Good evening.

You've got more than money.

You've got Gene Dickison, you've got Megan Smale.

You have an entire team here at PBS's to serve you for the next half an hour.

And I can assure you, if you're just joining us, it goes very quickly.

So don't wander off.

Don't let yourself get distracted.

A pad and a pencil, not a bad idea.

You might want to take a note or two because maybe, just maybe, one of the questions we answer this evening will help you.

That's the claim that we make.

We are bold in making the claim that our show, based here on PBS 39, is the most relevant financial show on television today, bar none.

I don't care what network you're talking about.

I don't care what city you're talking about.

We are the most relevant because of you.

I would love to tell you it's because of my sheer brilliance and some would agree.

Well, but you can convince some people of anything that we've figured that part out.

Bottom line is, it's not us.

It's you.

You are asking questions that are very important to you, that are the most critical for you, for your family, for the people that you love, for your community, for your country.

It's fantastic.

And sharing those questions, sharing those concerns as observations allows us to have impact, allows us to have that kind of a level of service that we're really making a difference in.

The emails that we get that are simply ones of things are so gratifying.

Our audience is amazing and we're the rare exception.

So very kind and so very gracious and we appreciate all that.

But it really the thanks belongs to you.

You give us that opportunity.

So if you are so inclined and you're you get through our show and you say, I've got a question I think would be fascinating, send those to me gene at ask MTM dot com.

We have an entire team our MTM team our more than money team, lots of advisors, lots of support so that we can answer all your questions back to you.

Send them one of our most recent one from Southern California, apparently PBS.

So Cal picked up our show and some folks saw us out there.

Fascinating.

And since we're a national operation coast to coast and border to border, we get to serve a lot of people.

You're very, very kind.

You allow us to do that means the world.

Let's give you a demonstration of how it actually works.

Megan, where do we start this evening?

Well, our first question, I hope you brought your Dr. Phil hat tonight.

This one says, My partner and I have been together for eight years.

We are committed to one another, but neither of us wants to get married.

We keep our finances separate and pay housing expenses based on a ratio of who makes more.

When we moved in together and decided on this split, I made significantly more than my partner and paid a higher percentage.

Over the past few years I have gotten normal raises and I thought she was too, as she had never said anything different.

I got two big bonuses over the past few years and disclosed them both to her and she has disclosed her bonuses to me.

We used the same accountant and last week the accountant accidentally sent my partner's tax return to me instead of her.

I didn't realize it until I opened it up and the numbers didn't seem right.

It took me a few minutes to realize I had the wrong tax return.

I was shocked to see my partner's income has more than doubled since we decided on our split of the expenses.

When I asked her about it, she first accused me of violating her privacy and then said that I never asked how much her raises were and she figured the split was fine.

Still, we should have been paying 5050 about a year after we moved in together, and she would be paying about 7030.

Now.

I feel really betrayed.

She is now proposing a 5050 split, but I don't think that is fair.

Part of me wants to her to reimburse me the money she should have been paying me the past few years and part of me just wants her to pay 7030.

She says I'm being stingy and that I feel threatened because she makes more than me.

I am rethinking our relationship not only because she lied by omission, but because she is accusing me of being misogynistic and is not seeing the ethical and moral failing on her part.

She thinks I'm making too big a deal out of this and that we just need to move on.

I don't feel like she's trustworthy.

Part of me just wants to find a new place, move out and have separate household expenses going forward.

And part of me wants to just move out and break up.

Am I overreacting, Gene?

No, you're not overreacting.

my goodness.

I think you may actually be under reacting this.

Your partner has made a number of choices over a very long period of time that basically has disrespected your entire relationship.

This is not a financial question.

Should it be 7030?

Should she pay you back?

Should have been 5050.

Those are all irrelevant.

And the fact that she's now accusing you being misogynistic, I don't know what message has to do with this.

I think that's a totally separate issue in my head.

That's very funny.

You may find it or not, her instantaneous, her knee jerk reaction of you violated my privacy.

By the way, your accountant has some real problems here.

If you wish to press the issue.

That mistake of allowing someone's personal information, even though you're in close proximity, he or she should have known that you keep your finances separate to share someone's purse.

All of her information to somebody that should not be seeing it.

Yeah, the account made a huge error and if it were me, I'd be having a serious conversation or worse, where the accountant.

But in in in the in this case you say we're both committed but we're not we're not interested in being married.

I think if that kind of sets the stage for what has happened here, you're right.

You thought you were both committed.

You're not she's not she's certainly not committed to honesty or trust or any of that kind of stuff.

And for anyone who has had a long term relationship, a successful long term relationship, trust is the key.

Trust is everything.

So your first suggestion, I think we maybe I'll move out, get my own place, and keep my own money separate.

Sounds like you want to continue that relationship.

I can almost guarantee.

Almost guarantee you.

Almost not.

Please.

Not psychic.

Psychotic.

Sure.

Not psychic.

Almost guarantee you this relationship does not have longevity in this future.

So big breath on place.

Separate and goodbye and start fresh.

Start fresh.

Not exactly.

Dr. Phil, I don't think he was that snarky, but maybe.

Bless.

I told you, I tell you, every week we get some of the most fascinating questions and some of them seem to be financial and they're really not Megs.

Maybe the next one is financial?

I think so.

And I think that was minimal snark edge.

This one says, Gene, I love your show.

My son has $10,000 to invest for his two children, ages five and nine.

He doesn't want a 529, so what would be a good alternative?

Thank you.

A good alternative to a 529 would be a 529.

I say that only slightly sarcastic.

I mean that to catch everybody's attention.

But I want you to hear that the 529 plan is so useful, has so many positives, so many good long term application sessions that in order for if this this gentleman son were to come to me saying here's ten grand, don't put it in a 529 plan, I would say, all right, let's stop right there.

Tell me why.

Tell me why you think it should not go into a 529 plan.

Now, one of the answers that we might get a 529 plan is for college education.

And I don't want my kids to be forced into spending this for college.

I hear you.

But the 529 plan is not just for college education.

well, maybe this is money that I want to have put away for their their long term financial security recently, the 529 plan rules changed so that if a child is not going to use it for education, the parent can direct that money into a Roth IRA for that child.

Pretty powerful stuff.

So if it's not education, it can absolutely be for retirement and it allows the 529 plan rules allow that if the parent at some point decides the children have kind of gone off the rails, that they this particular child doesn't deserve the money, I don't wish to give it to them.

They can take it back.

They can take it back.

So there's tons of flexibility.

Now, I will give you one answer that would absolutely shut me up.

Bottom line is, hey, I don't want to 529 because I already have a 529 and I've put a lot of money into it so that as I look at my kids, I know that they're going to have plenty of capital to get educated.

However, they wish to be educated.

And just as a reminder, folks say, well, was for college.

529 plans provide for tax free earnings to pay for.

Yes, a traditional four year college or a two year degree at a community college.

And if you haven't checked out community colleges lately, they are unbelievably impressive.

The breadth of their offerings are dynamic.

The ability to go in, grab a degree, grab a certificate, grab some education and go out and immediately put it to work is impressive.

by the way, you want to go to culinary school?

That would be covered.

You want to go to a carpentry apprenticeship program that would be covered.

Education is a very broad topic as far as 529 go.

And by the way, it's not just for college age anymore.

There was a time it was you had to be 18 or older, you had to be out of high school.

Now it is it can be used legally for preschool right on through.

And just for fun, let's say you're a little more senior, but you're in a position or you're in a profession that requires you to have continuing.

Ed, you can use 529 for your own continuing ed some states.

Pennsylvania is a good example, gives you a deduction on your state return for putting money into a 529.

So if you know you're in a profession, let's say you're 35, you're going to be in the profession another 30 or 40 years and you're going to have to spend five or $10,000 a year on continuing.

Ed, you might set up your own 529 plan for yourself.

Now, having said all of that, if indeed this gentleman already has 529 his first is children and they're all squared away in this 5000 that are $10,000, five apiece is to be used for different purposes.

I would encourage and in an investment account you can do it online, independently, you can do it through a financial advisor.

I would encourage them to use stocks, either stocks or stock funds, exchange traded funds because they tend to grow without a lot of taxation and when they are taxed it tends to be capital gains.

And for young folks with modest incomes, the capital gains is likely to be zero.

So let's pick I'm picking out of thin air Apple stock.

We put the money in and many years later it's sold and they're still students.

Their gains will be likely taxed at zero.

It's it's a pretty effective way.

You want to avoid CDs.

You want to avoid bonds.

You want to avoid those kinds of investments that create taxable income because that ends up eating eroding away at the profits.

And since these are young folks five and nine, they've got plenty of time for a good basket, $5,000.

You could invest in a number of stocks.

And there are a number of ways to do it very efficiently and very cost efficiently and yet end up paying either nothing or nearly nothing.

So either way, but you'd have to convince me 529 isn't appropriate.

Marcus Who has to convince me next?

Well, we have an estate planning question.

This one says we are looking to do estate planning.

We already are with a financial planner, but are not sure if we're on the right track.

We are also wondering if the fees being charged are reasonable.

I have a 401k with my employer.

I also have a traditional IRA Roth and savings with an adviser.

My wife has several accounts on her own self that are self-managed.

We enjoy watching the show on PBS.

The positive attitude that I get from watching the show is recommendation enough for me.

Thank you.

My goodness.

That's one of the nicest compliments that I've I've ever heard.

That's fantastic.

And we are optimistic.

We're we're not just a glass half full kind of folks.

We are glass pouring over the top, overflowing.

It is.

We're very blessed.

We're very blessed.

And it sounds like.

So are you.

You've got a couple different questions here.

And it's it's it's actually quite interesting talking about having a financial adviser for a piece of your puzzle and then for a piece of it, you're in the 401k, It does not sound like your financial advisor is involved there.

You're wondering about whether self-manage versus adviser versus 401K, how those kind of all fit the estate planning piece is what you lead with is almost sounds like it is gotten lost in the shuffle.

Most quality financial advisors and I emphasize quality because as much as our profession has a tremendous number of high quality, tremendously dedicated financial advisors there, there are some bobos and and it you'll you'll bump into some some firms that you can almost immediately identify they're not high quality.

If for example you ask a question about estate planning and they say we don't do that, you just check with your attorney.

Yeah, they're probably not that high quality.

If you ask a question about income taxes, they say, We can't answer your income tax questions.

We're not allowed to.

You got to check with your tax advisor.

Yeah, they're probably not very much in the way of high quality.

If you ask questions about Social Security, 401ks, IRAs, taxes, all of those brought together and they go, we can't really answer those questions.

We are just helping you with your investments.

It's probably not a high quality firm.

Now, if these any of those things apply to your current advisor and you're paying anything between goodness on the very low side, say three quarters of 1% per year, if it's a very large investment account to maybe 1.5, 1.6, if it's a relatively smaller account, if you're paying those numbers and you're getting these limited services, you're paying too much, it that's pretty straightforward because you could go to a very high quality firm with very well-trained professionals that can give you invest estate tax insurance, Social Security, Medicare, all those kinds of counsel, same cost, same cost.

So if indeed you're paying within that range and you're getting rather limited services, you're paying too much.

Now let's talk about the self-managed adviser managed and 401K, again, if you're with a quality financial advisor, they will be able to demonstrate to you that their services are so advantageous is a good word to you that you really want them to be managing everything if you're unsure or if, let's use the the extreme example, we're looking at all of all three of these kind of buckets, the do it yourself, the advisor and the 401k, and you find out, Gosh, I'm doing better on my own.

The question might come up, is it you're doing better because you're taking a lot more risk.

Are we comparing apples to apples or is it legitimately?

Yeah, I'm doing basically the same thing and I'm just doing better than the advisor kind of falls off the plate.

The 401k, 401ks typically are fairly limited in terms of their investment options, but that doesn't mean they can't be very, very efficient and very effective.

In many cases, their fees are quite low and if your menu is very dynamic and fit, you, you might benefit by moving IRAs into the 401k leaving the advisor behind.

Now let's assume just for fun that you find out that your fees are reasonable.

The advisor's doing a good job better than you are on your own and better than the 401k.

Now it's time for you to make a choice and bring those funds together to to under one roof, so to speak, so that you can get the advantage of high quality advice.

But again, if it's not including all the ancillary services that I outlined, sadly, you are probably paying too much.

Most quality financial advisors.

gosh.

Most as in basically everyone that I'm familiar with would welcome the opportunity to to sit with you and compare what you have with what they offer at no charge.

That meeting often referred to as a second opinion meeting.

There's no cost involved.

There's no obligation.

If they're quality advisors, there's no pressure involved.

It's a it's in essence, it's a job interview.

You're interviewing them to see how they compare to what you currently have.

If you interviewed two or three, I think you would learn a lot and either you would come away knowing we have to move or you would come away appreciating what you currently have.

Either result would be great.

Speaking of great results, is there a question back there that I can provide great results to?

I'm pretty confident you can.

This one says, I recently sold the family home that my parents purchased in 1964.

$10,000.

My parents gave the house to my sister and me in 1981 for no money.

Prior to that, they did considerable capital improvements like a large addition, new windows had a basement dog, built a garage and more.

My question is how to value those improvements without any receipts.

Most of the work was done in the early 1970s.

Thank you for your advice.

We sold the home for $375,000 in January of 2024 and we hope we can reduce our taxes.

Thanks.

Okay.

This is a remarkably common question.

Remarkably common.

There is there's a wrinkle here.

There's a wrinkle here.

And the wrinkle is that the parents gave I'm going to assume these are two sisters that gave the sisters the home 43 years ago.

So there is a line of demarcation in between prior the 20 plus years prior and the 40 years since when the parents gave them the home, they also gave them their cost basis.

So when this young lady says she, they bought it for ten.

That's where you start there may have been some expenses in the purchase.

Let's say there was $1,000 in legal fees, etc.

that gets added and then the cost of any major improvements, not maintenance, paint and paper does not count, but a new roof, new heating system, new porch and extension.

In addition, all those things, they are added to the basis.

How does she know?

And the answer is she doesn't have documentation, but by counseling with particularly a contracting firm that's been around a long time, would have done some work many, many years ago.

She can get a sense of what they paid.

In addition, they paid $5,000.

Today it would be 75,000.

Back then it was five.

Adding all that up will increase her basis.

Their basis up to the 1981 when they took it over.

Let's just for the sake of argument, say it's 30,000 bucks they sold her for 375 excuse me, in the 43 years since, if they've done capital improvements, it sounds like they might have 10000 to 375.

Those add to the 30,000 that are cost basis they started with, so a new roof heating system, etc., etc., etc.. All that gets added to and the any costs that they have in terms of the sale, whether it's a sales commission, they can be very expensive.

Could be as much as $20,000 on a home this size, transfer taxes, etc.

Those reduce the profit as well.

So a little bit of work, a little bit of estimate estimating is necessary.

We don't have the documentation.

The IRS understands that reasonable numbers will get you a reasonable result.

And it's a shame you don't have more paper, but the reality is you'll probably end up doing pretty darn well Megs, do we have maybe one more back there?

We do.

And it's a short and sweet one.

This one just asks, what is the difference between a Roth contribution and a Roth conversion?

Thanks.

Do we have a lot?

No, I'm kidding.

That is a short line goodness convert versus can't contribution.

Lots of people mix this up.

Lots of folks really struggle with am I allowed to do one or the other?

Lots of folks are not clear what the differences are.

So let's start with basic definitions.

A contribution to a Roth IRA is what you're allowed to put into your account based on your work history.

So currently, if you're 50 and under, it might be 7000.

If you're over 50, it might be 8000.

But it's based on the fact that you have earned income either in self-employment, income, you're an employee, etc..

So if you want to put in the maximum that you're allowed to contribute on an annual basis, you look at your earned income and you can put 100% of your earned income up to a limit of seven or $8,000.

So bottom line is, hey, I made 25,000.

I'd like to contribute to a Roth IRA.

You can put up to seven or 8000.

That's an annual contribution conversion, says something very, very different.

Conversion says I've been putting money into an IRA or a 401k or a 403b or other retirement plan forever.

And now as I've gotten older, I've got a rather large sum of money in my traditional standard IRA for one K and goodness, I would like to take advantage of the Roth IRA.

Can I do that?

The answer's yes.

The IRS has created a system where you can convert, meaning you can take a chunk of your current IRA and move it to a Roth.

It doesn't require you to be working.

Lots and lots of folks who do this are retired.

They have no earned income.

It there's no requirement that you be working.

There is a requirement.

However, are you sitting down that you must pay income taxes on whatever amount you convert?

So let's say that you have $200,000 in an IRA and you want to convert 30,000 into a Roth.

You will pay tax on the 30,000.

Once it hits the Roth, you will pay no more income taxes for as long as you live, according to the IRS.

Is it a good idea because the taxes might be very high?

Is it a good idea?

Because the taxes could be in many cases, people are surprised how low the taxes are.

Pay a few dollars now to get it out forever.

It's an assessment and evaluation that you've got to do with a trained professional, either a tax professional, enrolled agents, CPA, etc., or a financial adviser who is comfortable with taxes, a quality financial adviser that can discuss those tax issues with you.

So contribution means I'm working and I'm putting money away for my future.

Conversion means I have been working for years and I want to get from taxable to tax free cash.

I hope I help that a little bit.

It's it's a challenge.

Speaking of a challenge, it's always a challenge to make sure that we're bringing you the very, very best that we can.

And Megan and I, I think we're up to the challenge.

We do that every single week for you.

So whether your questions are about retirement investments, Social Security, Medicare, estate planning, ownership of real estate, Roth conversions or Roth contributions, these are all fair game.

And so much more.

Your questions are far more interesting than anything I might come up with.

So please allow us to serve you.

Send us your emails.

Gene at Ask MTM dot com.

We promise we'll answer you directly and maybe you'll see your question on a future edition of More than Money.

Speaking of future, hopefully you've learned enough tonight that you want to return next week when we're back behind this podium to answer more of your questions on another edition of More Than Money, Good night.