And good evening.

You've got More Than Money.

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

Happy to be with you.

And happy to serve you.

Hopefully tonight you'll hear your question on our show.

If you send us a question, that's the key.

You are the reason why we lay claim to being the most relevant financial show on television today.

And I think that is without question, because we don't focus on us.

We focus on you in the way we do that.

It's remarkably simple.

We allow you, we encourage you, we implore you, send us your questions, send us your concerns, your observations, your input about what you're seeing in the financial world and what you need counsel, on what you need service on so that we can bring that back to you.

So rather than giving you half an hour of a lecture on the IRS code, who, That'd be dreadful.

We give you a half an hour of the most insightful answers that we can offer on some of the most interesting questions that you can offer.

You're fantastic.

So if you have a question that you'd like to see explored, perhaps on a future show, the email address is Gene at Ask MTM dot com Gene at ask MTM dot com works beautifully and I assure you that our entire team is at your service.

We answer all of your questions right back to you.

Every single questions.

The hard ones, the easy ones, the silly ones and the snarky ones.

We answer them all.

And some of those some of those appear on future shows.

So Megan is our financial correspondent.

Let's figure out how this all works right away.

Megan, where do we start this evening?

Hi, Gene.

Our first email tonight says, My understanding is that the Secure Act 2.0 allows me to combine withdrawals from my fixed IRA annuity and other IRA to satisfy my RMD.

The payout from my fixed annuity is much higher than the RMD.

That would be required based on the fair market value of the annuity at the end of the year.

So I'm wondering can I use this excess towards RMD withdrawls needed from my other IRAs?

If yes, can I use this method for my 2023 RMD withdrawal?

Looking forward to your advice.

Thanks for your kind support.

you're very welcome and thank you for allowing us to serve you.

The answer is simple answer is ‘Yes’.

Now, for a lot of you, you're going.

I'm not really sure I understand the question.

She has an IRA part.

She has multiple IRA as part of her IRA lineup is a fixed annuity that pays her a set amount per year, and it's far more than she would normally have to take out from that particular IRA and her question is, may she use that excess, so to speak, to offset some of the armed fees from other IRA is the simple answer is yes.

She's quite correct.

It was not the case just a months, literally months ago before Secure Act 2.0.

But that has clarified the situation rather significantly.

Now, for all of you who are still going, I'm not sure.

Hang with me.

Let me give you some some numbers, some demo numbers.

If you had three.

She has three IRAs, each $100,000.

The IRA that she's describing has 100,000 in it.

But her payout roughly, I'm guessing, cannot be really close.

$7,000 a year.

Her RMD on that IRA amount would only be about $4,000 a year.

So while she also needs 4000 each from the other two IRAs, her question is can she use the excess, the $3,000 above and beyond the R&D on the on the annuity to offset and part of the R&D for one of the IRAs?

And the answer is absolutely yes.

Absolutely.

Yes.

And to take this idea one step further, but let's wipe out the annuity piece.

Let's just demonstrate what would happen if you had three IRAs.

It's very unusual that your three IRAs would be the same amount.

So let's paint a more typical scenario, 100,000, 100,000, 20,000.

So based on rough numbers, 220,000, your initial RMD would be about $9,000.

Must you split that up proportionately?

The answer is no, and you never were required to do so.

It's the annuity piece that has thrown that wrinkle into the first question.

But in this case, no annuities, 100, 120 And do you wish to take 9000 spread across three?

You may do that if you wish to take 9000 from one IRA only.

And in many cases that makes good sense.

We have a 20,000, 20,000.

Our IRA, if we take the IRA RMDs from just that IRA over the next couple of years, that one's gone.

Your life becomes a little simpler.

You've got two IRAs instead of three perfectly reasonable thing to do.

Keeping in mind that IRAs can be combined in mixed and match like that for one case can not.

So if you've got a 401k and you're going, then how do we treat the 401k?

I would strongly suggest you send us an email to Gene at ask MTM dot com.

Megan, who has sent us another email that we want to make sure that we address.

Well, our next email comes from a grandma who's trying to help out her grandkids.

It says I'm a grandma to five and I plan to put them all through college.

With the help of 529 plans, problems arose when my first grandchild had to live off campus in Rhode Island.

He needed some money for food, so I figured I could give him an amount that would not be over.

What I could give from his 529 plan for campus life that would have included food.

He graduated last June, so the IRS has not caught up with me yet.

But now my oldest granddaughter is living in an apartment owned by the school.

No food is included, so she also has the same problem.

She works at school but pays her own car insurance and gas bills.

This time I asked the 529 plan and they said I could not use the money for food.

Please tell me what I would be up against if I did give her money for food.

Thank you for your help.

Goodness, Grandma, We'll make sure you're not up against anything.

That's a sweet grandma.

She's trying to help her grandkids.

This has got to work out.

We've got to figure this out so that she's okay.

And the IRS hasn't caught up with you yet, So you feel like you're you're like, on the run, Like you're you're evading, you're pretty.

You're near bad ass.

Yeah.

Look at you.

Fantastic.

Good for you.

Bottom line is, what's the phrase?

Better to ask forgiveness than permission?

I think in this case, that's a very good guidance.

I think you should withdraw the money provided for your granddaughter for food as you did for your grandson.

And I expect fully expect you'll never even receive a question.

By the way, if you did receive a question, the IRS does not bang on your door in the middle of the night.

The IRS does not send the gendarmes after you.

The IRS doesn't do any of that dramatic kind of stuff that people are fearful of.

The IRS quite boringly.

They send you a letter.

Now, admittedly not your best day when you grabbed the mail.

And on top, the return address is Internal Revenue Service.

All right, maybe not your best day, but that's how they respond.

If they may have a disagreement with you, if you're claiming X and they think it's different, they send your letters, say, here's the two columns, here's what we calculate, send us a check.

The reality is I am not aware.

I'm sure there are advisors out there who have had clients that this has occurred to, but I am not aware.

I have not had any clients ever, ever be questioned about their 529 plan expenditures.

You do not have to send any receipts with your tax return.

That's never been the case.

And isn't the case for any deductions that you might have.

If you have real estate taxes, you don't send off to the receipts.

If you have charitable deductions, you don't send off the receipts.

But what do you do?

You keep those in your file just in case.

And three years later, if you have committed no, no frauds, if you're not Sam Bankman-Fried, if you're not one of those fraudulent kind of people, then you are home free.

Life is good.

And I suspect that that's the way this will go as well, if indeed you were challenged.

My suspicion is that even now you're withdrawing this money with the idea it's food, that there are plenty of other educational expenses that your grandson in this case now your granddaughter also have incurred that would qualify as as as appropriate educational expenses and those receipts would be very useful.

I don't think that you're ever going to be challenged.

I think you're doing the right thing.

I think you are a wonderful grandma and I'm just suspicious.

I'm just guessing and just going way out on a limb.

I'll bet your grandkids think you're pretty cool as well.

Good for you.

Bless you.

Keep doing what you know is right and will be just fine.

By the way, if you do get that letter, make sure you reach out to us.

We have a crack income tax staff.

They will be able to assist you in any way that is necessary and outstanding.

Wow.

Wonderful lady.

Speaking of wonderful lady, that leads us to Megan.

Megan, what's next?

Well, thank you very much.

Our next question says ESG is everywhere in the news.

If you had all of your assets invested with a mutual fund company, which has acknowledged that it is tailoring its investment strategy toward ESG, would you have reason to believe that your investment opportunities were being sacrificed to an ideology?

Thank you.

You are 100% correct.

Yeah.

This is a sensitive for some people.

Sensitive?

Gosh, for some people, everything is sensitive.

It seems like we're raising a generation of folks that if the wind blows, they get bruised and their sensibilities are offended.

And yet in some cases, they're not offended by things they should be.

That's another story for another time.

So let's talk about ESG for those of you going ESG, is that what they add to the Chinese food that I like so much?

No that's MSG.

It's very, very good.

ESG, environmental, social, governance.

These are philosophies, These are personal opinions.

These are topics that certain people believe are far more important than any other topics.

We must be green, we must be diverse.

We must have equal opportunities, etc.. Now, to be fair, the vast majority, vast majority, 90% plus of people that I know, they want our planet to be healthy and clean and safe.

They want everyone to have equal rights and opportunities.

They agree with all that.

The question is whether or not in this case very appropriate question, an investment company sometimes a mutual fund, sometimes an ETF, etc., is serving their investors correctly if they are tuning fine tuning their stock choices versus an ESG agenda and environmental, social and governance agenda.

And the answer is in almost every case no.

and the answer is in almost every case, your investment results are being sacrificed on the altar of ESG.

For many people, I don't know what percentage and never done the study.

For many people, they're fine with that.

They would prefer to have the ESG priority above and beyond rated above their investment returns.

They are willing to sacrifice profits for the ESG agenda.

Other folks, they are not.

They are not.

Perhaps I get from the tone of your email.

You may not.

I may not.

Bottom line is these are choices that we make.

And for investment managers, whether they be mutual funds, ETFs, pension funds, etc., that are for Square for ESG, you've got to do that research and and make your own call because there are tons, tons and tons of competitors to these funds that are ESG oriented, that are not ESG oriented.

Now, just to make this as confusing and challenging as it possibly can be, particularly for those who are very committed to the ESG agenda, identifying companies to invest in that.

Meet your standards of ESG might be much more difficult than you will expect.

You would say, wait a second, Tesla, for example, it's got to be very green, very environmentally approved company, electronic vehicles.

That's the kind of the poster child for environmental sensitivity.

On the other hand, the batteries that go into the Teslas are the carbon footprint off the charts and the ingredients, the the components, the materials that are used to make those batteries are mined and manufactured and and constructed in such a way that it is decidedly the I don't know what the opposite of green would be.

I'm I'm I'm forgetting my Roy G. Biv.

There's got to be a circle where opposite green is.

I don't I don't know.

Pierce don't know.

Bottom line is there there will rarely be a company rarely, certainly not any of the major corporations.

If you say what?

Jeez, terrible.

All right.

They're terrible in certain divisions and they're great in others.

ExxonMobil.

They're terrible.

They're they're they're are fossil fuels.

Reality is ExxonMobil is is is, as I understand it, the world's leader in alternative energy research and application.

So to reward them and invest in them because they're advancing technologies in solar and and wind, etc., or do you hate them because they're in fossil fuels to for for their current clientele?

These are very challenging decisions.

And your standards, your litmus tests will be goodness applied in a way that maybe you find very clear and maybe investment managers do not, or vice versa.

There may be investment managers are throwing out companies that are.

You're saying, wait, wait a second, they're actually pretty good.

And the manager is saying, no, thank you.

So deciding exactly where and how ESG standards are applied was very, very challenging.

And if that's a high priority for you, I wish you a great success.

I wish you good luck.

But understand that in all probability there will be a cost.

You will you will earn a lesser profit on that basis than you would otherwise.

So thank you for the question.

Very interesting question.

Lots of different sides to that.

The folks who wish to have just a simple, clean answer I know are disappointed, but goodness, the world is often a little more nuanced, a little more complicated than a simple yes or no.

Megan, is there a yes or no back there for me?

I think this one's pretty straightforward.

It's it asks, Can I start collecting Social Security at age 62 and a half and still continue to work until I'm 70?

I don't have a lot of money to put away in my retirement, so can I continue to feed my retirement accounts?

Thank you.

Wow.

Interesting.

So if I'm reading between the lines since I was if I'm listening between the lines, it sounds like the theory is I continue to work until I'm 70.

I'll take Social Security at 62 and a half or whenever, take that money and invest it in my retirement plans until I retire at age 70.

I think that's what I'm hearing.

I'm not sure that's the right way to go.

I'm not sure that's the strategy that will give you the maximum benefit for your retired.

But if you take Social Security 62 and a half early, normal retirement age, roughly 67, So you're taking it four and a half years early.

You're getting a reduced benefit if you get any benefit at all.

Social Security says that if you take your benefit prior to age 65.

I'm sorry.

And my apologies.

Normal retirement age, in this case, 67.

If you have earnings above a certain threshold, as I recall, around 32, 33,000, you will lose those benefits, Social Security benefits, $1 for every $2 that you have earned above that number.

So even rough numbers, if you're making 50 grand a year, you've got to reduce Social Security benefit.

You're going to lose $1 for every $2 above, say, 30, to make numbers nice and simple, you're going to lose $10,000 of benefits anyway, not likely in your best interest, made less likely, if possible.

Less likely by the fact that your Social Security benefits between 62 and 70 will rise dramatically.

They will nearly double if your Social Security benefit at 67 is roughly $3,000 and you take it that early, you will receive roughly $2,000 a month.

If you wait until age 70, you'll get roughly $4,000 a month.

Your Social Security benefits rise prior to normal retirement age at 6% a year, done monthly, compounded monthly and between normal retirement age and 78% a year.

So waiting on your Social Security and waiting on a benefit that is guaranteed by the federal government.

All right.

That that maybe doesn't give you as much comfort as it once did, but still guaranteed by the federal government and has cost of living adjustments.

Again, that may not give you a warm fuzzy considering that they fuss with those colas and they're not normally as responsive as they need to be, but they are still better.

So if the idea was we want to take it early, invest it so I have more money to create an income at 70, I think you're going to find I'm quite confident you're going to find you will likely be better off not taking it early.

Continue to work.

Let your Social Security benefits grow automatically at at a guaranteed rate, either six or 8%, by the way, and cost of living increases will increase those.

And if your income is high enough over the next seven years, that will raise your Social Security benefits as well, because they're based on the highest 35 years.

So you've got a lot of reasons why leaving the Social Security alone and not taking it until 70 is likely highly probable that it's in your best interest.

Make sure that you're sitting with a financial advisor or a financial advisory team that understands Social Security really, really well.

Not all of them do.

Many advisory teams are investments only.

They don't pay attention to taxes, they don't pay attention to Social Security, etc.

Make sure you're dealing with a financial advisor that does pay attention to all those things, because my strong feeling is that you will be far better served by allowing your Social Security to continue to grow until you turn 70.

Long winded answer to what was a very short question, but lots of nuance here.

Lots of moving parts that we've got to pay attention to.

And I think you'll find that the Social Security side wins out.

Megan, where to next?

Yeah, even if the question seems straightforward sometimes it just depends, right?

without a doubt.

Okay.

This next one says I'm 71 and have a regular IRA worth about $380,000.

Wondering, can I take money out of it and put in 529’s for my two grandchildren without paying taxes on one of your shows?

I heard you say that RMDs are not required to be taken if you are still working for 2022.

I was advised to take RMDs by the financial companies where I had accounts wondering was this a mistake and what do I do this year?

Thank you.

Well, goodness, it's two very different questions.

One, quite straightforward, an easy one, not so much.

So let's go right to the easy one.

That's where I always start.

May you take money from an IRA, Put it into a 529 plan and not pay taxes?

No.

In the state of Pennsylvania, money that comes out of your IRA is not taxed to the state of Pennsylvania.

And if you do put it into a 529 plan within certain limits, it is tax deductible.

So you're not paying the 3% upfront, you're saving 3% on the investment.

So in that respect, you're saving a little bit of money on on income taxes, on Pennsylvania income taxes, but not on federal.

Not on federal.

I wish it were the case that Ira's distributions could be used that way, but it simply isn't in the IRS code at the moment.

Now, you say that I said on a previous show that if you're still working, you don't have to take RMDs.

You heard that almost correctly, almost correctly.

If you are still working and if you are still contributing to a 401k plan, you do not have to take RMDs from that 401k plan.

So again, paint this scenario 71.

He is not required to take our empties at this point anyway that for him RMDs will start at age 73.

But under these sets of circumstances is he required to take and RMD?

The answer is yes from IRAs.

If he is investing in a 401k plan, the answer is no.

And you're saying, Whoa, whoa, Gene, you mean the RMD rules are different for IRAs and 401ks?

They absolutely are.

They absolutely are fairly confusing for sure.

By the way, are they also very different for inherited IRAs?

Yup.

And are they very different for Roth IRAs?

Yup.

So if you are looking at your scenario for RMDs and you've got all these various types of IRAs, they will be treated differently.

Now, you're still working, for example, let's assume just for fun that there is a41k that you're contributing to and you don't really have to take the arm days and you're saying, I don't want to take them from my IRA either.

In almost every case, I don't know that every case, but the ones that I have seen every case 401k plans will accept as a as a rollover monies from your current IRAs.

So if you wanted to continue to work, not take RMDs and you have a 401k one strategy you might employ is to take your current IRAs and roll them into your 401k.

Then you are free and clear from RMDs until you decide to stop working.

And that's up to you.

It could be a year, could be five years, could be never.

If you continue to work and make contributions, you may end up at 95.

Still having a great time and still not required to take RMDs.

RMDs if for one other purpose can be in terms of this question for one of the purpose can be confusing.

For example, gentleman says he's 71.

Even under the old rules, he was not required to take an RMD until the year after he turned 70 and a half.

So that's that is 2024.

That's, that's one thing.

Last year he would not have been.

So the fact that he was canceled, that he had to take RMDs is a head scratcher.

Make sure if you have some confusion, some challenge, some interpretation that you're not sure of.

Get a second opinion.

Get a second opinion, preferably from a tax professional.

And again, if your financial advisor happens as as we are blessed under our roof to have tax professionals right there, that makes it rather easy.

Estate professionals, right there.

Social Security professionals, there, Medicare.

All of these forming a team.

Then you can get your answers relatively quickly.

For some cases, in some cases, it's going to take a little work.

You're going to have to kind of dig.

But in in reality, it likely will be profitable for you to do just such digging.

We've covered a lot of ground.

Goodness.

All thanks to you.

The most relevant financial show on television, because we focus on your questions.

Really, really good stuff.

If you have a question that you would like to pose, gene at ask MTM dot com works very, very well.

Our team will respond to you.

And maybe, just maybe, we'll have a chance to air your your question on a future show.

Folks, thanks very much for being part of our show and hopefully you enjoyed it enough that you're going to want to return next week when we're back with another edition of More Than Money.

Good night.