So even if you're a person that works in another four 57 plan, 00:41:00.667 --> 00:41:03.587 like a nonprofit, this might not be something that's available to you. 00:41:03.587 --> 00:41:06.267 So this is something specifically to firefighters. 00:41:06.507 --> 00:41:09.747 and the reason that I bring this up is, so when we talked about the difference 00:41:09.767 --> 00:41:13.867 between, fidelity and mission square for West metro providers, there is 00:41:13.917 --> 00:41:17.757 a difference in their interpretation of how they're going to apply this. 00:41:18.167 --> 00:41:23.427 So, Fidelity requires you to at least be the age of 50 before you put in for 00:41:23.517 --> 00:41:25.897 Louie: what they consider the normal retirement age for a 00:41:26.207 --> 00:41:26.537 Jon: Yep. 00:41:26.537 --> 00:41:27.097 So, yep. 00:41:27.097 --> 00:41:29.067 And it's basically, if you're within three years of that, 00:41:29.067 --> 00:41:30.507 they're basically saying it's 50. 00:41:30.977 --> 00:41:34.557 If you actually look at the IRS regulations, it is pretty clear on this 00:41:34.577 --> 00:41:40.307 and it says that you must be at least the age of 40 and have at least 15 years 00:41:40.477 --> 00:41:43.217 of service in order to qualify for this. 00:41:43.227 --> 00:41:46.187 So mission square will let you do that. 00:41:46.407 --> 00:41:50.427 Mission square will let you be 40 and as long as you got 15 years of service So 00:41:50.427 --> 00:41:55.127 if you're hired at 25, you could actually put in for the special provision This 00:41:55.127 --> 00:41:59.087 is something that has to be conducted through your HR department And the 00:41:59.087 --> 00:42:04.087 reason is is they have to go back and make sure that you actually have room 00:42:04.107 --> 00:42:06.237 available for that What I mean by that 00:42:06.357 --> 00:42:09.517 Louie: have to have under contributed in previous years 00:42:09.557 --> 00:42:11.307 in order to make that additional 00:42:11.395 --> 00:42:16.637 Jon: you're one of our members that right out of the gates, you funded your four 00:42:16.637 --> 00:42:21.267 57 every year, and now you get to this point to the max, you won't qualify for 00:42:21.267 --> 00:42:23.087 this because you don't have any unused 00:42:23.102 --> 00:42:25.292 Louie: boohoo boohoo feel so bad 00:42:25.317 --> 00:42:26.707 Jon: is a catch all. 00:42:26.737 --> 00:42:29.347 And most of our members that will not apply to, right. 00:42:29.347 --> 00:42:30.727 We understand that people. 00:42:30.792 --> 00:42:34.452 From the, from the first day, very few can go ahead and contribute that 00:42:34.452 --> 00:42:37.872 to the max, but it is a very unique provision and it's something that 00:42:37.872 --> 00:42:39.642 is very specific to firefighters. 00:42:39.882 --> 00:42:43.382 and we just wanted to make a full awareness for not only our members, but 00:42:43.382 --> 00:42:45.262 other firefighters listening out here. 00:42:45.262 --> 00:42:46.062 that is something that. 00:42:46.112 --> 00:42:50.102 Potentially you could have access to, so get ahold of, your HR department. 00:42:50.112 --> 00:42:52.962 Who's ever, orchestrating your benefits and ask them about that. 00:42:52.962 --> 00:42:54.332 But cause you are going to need their 00:42:54.852 --> 00:42:56.692 Louie: True. 00:42:56.692 --> 00:42:59.592 And if you do it on a pre tax basis, that's going to dramatically 00:42:59.592 --> 00:43:04.032 lower your tax bill, for For those contributions, which is awesome. 00:43:04.562 --> 00:43:04.812 and 00:43:05.022 --> 00:43:05.982 Jon: a tremendous amount. 00:43:06.172 --> 00:43:06.512 Louie: Yeah. 00:43:06.622 --> 00:43:10.632 And speaking of that, maybe now that's a good segue to talk about pre tax and 00:43:10.632 --> 00:43:12.682 post tax or traditional versus Roth. 00:43:13.242 --> 00:43:17.842 So, John, we just mentioned that in our four 57, our options 00:43:17.842 --> 00:43:22.362 include both the traditional or the pre tax for 57, as well as the. 00:43:22.597 --> 00:43:25.437 post tax or Roth 457 option. 00:43:25.877 --> 00:43:30.467 Can you tell us a little bit about the pre tax and post tax ideas of contribution? 00:43:30.477 --> 00:43:30.757 Yep. 00:43:30.837 --> 00:43:31.107 I would, 00:43:31.157 --> 00:43:34.897 Jon: I would love to so kind of like Louie already alluded to so we'll start 00:43:34.897 --> 00:43:37.937 with the traditional of their pretext That's probably what most people are 00:43:37.937 --> 00:43:42.467 the most familiar with So basically the contributions that you're making in 00:43:42.467 --> 00:43:47.707 that year they go in tax free, you don't pay tax, taxes on those contributions. 00:43:47.957 --> 00:43:50.137 They then go into your 457 account. 00:43:50.417 --> 00:43:53.207 And then depending on whatever investment selection you have, 00:43:53.407 --> 00:43:55.117 hopefully there's some growth with that. 00:43:55.167 --> 00:44:00.907 And that growth, will continue to grow tax deferred, until you withdraw those Those 00:44:00.907 --> 00:44:06.582 distributions so one of the things so that is the traditional Pre tax 457 everyone. 00:44:06.582 --> 00:44:10.472 I think has a pretty good idea on that What's really nice about that is you're 00:44:10.472 --> 00:44:14.652 saving taxes on the front end because you're reducing your taxable income so 00:44:14.652 --> 00:44:17.522 you're going to pay less taxes because your taxable income is going to be lower 00:44:18.082 --> 00:44:22.332 which is very advantageous and especially if you're in a higher tax bracket that 00:44:22.332 --> 00:44:26.562 can save you a significant amount of money up front so I think people definitely 00:44:26.582 --> 00:44:28.502 in the 401ks and everything else. 00:44:28.662 --> 00:44:33.007 I think people really understand that Yeah what exactly the tax deferred growth is. 00:44:33.007 --> 00:44:35.907 So money comes in, so you're not paying taxes on that. 00:44:36.197 --> 00:44:38.107 It's going to grow tax deferred. 00:44:38.157 --> 00:44:40.657 So you're not paying taxes on any dividends and any 00:44:40.657 --> 00:44:42.117 earnings, anything like that. 00:44:42.357 --> 00:44:47.987 But when you do take a distribution, so what is unique about the four 57, which is 00:44:48.037 --> 00:44:54.137 a different than like a 401k plan is you can basically take that and Distribution 00:44:54.137 --> 00:44:58.207 when you separate from the fire department, which is very unique, right? 00:44:58.457 --> 00:45:02.557 the really cool thing about the four 57 that makes it a little bit more unique 00:45:02.567 --> 00:45:08.187 and really tailored to firefighters is that you can take distributions before 00:45:08.287 --> 00:45:09.787 the typical age of 59 and a half. 00:45:09.787 --> 00:45:13.577 So basically the way the four 57 is structured, at least from the 00:45:13.577 --> 00:45:15.307 pre tax setting is you can take it. 00:45:15.942 --> 00:45:19.972 Basically whenever you separate from service So if you're 50 years old, you 00:45:19.972 --> 00:45:23.882 can go ahead and start taking those pre taxed distributions And then when 00:45:23.882 --> 00:45:27.162 it comes out, basically you're gonna be taxed on everything that comes in 00:45:27.372 --> 00:45:31.102 Yeah, so both the contributions and the earnings because you've never 00:45:31.102 --> 00:45:34.337 paid tax on either of those so It's really easy when you think about it. 00:45:34.337 --> 00:45:38.017 It's, you know, if you pay, if you take out 20, 000, you're going to be pet 00:45:38.017 --> 00:45:43.047 taxed on all 20, 000 of those dollars at whatever your marginal tax rate is. 00:45:43.047 --> 00:45:46.677 So that's how the distributions work in the taxation works from a 00:45:46.697 --> 00:45:49.517 pre tax or a traditional four 57. 00:45:49.517 --> 00:45:53.257 So now we have the cousin of the traditional and that, or maybe 00:45:53.257 --> 00:45:56.517 the, maybe not the cousin, maybe the, the uncle Rico, I don't know. 00:45:56.687 --> 00:46:00.637 I was thinking something suave, something that's cool is the Roth. 00:46:00.697 --> 00:46:05.452 So once again, Roth 457, anything that has Roth before it, whether it's 00:46:05.452 --> 00:46:07.032 an IRA, it doesn't really matter. 00:46:07.032 --> 00:46:09.292 You can add whatever alphabet soup you want after it. 00:46:09.602 --> 00:46:13.182 Roth basically just means that you're going to pay taxes on it right now. 00:46:13.622 --> 00:46:16.432 So whatever your marginal tax rate is, you're going to pay that, 00:46:16.722 --> 00:46:20.762 but then it's going to have the opportunity to grow tax free until 00:46:20.762 --> 00:46:22.252 you take out those distributions. 00:46:22.572 --> 00:46:23.682 You pay taxes now. 00:46:23.692 --> 00:46:27.692 Paytax is now tax free growth and tax free withdrawals in retirement. 00:46:27.702 --> 00:46:28.162 Yes. 00:46:28.332 --> 00:46:32.452 So, but like anything, if it sounds too good to be true, it might. 00:46:32.762 --> 00:46:36.242 So one of the things, and I don't think this is once again, common knowledge. 00:46:36.452 --> 00:46:38.932 And for a lot of our members too, they've just had access 00:46:38.932 --> 00:46:40.802 to the Roth 457 for a year. 00:46:40.802 --> 00:46:43.982 So this is just some good, the more, you know, statements. 00:46:44.232 --> 00:46:48.522 So the way in order for it to be what is considered a qualified distribution, 00:46:48.752 --> 00:46:53.112 and that is how you get to those tax free withdrawals is you have to be 00:46:53.197 --> 00:46:58.827 59 and a half years and you have to have a Roth opened for five years. 00:46:58.827 --> 00:46:59.277 Yes. 00:46:59.347 --> 00:47:02.647 So you have to have both of those two qualifications in order to 00:47:02.647 --> 00:47:05.267 have your distributions tax free. 00:47:05.907 --> 00:47:09.527 Once again, though, there's some more nuances to this, and this is where, 00:47:09.707 --> 00:47:12.197 once again, if you start getting involved in this and you just want 00:47:12.197 --> 00:47:15.007 some more clarification or guidance, this is really where you do want to 00:47:15.007 --> 00:47:17.482 seek some tax advice, whether it's. 00:47:17.492 --> 00:47:20.462 Work with a tax professional to really see what some of these implications 00:47:20.462 --> 00:47:21.802 are, just generally speaking. 00:47:22.342 --> 00:47:26.132 But the way that the Roth works is distributions are always 00:47:26.132 --> 00:47:27.712 taken out in a certain order. 00:47:28.352 --> 00:47:30.812 So it always starts with your contributions first. 00:47:31.512 --> 00:47:35.072 And then if you made a conversion, And then if you didn't make a 00:47:35.072 --> 00:47:37.342 conversion, then it goes to earnings. 00:47:37.552 --> 00:47:42.222 So it's going to go contributions, then conversions, then earnings. 00:47:42.222 --> 00:47:43.732 That's how the money always comes out. 00:47:43.742 --> 00:47:46.652 So if you were someone, let's just take an example. 00:47:46.662 --> 00:47:48.262 You're that 20 year old firefighter. 00:47:48.512 --> 00:47:50.732 That's like, Oh yeah, I think I want to do the Roth. 00:47:50.742 --> 00:47:54.202 I'm going to open up a Roth for 57 and you do that for 30 years. 00:47:54.202 --> 00:47:54.932 You never change. 00:47:54.932 --> 00:47:58.182 You don't go to a traditional, you just stick with a Roth and you've made 00:47:58.182 --> 00:48:02.892 the 30 years worth of contributions, any money that you take out, even 00:48:02.892 --> 00:48:07.052 before the age of 59 and a half, you're going to just be taking contributions 00:48:07.052 --> 00:48:09.672 out and you won't be taxed on that because you've already paid the tax. 00:48:09.692 --> 00:48:10.902 You're not taking your earnings. 00:48:10.902 --> 00:48:12.322 You're not taking the earnings yet. 00:48:12.422 --> 00:48:14.212 You're just taking your contribution. 00:48:14.232 --> 00:48:15.622 You're taking your contributions. 00:48:15.672 --> 00:48:19.822 So that is something that is kind of unique and it's a subtlety, 00:48:19.822 --> 00:48:22.392 but it's definitely something that you don't want to violate those. 00:48:22.402 --> 00:48:23.922 You don't want to violate those rules. 00:48:23.932 --> 00:48:26.242 So it's just something to be aware of. 00:48:26.262 --> 00:48:30.547 So, well, you know, If you're, if you're on the fence, you know, this is something 00:48:30.547 --> 00:48:32.217 that Louie and I get asked a lot. 00:48:32.827 --> 00:48:36.237 I mean, this is probably one of the most common questions between like, 00:48:36.407 --> 00:48:39.477 Hey, I think everyone knows about the four 57 at least, but now they're 00:48:39.477 --> 00:48:41.697 like, they have this option and they're like, well, what do you think? 00:48:41.697 --> 00:48:43.057 Which one do I do? 00:48:43.327 --> 00:48:43.687 Yeah. 00:48:43.777 --> 00:48:46.027 And that one, there's a lot of different schools of thought. 00:48:46.027 --> 00:48:46.287 Yeah. 00:48:46.317 --> 00:48:48.677 And this is once again, a very personal decision. 00:48:48.677 --> 00:48:52.417 So, you know, one of the things, and some of this just depends on 00:48:52.417 --> 00:48:56.047 what underlying tax policy looks like moving forward in the future. 00:48:56.247 --> 00:48:56.517 Yeah. 00:48:56.557 --> 00:48:57.467 Most of us. 00:48:57.872 --> 00:49:03.402 Probably like I'm under the pretenses is like taxes right now, even though 00:49:03.402 --> 00:49:07.072 you feel like they're high, they are basically at historical lows. 00:49:07.072 --> 00:49:07.262 Yeah. 00:49:07.262 --> 00:49:09.182 They've never been really lower for the broad. 00:49:09.472 --> 00:49:10.982 Spectrum of the population. 00:49:11.012 --> 00:49:12.162 Yeah, they just really haven't. 00:49:12.172 --> 00:49:14.822 Yeah If you look at just some of the spending and some of the other things 00:49:14.832 --> 00:49:17.882 that's happening with government never been higher It's never been higher so 00:49:17.882 --> 00:49:21.652 at some point we feel like there is going to be some type of equalization 00:49:21.652 --> 00:49:25.882 there and Most people I think would argue that at some point taxes. 00:49:25.922 --> 00:49:29.347 They can't go they you know They can't go You would think that they can't go 00:49:29.347 --> 00:49:33.937 lower, but realistically, I feel this is my own personal belief that if I'm, 00:49:33.987 --> 00:49:37.017 if I'm advising someone 15 or 20 years down the road, I feel like they're 00:49:37.017 --> 00:49:38.097 going to be a higher tax bracket. 00:49:38.097 --> 00:49:38.537 I just do. 00:49:38.537 --> 00:49:41.517 I feel like they can, you know, over a given amount of time they can only go up. 00:49:41.527 --> 00:49:45.407 So if you're one of those people that are, you know, younger and 00:49:45.417 --> 00:49:48.297 you're definitely in a lower income, the Roth to me is a no brainer. 00:49:48.822 --> 00:49:49.852 I totally agree with you, John. 00:49:49.852 --> 00:49:52.002 I feel like, you know, we, we don't know. 00:49:52.002 --> 00:49:55.502 I, the traditional advice that a lot of financial advisors give is, 00:49:55.542 --> 00:49:58.382 you know, when you retire, you're going to be in a lower tax bracket. 00:49:58.392 --> 00:50:00.722 So defer your taxes. 00:50:00.822 --> 00:50:04.102 Basically what they're saying is contribute to a traditional 457 00:50:04.102 --> 00:50:06.272 account now to get the tax break. 00:50:06.272 --> 00:50:07.322 Now that you're making money. 00:50:07.342 --> 00:50:10.787 And then when you retire, you will, Have less money. 00:50:10.787 --> 00:50:12.157 You'll be in a lower tax bracket. 00:50:12.157 --> 00:50:15.267 So pay the taxes at the income rates that are lower. 00:50:15.567 --> 00:50:16.527 Well, that works great. 00:50:16.527 --> 00:50:20.227 If you feel like, you know, what those tax brackets are going to be, but like you 00:50:20.227 --> 00:50:22.627 said, we have record levels of spending. 00:50:22.637 --> 00:50:24.257 We have really low tax rates already. 00:50:24.287 --> 00:50:27.807 And I just, I'm not confident enough in the government and the tax rates 00:50:27.807 --> 00:50:32.577 that I'm willing to put everything in pre tax traditional four 50 sevens. 00:50:32.577 --> 00:50:35.177 Now I'd rather pay the taxes on the. 00:50:35.447 --> 00:50:41.077 Right now that I know the rates and know that when I retire I am that that's 00:50:41.087 --> 00:50:46.587 all mine Everything in that account is mine Now an exception to that would 00:50:46.597 --> 00:50:51.927 be you know, if if you're married to I don't know a doctor Or a dentist. 00:50:51.927 --> 00:50:53.687 Let's say you're a firefighter and you're doing real well. 00:50:53.957 --> 00:50:55.997 You married a, I'll kick your coverage. 00:50:56.007 --> 00:51:00.747 You married a PA maybe, or a doctor or a dentist. 00:51:00.747 --> 00:51:01.067 Oh yeah. 00:51:01.067 --> 00:51:01.757 I know a couple of those. 00:51:01.797 --> 00:51:03.197 And they're made, they're just crushing it. 00:51:03.197 --> 00:51:04.127 They're making a lot of money. 00:51:04.417 --> 00:51:09.097 Well then for you, it very well is probably going to be the case that 00:51:09.097 --> 00:51:12.117 when you retire, you're going to be in a lower tax bracket than you are now. 00:51:12.867 --> 00:51:19.227 So in that case, maybe it does make sense to, Contribute to a traditional 457 to 00:51:19.237 --> 00:51:24.087 get the tax break now But if you're uh, if you're a you know, single firefighter 00:51:24.097 --> 00:51:29.587 or your spouse doesn't make a ton of money Then boy paying that tax now and 00:51:29.597 --> 00:51:34.222 having tax free growth for the rest of your career Is a very attractive option. 00:51:34.222 --> 00:51:37.332 And then I don't tell when I always get asked this question a 00:51:37.332 --> 00:51:38.382 lot, John, you probably do too. 00:51:38.382 --> 00:51:41.882 One thing that I do tell people just to try to illustrate this is let's say 00:51:41.882 --> 00:51:46.292 you have two firefighters, firefighter a and firefighter B firefighter a 00:51:46.432 --> 00:51:52.372 has contributed this 10, 000 just like firefighter B into a four 57. 00:51:52.372 --> 00:51:54.592 The only difference is. 00:51:55.032 --> 00:51:57.962 One of them contributes on a pre tax basis on a traditional basis. 00:51:57.982 --> 00:52:00.112 And the other contributes on a four 57. 00:52:00.112 --> 00:52:02.042 And let's say the returns are exactly the same. 00:52:02.042 --> 00:52:05.952 So at the end of their career, they have, they both have a million dollars. 00:52:06.182 --> 00:52:09.372 Firefighter a has a million dollars in a traditional four 57 and 00:52:09.372 --> 00:52:14.872 firefighter B has a million dollars in a Roth four 57 who has more money. 00:52:15.192 --> 00:52:19.262 The Roth, the other, because he's not paying or she's not paying taxes on those. 00:52:19.262 --> 00:52:19.492 Yep. 00:52:19.502 --> 00:52:21.442 He or she has already paid their taxes on that. 00:52:21.452 --> 00:52:25.142 So at the end of the day, the two accounts are not the same. 00:52:25.162 --> 00:52:29.542 The money, even if the amounts are the same, the money in the Roth 457 is more 00:52:29.612 --> 00:52:31.062 because the government doesn't get. 00:52:31.327 --> 00:52:32.017 Any more of it. 00:52:32.027 --> 00:52:33.307 You've already paid your taxes. 00:52:33.957 --> 00:52:35.227 I just find that appealing. 00:52:35.247 --> 00:52:35.997 I find that good. 00:52:35.997 --> 00:52:37.697 And we can get into the weeds. 00:52:37.697 --> 00:52:39.997 We're not going to, but we could get into the weeds about tax 00:52:39.997 --> 00:52:42.577 efficiency and where else you should put that money and paying taxes. 00:52:42.577 --> 00:52:45.067 Now, I just like to tell people, Hey, you know what you're 00:52:45.067 --> 00:52:46.197 paying right now with the Roth. 00:52:46.297 --> 00:52:47.267 It's a great option. 00:52:47.967 --> 00:52:48.367 I love her. 00:52:48.367 --> 00:52:49.077 I love Roths. 00:52:49.077 --> 00:52:52.407 I, I love Roth four 50 sevens and Roth IRAs. 00:52:52.517 --> 00:52:55.247 So I always encourage people that that's, that should be the 00:52:55.247 --> 00:52:56.207 first one that they look at. 00:52:56.417 --> 00:52:56.707 Yep. 00:52:56.852 --> 00:52:59.722 And I think that's a pretty sage and sound advice. 00:52:59.762 --> 00:53:03.762 Um, and hopefully what I'm hoping in the future, um, for, at least for West 00:53:03.762 --> 00:53:07.902 Metro and some of the other listeners might already have this option is I'm 00:53:07.902 --> 00:53:10.752 hoping in the future that we will kind of be able to split the difference. 00:53:11.142 --> 00:53:16.192 So where you'll be able to, you know, Contribute half to a Roth and then 00:53:16.202 --> 00:53:18.722 half to a traditional and play them against each other and be like, I'm 00:53:18.722 --> 00:53:21.212 going to have options at the end where I'm going to have half of my 00:53:21.212 --> 00:53:22.582 money is going to be traditional. 00:53:22.612 --> 00:53:25.992 The other half is going to be Roth, and then I'm going to have a way, a lot 00:53:25.992 --> 00:53:27.362 of flexibility, a lot of flexibility. 00:53:27.402 --> 00:53:30.452 And that's something I think in the future, once again, speaking for 00:53:30.452 --> 00:53:33.762 West Metro, I think we're going to be able to, once they get some stuff set 00:53:33.762 --> 00:53:36.542 up with payroll and some accounting and just some of the tracking. 00:53:36.802 --> 00:53:38.852 Once again, this is sponsored by the employer. 00:53:38.852 --> 00:53:42.972 So the onerous is on them to, to get this set up and it's a, it's a heavy lift. 00:53:42.972 --> 00:53:43.112 Yeah. 00:53:43.312 --> 00:53:44.802 But we are working towards that. 00:53:44.802 --> 00:53:47.772 So, and if you're not with West Metro check with your department, because 00:53:47.802 --> 00:53:50.992 a lot of departments already allow you to split your contribution up. 00:53:51.352 --> 00:53:54.912 Ours is like a record keeping issue and, and a bookkeeping issue right now. 00:53:54.912 --> 00:53:57.342 So that's why we're having the issue, but we, that's totally something 00:53:57.342 --> 00:53:58.762 that we can figure out in the future. 00:53:58.762 --> 00:53:59.962 We're looking at that in the future. 00:53:59.992 --> 00:54:00.212 Yep. 00:54:00.482 --> 00:54:05.127 And then John, just, just Point that I want to make between traditional and 457, 00:54:05.137 --> 00:54:10.287 just to highlight a difference is with the traditional 457 account, you have, 00:54:10.787 --> 00:54:14.267 at some point you have to take what's called a required minimum distribution. 00:54:14.277 --> 00:54:19.057 So at age 73, you will be forced to withdraw a certain percentage 00:54:19.087 --> 00:54:20.267 of your account balance. 00:54:20.957 --> 00:54:24.077 And the government calls that a required minimum distribution. 00:54:24.077 --> 00:54:27.532 There's a formula that you can find an IRS formula that kind of Tells 00:54:27.532 --> 00:54:30.942 you how much you have to take, but they forced you to take it because 00:54:30.962 --> 00:54:33.042 uncle Sam wants his, his money. 00:54:33.052 --> 00:54:35.412 He's, he's, he's been letting you deferred it long enough. 00:54:35.592 --> 00:54:37.452 It's been differing for 50 years. 00:54:37.452 --> 00:54:37.952 Exactly. 00:54:37.952 --> 00:54:40.382 And now he's like, all right, you gotta, you gotta pay uncle Sam. 00:54:40.392 --> 00:54:41.222 He wants his due. 00:54:41.242 --> 00:54:46.552 So you are forced to take that money and pay taxes on it, which boy, that 00:54:46.552 --> 00:54:49.312 sounds as when, when I was younger, I was like, that's not a big deal. 00:54:49.312 --> 00:54:49.702 Who cares? 00:54:49.722 --> 00:54:50.652 You're 73 years old. 00:54:50.652 --> 00:54:51.972 You're you're on the road. 00:54:51.992 --> 00:54:52.212 Yeah. 00:54:52.617 --> 00:54:56.247 But I know that there are some people who are in retirement that are 73. 00:54:56.247 --> 00:55:00.437 My father in law is one of them who it now has like this tax headache 00:55:00.447 --> 00:55:04.407 associated with that required minimum distribution on the opposite end of that. 00:55:04.847 --> 00:55:08.427 If you have your money in a Roth for 57, there are no 00:55:08.497 --> 00:55:10.367 required minimum distribution. 00:55:10.377 --> 00:55:11.237 Yeah, that's a new update. 00:55:11.667 --> 00:55:13.297 So you can leave that money in there. 00:55:13.562 --> 00:55:16.062 As long as you want and you don't have to take it. 00:55:16.062 --> 00:55:19.502 So if you're 78 and you're like, I want, I don't want this money to be taken out. 00:55:19.502 --> 00:55:20.862 I don't want to be forced to withdraw it. 00:55:20.862 --> 00:55:21.912 I just want to keep it there. 00:55:22.212 --> 00:55:22.962 You can keep it there. 00:55:22.962 --> 00:55:24.892 And the reason why is because uncle Sam already got their money. 00:55:24.912 --> 00:55:26.492 They're not entitled to anything that you withdraw. 00:55:26.492 --> 00:55:29.942 So they have no incentive to force you to withdraw your money. 00:55:30.312 --> 00:55:34.557 Where I'm going with that is It turns out that Roth accounts, whether it's 00:55:34.557 --> 00:55:40.237 a Roth IRA or a Roth 457 or a Roth 401k are much, much, much, much better 00:55:40.587 --> 00:55:43.377 to inherit than traditional accounts. 00:55:43.657 --> 00:55:46.427 There's a lot of rules and we're not going to go into it, but when you, when 00:55:46.427 --> 00:55:51.617 you inherit a 401k or an IRA account on a traditional basis, there's a lot 00:55:51.617 --> 00:55:53.197 of tax headache that goes into that. 00:55:53.197 --> 00:55:56.377 And there's different things with tax basis and things like that. 00:55:56.377 --> 00:55:57.677 But with Roth, it's clean. 00:55:57.687 --> 00:56:03.327 It basically is just, it's an account that Is super easy to inherit that doesn't have 00:56:03.327 --> 00:56:06.957 all the tax headaches that the traditional accounts have So if you're one of those 00:56:06.957 --> 00:56:10.277 people who feel like you've been doing well and you've saved a lot and you want 00:56:10.287 --> 00:56:16.557 to make it as easy and as Inexpensive from a tax bill perspective on your children 00:56:16.557 --> 00:56:20.237 or your heirs Roths are great accounts for that too, because they don't have 00:56:20.237 --> 00:56:21.607 those required minimum distribution. 00:56:21.837 --> 00:56:24.837 And because of a few other tax advantages that the traditional 00:56:24.837 --> 00:56:25.947 accounts just don't quite have. 00:56:25.997 --> 00:56:29.817 Yeah, no, I think that's a really solid from like a legacy standpoint, 00:56:29.887 --> 00:56:31.427 um, planning aspect of it. 00:56:31.427 --> 00:56:34.067 Like, what do you want to leave your, your kids or your heirs or whatever? 00:56:34.067 --> 00:56:36.027 And they're definitely going to inherit more money. 00:56:36.027 --> 00:56:39.937 That's going to be available to them without a significant tax burden that 00:56:39.937 --> 00:56:40.987 they're going to end up paying on that. 00:56:40.987 --> 00:56:44.497 So that's a, that's a really good point, Louie regarding, regarding that. 00:56:44.497 --> 00:56:46.157 And some, sometimes it's often get lost. 00:56:46.157 --> 00:56:49.557 So, you know, once again, I think you guys see, we're trying to keep 00:56:49.557 --> 00:56:51.057 all biases out of the, out of. 00:56:51.282 --> 00:56:54.682 Uh, the conversation, but we all have our kind of our own biases. 00:56:54.682 --> 00:56:58.542 And this is definitely one that's, you know, uh, general advice, 00:56:58.552 --> 00:57:01.692 you know, younger people, lower tax bracket Roth all day long. 00:57:01.802 --> 00:57:02.052 Yep. 00:57:02.372 --> 00:57:05.322 If you're one of those people that are in a high tax bracket, we're talking 00:57:05.332 --> 00:57:10.852 the 32, 35, 37%, you know, seek, seek some tax advice on what's the best 00:57:10.852 --> 00:57:12.742 way to mitigate your tax or long term. 00:57:12.992 --> 00:57:16.472 And the other, the thing that I would say is probably not appropriate is for 00:57:16.472 --> 00:57:20.112 the people that are the very end of their career and they don't have a Roth account. 00:57:20.112 --> 00:57:20.152 Okay. 00:57:20.542 --> 00:57:23.942 Is, you know, once again, the really benefit of that Roth is that long 00:57:23.942 --> 00:57:27.942 term growth and being able to accrue all of those things, you know, tax, 00:57:28.462 --> 00:57:31.932 tax deferred, and then ultimately you take out the distributions tax free, 00:57:32.252 --> 00:57:35.892 you know, if you're in your last year or two, you know, I don't want to say 00:57:35.892 --> 00:57:38.602 it's too late, but you're not going to have the advantage of that person that 00:57:38.602 --> 00:57:41.492 opened up the account 25 years ago, unless you're just planning on not to. 00:57:41.522 --> 00:57:44.762 Not touching that account for 30 years, but just something to be mindful of. 00:57:44.762 --> 00:57:46.752 Cause we do have a lot of members in that circumstance. 00:57:46.752 --> 00:57:49.232 They're like, Oh man, this sounds really good, but just remember the 00:57:49.232 --> 00:57:53.582 seasoning period, that five year rule, and then also 59 and a half in order 00:57:53.582 --> 00:57:56.572 to have a qualified distribution, which basically means you can take. 00:57:56.782 --> 00:57:59.402 All of that money out and the Roth tax free. 00:57:59.462 --> 00:57:59.732 Yeah. 00:57:59.732 --> 00:58:01.252 So hopefully we've explained that enough. 00:58:01.312 --> 00:58:04.132 There's some nuances with that, but a little complicated. 00:58:04.142 --> 00:58:08.032 And the truth is John and I aren't going to beat you up if you are a pre tax 00:58:08.032 --> 00:58:10.762 guy, a traditional 457 guy or a Roth. 00:58:11.122 --> 00:58:11.292 Yeah. 00:58:11.292 --> 00:58:12.402 We just want you to contribute to it. 00:58:12.402 --> 00:58:15.992 Like honestly, like we can split hairs and start talking about what 00:58:16.002 --> 00:58:19.222 is more tax advantageous or what's going to be better in the long run. 00:58:19.222 --> 00:58:23.542 But the truth is, It doesn't matter at the end of the day what you contribute to. 00:58:23.542 --> 00:58:27.452 If you start putting money into your four 57, you are going to be, you're 00:58:27.452 --> 00:58:28.772 going to have a much better retirement. 00:58:28.782 --> 00:58:32.172 You're going to have much more money in retirement, and it's going to be 00:58:32.622 --> 00:58:37.167 much easier for you to supplement your Uh, pension in retirement, which 00:58:37.237 --> 00:58:41.127 brings me to kind of, you know, the meat and potatoes of why we decided 00:58:41.127 --> 00:58:43.067 we wanted to do this episode is John. 00:58:43.067 --> 00:58:43.867 I'm sure you've been asked this. 00:58:43.867 --> 00:58:46.237 I know I've been asked this, and I know there's a lot of people thinking it. 00:58:46.637 --> 00:58:50.917 Well, why, why do I really need a supplemental retirement account? 00:58:50.917 --> 00:58:51.687 I have a pension. 00:58:51.697 --> 00:58:55.397 Like we, we were, we're told that we have this defined benefit pension 00:58:55.697 --> 00:58:58.497 and it's going to make, it's going to be there when we're retired. 00:58:58.497 --> 00:59:01.837 And I put so much money, every paycheck into that retirement account. 00:59:01.837 --> 00:59:03.037 Well, why do I need a pension? 00:59:03.247 --> 00:59:04.737 this 457. 00:59:04.737 --> 00:59:09.027 And I'd like to get your thoughts, but I, you know, I, I try to tell people is 00:59:09.417 --> 00:59:13.237 it's important to know that the, that the pension is not truly inflation adjusted. 00:59:13.337 --> 00:59:17.397 And what I mean by that is in a year, when the, when the inflation rate 00:59:17.397 --> 00:59:22.297 is 7%, you are not going to get a 7 percent increase on your pension. 00:59:22.307 --> 00:59:23.867 There's just, there's not the money for that. 00:59:24.207 --> 00:59:26.597 And to make sure that the pension is a viable in the future, 00:59:27.217 --> 00:59:28.807 They will not give you that. 00:59:28.887 --> 00:59:29.707 They might give you 0. 00:59:29.707 --> 00:59:35.107 3%, which is a huge hit to your, to your pension, pension amount 00:59:35.477 --> 00:59:36.547 to the power of your pension. 00:59:36.557 --> 00:59:38.607 And we'll discover the pension in a later episode. 00:59:38.607 --> 00:59:40.437 And that's probably going to be in the next one or two episodes 00:59:40.447 --> 00:59:41.247 that we'll talk about it. 00:59:41.707 --> 00:59:43.127 And it's still a great thing. 00:59:43.127 --> 00:59:44.087 The pension is wonderful. 00:59:44.107 --> 00:59:47.737 But the point is, there's not cost of living adjustments 00:59:47.737 --> 00:59:48.987 that keep up with inflation. 00:59:49.217 --> 00:59:53.827 So if you want to keep up with inflation and if you want to be able to buy to have 00:59:53.827 --> 00:59:58.367 the same purchasing power in 25 years as you have the day you retire, you need 00:59:58.367 --> 01:00:02.007 to have something else other than the pension to help supplement your income. 01:00:02.397 --> 01:00:07.067 And the best tool for that for, for us firefighters is the four 57. 01:00:07.477 --> 01:00:09.047 It has a high contribution limit. 01:00:09.537 --> 01:00:11.107 There's no income limits to it. 01:00:11.177 --> 01:00:14.627 You can do it on a pre tax or a post tax basis and it will make 01:00:14.627 --> 01:00:18.757 sure that you can cover the gap in funding between your pension. 01:00:19.167 --> 01:00:20.337 and what you need to spend. 01:00:20.647 --> 01:00:25.057 So as simply put as possible, this makes sure that you can give 01:00:25.057 --> 01:00:28.147 yourself a cost of living adjustment and a comfortable retirement. 01:00:28.547 --> 01:00:30.527 In addition to the pension, the pension will get you a lot of the 01:00:30.527 --> 01:00:34.867 way there, maybe, maybe 80 percent of the way there, or 75 percent of 01:00:34.867 --> 01:00:35.997 the way there or something like that. 01:00:36.237 --> 01:00:40.797 But don't, you know, don't end your drive at the, at the 20 yard line, right? 01:00:40.797 --> 01:00:41.787 Don't end it in the red zone. 01:00:41.797 --> 01:00:43.782 This, This will make sure you get into the end zone. 01:00:43.782 --> 01:00:46.682 If you have that four 57 that you can withdraw from in retirement. 01:00:46.682 --> 01:00:49.072 So I think that's why John and I are super passionate about him. 01:00:49.072 --> 01:00:52.352 And that's why we think everyone should contribute to a four 57. 01:00:52.432 --> 01:00:54.822 Yeah, you're really, you're, you know, by doing that, you're taking 01:00:54.822 --> 01:00:58.272 matters into your own hands and kind of taking some accountability for that. 01:00:58.302 --> 01:00:59.752 And yeah, so. 01:00:59.812 --> 01:01:03.392 You know, when we talk about the pension, we're talking about specifically for 01:01:03.392 --> 01:01:08.062 Louie and I and West Metro members and people in Colorado, it's the FPPA pension, 01:01:08.062 --> 01:01:10.302 fire, police, pension association. 01:01:10.372 --> 01:01:11.922 And there's been a lot of dialogue. 01:01:11.942 --> 01:01:15.482 I actually sit on a committee right now in which we're reporting back to 01:01:15.482 --> 01:01:19.062 the Colorado professional firefighter, CPFF on specifically this topic, 01:01:19.072 --> 01:01:22.902 because they are a lot of retirees that are frustrated that they're not 01:01:22.902 --> 01:01:24.492 getting cost of living adjustments. 01:01:24.492 --> 01:01:24.752 Yeah. 01:01:24.842 --> 01:01:27.762 And if you look at the plan documents, there's nowhere in there that it 01:01:27.772 --> 01:01:30.212 basically says that colas are guaranteed. 01:01:30.212 --> 01:01:33.202 So cost of living adjustments, colas are not guaranteed. 01:01:33.202 --> 01:01:34.512 It's basically ad hoc. 01:01:34.512 --> 01:01:38.422 It's up to the board based on investment returns, based on payouts, based on 01:01:38.432 --> 01:01:40.982 accurate actuarials, all sorts of things. 01:01:40.982 --> 01:01:44.892 So, you know, the, the pension, and we'll talk about this more, cause it really 01:01:44.892 --> 01:01:48.982 does deserve a full episode to get into kind of the granular details of the 01:01:48.982 --> 01:01:53.722 pension, but really right now is they're taking a formula where they basically 01:01:54.017 --> 01:01:58.667 The inflation adjustment, the CPI, they, they put a certain formula with that. 01:01:58.947 --> 01:02:02.257 And depending on how the plan is doing the funding status of the plan, there 01:02:02.257 --> 01:02:06.627 may be the opportunity for an individual check, basically they call it a 13th 01:02:06.647 --> 01:02:09.027 check that gets distributed in October. 01:02:09.562 --> 01:02:14.112 So that is supposed to make up for some of the inflationary issues 01:02:14.112 --> 01:02:16.802 or challenges that we're having, but that's not guaranteed either. 01:02:16.812 --> 01:02:19.622 Cause that's based on inflation for one CPI, but it's also 01:02:19.622 --> 01:02:20.972 based on fund performance. 01:02:21.232 --> 01:02:24.832 So, and it's also important to know that it's not base building so that that check 01:02:24.832 --> 01:02:26.442 is paid out, but it's not compounding. 01:02:26.452 --> 01:02:26.872 Exactly. 01:02:27.162 --> 01:02:30.982 So even though inflation was 7%, those prices stay 7 percent higher 01:02:30.982 --> 01:02:32.062 than they were the year before. 01:02:32.252 --> 01:02:33.992 And then they raise again the next year. 01:02:34.032 --> 01:02:37.117 Whereas, Your you get that one time payout, but then your pension 01:02:37.117 --> 01:02:38.447 goes back to what it was before. 01:02:38.867 --> 01:02:40.657 So, so that's a very good point. 01:02:40.657 --> 01:02:45.047 And, and I mean, and if you can't tell by now in the podcast, Louie and I are 01:02:45.427 --> 01:02:48.557 Pretty fiscally conservative on a lot of these things and we always kind of like 01:02:48.557 --> 01:02:50.537 to take the worst case scenario, right? 01:02:50.687 --> 01:02:53.367 Yeah, and and that's how we always address this and how 01:02:53.367 --> 01:02:54.797 we talk to members about this. 01:02:54.817 --> 01:02:57.747 It's I want to have control of my financial future. 01:02:57.747 --> 01:03:00.127 This is one of the ways in which you can pull those levers. 01:03:00.407 --> 01:03:03.947 You can do it with a four 57, which Louie and I are huge fan of, you 01:03:03.947 --> 01:03:05.347 know, there's now the drop account. 01:03:05.417 --> 01:03:08.137 So that is potentially when you enter retirement, that's something that you 01:03:08.157 --> 01:03:09.497 could also use to help supplement. 01:03:09.497 --> 01:03:12.457 So we'll talk a lot more about that in a future episode because 01:03:12.457 --> 01:03:14.087 that deserves its own attention. 01:03:14.087 --> 01:03:15.582 But really, yeah. 01:03:15.722 --> 01:03:19.162 As far as our members are concerned and our listeners, you know, from 01:03:19.402 --> 01:03:23.052 Louie's and I standpoint, I do not look at the pension as any form 01:03:23.052 --> 01:03:24.292 of a cost of living adjustment. 01:03:24.292 --> 01:03:24.752 I just don't. 01:03:24.752 --> 01:03:27.192 And if there is money at the end of the day, they pass legislation, 01:03:27.222 --> 01:03:28.482 whatever that looks like, great. 01:03:28.672 --> 01:03:31.472 That's just another windfall, but I'm not planning on that. 01:03:31.722 --> 01:03:33.912 I'm going to, I'm, I'm thinking like, nope, I'm not going to 01:03:33.942 --> 01:03:34.962 get any type of adjustment. 01:03:35.132 --> 01:03:37.052 And I think that's a, that's a wise way to do it. 01:03:37.072 --> 01:03:40.252 That's how I look at it too, which what that means, John, is that. 01:03:40.522 --> 01:03:43.992 Let's assume that that inflation is two and a half percent a year Which 01:03:43.992 --> 01:03:46.702 is I think what the fed generally tries to target somewhere around there 01:03:47.232 --> 01:03:53.292 That would mean that in 25 years The purchasing power is cut in half, right? 01:03:53.322 --> 01:03:58.252 The purchasing power of a dollar is cut in half So the year that you retire 25 years 01:03:58.252 --> 01:04:03.572 from then your pension will be worth half of what if what it is The day you retire. 01:04:03.762 --> 01:04:10.752 So if you retire with a 50, 000 pension in 25 years, you will only have a 25, 000 01:04:10.752 --> 01:04:14.872 pension in order to purchasing purchasing power wise, in order to make up for that. 01:04:15.292 --> 01:04:16.622 You need to have something else. 01:04:16.722 --> 01:04:18.682 That's that, and that's why John and I are hopping on it. 01:04:18.692 --> 01:04:21.642 That's why we thought like this has to be one of the big episodes, because of 01:04:21.872 --> 01:04:25.652 the sooner we can get people to put into a four 57 and contribute, the better 01:04:25.652 --> 01:04:27.172 off they're going to be in retirement. 01:04:27.172 --> 01:04:29.482 So we told you we're passionate about getting you out when you want to get 01:04:29.482 --> 01:04:31.012 out and retire when you want to retire. 01:04:31.552 --> 01:04:35.992 We can't do that for you unless you start putting money into a four 57. 01:04:36.342 --> 01:04:38.702 And like John said, there's a couple other ways, but. 01:04:38.917 --> 01:04:41.777 Man, you have so much flexibility to start contributing to a 457 now. 01:04:41.787 --> 01:04:42.647 You definitely do. 01:04:42.687 --> 01:04:44.727 And there's so many unplanned things that might come on in 01:04:44.727 --> 01:04:45.917 your life and you're just never. 01:04:46.277 --> 01:04:48.637 You know kind of the louise part when he started out this conversation I've 01:04:48.637 --> 01:04:53.327 never once heard anyone say that they wish They hadn't contributed to their 457 01:04:53.327 --> 01:04:58.127 in any capacity and it's always always more to the to the liking of I just 01:04:58.127 --> 01:04:59.947 wish I had More I wish I had more time. 01:04:59.947 --> 01:05:02.317 I wish I could would have contributed more when I was younger That is 01:05:02.317 --> 01:05:03.627 the overarching thing always. 01:05:03.627 --> 01:05:04.597 Yeah, very good. 01:05:04.607 --> 01:05:07.537 Very good talks And it's just really hard to think about when you're really 01:05:07.547 --> 01:05:11.847 thinking 20 25 years in the future It's just really tough mentally for us to 01:05:11.847 --> 01:05:15.667 comprehend like what inflation does what it's going to look like and it just does 01:05:15.667 --> 01:05:19.877 I mean any any research studies you talk about people do just not do not appreciate 01:05:19.897 --> 01:05:23.097 just how much you know compounding over time that makes a huge effect. 01:05:23.097 --> 01:05:25.557 So, you know, and really good points on that. 01:05:25.577 --> 01:05:29.007 So we've kind of talked about what the four 57 is, the different buckets, if 01:05:29.017 --> 01:05:33.247 you will, the different taxations of the plans, different investment selections 01:05:33.257 --> 01:05:34.647 that you might have within your plan. 01:05:34.967 --> 01:05:37.287 Talked about the importance of keeping up with cost of living 01:05:37.287 --> 01:05:39.857 adjustments and using the four 57. 01:05:40.197 --> 01:05:42.427 Is there anything else potentially that. 01:05:42.792 --> 01:05:47.062 Firefighters have as an advantage for their 457 or where or why they might want 01:05:47.062 --> 01:05:52.732 to contribute Beyond just to those and really it's kind of a rhetorical question 01:05:52.942 --> 01:05:56.822 but this is something that I put in in our little document and something that 01:05:56.832 --> 01:06:01.032 I wanted to bring up because I think a lot of retirees might know about this, 01:06:01.032 --> 01:06:02.672 but there's also some that might not. 01:06:03.002 --> 01:06:09.502 There are some additional tax benefits to the 457, specifically the traditional or 01:06:09.502 --> 01:06:17.112 the pre tax 457, if you use it for health care premiums or long term care premiums. 01:06:17.352 --> 01:06:19.352 So this has been something that's been in place. 01:06:19.382 --> 01:06:21.482 I think when I did the research, it's been since 2006. 01:06:22.712 --> 01:06:24.312 There's something called the HELPS. 01:06:24.507 --> 01:06:24.957 Act. 01:06:25.287 --> 01:06:29.707 It stands for health care enhancement for local public safety retirees. 01:06:29.987 --> 01:06:32.697 So this has been something that's been enacted, uh, you know, since 01:06:32.717 --> 01:06:36.877 2000, actually 2007, I think is when it went into place, but basically it 01:06:36.877 --> 01:06:44.007 allows you to use up to 3, 000 as a retiree to use for your health care 01:06:44.007 --> 01:06:46.317 premiums or long term health care. 01:06:46.557 --> 01:06:47.677 Care premiums. 01:06:47.727 --> 01:06:48.267 All right. 01:06:48.567 --> 01:06:51.417 And that's, so it's not, it's not meant to be used for like qualified 01:06:51.417 --> 01:06:53.617 expenses, like co pays and medications. 01:06:53.927 --> 01:06:57.157 It is specifically for premiums, which pretty much everyone that 01:06:57.157 --> 01:06:58.447 I know of is going to have to do. 01:06:58.477 --> 01:06:59.177 We're all going to have them. 01:06:59.247 --> 01:06:59.527 Yeah. 01:06:59.527 --> 01:07:02.277 If you retire before Medicare age, you're going to be paying out 01:07:02.287 --> 01:07:03.767 some type of healthcare premium. 01:07:04.017 --> 01:07:07.477 And it's really nice because it's 3, 000 every year. 01:07:07.492 --> 01:07:12.132 That you can use towards paying for those premiums, which is a really nice thing. 01:07:12.502 --> 01:07:15.762 And what's nice is starting president Biden signed this and I think 01:07:15.762 --> 01:07:18.982 it was 2022 as part of secure 2. 01:07:18.982 --> 01:07:22.492 0 is before it was kind of a, my understanding is a kind of 01:07:22.492 --> 01:07:23.932 an administrative nightmare. 01:07:24.142 --> 01:07:26.862 So you basically had to go to your plan provider. 01:07:27.112 --> 01:07:30.212 They then had to send it to the insurance company for reimbursement. 01:07:30.592 --> 01:07:33.042 Like that's how that how all got orchestrated through. 01:07:33.042 --> 01:07:35.932 So there was a lot of record keeping and just, it wasn't, 01:07:35.942 --> 01:07:37.362 the ease of use wasn't there. 01:07:37.832 --> 01:07:41.742 So we got some lobbyists behind us and some action groups 01:07:41.742 --> 01:07:43.292 behind us to advocate for this. 01:07:43.292 --> 01:07:45.382 And they changed it with a secure 2. 01:07:45.382 --> 01:07:49.392 0 is now you as a member can basically get those reimbursements. 01:07:49.472 --> 01:07:51.522 So you don't have to go through the plan provider. 01:07:51.742 --> 01:07:54.712 It's basically an election that you make on your tax form. 01:07:54.992 --> 01:07:56.962 So there's a lot more to come with that. 01:07:56.962 --> 01:07:58.822 But if, if, if you find yourself. 01:07:58.897 --> 01:08:04.017 As a retiree or nearing retirement right now, just something to be mindful of is 01:08:04.017 --> 01:08:10.117 that because of this helps act, you can use up to 3, 000 per year to be able to 01:08:10.117 --> 01:08:14.877 use for healthcare premiums or long term healthcare insurance, either one of those. 01:08:14.877 --> 01:08:17.937 So this is something that you would, this is something that you'd want 01:08:17.937 --> 01:08:19.717 to use your traditional for though. 01:08:19.767 --> 01:08:21.397 Do not use your Roth for this one. 01:08:21.687 --> 01:08:23.797 Use your traditional because basically. 01:08:24.087 --> 01:08:25.397 You're not going to pay tax on that. 01:08:25.407 --> 01:08:28.537 It's a, it's a qualified subsidy, if you will, a credit 01:08:28.547 --> 01:08:29.787 that you can use towards that. 01:08:29.787 --> 01:08:33.277 So just something that I wanted to put that out there once again, when 01:08:33.277 --> 01:08:36.187 I've been researching some of these things, there is a level of frustration. 01:08:36.187 --> 01:08:40.177 So this is another one of those things that is not indexed for inflation. 01:08:40.337 --> 01:08:45.937 So this has been in place since 2007, and it's been 3, 000 now we're in 2025. 01:08:46.157 --> 01:08:47.957 Once again, I did the fast math on that. 01:08:47.957 --> 01:08:51.997 Once again, if you're keeping up with the inflation, it should be like 4, 700. 01:08:51.997 --> 01:08:55.217 Much like what we talked about on the last episode with the dependent 01:08:55.217 --> 01:08:57.297 care and that being stuck at 5, 000. 01:08:57.297 --> 01:08:59.337 And it really should be like 15, 000. 01:08:59.347 --> 01:09:03.747 So this is something that, you know, I wanted to give a shout out to our own 01:09:03.747 --> 01:09:05.717 Senator from Colorado, Senator Bennett. 01:09:05.737 --> 01:09:08.007 Sponsored a bill a couple years ago. 01:09:08.137 --> 01:09:13.757 I don't think it's really gotten anywhere, but basically he is trying to get this 01:09:13.797 --> 01:09:16.377 helps act inflation adjusted for one. 01:09:16.547 --> 01:09:20.137 So you'd be able to use that 3, 000, but now adjusted for inflation. 01:09:20.377 --> 01:09:23.117 It's probably going to be closer to like 4, 700. 01:09:23.117 --> 01:09:26.487 We'll see what happens with that and see if there's, if there's anything that 01:09:26.487 --> 01:09:30.477 comes of that, but just know that right now, though, the current legislation, 01:09:30.717 --> 01:09:36.627 you are able to use 3, 000 out of your four 57 monies to be in retirement. 01:09:37.037 --> 01:09:41.667 To be used for health care premiums and or long term health care insurance. 01:09:41.667 --> 01:09:43.407 So just something I thought was super important. 01:09:43.407 --> 01:09:43.677 Cool. 01:09:43.857 --> 01:09:44.717 Yeah Thanks for that. 01:09:44.817 --> 01:09:48.797 Yep So once again when Louie and I are trying to think about topics and stuff, we 01:09:48.797 --> 01:09:53.777 want it to be applicable to all age groups Diversification whether it's brand new 01:09:53.787 --> 01:09:58.032 or you're retired and you're listening to this Some shout out to any, any retirees. 01:09:58.032 --> 01:09:59.472 You're living the good life, hopefully. 01:09:59.722 --> 01:10:01.432 And really just everywhere in between. 01:10:01.432 --> 01:10:06.462 So just wanted to bring that to your, your guys attention. 01:10:07.082 --> 01:10:07.352 All right. 01:10:07.372 --> 01:10:08.652 That's kind of a long episode. 01:10:08.702 --> 01:10:09.062 Yeah. 01:10:09.102 --> 01:10:10.342 Talked about a lot of stuff. 01:10:10.372 --> 01:10:11.052 We did it. 01:10:11.072 --> 01:10:11.822 We nailed it. 01:10:11.822 --> 01:10:12.442 We got through it. 01:10:12.452 --> 01:10:16.052 We only had a timeout once on our little recording device. 01:10:16.422 --> 01:10:20.802 But really, hopefully this just helps give some clarity, some guidance, 01:10:20.802 --> 01:10:22.692 maybe just raise some awareness. 01:10:22.692 --> 01:10:22.752 Yeah. 01:10:22.992 --> 01:10:27.222 All of these other things are the missions and the goals here at the fiscal firehouse 01:10:27.222 --> 01:10:31.302 and, and providing firefighters with creditable information first and foremost. 01:10:31.302 --> 01:10:31.392 Right? 01:10:31.392 --> 01:10:34.812 But just, you know, just raising awareness and, and planting that seed. 01:10:34.812 --> 01:10:37.872 And it's really up to you guys on, on if you follow through with it or not. 01:10:38.082 --> 01:10:40.632 But I, the last thing I want to do is have, but follow through with 01:10:40.632 --> 01:10:42.972 it, but, but follow through with that through your future self. 01:10:43.442 --> 01:10:44.482 Well, thank you tremendously. 01:10:44.492 --> 01:10:47.952 And your family and people that rely on you or, yeah, 01:10:48.132 --> 01:10:49.092 they're all going to thank you. 01:10:49.542 --> 01:10:52.492 That member that's getting ready to retire next year and taking his 01:10:52.492 --> 01:10:56.102 family on the road and going to spend five years going to all sorts of cool 01:10:56.102 --> 01:10:58.412 places, you know, take it from them. 01:10:58.562 --> 01:10:59.032 Oh, man. 01:10:59.327 --> 01:11:01.217 It's an amazing opportunity. 01:11:01.257 --> 01:11:01.587 Yeah. 01:11:01.597 --> 01:11:02.407 So don't waste it. 01:11:02.427 --> 01:11:06.967 So for those of you that have been listening on 2x speed and have been 01:11:07.277 --> 01:11:10.467 shoveling snow and doing other stuff, as you're listening to this and 01:11:10.467 --> 01:11:13.797 you've glossed over some of the things that we talked about, some of the 01:11:13.797 --> 01:11:17.167 details, just to recap, 457, awesome. 01:11:17.297 --> 01:11:19.477 Doesn't matter if it's pre tax or post tax, they're awesome. 01:11:19.997 --> 01:11:22.217 Contribute to one, max it out. 01:11:22.432 --> 01:11:24.842 That'll give you a cost of living adjustment when you retire, and 01:11:24.842 --> 01:11:26.022 it'll help get you out of here. 01:11:26.022 --> 01:11:28.402 When you want to get out of here, they're awesome accounts. 01:11:28.432 --> 01:11:30.802 They have some benefits that 401ks don't. 01:11:31.182 --> 01:11:34.902 And there's not a good reason to not contribute to a 457, man. 01:11:36.262 --> 01:11:38.502 Like John said earlier, no one else, no one has left. 01:11:38.502 --> 01:11:42.022 I've never heard a retiree be like, man, really wish that I. 01:11:42.117 --> 01:11:43.777 Didn't put that money in a four 57. 01:11:43.817 --> 01:11:46.517 Every, the only thing we hear is I wish I would have saved more 01:11:46.527 --> 01:11:50.207 in a four 57 or man, I'm so glad that I had money in my four 57. 01:11:50.207 --> 01:11:51.567 That makes a huge difference. 01:11:51.807 --> 01:11:55.247 So yeah, there's, there's, there's no tricks. 01:11:55.267 --> 01:11:59.317 It's just solid contribute contributions and solid investing. 01:11:59.677 --> 01:11:59.867 Yeah. 01:11:59.867 --> 01:12:01.037 There's no replacement for just. 01:12:01.252 --> 01:12:05.182 Doing the work, you know, just putting in the money, paycheck over paycheck, year 01:12:05.182 --> 01:12:11.532 over year, that slow methodical snails or turtles pace and 25, 30 years, you 01:12:11.542 --> 01:12:15.612 hopefully will be buying Louie and I an adult beverage and saying, Hey, thanks 01:12:15.612 --> 01:12:17.332 for, thanks for the heads up on that one. 01:12:17.332 --> 01:12:19.342 That one, this rounds on me, so to speak. 01:12:19.342 --> 01:12:21.362 So really do appreciate you guys. 01:12:21.392 --> 01:12:24.392 And one of these things we are trying to grow the podcast, you 01:12:24.392 --> 01:12:27.372 know, just when I talked to other members outside of West Metro. 01:12:27.882 --> 01:12:30.622 Their members have the same questions our our people do. 01:12:30.652 --> 01:12:31.642 We want to share this. 01:12:31.672 --> 01:12:34.392 This should not, we don't have a patent on any of this information. 01:12:34.392 --> 01:12:35.852 We want this available to everyone. 01:12:36.112 --> 01:12:39.642 Hopefully we have a manner in which this is, uh, you know, receivable 01:12:39.662 --> 01:12:43.242 from our members and it's digestible and we're always working to improve. 01:12:43.242 --> 01:12:45.812 So if you guys got feedback for us, you know, where to get to us, 01:12:46.012 --> 01:12:48.072 how to reach us, but I, you know, we're always working to improve. 01:12:48.452 --> 01:12:49.282 Leave us a review. 01:12:49.282 --> 01:12:52.942 I never thought I'd be in a place where you leave us a review, smash that 01:12:52.942 --> 01:12:56.402 subscribe button, you know, really do though, we are trying to tailor this 01:12:56.412 --> 01:13:00.072 to a broader audience and we really do want members, within the Denver Metro 01:13:00.082 --> 01:13:01.632 region, but outside of there as well. 01:13:01.652 --> 01:13:04.502 So much of this is applicable and is important. 01:13:04.552 --> 01:13:08.442 We want to be the torch bearers for sound financial decision making and 01:13:08.442 --> 01:13:12.462 really for you, for everyone out there to have a quality of life and retirement 01:13:12.462 --> 01:13:15.802 in which you can enjoy all the things that you have worked really hard for. 01:13:15.862 --> 01:13:16.482 And you deserve. 01:13:16.882 --> 01:13:20.382 So without further ado, we'll leave it to next week. 01:13:20.382 --> 01:13:21.632 Who does Michigan play this week? 01:13:22.042 --> 01:13:22.242 Anyone? 01:13:22.252 --> 01:13:22.732 Who cares? 01:13:22.922 --> 01:13:23.692 Who cares, dude? 01:13:23.692 --> 01:13:24.712 Their season's over. 01:13:24.742 --> 01:13:25.622 We got next season. 01:13:25.622 --> 01:13:26.242 Next season. 01:13:26.312 --> 01:13:26.892 All right. 01:13:26.912 --> 01:13:28.772 Signing off from the Fiscal Firehouse. 01:13:29.082 --> 01:13:31.282 Everyone have a wonderful day. 01:13:31.322 --> 01:13:33.762 Be safe out there and we'll be talking to you soon. 01:13:33.762 --> 01:13:34.317 See you guys. 01:13:38.506 --> 01:13:41.906 The Fiscal Firehouse Podcast is a podcast curated specifically 01:13:41.916 --> 01:13:43.626 for local 1309 members. 01:13:43.776 --> 01:13:47.416 This podcast is for informational and educational purposes only, 01:13:47.816 --> 01:13:50.546 and should not be construed as professional financial advice. 01:13:50.746 --> 01:13:53.476 Should you need professional advice, consult a licensed 01:13:53.596 --> 01:13:55.996 financial advisor or tax advisor. 01:13:56.176 --> 01:14:00.026 The opinions of John Beatty, Louie Barela, and their castmates are 01:14:00.026 --> 01:14:03.496 solely their own, and don't reflect that of West Metro Fire Rescue.