Good evening.

You've got more than money.

You've got Gene Dickerson, your host, your personal financial advisor for the next half an hour.

I'm all yours.

And I mean that quite sincerely.

And I mean, that was a great level of appreciation.

Because of you, we are the most relevant financial show on television, anywhere, any station, any time of the day, any day of the week because of you.

Yeah, I bring my 780 years of experience.

That part is true.

I bring you lots of accumulated experience and wisdom.

That part is true.

But all that, left to its own devices could end up being just a tad boring.

But adding you, that's the spice.

That's the real, secret sauce of why more than money is so popular and so relevant.

Because we answer only the questions that you submit to us and that are most important to you after all.

Isn't that the very definition of relevant?

So thank you all for sending us your emails.

If you're just joining us tonight.

Whoa, whoa, what is this email thing?

We invite you to send us your questions by email.

Jean, just as my name Jean at ask mtm.com.

Jean at ask mtm.com.

We invite you to send those questions to us.

We have an entire team of financial advisors to answer those questions back to you.

We answer every single question back to you.

There's no cost.

There's no obligation, there's no pressure.

We simply give you as much information as we can, to make sure that your financial life is as smooth as it can possibly be.

And then we select some of those questions, to air on subsequent shows.

We can't air all of them.

My apologies.

There's just too many.

But the questions you ask in many cases are either incredibly relevant to so many people that we really want to address those on the air and help tons of folks, or they're so interesting.

So, absolutely interesting that we want to share those because it shows the texture of of American life and of the challenges and the opportunities that you find in your day to day lives.

It's an absolute joy.

It's a pleasure to serve you.

And, goodness, if you are so inclined, allow us to do exactly that for you.

Send those emails to us and, we're happy to serve you now.

Often.

Often, we give you a little peek behind the curtain about how how the sausage is made in television, how we make magic with more than money.

And a little peek behind the curtain is that on occasion, on occasion, my response back to, certain, emails is not well received.

We had one recently where a gentleman was, chastising me.

It's a fascinating word.

I don't actually know what it means, but it sounds so good.

In this conversation, he was chastising me for not being educational enough in my response to his email.

Goodness.

I often get chastised for just the opposite, trying to educate too much.

And the reality is, I don't think it's possible to educate too much.

I think there's tremendous amount of information out there, that that can be very useful.

The key is useful.

The keys are useful.

Let me give you an example.

We're coming.

We're in the the the last quarter of the year, it's year end is coming up.

Holidays are fantastic.

And then new Year's fantastic.

It goes lightning fast, but you still have a little bit of time.

And there are certain things that I could educate you about that might save you on your income tax bill next April 15th, for example, if you're still unemployed and you're under age 60, you might very well consider looking at your for one K and ensuring that you are maximizing the contribution amount that you're permitted.

So if you're between 55 and 60, you're allowed $31,000, thousands of dollars into your 41K.

Lots of folks are saying, I'm maximizing I'm putting in 5%, 10%.

It's not a percentage, it's a dollar amount.

And if you find out, check your records and find out.

Cash.

I've only put in ten.

I can put in 31.

You might very well save a tremendous amount of money by adding to your 41K at this end of the year if you're over 60, maybe even retired, but you're not yet taking your required minimum distributions.

For most folks, 73 or 75, you might be considering Roth conversions.

Roth conversions cost you a little bit of money now.

Pay me now and save a ton later.

So that's an idea that you might get some education on.

And if you are 73 or older, if you are taking your required minimum distributions from IRAs, you might consider saving money on your taxes using a QCD.

And since everybody knows what that means, I don't.

I'm kidding.

QCD qualified charitable distribution.

It allows you to send money to charities that you care about, that you care about.

You select, directly from your IRA using your RMD.

So right now you're armed these $10,000 this year and you're forced to pay income taxes on it.

And it annoys you.

You may be, contributing to your church, other, nonprofits that you care about, that same $10,000.

And if you do it directly from your IRA, no tax, no tax.

It's a beautiful thing.

Now, these are ideas.

Ideas to explore.

They don't apply to everyone.

And unless we have enough information about you when you send us your email, we don't know which might apply.

So make sure when you're sending us your questions, you're ready for a little interaction.

Interaction is a great way to learn.

Speaking of learning, let's get to it.

Let's answer some questions this evening, sir.

What do we have?

Fantastic.

What a great title.

Still married to my first wife.

That, that was curious to me to begin with.

Gentleman writes, I'm 79, grandfather of three grandchildren.

We're thinking of setting up 529 accounts for each grandchild.

One who is now in the fifth grade, one who's in the ninth grade?

One that's in the 11th grade.

Should I do so now?

My wife and I want to do what's best for our grandchildren.

I largely worked my way through school, and I believe that that negatively impacted my grades.

My wife is supportive of these efforts.

I'm not wildly wealthy, but I have done well.

I have just under 3 million in assets.

I might live another ten years plus or minus.

I'm still married to my first wife, so any input you can give would be welcome.

Well, good for you, sir.

First wife indeed.

A couple things before we answer this question.

He had to work his way through school and it may have negatively affected his grades.

But now, at age 79, with assets in excess of $3 million, I can't see where it hurt him and his abilities at all.

As a matter of fact, I might suggest if he and I were in the same room together, that he benefited by having maybe not the best grades that he could have had, but having the experience of working while being in school, being, responsible, having a work ethic, learning to juggle schedules, learning to meet deadlines, learning to do the kind of responsible things that very successful people do.

I understand lots of folks that he went to school with did not have to work, and they had a fairly, increased level of fun and frivolity that maybe he missed out on.

But it doesn't seem like he missed out on much of anything else.

And he may very well have gained so much more.

First wife at 79, $3 million of net worth.

Congratulations, sir.

You are a great success indeed.

And, part of that, I'm sure, is your spirit.

And your spirit says we want to help our grandkids.

529 plans would be fantastic.

And if they were only restricted to college, I would be hesitant.

They are not.

They are, easily available to pay for a four year traditional school.

Absolutely.

They are also available to pay for community college, for apprenticeship programs.

If someone wants to become a carpenter, a plumber, an electrician, they go through an apprenticeship program, culinary school.

They are appropriate for culinary school.

They are appropriate for so very many, different educational opportunities that would likely be able to cover whatever needs any of these three grandchildren might have.

Now, along the way, life throws us curveballs.

Maybe your grandchildren at some point today.

Really not into the educational thing.

I think I'm going to take a pass.

Maybe they say, hey, I'd like to go into the military.

I don't need the money for for college or education.

I'm going to be trained by the military, maybe given a scholarship by the military.

Fantastic.

What a great thing that they could do there.

Maybe that money doesn't go for education, but later, because 529 has some very significant flexibility to them, you might be able to use those funds to start their retirement monies, because 529 plan assets can now be used as, under certain circumstances, to fund Roth IRA contributions, you might be able to put as much as $35,000 away for an individual grandchild's, future.

And let's say you do that at 25 and they take that out 50 years later.

It is likely to double five times.

So if you've got 35,000 in, it's going to go to 71, 42, 85, 60 over $1 million.

So not only could you help them now with education potentially, but maybe, just maybe if education isn't in their cards or isn't in their plans, you end up making them a tax free millionaire at retirement.

That's a pretty cool thing.

Pretty cool thing that you're thinking about doing.

You're on the right track.

If you need help with the mechanics, make sure you circle back.

Outstanding, outstanding.

Where do we go to next year?

Excuse me, but are we really up?

Yes.

Individual rights.

I'm 68.

I have over $1 million in my pretax 401 K plan with Social security, jobs and pensions.

My total annual income is $76,000 a year.

Bless you.

Fantastic.

I live in Florida, so I have no state income tax.

Just as an aside, because our, show is, posted on the PBS website on the More Than Money website and lots of other places, and picked up by PBS systems around the country.

We have lots of viewers from all, gosh, coast to coast and border to border.

So our friends in Florida, thank you very much.

They go on to say my son is 25, attempting to buy his first home.

I'd like to help him.

I was thinking of taking out $100,000 and giving it to him as an inheritance, so he wouldn't have to pay any tax on it.

I know I will have to pay income tax when I take it out, but I was wondering what's the best way to do that and what's the best amount to minimize my tax responsibilities.

I appreciate any help since these rules can be confusing.

No question about that last statement.

They absolutely can be.

But are you really helping if you're handing your son 25 years old?

Pretty young, $100,000 that you must pay tax on.

So you might need to take out 130 or $140,000, a substantial chunk of your savings, in order to hand him a check for $100,000.

Are you really helping?

I keep coming back to that.

I'll keep coming back to that for a couple of reasons.

Number one, at 68, you are likely on Medicare.

You are likely, paying premiums on Medicare Part B, and if you take a substantial amount out of 130, $140,000, that will affect your Medicare premiums two years from now.

The rules are weird.

But following me, in two years, your premiums will be adjusted higher because of your income, because you've taken more money out.

That's added to your 76,000 year over 200,000.

And instead of paying the base premium, you will pay substantially more.

Is that really helping?

Certainly it's not helping you.

If if it's helping him, maybe, but it's certainly not helping you.

Second thing, you're 68.

If you have been following us for any length of time at all, and I assume you have, because you're sending us your questions.

You know that we invite you to become part of our club.

It's a club.

It's not exactly the Mickey Mouse Club, and it's not Sesame Street Club, but it's a club.

Triple H club.

Happy, healthy, 100 hundred.

You're 68 years old.

In my world, that's young.

In my world that says you've got to plan for about 32 more years.

And unless you've gone through, an appropriate, rigorous exercise, using sophisticated, planning tools to be able to project out where you will be when you are 78 financially, where you'll be at 88 financially, where you'll be at 98 financially, and then 100, then giving away big chunks of your money, perhaps 32 years before your graduation to the next dimension could very well end up hurting you in the long run, hurting you when you most need the money.

And is that really helping your son?

One of the things I, I assure you, would help your son is for you to live a long financially independent life, a long financially independent life, financially independent, never needing to go to him.

In 20 years when he's now 45, raising a family of his own and say, son, I'm out of money and I need your help.

Never needing to do that, never being in a position where you must go hat in hand to anyone.

That's a powerful role model that you gave your son.

Are you really helping your son by making it easy for him to buy a home?

Or maybe is it, more appropriate, more helpful, more helpful to give him just a little bit of help, for example, instead of 100?

What if you gave him $10,000 to a 25 year old?

That's a lot of money.

And going towards a house that may very well be, a lot of money, and it reduces all the negatives we just talked about.

And it encourages him to dig in, work hard, save a lot of money on his own, and add it to the start that you've given the nudge that you've given him.

If over time you want to give him a few thousand dollars a year, absolutely.

If he gets a house and it gets a little bit of a pickle and the mortgage payment some months is a little tight, absolutely.

Help out a few hundred dollars here, thousand dollars there.

Absolutely.

But to take 130, 140, $150,000 out of your million dollars of savings this early in your retirement would not be my recommendation.

Help, but help in different ways, and encourage your son and absolutely encourage your son to think creatively.

Because if all he's thinking is I had to buy a house, it's got to be big.

It's going to cost me a lot of money.

He's not thinking creatively.

There's lots of ways to buy a home, lots of ways to have wonderful homes without spending an awful lot of money.

So maybe in this case, going back to our our first observation, maybe education is a good first step.

Just a thought.

I hope that helps.

Speaking of helps, who do we help next?

There.

Yes, indeed.

There is a first time.

For our first time for everything.

Of course.

First time for our MDS.

I will turn 73 in November.

This month.

I don't know when I should take my first R&D.

I really do not need the funds.

Would like to move them from our present 41K plan and open a Roth account.

My concern is I'm not sure what my options are to pay the least amount of taxes.

If I roll over the funds in my 41K, should I roll over the entire amount and what's the best thing for me to do?

Okay, let's let's be clear.

The best thing is very, dependent on the individual.

We have some questions, some information.

But we certainly don't we absolutely don't have enough information to tell you what is the best specifically for you.

RMDs required minimum distributions.

If you're not yet in that a game, it may not mean anything to you.

It may not even catch your attention.

But once you hit 70, 71, two, you're approaching.

People really get interested in how these things work.

Now you must take your arm D by the final day of the year of the calendar year, you turned 73.

He turned 73 this month.

He must take that out in November.

December.

And I would encourage him strongly encourage him to look at taking it out as early as he possibly can manage to do that, because custodians, depending on where his money is, they get very busy at the end of the year and the IRS does not want to hear, hey, I asked them for this on December 29th and they didn't get it done, so it's their fault.

IRS says no, it isn't cheerful, so make sure that you're acting as quickly as you can to get this done by by year end.

Now, having said that, is there a way to minimize the tax?

The answer is yes, but it also includes giving up the funds.

And in this case, QCD qualified charitable distribution is something you should look at very carefully.

If you have charitable instincts, maybe you support a church, maybe it's a folds of Honor, maybe it's PBS that you'd like to support, and maybe you're already doing that if you direct your your arm d to those charities, it's not taxable.

So instead of writing the check out of your checkbook, you write a have a check written out of your IRA goes directly to the nonprofits that you choose, not taxable.

So you may very, very well end up benefiting dramatically by having, funds that you already want to direct, to nonprofits.

Do exactly, exactly that.

Now, one caveat, one, one warning, early in the email says, yeah, I'd like take the money out, put it into a Roth IRA.

You can't.

That's one of the few things you cannot do.

Can you take the money out, pay the tax and invest it somewhere else?

Yes.

Can you put it in an individual investment account?

Yes.

Can you take it out, put it in the bank and buy a CD?

Yeah, you can do it almost.

All right.

You can do all those things and lots, lots more.

You cannot put it into a Roth IRA.

Now, one thing you might be able to do, one thing you might consider doing.

You can take that money.

And let's use a simple example.

Let's say your, R&D is $15,000 and you're going to pay a chunk of money in tax, 5000 bucks, and you have 10,000 left over.

What might you do if you don't need that money, you might consider a Roth conversion, a Roth conversion.

If you're in a high tax bracket for every dollar that you take out, you have to pay.

In my case or in my example, I'm using a 33% that's too high.

But but follow my example.

So if if you have $10,000, that you're not you have no current need for it.

You could convert $30,000 from your IRA, drop it into a Roth IRA and use the $10,000 to pay the tax.

Now, two very good things have happened.

Number one, your IRA balance has dropped.

So going forward, your RMDs will actually be lower.

And number two, you've started a Roth IRA, with $30,000 that now will grow tax free and be able to be spent tax free eventually.

So it is a very interesting idea of using the net proceeds from an RMD that you really don't want to take to create a Roth conversion that might very well, over time, eliminate the need for you to take RMDs at all.

Always thinking, always thing.

It's called strategy.

That's called strategy.

Can we help somebody else with some strategy?

It's not just what it costs that counts.

Jeanne, love the show.

As soon as you compliment me, you can almost be assured you're going to hear it on air.

I'm, I'm learning that I have a long way to go.

Bless you.

I own a second home.

A, a non rental home.

No depreciation has been taken to date, so I can I am considering gifting it to my daughter.

I realize she, would not benefit from a stepped up basis.

That would be possible if I left it to her in my estate.

We'll come back to that.

What is the cost basis for the gifted house?

Would it only be my original purchase price, or is it adjusted, based on, the gift, the date of the gift?

Or is it adjusted on improvements?

I'm confused.

Hopefully you can help.

Of course I can know.

Goodness, I so rarely bring questions that I don't know the answers to.

Kind of my thing.

All right, let's think about this out loud.

Let's use a simple set of numbers as examples.

Gentleman bought the house, ten years ago for $200,000.

It's now worth 300.

He wishes to gift it to his daughter.

Can he do that?

The answer is absolutely yes.

The gift tax rules are very, very straightforward.

Not a problem in any way, shape or form.

The fact that it was not a rental, the fact there was no depreciation, there were no, business, deductions taken from it that cleans things up a lot from the IRS standpoint.

So the examples I'm giving you, 200,000 purchase 300,000 are value.

Is is appropriate is appropriate.

If it were a rental property it would not be appropriate.

We'd have to do a lot of adjustments.

In this case, we don't have to.

He's absolutely right.

If he did nothing and passed away, we don't want that.

But if he did nothing and he passed away, his daughter would inherit the house and she receives a stepped up basis to the value the date of death, $300,000.

And she could then sell it $300,000.

There's no gain because her cost basis was 300.

Sale price 300 zero.

If he gifts it to her, the 300,000 has no real bearing.

The 200,000, our purchase price, his cost basis, if he's gifting the home he's gifting is cost basis.

So her cost basis is now 200.

If she were to sell it, she has a $100,000 capital gain.

She would pay tax on $100,000 at whatever her capital gain rate is maximum, right around 20%.

Is that the end of it?

It's not just what it cost.

The answer is no, it's not the end of it.

Any capital improvements that he made in the past ten years?

Capital improvements are not maintenance.

If I painted the house, that's maintenance.

If I, had everybody, shovel the box cutter, that's maintenance, replacing light bulbs and, keeping the home up to date.

Now that's maintenance, a new roof, that's a capital improvement.

A new kitchen is a capital improvement.

All of those types of expenses would add to the cost basis.

So let's say he did a new roof at $10,000.

He put a new kitchen and not a 10,000.

He did at 30,000.

So that's 240,000 in total.

That is her cost basis.

He is gifting her his cost basis.

So from his standpoint, is it advantageous to do at my guess is that that is his his wish.

He wishes that that impact the joy of his daughter having this home while he can, while he's still, a living and able to enjoy her appreciation.

Father of three daughters and a granddaughter.

Yeah.

Nothing gives me more joy than to see them joyous.

So, should he do this?

Likely, yes.

Should everybody be very aware of the financials involved?

The answer is yes.

And using a tax advisor, certainly a financial advisor is possible.

But a tax advisor absolutely would give everybody a very clear picture of what they're entering into before the transaction occurs.

Always best, to ask permission rather than forgiveness when talking about the IRS folks, I hope you picked up a couple ideas.

I have a couple.

Those ideas really apply to you specifically.

If they weren't exactly your questions, send me those exact questions.

Make sure that Jean at ask mtm.com is part of your notes for this evening.

And whatever questions you may come up with, as much detail as you'd like to send us, that would be, very much appreciated and gives us a chance to serve you at a much, much higher level.

Speaking of serving, I hope you felt that we served you this evening enough that you become a fan, that you want to regularly join us.

Because when next week rolls around, at this time, there'll be another edition for you to view right here.

Another edition of more than one.