You've got more than money.

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

You have Megan Smell.

Your financial correspondent will be bringing you our questions this evening and just moments.

And you have an entire half an hour where you can be better informed by the time we reach our shows end than you were when you began.

And perhaps, just perhaps, a little entertainment along the way.

Goodness, that's that's the whole idea.

A little balance between information and entertainment and goodness.

I have been accused of playing a financial advisor on TV, but I really are one, so that's pretty cool as well.

I actually have laid claim in the past to having 780 years of experience.

That's more a tribute to the visual than it is reality.

But goodness, having all that experience at your behest is certainly something that you might want to take advantage of.

And considering that over those 780 years I've assembled a team in our more than money world that is second to none.

We are so very proud of our financial advisors, our entire team, our tax team.

Gosh, everybody.

They have done a tremendous job in serving you.

So if you're a loyal viewer, you knew that already.

If you're joining us for the first time, you're saying serving me directly personally.

And the answer is absolutely yes.

If you have questions that are concerning you in your life, if you have challenges that you wish you had a strategy to face, if you have observations about something that you like to share and maybe even be corrected upon, all you have to do here is interact with us.

PBS for years has been very interactive, starting with the kids and now older kids.

So very interactive.

All you have to do is send us your emails.

Gene at ask MTM, GNN and ask that allows you to share anything that you wish with us, particularly questions and goodness.

Almost all the questions that we that we answer for you are multidimensional.

Gosh, so many financial shows.

To be blunt, I think we're the I think we are the preeminent financial show.

I think we're the most relevant financial show on television today.

No matter what station you're watching, no matter what time of the day.

24 over seven 365 because of you, because you ask such interesting questions are saying, wow, I'm going to spend an hour and a half talking about stocks.

If you're not interested in stocks, it's not relevant at all.

I spent the next half an hour talking about Roth IRAs.

It may not be relevant at all if you're talking about your life, if you're talking about your family, the people you care about in love, that's as relevant as it gets.

And that's hopefully what we're able to bring to you.

I will never know as much about you as you do.

You'll never know as much about all this stuff as I do 780 years of experience, of course.

But if we bring those two things together, if we act as a team, if we work together, you share what you know.

I share what I know and bring that together.

Wow.

That's a that's a that's a pretty tough team to beat.

And I wouldn't bet against this.

So goodness our team here PBS we're ready to answer your questions Megan where do we start this evening.

Well, our first team member tonight has a little bit of a pickle.

So let's see if we can help them.

It says I own $1 million business.

And I'm about to retire.

My son, who I know won't keep it afloat, wants to buy the business.

What do I do, Gene?

Thanks.

Oh, goodness.

Oh.

Bless you.

Yeah, that's that's a question you won't find on Jim Cramer or any other financial show.

First of all, give yourself some grace.

Understand that you have options.

That's really, really important.

It it may feel like you're kind of in a corner because you want to leave.

You've built a beautiful business, $1 million business.

Gosh, people dream about that.

And your son is intending whatever that means to buy it, wants to buy it.

But your confidence in his abilities are close to zero.

You're not in a pickle.

You're not in a corner.

You are in control.

It's your business.

You own it.

It's your decision to make.

Yes, I understand that family dynamics can make this very, very challenging, in some cases awkward, in some cases uncomfortable.

I get all of that.

It doesn't have to be.

And I'll give you a couple ideas here in a moment about why it doesn't have to be, and some things that you might be able to do that, that not only might protect the business, but might protect your son and might protect your employees.

But I'll talk about that here in a moment.

The second piece of information I want you to to identify and acknowledge this is way more than money, ironically, way more than money.

This is your baby having built a business a we are blessed, a very successful business.

I understand the the dollar value of my business.

Absolutely.

What I understand even better is how emotionally invested I am in in my business, in our business, how committed I am, how proud I am, how much again, emotion is connected to my ownership of this business and what I voluntarily give anyone my son, my daughter, my wife, my granddaughter, the opportunity to destroy the business that I worked so hard to build just based because they want to know, wouldn't do it any more than I would hand my granddaughter off to somebody who says, hey, I want to be a babysitter.

I have no idea that you have skills.

As a matter of fact, I suspect you don't.

But okay.

What are you, crazy?

That's a craziest thing I've ever heard.

Wouldn't trust my granddaughter with anyone without knowing for a fact.

That's the analogy that you've got to embrace with helping your son.

And when I say helping, I don't necessarily mean selling them to the business.

Because if if you are going to give him any opportunity to succeed, any possibility of success, you're going to have to do at least a couple of things.

Number one, sit with him and be as honest as you possibly can be.

He is interviewing, in essence, for the job of running your business, and as you identify as you would identify with an outsider, anybody not related their skill sets, you need to identify the skill sets that your son brings to the table, and then you need to match them against the skill sets.

Not a bad idea to have a spreadsheet.

Not a bad idea at all.

Here's the column that has all of the skills that you currently have.

Here's the column of all the skills that we need for you to be successful in this business.

And how do they match up?

Where are you from?

Knowledge of accounting, for example, if you don't understand the numbers of your business, you don't understand your business.

If the answer is I don't.

I don't have any real accounting skills.

Excellent.

We understand that.

Let's identify that.

How about leadership skills?

How about understanding the legalities of your business?

How about understanding the operations of your business.

There are probably six seven, eight different parameters six, seven, eight different characteristics that the owner of a business has to have in order to have the chance, no guarantee the chance of succeeding.

And let's identify 789678.

Doesn't matter.

Let's identify them and match them against where this this young man currently is.

And let's say he's short on the accounting side, the operational side, the compliance side.

Three different areas.

Get him training.

Let him know not going to happen.

You're not going to own this business until I'm confident that you can demonstrate that you have these skills.

And in the absence of that, while we're waiting, if you wish to retire, great.

Hire someone to run the business.

In the interim, hire someone that has all those skills that understands that they're going to be, in essence, standing in for your son until he's in a position that he's well trained.

Understanding, of course, that may never come, that may never come.

It may turn out that with all your good intentions and good efforts, he doesn't have the skills and never will.

In which case, now you can confidently and respectfully say, we did everything we could.

It's not going to fit.

I'm going to sell it to someone else, but do all those things first.

I think that'll give you some direction.

You can be proactive.

I think your son, if he's respectful, will respect that process and understand the importance of that process.

And hopefully, hopefully it maintains peace in your family as well.

Wow.

Again, we've done this before.

Short question.

Long answer is where do we go next?

Our next question says after watching your program last year, I had two charitable gifts totaling $7,500 sent from my IRA.

I understood I would not have to pay income tax on this amount.

I received my 1099 R from Morgan Stanley and item one gross distribution shows $35,562.93.

My required minimum distribution and item two taxable amount shows the same amount.

I thought it would have been $7,500 less.

Also item to be taxable amount not determined is checked.

So I'm wondering is my form incorrect?

Thanks.

Well walking away from the obvious this is good form.

This is incorrect.

Sorry.

Walking away from that.

No, your form is not incorrect.

This is one of the reasons I wanted this.

This question on our show is that it is one of the most unsettling results from a process that's very beneficial.

So let me give you the understanding of the process.

First, qualifying charitable distribution says that if you are age 70.5 or older and you have distributions that you wish to take from an IRA profit sharing retirement plan, almost all the ones that we see are IRAs that you would like to direct to a nonprofit.

That money will go directly from the IRA to the nonprofit.

Could be a church, could be PBS, it could be any qualified nonprofit goes directly from the IRA to the nonprofit.

No tax.

You're not taking the money out first, putting it in your pocket.

That would require you to pay tax.

Take 10,000 out.

You have to pay 2000 in tax.

Now you can only have you only have $8,000 to give to your church, give to PBS, give to folds of honor, give to whomever.

Having said that is relatively recent last five, six, seven years that they've been permitted.

QCD says qualified charitable distribution says money goes direct.

You can go $10,000, 10,000.

You don't pay any tax.

This particular question asks about the R&D required minimum distribution.

This typically, if you've already been on your DDS for quite some time.

That used to be the the initiation day age was 70.5.

Now for many people at 73, and very soon it will be 75.

For some people who are born in 1960 and above.

So goodness, the the d the required piece makes this actually more palatable.

A simple example you have 500,000 in your IRA.

Your armed.

This year is expected to be 20,000.

You look at what you are currently giving in terms of your your charitable giving, your philanthropy.

Hey, I give $10,000 a church.

I give 5000 to PBS.

I give, give, give.

You can continue to do it that way.

But if you were wise and you have requiring $20,000, you would identify those nonprofits, those charities to receive those distributions from your IRA.

And now instead of getting an R&D, I didn't really want it.

I don't want to pay the tax.

You're getting an R&D, and you're using those funds to do what you're already doing and you're paying no tax.

Very, very powerful.

Very, very powerful.

Now, having said all of that, let's get back to the question at hand.

One of the reasons I rarely, I rarely my apologies.

I'm verbally racial.

I rarely include any competitors names in our questions because it just so what it could be ABC it doesn't matter in this case.

I wanted to leave in it was Morgan Stanley for a good purpose.

It is well recognized.

It's a multi-billion dollar company.

Well respected folks recognize the name and they go, would they really mess this up?

And the answer is they didn't they didn't mess it up.

There is no requirement currently, no requirement from the IRS that a 1099 R the the document that alerts the IRS that you've taken money out, there is no requirement that they identify QCD.

Now, in my world, in my mind, in your world, for sure.

That's goofy.

That's goofy.

Some of this is taxable.

Some of it isn't.

Why not identify that?

Well, the IRS theoretically is going to correct that.

We'll talk about that here in a second.

But the reality is that it's on you.

And the reason the box saying how much is taxable is in determining is because you must keep the records.

You must identify the QCD, you must self-report that you move 7500 as a CD to charities.

So yes, the taxable amount 35,000 and change is reported by Morgan Stanley accurately, appropriately.

But as it appears on your tax return, it will show as a gross amount, and there will be a deduction for the QCD of 7500.

You will only pay tax on the difference roughly 27,000 28,000 bucks.

So you will not be paying tax on the entire amount.

So now frustrating?

Yep.

Unsettling?

Yes.

Especially the first year that you do this.

If you have a financial advisor who does not give you tax advice, lots of them don't.

Morgan Stanley does not.

If you have an independent advisor that does have a tax department under the roof, they will likely have already explained this to you and it's just not a problem.

And you go, that's fine.

But for many folks, it's very unsettling.

The IRS recognizes that, at least in theory, and the IRS says it will soon require custodians to identify sheds soon.

No one knows.

No one knows.

Now, I want to extend this question just a tiny bit, because some of you listening saying, wow, I get it.

As I come up on my required minimum distribution, some of what I'm already giving my church, my PBS, etc., etc.

can be tax free for my MDS.

This is fabulous, but I like putting my check to the church in the envelope and giving it on a weekly basis.

I like being able to go to the school fair and make a contribution to the school right then and there.

I like being able to the flexibility, the ability to write the check kind of at a drop of a hat, so to speak, to a qualified charity and receive QCD status is easier now than ever before.

Until not many years ago, a checkbook with an IRA account not allowed absolutely could not happen.

Now can happen.

So you can have an IRA.

500,000 is our example $20,000 R&D.

And you could say, well, typically I give my church 5 or 6000, I give PBS 5 or 6000.

But I have some other stuff that I do.

I just don't know what it is right this moment.

Request a checkbook.

Write the checks as you wish.

It's still on you.

It's still your responsibility to identify which are QCD and which you're just writing a check to yourself so you can go spend some money.

But as long as you have good documentation and most charities are very attuned to this, anything $250 or more, they almost inevitably will give you a receipt.

As long as you have good documentation, you have nothing to worry about and it can give you tremendous flexibility.

So something to think about.

Put yourself in a strong position to make the IRS not your enemy, but your ally in helping organizations that are very valuable to you.

And and yet at the same time reducing your tax bite.

And let's let's all agree the government gets more than enough of our money as it is.

They don't need any extra.

Excellent, excellent indeed.

A lot of information there.

Hopefully you picked up on that if you have more questions of course in that email to us gene and ask MTM.

Com megs where to next.

Our next emailer wants to know if you if you approve of their idea.

This one says my father sadly passed away and I'm looking to purchase my family home from my mother who inherited it.

I plan to take out a mortgage to pay off my siblings and the small existing mortgage on the property.

I would still be purchasing the home at a 40% discount.

I've been caring for my mother and we each occupy a unit in the house.

Do you think this is a good idea, Jean?

Thanks.

It absolutely can be a good idea.

I have a little bit of angst about one small piece of this, but then I think we can.

I think we can get to a place where this is a good idea, seeing as you're caring for your mom, seeing as that obviously having passed away is not in a position to help.

Seeing as you're willing to share the home to different units.

All that makes perfect sense.

Does it make sense to leave it in your mom's name?

I think not.

That's kind of a rare position for me to take.

I think in most cases I would say to to folks that it's not a great idea for mom to to give up control of her home because.

Because what if what if something happens to her son?

But in this case, son is the caregiver.

And what would be extremely negative would be if she would lose her health, need to be cared for, Medicaid, etc.

and there were leans against a home that you live in that could be extremely detrimental.

So the idea that you are buying the house in your name, caring for your mom.

I like all of that.

Getting a mortgage to pay off a small existing mortgage.

Excellent.

Makes perfect sense.

The part that gives me a little angst is is the connection between paying off my siblings.

I don't know how many, and the fact that you would be getting a 40% discount.

I'm not sure how those are connected if they're connected because mom is willing to sell you a $200,000 house for 120, and your siblings end up getting far less than they would have normally.

Yeah, I'm uncomfortable with that.

If the other on the other hand, the issue is you're getting a discount because you're paying your siblings their full share, but you're not having to pay for your share, then that makes perfect sense to me.

Perfect sense to me.

Certainly you will need to work with a a trustworthy lender because they need to understand the moving parts here and the fact that it's not only your mom's home, but your residents as well.

But I think in the grand scheme of things, if you can make me comfortable that your siblings are being properly, properly attended to, they're getting their fair share.

I think this is a great idea and bless you.

God bless you for caring for your mom and being there when she needs you.

Well done you well done.

You make another.

Sounds good.

Our next question is about buying a car.

This one says my.

My spouse and I are both recently retired at 65 years young, but unfortunately we need to buy a new vehicle as our current one is on its last legs.

We have $600,000 in a Vanguard account with a 6040 stocks and bonds split.

I also have $1 million total in various IRAs as well, sorry, as well as $65,000 in a Roth IRA.

We plan to spend about $40,000 for an SUV, and I'm wondering if we should use our Roth money or withdraw from other accounts to pay for the new vehicle.

We have no other bills and don't want to have a car payment, so we intend to buy the vehicle outright.

Is there a pro who can help us make the right decision?

Thanks.

Well, goodness.

Let me let me go through the studio and see if I can find a pro that can help you make that decision.

Goodness.

First of all, I understand.

I understand your concerns.

I understand the challenge.

Everything seems pretty straightforward.

The only thing I don't have, what I don't have, that would make answering your questions so much easier is what your monthly budget is.

You're both retired.

You're both 65.

You are young.

Yes.

If you're going to enter our triple H club.

How healthy.

Happy 100.

You got a long way to go.

So making wise financial choices is very, very important because you've got a long way to go.

Having in essence million six.

If you're telling me, hey, we live on our Social Security, we don't really need anything else, then obviously you're in great shape.

If, on the other hand, we need in addition to our Social Security, we need, you know, a $150,000 a year off of 1,000,006.

I would say you got a real problem because that's a nine and a half, 10% withdrawal rate.

You're not going to make it triple H. You'll make maybe healthy.

I don't know about happy because you're not going to be happy being broke.

So knowing that number would make a big difference to me.

The other thing that I would suggest is that you need to be a little more mentally flexible, a little more mentally flexible.

You say, I don't want a car payment.

What if that's the best solution?

I don't want you taking money out of the Roth IRA.

Roth IRAs are tax free.

It's a relatively small piece of your portfolio if you have a legacy interest.

Children and grandchildren.

Roth IRAs, as given to beneficiaries can be immensely advantageous over an IRA or basically any other asset.

So I would absolutely not want you fussing with your Roth IRA, simply saying I am not interested in a car payment ignores some realities of life.

One of those realities of life is that if your investments are well positioned, I'm going to use very simple numbers.

No guarantees, very simple numbers.

8% return on your investments, 4% interest rate on your car loan.

You would be foolish to not borrow the money.

You would be forced to not have a car payment, because if it's $40,000 and the interest rate is 4%, 1600 bucks a month, but you had the same 40,000 earning eight, I'm sorry, 1600 a year.

If you had the same investment earning eight, you made 3200.

So you could pay the 1600 and you'd be ahead by 1600.

Saying, I don't want to use a particular financial tool is equivalent to me saying, I want to paint my house.

It's a 10,000 square foot house, and I'm going to use those little tiny artist brushes because I don't want to use a paint roller.

That's the silliest thing I've ever heard.

So don't be stuck in the mud, so to speak, mentally, by the way, it works the opposite as well.

If your investments sadly are making four, and the finance package that they're asking you to finance is is crushing you eight then yeah, you want to pay off and you're going to want to pay it off out of your Vanguard account, not the IRA.

Vanguard accounts are already taxable.

You don't want to have to increase your taxes anymore because the Vanguard account is 1099 issued interest, dividends, capital gains every year anyway.

So if you're going to write that check, you're going to write it out of the Vanguard account.

But look very, very carefully.

You may find, gosh, we've seen in recent days some cars that are available at 0% interest.

So again, you would be very foolish to not take advantage.

Speaking of taking advantage, perhaps you'd like to take advantage of 780 years of experience and an entire team of financial advisors who are admittedly, maybe even a bit sharper than I, who answer all your questions back to you.

So send those emails to me, Jean, at.

Be as specific as you wish, as much detail as you wish.

We answer everyone back and if you like our newsletter, all you have to do is request that it's absolutely free.

Come to your inbox every other month.

Folks, thanks for being part of this show.

Hopefully you'll be back next week with another edition of More Than Money.