Dr. Friday Radio Show – December 27, 2025

In this episode, Dr. Friday is joined by her long-time friend and colleague, Hank Parrott of Estate and Financial Strategies. Together, they dive deep into the critical importance of the “Team Approach”—ensuring your financial planner and tax professional are working in unison rather than in silos.

As we head into the new year, Hank and Dr. Friday discuss how to maximize your retirement income without triggering unnecessary taxes. They cover complex topics like IRMA surcharges on Medicare, the strategic timing of Roth conversions, and how to turn high medical costs, such as assisted living, into tax-saving opportunities. If you want to ensure you aren’t leaving money on the table or paying the IRS more than your fair share, this is a must-listen episode.

Episode Summary Points

• The Team Approach: Why it is vital for your financial planner and tax preparer to communicate to prevent costly mistakes and amended returns.
• Understanding IRMA: How selling property, stocks, or doing large Roth conversions can spike your Adjusted Gross Income (AGI), triggering higher Medicare Part B and D premiums (Income-Related Monthly Adjustment Amount).
• Roth Conversions: Strategies for converting traditional IRAs to Roths over time to manage tax brackets and avoid “tax shock.”
• Medical Deductions & Assisted Living: How to use the high costs of memory care or assisted living to offset taxes on IRA withdrawals, effectively allowing for tax-free “spend downs” of assets.
• Qualified Charitable Distributions (QCDs): A strategy for those 70½ and older to donate directly from an IRA to a charity (tax-free) rather than withdrawing the cash first.
• Estate Planning: The “10-Year Rule” for inherited IRAs and how to plan for your heirs.
• Workshops & Evaluations: Information on Hank Parrott’s upcoming educational workshops and how to get a comprehensive financial evaluation.

Episode FAQ

Q: What is IRMA and how does it affect my retirement?A: IRMA stands for Income-Related Monthly Adjustment Amount. It is a surcharge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds (e.g., over $212,000 for a married couple filing jointly). Dr. Friday and Hank warn that one-time events like selling a house or a large Roth conversion can accidentally trigger this extra cost.

Q: Can I deduct assisted living costs on my taxes?A: Yes, in many cases. If a resident is in assisted living or memory care primarily for medical safety and requires assistance with daily living activities (like dressing or medication management), a large portion of the monthly fee may be considered a medical expense. This can create a significant itemized deduction on Schedule A.

Q: What is a QCD?A: A Qualified Charitable Distribution (QCD) allows individuals aged 70½ or older to transfer money directly from their IRA custodian to a qualified charity. This counts toward your Required Minimum Distribution (RMD) but does not count as taxable income, offering a tax advantage over withdrawing the money and then donating it.

Q: Why shouldn’t I just pay off my mortgage with my retirement funds when I retire?A: Hank Parrott advises caution here. Taking a lump sum from a tax-deferred account (like a 401k or IRA) to pay off a mortgage creates a massive taxable event in a single year, potentially pushing you into the highest tax brackets and triggering other costs like IRMA. A staggered distribution strategy is often more tax-efficient.

Transcript

Dr. Friday 00:00 Alrighty, we are here on the Doctor Friday show. The Doctor is in the house, and today we have an awesome guest, one of my best friends, Hank Parrott Estate and Financial Strategies. He is one of the best financial planners. If you don’t have one, you need to get him. And if you do have one, you need to come in and get a free evaluation. So that way you know if you actually have the best person because you don’t know. Sometimes you have to have someone check out the number, see if it’s a better deal. Sometimes we kind of get stuck in a a little bit of a a system, okay, I’ve I’ve got my accountant, I’ve got my tax thing, I’ve got this. And we don’t really go back and see are they really giving us the best advice? Are they really looking at the current tax changes? Because wow I think one of the biggest things we’ve known each other for a number of years. We don’t need to count how many numbers. Uh, but one of the things I’ve always learned You had to go there, didn’t you, boss? Um but no, we have known each other a long time and most of what I know of financial planning has come from sitting in on meetings because every year you bring your clients and I bring mine. We all do these conversations and while you’re in the office a lot of times you’re evaluating Hank Parrott 01:03 and and it’s that team approach which we’re big believers in and it it’s a combination of working with uh on on taxes together for uh for our clients as well as Uh estate planning, working with, you know, we’ll bring in an estate planning attorney like uh Russ Cook over in Brentwood, uh board certified estate planning attorney, great guy. Uh Jack McCann in Cool Springs, another great guy, both real estate and uh estate planning. So w when we do that team approach, now you’re you know, they say two heads are better than one, three maybe even better yet. Exactly. Uh bring it all to bear and and this is one of those areas with uh when we get together we got what, about six I think six different days that we Just our clients in tax season. But that that means that whole day we get we’re getting 10, 12 of our clients at least in. And then I can come spend the day with you. Dr. Friday 01:59 And I get to pick your brain. And and vice versa. But what’s nice about those meetings that I do with you and I I mean I do a lot of different financial people as far as everyone has their own financial planner, but you’re the only one that really ever maximizes that same partnership because How many times does someone have a mistake on a tax form? And I’m like, I can’t this is what it says, Hank. I can’t change it. And you’re like on the phone dealing with that issue right there. So the client is getting such a nice simple relationship versus I’m sending them back to their financial person, then they’re gonna say, well, this is what it you know, and it could take months. It could take a bunch of things. A lot of times you actually get it before we actually leave the office. They’ve got a amended or corrected return so we know we can continue. It just makes that experience and also The um future tax planning. A lot of times people want to know about are we going to do a conversion? How much will my RMD? How’s that going to affect my IRMA? All these kind of questions come up and all those words I just use is because I sit in these meetings and now I know more about I mean, uh even in my tax office we talk a lot more about like Irma because it gets affected a lot faster. Everyone’s making But Irma is a big number. So if you sell a piece of real estate, for example, or you’re coming out of uh working a real job and going into retirement. But most of the time it’s when people do big stock sales or something and then the next thing they know they get a love letter from Social Security saying we’ve reduced your benefits And they think it’s Social Security being reduced, but actually it’s Irma being affected. And since you’ve looked it up, what is the affection of IRMA on a basic? Hank Parrott 03:40 If you are a married couple uh filing jointly and you exceed two hundred and twelve thousand between two twelve and two sixty-six, uh, you’re gonna add about seventy-four dollars to your uh Part B uh premium and an additional 1370 on your Part D prescription coverage. Dr. Friday 04:00 And I think that’s on AGI, which is your adjusted gross income, not modified, which is after your standard deduction. So this would be more like your gross income. Hank Parrott 04:11 Hit with it a lot of time, they sell a property, or maybe they’ve sold off a bunch of stock and they’ve so they’ve bumped up Dr. Friday 04:19 Through any or it could be an IRA distribution or conversion. That’s the one. I’ve had a number of them come in this last year. We’ve been playing the game a little bit. And before I was always just worried about tax brackets. Hank Parrott 04:30 Right. Dr. Friday 04:31 And then the last couple of years we in our meetings with your clients and stuff, it kept coming back with the Irma situation. Irma was being affected and people didn’t, you know, because I’m only I’m a tax person. I won’t keep you in the twenty-two, I want to maximize twenty-two, but if I do I now have affected your other side, possibly, Irma. So you want to have that team effect is all I’m saying, because you go to a tax person and say, how much can I convert? I’m gonna say tax wise this is what you can convert and this is how much, but what no one’s gonna say in that meeting most likely is now I’ve affected your IRMA and you’re gonna be paying $75 more a month for your healthy care for another year. And if you do these for multiple years, that could add up. It needs to be at least in the mathematics. Hank Parrott 05:11 And this is one of the things with Irma that a lot of people, you know, this is by the way, IRMA is a Acronym income related monthly adjustment amounts. And basically this has to do with Medicare. Dr. Friday 05:22 Right. Hank Parrott 05:23 So on your Medicare, if you’re 65 or older, th