Good evening.

You've got More Than Money.

You've got Gene Dickison, your host, your personal financial advisor.

Happy to be with you.

Happy to serve you the next half an hour.

I am all yours.

And that's a pretty good thing for you because I have 780 years of experience.

Seems like a lot.

Seems like mysterious.

It's one of life's great mysteries.

How can he do it?

But the reality is, he does indeed.

So when you send us your emails, Gene at ask MTM dot com, you're getting a lot of experience out here and you are also getting an entire team, one of the peaks behind the curtain that perhaps will offer you this evening is the question that I get not often, but regularly.

How in the world can you answer all these questions back to us?

And the answer is, I can't.

Not if I were doing this alone.

So fortunately, in the more than money world headquarters, we have dozens of folks who are helping us in many different areas, financial advisers answering questions directly back to to you partners who are giving us great insights into areas like Social Security, big one, Medicare, of course, estate planning, outstanding tax preparation, tax questions, tax planning, huge.

So many different areas of financial lives that are important to you.

And what's important to you is very important to us.

We are very proud.

And when I say we our entire team, our production team here at PBS, our team at More than money, we are very proud to be the most relevant financial show on television today.

Not because of us, but because of you.

You make us so you ask interesting questions, but most importantly, you ask questions that are very important to you.

High priority questions, very insightful questions.

And quite often, unlike so many other shows who are boring.

Bottom line, let's talk tonight about IRAs and then they give you a lecture.

Woo, Dreadful.

Don't operate heavy equipment while watching that.

Really, really dreadful.

Now your questions often bring together so many different pieces of the financial puzzle that is really rather remarkable.

And goodness, we we thank all of you.

The ones who have their questions aired.

Fantastic.

The ones who in some cases say please don't, or they have their questions answered directly back to them.

It works out very, very well.

So having given you all of that as context, let's see how this works in real life.

Megan, what real life can we affect right now?

Well, our first question tonight is quite a lot.

Dr. Phil may need to help us out here.

It says, I have been married for eight years.

My husband and I have our ups and downs as most most married couples do.

We got married young.

He was 26.

And I was 25, which was probably not the best idea, as we had only known each other for about a year and a half.

We both have changed, not always for the better, and we're now very different people.

We have one child together.

I've sacrificed my career and have shouldered most of the responsibility for our child working part time for a while.

He plays golf.

I stay home.

He gets a promotion.

I take our child to birthday parties and after school activities.

We are so used to being in an unhappy marriage that it has become our way of life or normal.

We've talked about the future and we've talked around the fact that we may have a future separately.

And I've privately thought a lot about divorce.

If I'm being honest, I have not been happy for more than half of the time.

We've been together.

Having a child two years after we got married merely put us in a holding pattern.

His only remaining parent is in ill health, and when his father eventually passes away, he expects to inherit about $1 million or more.

I feel like I have given so much.

Do I hang on until he inherits this money?

Don't I deserve some of this inheritance at least?

I would like to start again with some kind of security.

If we remained married, would this inheritance be his and his alone?

Is there a way to make sure that that does not happen?

I know this makes me sound like I am a gold digger, but I'm not.

Thank you for your help.

Dr. Phil?

Indeed.

So, yeah, I feel like I should be on one of those game shows where you have a lifeline where you could call somebody.

The reality is, I do have several lifelines.

And I did call somebody before this question was aired, and.

And I felt I needed that.

The perspective of a woman.

So that I could more effectively serve this family.

When you start with, it sounds like I'm a gold digger, but I'm not.

It sounds a lot like you're a gold digger.

Certainly, to me, it sounded a lot like you're a gold digger.

I'm not happy.

I don't like the guy.

But there's some money and hey, it's should be mine.

It sounded to me like a gold digger.

Having consulted with several women that I respect tremendously.

They saw this quite differently.

And they saw this in a much more certainly compassionate way than I did.

And they were uniform in their recommendation that this couple get marital counseling, that the family is so very important, the integrity of the family.

So very important.

The fact that they have grown into be different people.

So that's that's every human being that that that lives another year.

We are all evolving in different directions.

Some positive I get it, some not so positive.

I understand.

But the fact that you are different people.

For all you know, if if these things are simply reframed a bit, perhaps maybe you're better suited now than you were when you were younger.

Certainly you have a higher motivation now.

You have a child and the child has to be the number one priority no matter what emotionally.

Certainly from a family standpoint, of course, financially, yes, of course, you will likely be disappointed in the financial answer to your question if.

And every state is different.

Every state has different tax laws.

The IRS federal law, of course, is fairly clear.

But from a state by state standpoint, you've got to consult with a trusted family law attorney to determine in your state how this would unfold in our state.

State of Pennsylvania, the inheritance, even while married, can be kept segregated from marital assets, in which case, if there were a subsequent divorce, this young lady would have no claim on that million dollars.

Can it be co-mingled within the marriage?

Absolutely.

In which case, she then would have a claim.

If she has privately thought about divorce, my suspicion is so has her husband.

And if indeed there is an inheritance to be had, we can we can assume that he will consult with a marital attorney and take steps to protect himself.

Now, having said that, can he take steps to insulate this money from his financial responsibilities to his child?

The answer is no.

I'm not familiar with any state that would let a father off the hook, so to speak, for supporting his child because of an inheritance versus an income.

An income stream.

It sounds like he has done rather well.

Good for him.

It sounds like, in my opinion, you have also done rather well.

You've had an opportunity that many women envy you for.

You've had the opportunity to not have to leave home every day and go to your job to help support the family and miss seeing your child.

The reference to I take my Child to birthday parties and actress school activities.

There are women who heard that in and their hearts hurt because they're not financially able to do that for their child.

So the term reframing is a really powerful one.

It's looking at the same set of circumstances and looking at them in terms describing them in a different way.

He got a promotion.

I stayed home with the baby is one way to look at that.

He went to work so that he could pay the bills.

So I had the good fortune to watch my child grow and be actively involved in his or her life.

So my financial angst potential snark for this question has been dramatically softened by, I think, very valuable insight from women I trust who say, okay, hang on a second.

Everybody deserves to be happy.

Perhaps this marriage can be saved and nothing should be done that would prevent this marriage from being saved until every effort has been exhausted.

And all of that has to be directed towards the child.

I think that was really good advice that I got.

I hope that that helps at least a little bit in terms of giving you a direction.

And if the ultimate resolution, sadly, is a divorce, knowing that you've done everything in your power to save your marriage and provide for your child will give you significant comfort going forward.

Wow.

Very challenging.

Very challenging indeed.

Make sure you have something back there that maybe won't hurt my head quite so much.

I think so.

That was very good advice.

It gave me a different perspective on the situation.

This is our regularly scheduled program now.

This one says I have a number of I bonds reaching maturity.

The point of no additional interest accrual.

What options are there to continue tax deferred treatment of interest upon redemption other than CDs at plus or -5% APR?

What recommendations would you have for a safe parking place for funds?

75 K allowing gradual draw out over the next 15 years?

Thank you in advance for your advice.

Well, this is an interesting question because it's got a couple pieces that actually don't seem to fit together.

But I will do my very best.

When bonds mature, I bonds, E bonds, age bonds when they mature, the tax deferral, the pushing off of the tax that is due ends.

So let's simple numbers.

I gave somebody ten grand.

It's now worth 20 grand.

When it matures, that $10,000 of gain is taxable.

It is no longer deferred.

I am unfamous earlier with a mechanism that would allow you to defer the tax further.

There are certain investments where that is possible.

I am not familiar with one here.

This type of investment where you can avoid paying the tax on in my example, $10,000.

Now, having said that, we dropped down to the final part of your question, which is we've got 75,000 bucks and we want to park it.

That's an interesting term and allow for a gradual withdrawal over the next 15 years.

That jumps right off the page at me.

15 years.

It sounds a lot like an annuity.

It sounds a lot like a single premium one.

One deposit $75,000 into an annuity that would then allow you to draw an income over a very long period of time, 15 years.

In this particular example and have tax deferral along the way.

You would not have to pay taxes on assets, on income that you did not withdraw.

You only pay taxes on withdrawals.

So we put 75 in.

Let's say it makes a 5% return.

That's a at this moment as of this recording, pretty reasonable number.

So we're looking at 30 $504,000 a year of potential income.

I only need to I would only pay tax on two.

So I would end up with this deferral.

I could pull it out gradually.

I could pull it out maybe later.

And larger blocks.

But it would give you some tax management.

It would give you the opportunity to make a reasonable rate of return, depending on the type of annuity that you would choose.

You might even get an exceptional rate of return.

There are variable annuities, ones that allow you to invest in the stock market, in real estate, commodities, etc.

That could give you the opportunity to make substantially higher rates of return.

It comes with risk.

So you need to evaluate these options very, very carefully.

But it's at least something for you to take a peek at.

CDs are not tax deferred much beyond their maturity, and most CDs today that we're using fairly short maturity ranges six months, 12 months, 18 months, certainly not 15 years.

So lots of interesting little what potential flies in the ointment there that we certainly don't want you to have to suffer through.

So sit with a financial advisor that you trust.

Go through your options and pick the one.

As soon as I said one.

I don't know if I like that answer.

Pick the one that you like best.

The one that you like best might end up being several of these types of investments in pieces.

75,000 is a substantial sum of money.

Is it possible that you might want to put 25 in a certain type of annuity for five years?

25, maybe one that would pay you from 6 to 10 and one that pays you from 11 to 15, that these are all possibilities that you should explore, exploring in the financial world is a very wise thing to do before you take action.

And thankfully you have asked in advance that makes you top of the list.

Well done.

You Where to next?

Our next question says Thank you so much for your great programing, your break, your great program, answering real questions that improve our financial health.

My wife and I were born in 1964 and have been married for 38 years.

My wife is receiving Social Security benefits and Medicare due to her disability.

Our oldest son was born in 1990.

He has special needs and qualifies as a disabled adult child.

He receives one half of my wife's Social Security monthly amount.

Financially, I can stop working full time.

However, I would prefer to work a few more years.

Working more will increase my Social Security work history and eventually my benefits.

I plan to start receiving Social Security benefits at age 70.

I think this will provide me the maximum benefits for a membership in the happy Healthy club.

My question relates to my son's benefits based on my work history.

Does the age that I start Social Security benefits impact his monthly amount?

If I wait until age 70, will that increase his benefits or just delay when he starts receiving benefits?

Under my record?

What can I do to maximize my son's lifetime benefits?

Jean?

Thank you.

Well, bless you.

Special needs adults is a growing population in America.

The questions that this gentleman is, questions that he is asking is, yeah, makes sense.

Our question is that that even 25 or 30 years ago would likely not be asked.

Special needs children maturing into adults were largely discussed.

It was a topic that was there.

There was a stigma.

Fortunately, blessedly, that has largely gone by the board, and there are many organizations that are providing significant support to the parents of special needs children.

In this particular case, the Social Security rules have some interesting little potential benefits, and there are some issues that this gentleman does not ask about that we must address.

So first and foremost, if you are comfortable waiting until age 70 for your Social Security benefits, that is in all likelihood a real benefit, a real plus for both your son and your wife.

If your wife and son outlive you, then the survivor benefit that they will receive will be maximized for it by by your waiting.

If your son outlives you, certainly likely his survivor benefit again will be maximized by you maximizing your Social Security benefit.

These are obviously to you and your family, very important decisions to be made.

Sitting with a financial advisor that has a strong Social Security training and or a an individual who is a Social Security expert.

Him or herself will reinforce your strategy, but you're on the right track.

The piece that I'm concerned about is as a special needs individual, your son may be receiving benefits that could be at jeopardy if your estate planning documents are not well drafted.

There is a term special needs trust that is heard quite often these days in families and in estate planning venues, of course, where an adult with special needs resides because having too much in the way of assets might disqualify them from receiving the services that they very much rely upon.

So why your Social Security question, I think, is an important one, and I think you're on the right track and you'll be fine making sure that your estate planning is reflective of your son's needs is extremely important and may even supersede your your questions, your concerns around social Security.

I am hopeful, prayerful that you have already done exactly that.

Your son is 34.

This is not likely news to you.

But if it is, this could be a game changer and one that you've got to pay a very special attention to.

By the way, not all estate planning attorneys are skilled or experienced at special needs trusts.

Not all attorneys, even the ones that claim to do estate planning, are terribly experienced, even in estate planning, let alone the subtleties of prepping for the legacy left to an adult with special needs.

Make sure you're dealing with a an attorney that not only can you trust, it has the experience in your area, but maybe has come well recommended to you because of that experience.

And God bless.

Next, we have another one back there.

We do.

Our next email says I'm 63 and my wife is 62.

We would like to retire in two or three more years.

She is self-employed.

I have been working for the Commonwealth of Pennsylvania for the last 23 years and was self-employed for 20 years prior to that.

We have $138,000 each in a traditional IRA and $33,000 each in a Roth IRA, along with other investments and for rental houses.

I hear a lot of talk about converting traditional IRAs to Roth.

Should I be making future contributions to Roth and would it benefit me to convert some or all of our traditional IRAs to Roth IRAs?

Thank you for your help.

you're very welcome.

Okay.

Really important to understand the distinction between contributing to a Roth and converting to a Roth, Contributing to a Roth says.

I earn money.

I am employed as as this gentleman.

And his wife.

Both are.

I would like to follow the IRS rules and put money to the limit or or approaching the limit that the IRS allows in a Roth IRA.

If it's a Roth IRA, the current limit for a gentleman of this age is approximately 70 $500.

His wife could do approximately the same amount.

So we're looking at about $15,000 going into the Roth as a contribution.

This is not taxed deductible.

So the tax of 15,000 will still be paid.

But from that point on, it is tax deferred and done properly in your retirement.

It will be tax free.

Converting, on the other hand, says you have $138,000 into an IRA.

You would like to take some piece of that and bring that over to the Roth.

The IRS says no worries.

Perfectly appropriate, but you pay tax.

So let's assume just for the sake of argument, you are 63.

You have to start taking your RMDs currently at age 73, ten years from now.

And if let's assume just for fun that you are hoping to drain your current IRA and get it all into a Roth over that time period, you would convert about $14,000 a year, bring that over into the Roth.

You would pay tax on the $14,000.

But again, once that 14,000 hits your Roth, you are out from under the IRS, some, so to speak.

And if your wife is so inclined, she could do something very similar.

It doesn't have to be spread out equally, can be done in big chunks.

It can be done in small chunks.

And the question your question is, is this sensible?

The answer is yes.

And to the degree to which you convert dollars from your current $138,000 IRA to your Roth will be driven by two factors.

Number one, your tax bracket.

You're both working this money is going to be on top of your taxable current taxable income and may very well push you into a higher bracket.

You may be okay with that.

You might very well not be, but you can certainly kind of dial it in, convert enough that you're okay with the taxes being spent and you're encouraged that you're building up your Roth IRA.

So that is rather easily calculated, sitting with either a tax preparer, professional tax preparer or your your financial adviser, if you have one that you trust and is comfortable talking about taxes and you can even do some pretty strong projections.

Most quality financial advisers have the ability to project your retirement rather nicely, including calculating Roth conversions, tax liabilities, etc..

So is it in your best interest?

I think it is.

I think in the future, tax brackets sadly, are going to go higher.

I think considering how the federal government is currently operating, paying down debt and meeting our obligations is going to take more money.

So getting out from under that tax in the future might very well be the smartest thing that you're going to do over the next ten years.

Thank you so much for the question.

And thanks to all of you.

Thank you for being part of the show.

If you have questions that you would like us to explore, we answer every single one, even the ones that don't appear on the show.

Answer all them back to you.

Just send those to me.

Gene at ask MTM dot com.

We have our entire team at your service.

There's absolutely no charge.

There's no pressure.

There's no obligation.

It's just a chance to get the insights from some very, very smart financial advisors in the questions that are most important to you and to all of you.

Thank you for spending part of your evening with us.

We know you have lots of places you could be in things you could be doing.

Spending it with us is a great honor indeed.

And we hope that you learned enough that you're going to want to return next week.

When we're back here for another edition of More Than Money.