And good evening.

You've got More Than Money, you've got Gene Dickison, your host, your personal financial advisor.

And for the next half an hour, I am at your service and happy to be so.

If you are a loyal viewer of More Than Money, you know exactly what occurs here.

We try to give you as much good information about your financial life as we possibly can.

So in many cases, tonight's a good example, we answer tons of your emails that you have sent us.

Your questions, our answers that hopefully give you some insights on at least two different aspects of the financial world.

Number one, what your friends, your neighbors, your family, what challenges they're facing?

Very, very interesting questions.

And what perspective a financial advisor might bring to those very challenges?

So in some ways, you're being a bit of a financial voyeur this evening, watching over what is unfolding in the lives of others.

And in many ways, you are using that as a demonstration, as an opportunity to learn from others' experiences, others' challenges, others' questions and others' answers.

So if you are interested in investments or retirement, income taxes, perhaps 401ks, estate planning, wills and trust and medical directives.

and powers of attorney or business issues, starting, running, liquidating a business for maximum advantage, you've reached exactly the right spot this evening for you.

The way we do this, of course, is that we solicit your email questions, and you can send those directly to me... You see it spelled on your screen.

We answer as many questions on air as we possibly can.

We don't answer every single one.

We couldn't, possibly, but we do answer every single question back to you.

So if you have a question and you have a concern, you will get a response from our More Than Money team.

And again, we're happy to serve you.

It is so close.

We are spring.

If it's not already sprung, it's on the way to sprungage!

You'll figure that out.

I'm not sure I figured that out.

But it is... As always, spring for all these millennia has followed after winter.

So we have a pattern of life, a rhythm of life, and there's a rhythm to how a financial life unfolds as well.

So we're going to try to give you as much insight, not just into the hard answers, the dollars and cents side, but more the money answers.

So let's give you a demonstration.

Let's go to our financial correspondent, Megan.

What's our first question for this evening?

- Hi, Gene.

Our first question says, I just started viewing your program and I find it to be very useful.

I have two questions about my estate and was hoping you could answer them or direct me to someone who can.

First, I was married at one time, but I'm now divorced.

I am 63, and both of my parents are deceased.

I have two sisters and one brother, all older than me, but none of which I have ever really been close with.

I have no estate plan, no will, no living will.

Absolutely nothing.

I intend to have the aforementioned created, but I'm unsure as to how I would choose to name an executor.

As I mentioned above, I do not wish for my siblings to be involved, nor do I wish to bequeath anything to them.

Do you have any suggestions as to how I can choose an executor?

Secondly, I have fairly substantial assets in the form of a house and automobile, both fully paid for, and an IRA, 90% Roth and 10% traditional, and individual stocks.

I would like to donate the house to charity and the automobile as well.

I would also like to donate the IRA, consisting of 11 mutual funds, eight which are Roth and three traditional each to a different charity - the majority of them charitable, some which are not.

I am of the belief the charitable donations are non-taxable, with a possible difference of whether they originate from a traditional or Roth, and I would expect the non-charitable donations to be taxable regardless of the origination.

I do not have a life insurance policy, either whole or term, but do have a long term care policy with MetLife.

I apologize for the lengthy email, as I have attempted to include all the facts which I believe are necessary to formulate a response.

Thank you.

- Well, goodness, all the facts, indeed!

Lots of detail, lots of texture inside this question, but the fundamental questions are very straightforward, and I hope that I'll be able to give you a very straightforward answer, as well as some context that you can guide yourself.

Understandably, you've got some concern about how all this is going to unfold, considering that your relationship with your siblings is not a close one, is not a strong one.

And, yes, lots of folks, when they create their estate planning documents, they turn to a family member to act as the executor or executrix.

In your case, that's not appropriate.

And for a lot of folks, in other circumstances, it's not appropriate either.

If you have found yourself at the senior end of a very long life in your 80s or 90s, you may have found yourself having outlived a great deal of your relatives, and as a result, you may be in a similar circumstance.

Or you might be early in your life and may be distant from your family.

If you were raised in the Lehigh Valley and you now live in Southern California, that's another example where you may not have easy access or any access to a family member to act in this role.

Do not be discouraged.

This is not a difficult problem to solve.

As you counsel with an estate planning attorney, a trusted, experienced estate planning attorney, you will undoubtedly form some degree of a relationship there, and most trusted, experienced estate planning attorneys can operate as your executor or executrix at no real hassle whatsoever.

They will be paid for that experience, that work effort, as they should be, and that solves your concern about how that might unfold.

And, of course, if you are naming your attorney as the executor or executrix that you are, rest assured, that they have the experience in doing exactly what you need to have done.

They have the skill set and that things will be done, according to Hoyle, as they say.

Now, the issue about charities is much simpler than I think you may be fearing.

The naming of a charity as the recipient of any asset will transfer that from a taxable, estate taxable asset into an estate tax-free asset.

In simple terms, if we had half a million dollars in your estate and you named a charity, a non-profit, as the recipient of all of it, your estate tax would be zero.

Now, coincidentally, if you name charities as the recipient of all these assets, it will matter not whether they are taxable, IRAS, Roth IRAs.

The charities will not pay income tax either.

So you are going to be able to make a significantly greater impact, perhaps, than you might have thought, because there's no loss to the IRS, there's no loss to the state of Pennsylvania, there's no loss to taxation.

That's a pretty good deal.

Naming as many charities as you wish is literally as easy as listing them on a piece of paper and signing it.

You would normally get that advice or that assistance from your financial advisor or the custodian of your IRAs.

They have a beneficiary designation form.

You list out the charities and the percentages that you wish them to receive.

At your death, they go directly, they do not go through probate.

They don't have to.

Beneficiary designations will supersede any will that you construct anyway.

Your home and your car, of course, will pass, using the will as the device.

Bottom line again, if you're intending, as you indicated that they're going to go to charity, this simply isn't a problem.

So, again, using a simple example, we've got $500,000, we've got it in multiple accounts, but we have multiple charities that we wish to benefit, whether it be PBS39, Folds of Honor, Laughing At My Nightmare, the list goes on and on.

These are some of the ones that we are impressed by the work that they do.

You can do all of that simple... A bit of work.

Maybe an hour, maybe two.

Not very much.

The estate planning with a good, trusted estate planning attorney.

A few hours of work and you're going to be in very, very good shape indeed.

I want to thank you for sharing that and sharing the detail.

For those of you listening out there, if you send me an email, as many of you do, going, I'm not really sure what to do with my IRA.

I'm not really sure either, because the question is too open ended.

I don't have enough background or detail.

This gentleman did the exact opposite.

So in the future, if you are so inclined to send us your email to... ..you might follow his lead.

Pretty good stuff.

Megan, that was an excellent start to our show.

What do we follow up with?

- This next question starts off a little rough.

It says, I messed up pretty big time and I'm hoping you can help save me from the IRS.

In 2020, I didn't take my RMD because they said I didn't need to.

In 2021, it completely slipped my mind and my IRA didn't say anything until the December statement.

I'm lucky I even saw that small print and all.

Now I'm scared and I don't know what to do.

My friend said the penalties are awful.

How do I fix this and not lose my IRA?

- Oh, goodness.

First of all, let's put your mind at rest.

You will not lose your IRA.

The penalties would apply to the required minimum distribution that you did not take.

They would not apply to your entire IRA.

Let me use simple numbers as a demonstration so that everybody watching can kind of see how this might unfold.

If this person had a $200,000 IRA, if their RMD was, say, age 75 or so, they would be looking at a required minimum distribution of about £10,000 they should have taken in the year 2021.

Unfortunately, they did not.

Left unaddressed, the IRS indeed will find themselves disgruntled with this taxpayer, and they will assess two different disgruntlements.

The first will be full income tax on the entire amount that should have been taken out to 10,000.

So, picking a number, if they're in the 20% bracket, $2,000 of tax, and a 50% penalty on the amount that should have been taken out.

In this case, a $5,000 penalty.

It's draconian.

So a $10,000 RMD that is missed, that is intentionally not taken, could end up costing the taxpayer $7,000, and the IRS will get all of that and the taxpayer will get 3,000.

The IRS gets 70%, the taxpayer 30.

This is terrible.

Now, is it?

Can this be salvaged?

Unsalvageable was the word I was looking for.

Is this unsalvageable?

I think not.

I think there's an opportunity here.

I'm cautiously optimistic that if you file your return, I would indicate on your return two things.

Number one, you have taken your RMD for 2021 as soon after you discovered this mistake as humanly possible.

If we are looking at recent weeks, say, you were a month or so into the new year, I think that will indicate to the IRS rather clearly that you fully intended to rectify this error and that it was an error.

It was not intentional.

Number two, I would send along an explanatory note - he tried to say!

- with your income tax return, saying, My RMD is not being shown here.

I messed up.

I have since taken it.

I will be declaring two RMDs in the year 2022, and I think in many, many cases the IRS is going to automatically give you a pass.

In some cases, you may end up getting a letter from the IRS saying, Hey, we disagree, in which case you will need to respond to that letter.

It's not difficult.

Nobody's going to bang on your door in the middle of the night.

It's all done through the Postal Service, so take a deep breath.

Rectify the problem.

Explain it to the IRS, and I am again cautiously optimistic that you're going to be OK.

I think this is going to work out for you just fine.

Interesting question.

Folks mess up.

We're here to help.

Megs, has somebody messed up on this next question or is it a little more positive?

- Well, I'm not sure.

They want your advice, though.

It says, With inflation going sky-high, I'm certain that gold and silver coins will be useful.

I heard that there is a company that sells these coins inside IRAs and sends you the coins so you know they are safe and the real deal.

I'm ready to shift my IRA to gold and silver coins.

What do you think about my plan?

- I think you need to think again on a couple of different levels.

Any investment strategy, yours included, that's predicated on, I'm certain that something is going to happen...

I'm certain that gold and silver are going to rise.

I'm certain that in these crazy times that we find ourselves in that that coins are going to be the place to be.

Anyone that has a financial plan, an investment plan that's based on that level of certainty about predicting the future is being foolish.

If you're working with a financial advisor that was making such definitive statements about knowing the future, my guess was that the name Madoff would be in there someplace.

Or maybe should be.

Because that simply isn't the way of reality, certainly not in the investment world.

I'm not clear it's the reality in any world, certainly not the one that we live in, that we can predict the future.

Those who assume that they can predict the future as financial advisors, fall into the category of criminal, delusional or medicated.

Well, I guess there may be a fourth.

They should be medicated, none of which is good.

So your assumption that this crazy time that we're in with invasions and with pandemics, etc, is going to significantly drive the value of gold and silver coins higher is a pretty scary assumption.

If you said to me I was going to move a portion a piece, 5%, 10%, into gold, silver, precious metals, commodities, I would be fully supportive of that.

The indication that you're going to take wherever your IRA funds currently are invested and move them completely into gold and silver coins is, in my opinion, foolish.

Now, as if it couldn't get any worse... And my apologies, I don't mean to be harsh, but in this particular case, it's very important that you hear me clearly, what you're suggesting is available to you, where a company will sell you gold and silver coins and allow you to put them inside an IRA and yet send those to you so that you can stack them up on your dining room table, is illegal.

And it's not a gray area, not even a little bit.

Are there opportunities that would allow you to own gold and silver coins inside an IRA?

The answer is yes.

One of the requirements of that opportunity would be that the custodian actually hangs on to the coins in question.

It is not legal.

It is... Say it a slightly different way, maybe a little blunter - it's illegal!

And any attempt on your part or on the part of a company to circumvent the IRS regs around the IRA would be, very, very simply, with some pretty draconian penalties.

If, for example, you have a $100,000 IRA and you are 55 years old and you move it all into a gold and silver coin IRA and they send you the coins, the very next thing that will happen is that the IRS will assess a tax on you for the entire $100,000 IRA distribution.

And because you are not yet 59 and a half, they will penalize you an additional 10%.

Another $10,000.

So you will lose a dramatically large sum of money because you are aligning yourself with a company that is offering you something that is patently illegal.

Can you do it other ways?

The answer is, I don't know if that's going to fit your need.

It seems that you may have some... ..your attention is being drawn by the ability to hang on to these coins in your hands.

That's not going to happen.

It is very simple.

If you are interested in the potential, the investment potential of, say, gold and silver, if we eliminate the word coins from that... Gold and silver bullion have traditionally been turned to in times of great inflation, in times of great upheaval.

All those things are true.

Those are easily available in virtually any IRA, standard IRA, that's operated by a brokerage firm of any kind.

There are exchange traded funds, ETFs, in other words, that will allow you to invest directly in gold bullion, silver bullion, other commodities, and it's held by your custodian.

Easily done.

Very low cost.

No transaction fees.

So if your instinct is, I need gold and silver, that can be met.

if your instinct is, I need gold and silver coins, and I need them in my hand, buckle in, it's going to be a painful ride.

Megs, two in a row.

Kind of sad.

Oh, my goodness.

Hopefully, my cautious optimism is met with a much nicer question this time around.

Or maybe a much nicer answer.

Let's find out.

- I hope so too.

I guess it's good.

Even if it's a bad answer, at least they asked.

- Yes.

- So this question says, My wife and I, retirees, have a matured annuity of about $135,000 in our joint account.

A financial advisor recommends that rather than cash out, that we reinvest in a new lower fee annuity so as to delay the tax burden on capital gains.

As we do not have a foreseeable need for this money, but rather plan on leaving it as part of our estate, in your opinion, is this a good plan?

Do you recommend an alternative investment strategy?

The investment instrument he recommends has the interest crediting option of 7% annual point to point index account with participation rate and annual spread.

Do you have any reservations with this?

Thank you in advance.

- Goodness, I sense a theme to tonight's show.

Just correcting people everywhere I look!

And goodness, sometimes...

Thank you, Megan.

..I guess it is better that you ask the question and get a negative answer than it is to just go ahead forward and then, what is the phrase?

Better to ask forgiveness than permission?

No, in this case, much better to ask permission.

The last few phrases... 7% point to point...cap participation rate etc... ..tells me quite clearly that the perspective annuity that this financial advisor...

I'm not sure I'd use that phrase "financial advisor."

I'll circle back to that here in a second and tell you why.

The instrument, the annuity instrument that this individual is discussing is referred to as a fixed index annuity.

It is an annuity that provides for a lot of protection for the principal, in some cases complete protection up to the financial security offered by that particular insurance company.

Most annuities are issued by life insurance companies.

They're very heavily regulated and often the rating services, the financial rating services, can provide you with really, really good insight into the financial strength of that company, whether you can rely on their assurances or not, keeping in mind that their assurances are the only assurances that you get and they need to be in place for years and years and years to come.

So the principal is protected.

The gain that you will get will be adjusted based on the performance of the underlying index, quite often the S&P 500, but it could be others and it can be a combination.

So it's not a dreadful product, but it is not one that would normally come to mind when you ask about leaving this asset to your heirs, to your beneficiary as part of your estate.

A fixed indexed annuity is typically used to provide guaranteed principal, so that you have something to rely on in your future years in your senior years, to generate income at a point in the future.

If it were my choice, I would be suggesting that you look at this exchange from your current annuity.

You don't need the money currently.

Exchanging it, tax deferred, meaning you don't pay tax on the exchange, into a new annuity on a variable annuity platform.

There are a number of outstanding companies that offer, in addition to the underlying investments and the tax deferral, a estate option, in effect, a life insurance option, so that your beneficiaries would be either guaranteed a certain amount, guaranteed a certain amount of growth, guaranteed a rather generous life insurance distribution at your passing.

But whether you choose one or multiple pieces of that, you will benefit the beneficiaries far more than you benefit yourself.

And if that is your number one priority, that's the direction I would go.

For those of you out there listening, going, My head hurts!

He's talking about fixed indexed annuities, variable annuities... Goodness!

Who knew?

That's true.

Who knew?

I knew.

But for an average human being, who knew that annuities came in so many different flavors?

Apparently not this advisor.

And I use that phrase loosely, because it sounds to me like this "advisor" is an annuity salesman, not an advisor.

An advisor has a fiduciary responsibility to provide the client with the best option for the client, not for the advisor.

Fixed indexed annuities can offer some pretty amazingly high commissions and may not be in the best interest of the client.

So I would strongly encourage you get a second opinion.

Megan, do we have a short one?

- We do this.

This one says, I heard you and Alyssa talking about QCDs on the radio show the other day, and I had a couple of questions.

Is there a limit to how many charities I can send money to?

And do I have to wait until the end of the year to make these contributions?

- Well, first of all, perfect short question.

QCD.

Qualified charitable distribution.

Folks who have attained the age of 70 and a half, who have an IRA or a 401k and need to take out some money, can decide to take that out and send it directly to charities.

And when I say directly, it's done mechanically in one of two ways - either the custodian...

In our shop, very often we'll use the Charles Schwab as the custodian for an IRA.

They can send the check directly to the charity, or they can send the check made out to the charity to the taxpayer, and the taxpayer, then hands it to the charity.

That sometimes works out really, really nicely, that kind of connection.

So, qualified charitable distributions have tremendous advantages from a tax standpoint, and for many people, it ends up that they can give away far more to the charities that they care about than they expected because they're not paying any income tax on those withdrawals at all.

So let's answer the question.

Is there a limit to the number of charities that this individual might benefit?

The answer is no.

So that's fantastic.

And number two, do they have to wait until the end of the year?

The answer is no.

So that's fantastic as well.

Look, we finally get to a question where all the answers are good.

You may decide to do this any time of the year.

A lot of charitable distributions are done on a monthly basis.

So if you're supporting your church perhaps and you want to make sure that they're getting it in the collection plate, so to speak, on a regular basis, you can set that up automatically and it works out very, very nicely.

Or you can do it throughout the year, however the timing and however the selections are made for you.

So, again, 70 and a half, if you've got an IRA or a 401k and you have to take some money out and you want to send it to charities, this could be the answer that you're looking for.

I hope we gave you some answers that you were looking for tonight.

If you have questions for us, of course... ..works very, very well.

We encourage you to send those to us.

We answer every single question directly back to you, even if not every single one can make it on air.

We just have only so much time.

I want to thank you for being part of the show.

You're the most important part of the show, and I hope that you'll return with us next week when we bring more of your questions back to you so you can learn more and more day by day.

Thank you so much.

We'll see you next time right here on More Than Money.

Goodbye.