The Retirement Savings Time Bomb . . . and How to Defuse It: A Five-Step Action Plan for Protecting Your IRAs, 401(k)s, and Other Retirement Plans from Near Annihilation by the Taxman

by Ed Slott

"The best source of IRA advice" (The Wall Street Journal), extensively revised and updated for new tax rulesWith the possible exception of home property, the most valuable asset for most Americans is their retirement fund. Yet most people don't know how to avoid the costly mistakes that cause a good chunk of those savings to be lost to needless and excessive taxation. Now, in this fully updated edition of The Retirement Savings Time Bomb, renowned tax advisor Ed Slott explains in clear-cut layman's terms what people need to know to keep their money and pass it on to their families. This book is for every American with savings who is planning to retire.

Genres: Finance, Business, Nonfiction, Personal Finance

416 pages, Kindle Edition

First published January 1, 2003

Reviews

[Holly · Rating 2 out of 5]

Well...the five steps are legit in terms of stretching your money, lowering income taxes, and avoiding estate taxes. However, I found the read to be very complicated and hard to follow. It was as if the author wanted to explain every possible variation of scenarios in all of their possible complexities. But I’m really only giving the book two stars because I thought the title of the book was misleading. It’s not about your retirement and how much money you will have. The book is really about how to leave your family the largest inheritance possible, which might be nice to do, but is not my primary goal.

[Hunter McCleary · Rating 4 out of 5]

I normally avoid self-help books hyped with scary-sounding titles but the Slott book is excellent. There is so much meaty and practical information here. One thing I did not quite get was the insurance recommendation. He makes it sound like an insurance policy is found money.

Notes:

82 Roths not subject to required minimum distributions.
122 You do not want a trust to be the beneficiary of an regular IRA because it is not an individual so the RMD cannot be applied which means it has to be cashed out.
124 Spouse survivor can roll IRA of deceased to their IRA without penalty. The non-spouse beneficiary must leave it in their parent's name but change the tax ID. Be sure to do this or you might get a big tax hit.
140 A rollover is usually best when a spouse inherits an IRA.
179 Make sure it is s designated beneficiary not just beneficiary.
193 Stretch IRA lets you specify a younger beneficiary who can protract RMDs over their lifetime. Note that with multiple beneficiaries the eldest one determines the RMD timeline.
203 But you can get around this by immediately splitting the IRA into the number of beneficiaries upon death of the owner. Then the respective owner timelines applies.
100 Be sure to make paper or pdf copies of beneficiaries in case financial institution loses them.

[Ger · Rating 5 out of 5]

This is the expert....actually, he's the guy the other experts go to for answers. Read the 2021 edition, tax law changes have made the prior ones obsolete in some ways. Ed knows this, that's why he writes new ones periodically.

[James McGlynn · Rating 5 out of 5]

Great detailed book. Needs updating.

[Quinton · Rating 3 out of 5]

Same advice from any financial podcast

[Michael · Rating 4 out of 5]

For many people the subject of retirement means little. Some people will have to work the rest of their lives because the high cost of retirement is to much to handle. Many people can't retire because all they have is Social Security and that program will just not cut it for all of us even if it is still around by the time we want to collect on it. Yet, some of us out there have done a great job of contributing to our 401k, IRA's and I think this book The Retirement Savings Bomb by Ed Slott will help us understand it more when we start to collect it. Ed gives us valuable information that will help protect us from excessive fees and taxation from the IRS. Ed gives us five tactics that can save you thousands of dollars. He shows you how to "stretch your IRA" to create a financial legacy so your heirs can benefit from their inheritance. Estate planning, Roth IRA's are topics that he offers great advice on. This is not light reading so go slow reread and digest it because this is good material that will keep a large percentage of your estate out of the clutches of Uncle Sam. Having read the book I feel confident and better equipped to understand the complicities of these issues. In fact I believe it should be required reading for everyone who has a retirement plan.

[Michael Smith · Rating 3 out of 5]

I’m an historian and archivist with a “humanities mind,” whereas my wife is a mathematician with a knack for anything financial. Our arrangement has long been that she keeps track of our investments (also those of her parents and most of her siblings), works out what to do about them, and then explains it all to me (and them). But she still insists that I make an attempt to understand what’s going on, and to that end she hands me books like this one. I have to say that, except for a sense of humor that tries too hard, Slott is better at providing a clear explanation of tax law and financial decision-making than many similar books I’ve waded through. His specialty is IRAs and similar retirement arrangements, and since I’ve just turned sixty, I’m paying attention to this stuff. After an introductory section explaining the jargon and describing the theory behind traditional and Roth IRAs, he launches into the details of his “Five Easy Steps”: Timing (when and how much to take out of your IRA, including both the legal requirements and your own strategic needs), life insurance (to cover the taxes your beneficiaries will have to pay when they inherit your IRA), stretching the payout period (selecting a child as a beneficiary can keep the distributions going for decades after you’re gone, allowing your bequest to keep growing), converting to a Roth IRA if possible (a great tax deal, especially for the beneficiaries), and avoiding estate taxes.

Although he calls it “death taxes,” a partisan pejorative term I despise; there’s far too much concentration of wealth in this country already. He also waxes on about the unfairness of the IRS and the tax code, forgetting the basic principal: Taxes aren’t intended to be “fair,” they’re intended to raise money for the government.

Anyway, he does a good job of explaining the options the retiree faces at each step and in each new or variant situation, and he does it without resorting (much) to unexplained bizspeak, which certainly increases its accessibility for most of us. I’m told the regulars on Morningstar’s Vanguard discussion board -- a group which has included John Bogle, Larry Swedroe, Rick Ferri, and other Big Names -- think highly of Slott’s take on things, and you probably can’t do badly if you follow their advice.

[Sandy · Rating 1 out of 5]

This book lost me in the first couple chapters, for several reasons.

First, the author appears to assert that the only problem with keeping your retirement assets is taxes. Sorry, buddy, that may be the accepted view in your world (government bad, taxes bad) - but I saw a lot of the value of my 401k get wiped out in 2008, and that had nothing to do with the IRS.

Second, the author gives us a couple scary anecdotes about people losing much of the value of their inherited IRAs. Then he says that, of course, the tax laws have changed since then, but still.................. Ridiculous. Don't try to scare me and then tell me that the monster isn't actually under the bed any more, but has already been captured and defanged.

Third, the anecdote that made me close the book was an elaborate tale about a "genius" who was too stupid to listen to the author's advice, and rolled his IRA over into his new company's 401k plan. Then, DISASTER STRIKES! The IRS comes after him? No, no - the Enron mess happens, his new company is somehow involved, and his 401k is somehow wiped out or seriously reduced. Not clear why this happened - the author doesn't say that the 401k was all in company stock - but whatever. The punch line? See, the IRS treats you just the same whether you're a genius or not. HUH? How did the IRS become the villain in this scenario?

It appears that the author is a one-trick pony - taxes are evil and they're the only thing you need to worry about. Personally, while I certainly want to protect my retirement assets, I'm just as concerned with the other threats to it, such as the Wall Street greed that already cost so much. And, frankly, I'm not ready to sit around and weep about people who don't manage to inherit as much from Mom and Dad as they'd like - I'm more concerned about the seniors who are having trouble paying for basic needs like food and shelter and medicine.

[Jay French · Rating 4 out of 5]

You have to wonder, reading a book like this, whether the author is aiming to make dealing with IRAs easy, or if he's trying to make it hard enough to go to an IRA specialist, which it so happens he certifies (and is himself). This book actually worked both ways. The first thing to realize about the book is that a majority (the most complex part) is about the estate, what happens to the subsequent owner of an IRA. If you don't care, you can skim about half of the book. Keep in mind that you might be the recipient of an inherited IRA -- then these rules will be important to know and even plan for, the book has plenty of suggestions for this. The first part of the book is about setting up the proper IRA and 401k, etc. to ensure you follow the regulations so you don't get tax penalized. I found the book easy enough to understand, even though covering a very complex topic, and I will do a Roth conversion and start keeping more copious records because of the lines of reasoning in the book. The book spends plenty of ink on the many situations that you could run into, both common and rare. These can be frighteningly complex, and I believe I now understand enough to know when I would need an advisor to help configure my options. I enjoyed the writing style, with Slott's dry, accountant wit making this complex topic easier to read. Seems to be quite complete.

[Read Ng · Rating 4 out of 5]

A great book that you should own as part of you estate planning.

Okay, I most recently read an older 2007 edition, otherwise i would give it a higher rating. Things have changed and Slott updated this in Jan 2012. Unfortunately, tax laws changed yet again in 2013. I will be buying this book, after it is updated again for 2013. Yes, you end up constantly having to upgrade to the latest edition, but it is a topic that has very important long term impacts to your estate. You owe it to yourself and your loved ones to keep abreast of the current rules. Go get informed!

[Diane · Rating 5 out of 5]

I felt I needed to find out what Mr. Slott had to say about our Retirement Savings, but after seeing him on PBS I wasn't poised to like the book in spite of its enticing title. Very specific directions into how you can protect your wealth just as the very wealthy protect theirs. For the rest of us, there was literally one line in the book that suggested I do not have enough money to convert to Roth IRAs. But that one line was worth the read.

[Jay · Rating 4 out of 5]

I read this book shortly after my retirement and I found it very enlightening as I planned for my financial future. When I presented Slott's ideas to my financial planner, he was in total agreement. I took the author's advice and am glad I did. Possibly reading Slott's book earlier would have been a good idea.

[Alice · Rating 5 out of 5]

This is a must read especially when most American's retirement is in defined contribution plans. If you are in a defined benefit plan (read pension) consider yourself lucky especially if it's getting funded. Knowing what to think about regarding your 403, 401, 457 plans and how to minimize your taxes will be key. This book is dog eared and underlined to death.

[David · Rating 3 out of 5]

It's hard to give a tax strategies book a lot of stars but Mr. Slott has a good sense of humor and makes a solid case for the importance of designated beneficiaries and stretch IRAs. His discussion of Roth IRAs was also solid. Some of his estate planning data was a bit outdated because I picked up the 2007 edition of the book. Overall a helpful book.

[Ryan]

Ask most estate planning attorneys and they will tell you that many clients just talk a lot but never really do anything...'I'll think about it'. What's to think about? That's just an excuse to do nothing." - Ed Slott

[Waynestennett · Rating 5 out of 5]

This book is awesome. Great advice from a well known tax code authority.

[Mitchell Rubin · Rating 3 out of 5]

Retiring in 10-years or less? This is probably the most valuable book you can read.