Business Innovators Radio - Interview with Eric Liriano, CFP®, Principal and Founder of Liriano Wealth Advisory Group-IRA Strategy

Episode Date: April 24, 2025

Eric E. Liriano, CFP®, is the Principal and Founder of Liriano Wealth Advisory Group, LLC, with over 25 years of experience in the financial planning industry. A graduate of Boston College with a degree in Business Marketing and Communications, Mr. Liriano employs a distinctive macroeconomic approach to wealth accumulation and preservation.He serves a diverse clientele, including business owners, executives, affluent families, and professionals in academia. As a sought-after speaker, he frequently leads financial planning seminars for employees of major corporations, healthcare organizations, and educational institutions.His areas of expertise include estate planning, insurance, investment strategies, employee and executive benefits, and retirement planning. Through comprehensive financial guidance, he helps individuals and businesses secure their financial futures with confidence.Learn more: http://www.lirianowealthadvisory.com/Phone: [phone]Check the background of your financial professional on FINRA’s Broker Check.https://brokercheck.finra.org/individual/summary/1905998All content in this presentation is for information purposes only. The views expressed in this video are subject to change based on market and other conditions.  Opinions expressed herein are solely those of Eric Liriano.  Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your financial advisor. Content should not be regarded as a complete analysis of the subjects discussed.Investment advisory services offered through Liriano Wealth Advisory Group LLC., an SEC Registered Investment Adviser* located in Newton, MA, and its representatives are in compliance with the current registration and notice filing requirements imposed upon SEC registered investment advisers by those states in which Liriano Wealth Advisory Group LLC maintains clients. Liriano Wealth Advisory Group LLC may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Liriano Wealth Advisory Group LLC’s website is limited to the dissemination of general information regarding its investment advisory services to United States residents residing in states where providing such information in not prohibited by applicable law. The Living Balance Sheet® (LBS) and the LBS Logo are registered service marks of Guardian. © 2005-2023 The Guardian Life Insurance Company of America.Online Terms & Conditions – https://static.fmgsuite.com/media/documents/b73e8f1c-12a6-4dc0-ac5e-b6bb81e5bea3.pdfOnline Privacy Policy – https://static.fmgsuite.com/media/documents/36a04efa-7d6f-4790-89b6-9cbc6de8d003.pdfImportant Disclosures – http://www.guardianlife.com/Disclosures/index.htmCalifornia Insurance ID # OC63111.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-eric-liriano-cfp-principal-and-founder-of-liriano-wealth-advisory-group-ira-strategy

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us Eric Liriano, who's the principal and founder of Liriano Wealth Advisory Group, and we'll be talking about IRR. strategies. Eric, welcome back to the program. Thank you, Mike. Great to be here again. Thank you so much for the invitation. You are welcome. I'm looking forward to learning from you like we found out last time you take a big focus on teaching and educating your clients. And I find that that is such a

big, well received with people because people don't like to be told what to do. They like to understand the process. So let's get started with when you are talking with your, your client about an IRA strategy, where do you start in teaching them and educating them on how they should approach building an IRA strategy? Yes, so the IRA strategy, you know, has been great. IRAs have been around since 1972. They basically have the same characteristic as a 401K, except as an individual account, not through an employer.

an employer would offer folks a 401K, sometimes there's a match, sometimes not. And then people who work for nonprofits, certain hospitals, they also can participate in a 403B. All of those are retirement plans and, you know, a cornerstone of every financial plan because people are able to put money aside before their tax and earn interest along the way. and all of that tax is deferred. And what a lot of people might forget, they don't think about, we don't talk enough about it, is that when that money comes out, whether it be at age 65 or 70 or 75, when people are ready to use up that money, the money is then taxed.

So that is the IRA strategy. There are a lot of changes that we should discuss today with IRAs and how they work. But definitely they've been a staple in everyone's financial plan for years. Ever since, Mike, as you know, pension plans, it used to be that corporations and the government offered people a pension where they had a guaranteed income stream for the rest of their lives. And corporations got a little smart. And they say, hey, why should we take all the risks when we can do these 401K plans or simple IRA plans and have the clients put away their money and maybe some matches that we do,

and now they take the risk and they have to manage it and everything else. But that is the platform that we've been given, and we have to be able to use the retirement plans and IRAs very efficiently and make sure that we know what we're doing and we're paying attention. You know, when you were talking through that, it made me think of a little phrase that I've heard over the years, and I'm sure you have as well, that an IRA, is an IOU to the IRS.

I like that. Yes, absolutely. And I don't know why it is. I think that we just feel that between the employer and the government, the investment company, that they're supposed to take care of us, maybe watch out for us. But a lot of people that I run into when they're not clients and we start talking and they're close to retirement, they always forget or they're amazed or they're surprised that they still have to pay taxes on that money.

And what I like to tell clients, and the reason why we spend a lot of time educating clients about IRAs and 401K, those retirement plans, that you're paying taxes on everything, on the money that you put in originally and the growth of that money. So it's a significant tax, absolutely. So let's talk about some of the legislations and things. We hear all kinds of acts and laws that are in place. what are some of the things that a retiree should be aware of with respect to IRAs?

Yes, the biggest change, Mike, and this happened due to the Secure Act. And a lot of people are not talking about it. And for the past couple of years, I've been asking myself, you know, why isn't the industry, why aren't other financial advisors really talking to clients about this new rule? And the problem is, Mike, that this rule was enacted at the end. of 2019, and as you know, early 2020, we were hit with the pandemic, and I think that obviously people were just preoccupied with what was going on, and no one was paying attention to the IRS code and the changes that happened. In any event, the big change that happens,

that it used to be that we would create for clients when they passed away, and after the husband and wife passed away, and the money went to their children, or other beneficiaries, those folks could do something called a stretch IRA, which meant that they could take it over their lifetime. So take the money out little by little over their lifetime and pay taxes over their lifetime little by little. And that was helpful because they weren't going to hit with a huge tax bill on day one. So that rule changed. And now the rule reads that that people have to take all of those distributions within 10 years after the death of the owner. And there are a few exceptions.

And we can talk about that a little bit later of, you know, who doesn't have to do that. But certainly not spouses. So between spouses, you can basically transfer the IRA to the surviving spouse. But from there on in, there are a lot of restrictions in that 10. your rule applies to most individuals. And then we can talk a little bit about what that does. But of course, the impact of that is that people are going to be receiving this money, which is great. But they're also going to pay taxes on it.

Yeah. And you know, that reminds me of, or it makes me think that why would the move from lifetime access to 10 years be made? Well, it's because that money's never been taxed. and the government wants to get that tax revenue coming through sooner. Oh, absolutely. So as you know, the other issue, when we take a look at the financials of the United States, we have a debt, a national debt that is increasing over $33 trillion right now. And yes, the government has to start finding ways to tax us.

And it's funny, about 10 years ago, there were advisors and commentators, and they were saying things, Mike, like, hey, can the government choose to tax these IRAs and retirement plans 100% of it? And they said the answer is yes, and sure, the government can start putting rules into effect that would basically have us paying a lot of taxes into these retirement plans because they can change the rules. at any time. And when we take a look at this, exactly what we said, hey, they're accelerating the pace and we're going to pay the tax. And then if someone who has a lot of other assets and is subject to estate taxes, their beneficiaries may be paying another 50% on the remaining funds. So, you know, it's amazing. And then we have estate taxes that also come into play. So you're absolutely correct. The government's trying to just take their share because they need it. And it's just, you know, that's the right time for them. Yeah. So what are some of the other challenges that

families face with that 10-year withdrawal rule? Yeah. So one of the major challenges that I see and where I'm spending a lot of time, not only with clients, but their children, is that, you know, if we think about it, and we've talked about longevity, but if the average lifespan is that of 85 years old, and most people are having children when they're 30, 35. So that means when a lot of folks are dying, their kids are maybe age 55 or so. Well, that's their peak earning years. And if they're married and the spouse, that's a nice job also.

The household is making a lot of money. So now if their parents die and they have to take out those distributions and they're earning for $500,000, $800,000 a million on their own right. And let's say that they inherit a $2 million IRA and they're taking out 10% per year. That's another $200,000 of income that they're receiving. And they're going to be, they're going to be paying taxes in the highest marginal tax. bracket and with state taxes you know it can easily be between 40 and 50% if you're in California it can be even more than that absolutely so that is a big big issue and you know most people think hey if I stretch it out for 10 years that might be the easiest way of

managing this but so we spend a lot of time talking about to talking to clients about how to make these decisions. But that is huge. And again, yeah, a inheritance or inherited IRA can be highly taxed under these new rules. And I think that probably if you were to ask a family that is dealing with that highest tax bracket, you know, hey, you're a high net worth family. We need to help minimize the taxes. They would, number one, feel like, I'm not high net worth. You know, so it's like with money and inflation and debt, or cost of living these days. A lot of times people hit the category of high net worth and they don't feel it.

But nonetheless, that point that you bring up is really important because if it was X number of dollars that was inherited and it triggers that higher tax bracket, that then is a lot of money to be paid. So there should be a strategy to help mitigate that. What are some of those things they should be keeping in mind to minimize tax implications of those inherited IRAs? Yes. So one of the things that we've been doing in our practice quite a bit, and I've always, you know, obviously loved Roth IRAs. Many of my clients cannot make Roth IRA contributions because they earn too much money unless there's a component with their employer and a Roth 401K. But what is available to a lot of people are Roth conversions. And before we said, okay, yeah, it's definitely valuable. But we. didn't do a lot in that realm just because, you know, clients, we had to educate them. They had to, you know, want to do it. It was time consuming. So we didn't spend a lot of time doing broad conversions. We would do some here and there. But with this new rule, it's been one of the most important things that we can do with clients because now we're saying it's not what tax bracket you may be in.

it's just it's likely that you or your children will pay taxes in one of the highest, you know, tax brackets possible. So now the rotary conversions really carry a lot more weight. So that's the person that we're doing. And we have to be careful because, again, we have high network clients. They may have monies coming from different investments and real estate and so forth. So they can still be earning money that you add Social Security to them. that, but whenever we can, we do Roth conversions. We don't do usually huge sums of money because we could throw them into higher tax brackets. Sometimes we're doing as little as, you know, $25,000,

$50,000 a year, but we start doing Roth conversions as early as we can over the years to help clients move a lot of this money that will get taxed later on in an IRA to a Roth conversion, will they pay the tax now? And now we know that it's going to be taxed later on, either for themselves or for their beneficiaries. You mentioned just now paying the taxes now, meaning it made me think of this. Right now, we know what the tax rate is today

and what tax brackets are today. But in five years or 10 years or 15 years, we just don't know because no one has a crystal ball. So that seems like for some people, Again, every strategy is not the right one for every single person every single time, but that would be a factor to consider in this strategy because at least if you were to trigger paying taxes now, at least you can quantify that and know exactly what it is versus way down the road. It's a big question mark.

Oh, absolutely. And you're right. And we take a look at, you know, the factors that made us go into lower tax bracket years ago where the baby boomers were just making a lot of money. Women, they had been in the workplace, but women also started making more and more money in the 80s and so forth. And the government was able to lower the tax brackets significantly from where they were in the 1960s and 1970s, where we had marginal tax brackets as high as 80 to 90%. Mike, you may remember reading about this and so forth. But now, you know, tax brackets had been in the, you know, 20s and 32% in terms of the highest marginal tax brackets now.

They've gone up a little bit to 37%. But we're seeing with so many things that are going on right now with the national debt, with issues with Social Security and funding that, that there may be a need to have tax brackets increase in the future. So you're absolutely right. We don't know what tax brackets are going to be in the future. So we should do as much as we can to put our retirement plans into a tax-free environment if we can. Yeah. You know, I know we're going to go into deeper topics in our series coming up,

so I don't want to go too in-depth on trusts or things like that, but is there something like a trust that could help out with managing an inherited IRA distribution? Yes, great question. And my clients or my new clients, people that come to me and are introduced to me now. That's one of the first questions that they ask. And the answer is when we take a look at a trust, if there are any family dynamics or they're trying to protect their children from overspending or maybe children don't have a good handle on finances, for all of those reasons, a trust makes a lot of sense. But when it comes to saving money in taxes from a retirement account or an IRA account or a 401K, it really doesn't help there. The trust are still subject to this 10-year rule. And then there's one particular area.

We're actually working with a client right now where they have charitable intents. The one charity that works here is if you have, again, different assets and you have an IRA and you gift it to a charity and you create what's called a charitable remainder trust. and that is earmarked to go to a particular charity, then you are able to save some taxes there. It doesn't mean necessarily that your kids end up with more money because you're giving the money to charities, but you can make it.

The kids are getting some of that income before the charity takes some money. And between the charity and the kids combined, they will get more money. So it's a great strategy. We're implementing this strategy with some clients right now where they have about a million, a million point three and an IRA. And they also own real estate. So they know that their kids will inherit that real estate. That will be their legacy.

So they're choosing to give the IRA money to a charity. and it works out really well, something they want to do. By the way, their kids are doing well in their own right, even if they didn't inherit anything from their parents. It'll be okay. But, of course, we want to keep the money in the family and, you know, eventually to the grandchildren. But it's a great case that we're working on now,

and something that for our clients who are in that situation, that position where they're charitably inclined, that's a great way to do it. Other than that, for a lot of other families, A trust will not help with that tax savings. Because if the taxes haven't been paid, the government's going to get their due and you can't get around it, but you can mitigate it, like what you were mentioning with that charitable remainder trust. And I've heard of that CRT before, but it's similar to what we said in a previous conversation, I would think, don't hear charitable remainder trust, Google it and then go, okay, click, click, set it up. There are so many intricacies and so many things that need to be done.

the right way to make sure it's going to perform the way you want it. So you want to make sure that you're getting it done the right way, if it even is an option for you. Oh, absolutely. And one thing, Mike, we've talked about this before in terms of, you know, the difference about my practice and a lot of other financial advisors. So if people attempt to do some of this themselves, it's very complicated. When I do this type of work for my clients, I'm working in unison. with their estate planning attorney. And again, it has to be a specialist and a state planning attorney and their CPA. We're working together. While we're doing this, it may take two, three months to put it together. We're having many, many conversations just to be sure that it's done correctly. And there are

many different rules and steps to follow? Absolutely. You know, and I like that you brought up that team approach because I know that sometimes people would go, yeah, but I've got my, you know, favorite estate planning attorney, my favorite CPA, things like that. That's wonderful. And you can work with all of their team. But I think the big point to keep in mind is it's similar to playing chess when you make a move and you keep your finger on the piece. You got to make sure that this is the right move.

And so you look around and double check. So you mentioned a certain time frame that it might take a while. Good. Because you want to make sure that the entire plan is performing. performing the right way and going to perform with all of those moving pieces. So, you know, your financial input is wonderful, but let's make sure that the legal, the tax input and all of those variables all fit together. I think that makes so much sense.

Yes, absolutely. It has to be done that way. And again, it's not a point and click solution by any means. It takes a lot of time, too. And you're right about not moving your finger off the chest piece. You really have to look around, make sure eyes are dotted, teens are crossed. Very important, absolutely. So when you're working with some clients, I'm sure you have occasion to work with some of the beneficiaries.

So how should some of the younger beneficiaries like children or grandchildren be updated on this plan so that they could potentially adjust their financial planning under these rules? and strategy. Yes, very important, Mike. And we do work with a lot of our clients' children, older children, who are now, again, getting to the workplace, starting to get to their peak earning years as well. And the first thing that I'm telling them is, hey, the rules have changed. Everything has changed from what your parents did, the way that they built their wealth.

There still may be some things that are done the same way, but a lot of things have changed. And now we're taking a look at how can we take advantage of certain situations. Again, many clients earn too much money to make contributions to a Roth IRA, but if there's a component with their employer of a 401k Roth IRA, that they make contribution, that has to be paramount. That is going to be a lot more powerful. than a regular 401K. So that's something that we're working with them now.

And also if they can do what we call backdoor Roth IRAs, where if they don't qualify for a Roth, that's something, again, that has been available to us. We didn't do a lot of it because clients really, again, it's something, yeah, we can do that, but we've been doing so many other little things. But now backdoor Roth IRAs have become much more significant and much more powerful.

So, you know, we have all of these strategies available to us, and sometimes they become more of an opportunity. Going back to your chess analogy, I love it, because we have different pieces and more powerful pieces in a chessboard, and sometimes we don't want to move them out there so early because we don't want to risk them. And then other times, this is what it's made for, And now we have to take advantage of it.

And we have to, you know, make this move now. So for all of those reasons, you know, we really work hard with our client's children to take a look at, hey, how can we now position ourselves for our retirement down the line? Yeah. And for those of your clients or people listening to this interview that want to kind of see the whole board at once and look a few moves down the road, what's the best way that? the best way that they can learn a little bit more and also reach out and connect with you? Yeah, no, that's great. They can reach me by cell number, by actually, I'll give you my office number and then also my email and my website, but the office number is 617-929. I'm sorry, I went the other way. So my phone number in the office is 617-969-29-29-29-39-3-3.

And then my email address is e-Luriano at Lurianowealth.com. And the website is LirianoWealth.com. Excellent. Well, thank you so much for coming back on today, Eric. It was a real pleasure chatting with you about this super important topic of IRA strategy. Great. Thank you so much for the invite, Mike. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes,

visit www. www.influentialentrepreneursradio.com.