Good evening.

You've got more than money.

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

The next half an hour.

I am yours.

Hey, hey.

Rather wonderful opportunity for both of us.

You two get your questions asked and answered about the wide range of financial topics that might be concerning you.

And they should be.

Or for me, because you make us more than money.

The most relevant financial show on television today, on any station, any channel.

Coast to coast and border to border.

And I thank you for that.

Indeed.

Sincerely.

Because your questions set the tone.

You set the priorities, you set the agenda for us.

I had a little bit of something here and there.

I, I should hope, with the experience of 780 years behind me, that's all at your service every single week.

For those of you who are loyal viewers, you already know how this works.

We give you a little bit of an intro, a little bit of context, and then we answer questions, as many as we can fit in to each and every show.

If you're just joining us for the first time, you might be scratching your head a little bit, going way more than money.

What exactly does that mean?

What it means exactly what it sounds like.

We talk about the finances, of course, your situations, your concerns about dollar connected issues.

But often, quite often the intertwined components of your questions have way more to do with the personal side, your personal side, than maybe they do with the dollars and cents.

So we address both.

We address the financial questions you might have about retirement, about Social Security, Medicare, about investing, stock market, bond market, about real estate, about estate planning, about insurances, long term health care, about all of these things.

We discuss all of these things.

But then the context of what's important to you.

So if you're just joining us for the first time, welcome.

And hopefully you will want to do what so many have done before you send me your questions.

The email address Gene at ask mtm dot com works beautifully.

Comes directly to me, and I have an entire team of financial advisors that answer questions back to you.

We answer every single question.

If you are saying, hey, I'm not really sure I got my answer.

Check your spam filter.

That's often the culprit.

Before we get to our questions this evening, at the time that we are producing this this taping, we are experiencing some very, very unsettled, occurrences, events, results inside the stock market and far beyond, at the time that we are in front of this camera.

The stock markets have been up and down and sideways.

The issue of tariffs has been, floated, implemented and responded to around the world.

So as we speak to you, there's a lot of uncertainty.

There are a lot of folks who have been invested in the stock market for many, many years who are now questioning whether they should stay invested at a time when the market drops rather quickly and rather substantially.

Is it time to add more money in, if that's possible?

Is it time to pull money out if your nerves are so frayed?

The answer is, It depends.

It absolutely depends.

It depends on you.

It depends on your goals.

It depends on your time frame.

And it depends on whether or not entering a time like this.

You were properly invested in the first place.

And that may be, an unsettling piece of information to process.

Because how might you know if you've been, running your own investments, if you've been kind of a do it yourself, for you may not be confident that you were well structured prior to this kind of an event, this this kind of a uncertainty.

If you are working with an advisor and the results have not been pleasing throughout this uncertainty, it may be again, you are not confident that you were well positioned prior to this, this challenge.

Some would say, what's the big deal?

Tariffs once in a lifetime upheaval.

Pretty natural.

Not to worry.

The answer is that's not true.

While the the issue of tariffs in this case may be different that what from other issues that have caused upheaval 2008 the financial meltdown in the markets 2022.

The administration in, in printing way too much money caused the market to drop almost 20% in a year.

The issues may change, but the cycles will not through the rest of our existence on this strange world that we live in.

We will be seeing very good results in some years, very modest results in other years, and very poor results in certain years of our existence.

So every investment portfolio has to be prepared, has to be prepared for the downtimes, the down cycles, the the roller coaster ride that has to be prepared to the extent that it is an event like this or a time like this, even though it may last days or weeks or months, is is of very little, concern because there's very little anxiety in the event that you have not had your investments well prepared, it would cause immense anxiety and almost certainly caused you to make choices, take actions that probably are not in your best interest long term.

So putting all that into context, understanding that having a long term view and an appropriate view and appropriate strategy that fits you.

Let's turn to the questions that are being posed this evening.

And sir, where do we start tonight?

In the in the.

Wouldn't this be great?

Gentlemen rights.

Can I take the proceeds from an RMD required minimum distribution and placement and a Roth IRA?

I am retired and have no earned income.

Well, wouldn't it be great if the answer were yes?

Sadly, the answer is no.

Specifically, the proceeds from a required minimum distribution, which applies to the vast majority of folks who are 70 and older.

In, in, recent years, the rule changed slightly so that RMDs began at age 73.

But for many folks who are in their late 70s, early 80s, they've been dealing with RMDs for many, many years.

Required minimum distribution.

For those of you who are not familiar with that idea, it is the IRS requiring that's part of the title for you to take some a relatively small piece in most cases of your IRA out pay tax on it and and then do what you will do, what you will with the where the net proceeds.

So keeping that in mind, using a a simple set of numbers as an example, we have 300,000 in an IRA, our RMD, if we have just turned 73 for the first time, may very well be roughly $12,000 a year, roughly $1,000 a month, the IRS says you add that to your other income, taxable income, and you are taxed at whatever your tax bracket, calls for.

So in this particular case, the gentleman says he has no earned income, which means two things.

Number one, he cannot make it contribution, to a Roth IRA, eight earned income is a requirement of making a contribution to a Roth IRA.

So that doesn't work.

Number two, it may mean maybe we don't know this for a fact, but it may mean fairly low taxable income.

So taking the RMD out and a fairly low tax bracket, let's say $12,000, fairly low tax break.

Let's what's called 10% would require that he pay about $1,200 in federal income tax, not a dreadful number.

And he would end up netting something.

What I we'll call it nice round number $11,000.

Can he put that into a Roth?

We've already determined the answer is no.

But can he do something a little different, a little more strategic.

And the answer is perhaps could he take that $11,000 net he's in the 10% bracket and convert some piece of the IRA assets that have been left $300,000 into a Roth IRA?

The answer is yes, he can do that and anyone can do that.

They can't directly put the RMD proceeds into a Roth, but they can do something that may end up actually being far better.

Let's use a again, a simple set of numbers.

Not intended to be accurate to the penny.

Any good CPA would tell you they're not, but we're if we're in the 10% tax bracket and we want to use that $11,000 to pay the tax on a conversion, how much could we convert in very round numbers?

We're going to call it a $100,000.

Wow.

That's a very substantial sum of money.

Way better than simply putting the 11,000 directly into a Roth.

We're now putting 100,000 into a Roth.

Our IRA balance drops from 300 to 200.

Our Roth goes from 0 to 100.

We still have all our money, but it's in two very different accounts the IRA account that next year we have to take our RMDs again, and the Roth IRA account that we will not, and any monies that we end up taking from the Roth income tax free.

So what have we done?

Some pretty substantial and radically beneficial actions taking money that perhaps is not necessary to pay bills right this moment, shifting a huge block of money, $100,000 into a Roth and eliminating the tax going forward for the rest of this gentleman's life.

What's interesting is that's one time next year the RMD is not going to be 12.

It's going to be roughly eight because there's much less money.

Again, we're going to net, say $7,500.

That would pay the tax on again, roughly $75,000.

That gets shifted over.

Now our Roth IRA has 175 again in very simple numbers.

Our IRA that started at 300 is down to 125 over the series of just the number of years, the entire IRA balance can be moved into a tax free environment.

Takes a little bit of, of work, takes a little bit of planning, takes a little bit of execution.

But, the end result, in my opinion, might be very, very worthwhile.

So very cool question.

Not the answer that he was expecting, but maybe the answer that he really, really can use.

What's next sir?

Big brother, for those of you who grew up, as I did with, the threat that big brother was watching, it's not a threat anymore.

Big brother's watching everywhere.

Everywhere.

Is the IRS the big brother really watching?

Gentlemen.

Right.

So I'm putting my house up for sale at the end of this year when I report this sale on next year's tax return.

Technically, it's this year's tax return.

2025.

What taxes will I have to pay?

And how closely does the IRS check cost basis?

Fascinating.

Well, let's start with the basics.

He's going to sell his home at the end of this year.

It will be reported on 2025, which is next spring.

On the return is filed next spring.

And, the basics are, he has a cost basis in his home.

What he paid for it, and what capital improvements he's put into it.

I'm going to use a simple set of numbers and say, if I totaled that up, it's $300,000, paid 100 and over the years has put a lot of money into it.

It's where he has 300,000 in.

He's selling it for 500,000.

It's making a nice $200,000 profit.

What tax should he expect to pay?

I can hear people all around the country yelling the answer at the TV as we speak, because they already know the answer is zero.

There is no tax on that set of numbers 300,000.

Our cost base is 200,000 profit.

The profit is less than what an individual is permitted to exclude as profit on the sale of a residence which has an individual one person, $250,000.

If this individual was married, that exclusion is doubled up.

He could have a $500,000 profit and pay no income tax.

Pretty interesting, by the way.

Just as an aside, for those of you are saying in retirement, I'd like to do something that could make a little extra money.

I hate paying taxes.

What might I do?

Well, you could move from residents to residents every two years, buy, improve, sell, make a profit, anything.

If you're married, up to $500,000 of profit is tax free, and you can do it every two years.

Every two years.

That's not what this gentleman is suggesting by a stretch.

But bottom line is he is unlikely to pay any income taxes on the profit, with the exception of the situation where my numbers are totally wrong, where the sale price is not 500 against 300,000 of cost basis, the sale price is 3.5 million against a cost basis of a million.

And now the the gain 1.5 million becomes partially sheltered again.

Married 500,000.

We still have to pay tax on a million.

The numbers are now large enough that the IRS might very well become interested in.

How did you calculate your cost basis?

And let's see the documents of the improvements that you made, the cost basis.

What you paid for, the closing cost, you get the idea.

So for the average American, how closely will the IRS examine a transaction that results in no tax anyway?

The answer is they're not interested.

However, how interested might they be if the numbers got quite large?

The answer is they could be quite interested.

And with the advent of AI, artificial intelligence, and the use of software to analyze certain patterns and tax returns, it doesn't take a human being at the IRS headquarters, to say this looks fishy.

It might be a computer that decides that that looks fishy, and then it's a human being that drafts the letter and says, send me more money.

Interesting brief question.

Lots of interesting opportunity there for you to see how the IRS looks at all this kind of good stuff, and particularly interesting if your cost basis.

I bought the home in 1982.

You know, the IRS becomes less and less interested when it when the time frames become 30 and 40 years.

Interesting question.

Do we have another interesting question?

Sure.

This is a, this is a question that sounds very specific.

Welcome to Pennsylvania.

The reality is it it it it opens up a discussion around some very, hope, potentially, potentially not hopefully potentially impactful, discussions around your estate planning.

Gentlemen writes I'm moving from New York to Pennsylvania.

Is there any way to avoid the death tax imposed by the state of Pennsylvania?

Now, interestingly enough, New York is one of the highest tax rate states in the country.

Pennsylvania is much less a tax oriented state, but still substantial, still substantial.

Florida, for example, has no inheritance tax whatsoever.

What I expect this individual is hoping was that the response would be sure.

If you have no assets in the state of Pennsylvania, this is what many people believe.

I have real estate in New York.

My bank accounts are in new Jersey.

All my assets are out of Pennsylvania.

Even though I live here.

When I die, there won't be any inheritance tax.

That is absolutely incorrect.

The rules of, estate, whether it's a federal estate issue, state, inheritance tax issue, death tax issue, they're all governed by your residence.

It has nothing to do with where your assets are situated.

So I live in Pennsylvania.

I have a property in North Carolina, and I pass away.

The North Carolina property is included in my estate, but the estate tax is calculated based on the rules of the state in which I reside.

In my example, Pennsylvania.

So are there a fair number of folks who have, their residence has changed as this gentleman's has?

They're considering changing their residence for any number of reasons.

Be closer to family, get warmer during the winter, avoid snow shoveling and all that kind of good stuff.

There are lots of reasons to change residences.

Some folks don't think through the, implications of such a change.

They move.

I'm picking a state south Carolina, beautiful place to live, but they never change their estate planning documents and estate planning documents must be tuned to the laws of the state in which you reside.

Extremely important for some states.

The difference is they're so minor as to be immaterial that you would you would spend no, good amount of effort in terms of, of, changing up your documents for very minor changes in other states.

The changes are dramatic, such as?

So much so, that in, in some moves, the, the current estate documents have to be, scrapped completely and you start over.

Bottom line for you is, number one, acknowledge that when you move residences, you're you're under a different set of rules.

Number two, make sure that your estate planning documents are being reviewed by an attorney familiar with the laws in the state in which you now reside, and then do your planning appropriately.

So again, simple question.

A lot of implication.

And with Americans on the move, so many folks making changes over the years, very appropriate, very appropriate indeed.

We have time.

Yeah.

Let's do another one, please.

Absolutely.

Interesting.

I remember this wheel paying off the car in the long run.

Pay off in the long run.

The payoff amount on this car loan is about 29,000.

It's due on the 31st of each and every month.

We have, in our bank, a little over $10,000 that we don't feel we need at the moment.

We also have some money in our investment checking account.

If we take, this is very interesting.

We take our RMD back to required minimum distributions.

Now and put it into the funds with, our, our bank and our investment account.

We would have enough money to pay off the loan.

Is this a good idea?

Number one?

Is is there a reason why we might want to keep the loan?

Number two and number three, with the car payment of 552 a month, 145 of that goes towards interest.

Isn't it just sensible to pay off the loan?

Sensible.

Interesting.

Interesting word.

Sensible, implies that it's the only logic thing to do.

And the answer in this case is that's not true.

That's not true.

We're using 29,000.

Let's use a simple number.

30,000 makes the math much, much easier.

If we're paying interest, apparently about, what, 17, $1,800 a year at interest?

That's a real cost.

That sounds like right around 6% return or 6% interest.

So the the differentiator will be, two things.

Number one, if the money that you are currently hanging on to that you're considering using to pay off, this this car loan is earning higher than 6%, it might be tempting to keep the loan.

It might be tempting to, keep the money invested.

Let's say you're earning 8%.

Take the 8% is income.

Pay the 6% on the interest, and just do that year by year and end up making 2% a year as a net return.

The reality is, you're not going to net 2% because there are some income taxes in this issue.

Some of you are saying, wait, wait, wait.

The interest on the car loan will be tax deductible in all likelihood, 95% sure it won't be because the vast majority of folks are using the standard deduction on their tax return.

So 6% out of pocket is a seven and a half net that we're going to get after tax.

We end up saving about 1.5% on $30,000, or about 450 bucks.

Now for a lot of you, you're going to that's 450.

That's nice money.

I would like the extra 450 in my pocket.

I absolutely understand, absolutely understand.

For some of you, you're going.

It's annoying.

I don't want to pay the interest.

It's not a big enough differential.

And I would just watch how I phrases.

I would just feel better not having the car loan.

I understand that completely.

I mean, after all, the title of our show is More Than Money.

These decisions are not simply financial.

These decisions include how do I feel about this?

Lots of folks that paid off their mortgage very, very quickly because they hated the idea of owning, of owing money against the home that they own.

They hated that idea.

Was it the right financial move?

Who cares?

They felt so much better.

And that has a real value in this case.

Since I know these folks very well, we ended up paying off the note.

We ended up doing it.

Rather efficiently, and they sleep better at night.

So do we have a short one back there?

One more.

Maybe we can squeeze in two good options.

Maybe three.

I don't remember this.

Couple REITs were a married couple in their early 40s with no children.

What factors should we consider when deciding between an IRA and a Roth IRA?

Excellent question.

Again, short, but has a lot of, options to unpack.

But let's talk about just a couple.

Number one, your tax bracket.

If you're in a very high tax brackets of 35, 40% tax bracket, it can be painful to give up the tax deduction on a traditional IRA to go into a Roth.

But your age fits the use of a Roth IRA.

If you can swallow, the the paying the extra tax if you're doing it married couple to IRAs, roughly $15,000 a year, and you're in the 40% bracket, it's going to cost you six grand.

I get that to get 15,000 into a Roth IRA.

But over the next 30 years, that money's probably going to double.

Let me see five times.

So if you've got 15,000, it'll go to, 30, 61, 22, 40.

It'll go to a half $1 million over a very long period of time and come out tax free.

What would they tax at a very high tax bracket be on half $1 million?

Well, you'll pay 6000 now.

You'll pay 200,000 later.

What was that old commercial.

You can pay me now or you can pay me later.

In this case, in my opinion, based on everything you've told me, paying now makes sense.

Use a Roth IRA.

Goodness, we've covered a tremendous amount of ground in a short period of time.

I hope you got some information that fits your situation in the, likelihood your situation is different.

Everyone is.

So if you have questions that you would like to outline your situation and explore how best to approach it, how best to strategize around your, financial picture and your financial actions so that it benefits you the most.

All you have to do is ask.

It's just that simple.

No cost, no obligation, no fuss, no mass.

An email Gene at ask mtm dot com gene at ask mtm dot com.

Our team will respond to you and give you some guidance, some information that will get you closer to your financial goals.

Folks, thanks for spending part of your evening with us.

You do us the honor when you do so, and hopefully you'll honors again next week when we're back behind this podium for another edition of More Than Money.