- And good evening.

You've got More Than Money.

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

I'm offering you all of my 780 years of experience.

I understand, how can that be?

It's one of life's great mysteries.

But what's not mysterious is what makes us the most relevant financial show on TV today, and that is you.

You allow us to be the most relevant because you send us your questions, you send those to me, Gene@AskMTM.com, just the way it sounds, and we select some of those.

We can't possibly answer all of them, of course, not enough time, but we select some of those to appear on future shows.

So if you are so inclined and you've got questions in general terms about retirement or Social Security, about estate planning or naming a guardian for your minor children, or perhaps starting a business or maybe tax deductions, exemptions, etc... gosh, those are general topics.

Your questions are much more interesting because they are very specific to you.

So while we might wax on and on about Roth conversions, you will ask very specifically, "Here's my age, here's my situation, what should I do?"

And that's what makes it so very interesting.

You are the key.

You are the secret sauce that makes More Than Money so very not just relevant, but even on occasion, even on occasion, entertaining.

Because, as you see behind the scenes of people's lives, it is fascinating.

Indeed, lots of things to be fascinated about.

Lots of good questions.

We'll start momentarily.

But I make just an observation because as you might expect, as a financial advisor, I review lots of material, lots of great professional journals, lots of podcasts, lots of video sites that I check out.

And on occasion you find something that you just scratch your head and go, "Seriously?

Seriously."

And I have one of those for you.

As I came across a short item this week that alerted me to the fact that a growing trend, a growing trend among Americans is do-it-yourself... Coffin kits.

Build-Your-Own Coffin Kit.

I must confess, I found that a little surprising.

It went on to explain, of course, that coffins can be very expensive, thousands and thousands of dollars, or much more, and a coffin kit is being currently sold for right around 700.

That's pretty fascinating, but not nearly as fascinating as what you have to offer.

So let's turn to our financial correspondent.

Let's ask Megan.

Where do we start this evening?

- Hi, Gene.

Our first question tonight is nice and in-depth.

It says, "I watched an episode previously in which you "discussed grandparent options with the "529 college savings program.

"We have them for our three granddaughters.

"I'm the owner, and my wife is the beneficiary owner.

"Certainly we have every intention of happily making "these accounts available to our grandchildren "for their education, but I have an estate planning issue "for which I would appreciate your comments on "the regulations governing these accounts.

"We are both in our mid-70s, and have quite a comfortable "retirement from my military service.

"However, if I predecease my wife, she will be left "with only a meager monthly Social Security income, "and none of my military retirement benefit.

"I believe 529 funds are the property of the owner.

"I understand there is an extra tax penalty for those funds "withdrawn for other than educational purposes, "but if she absolutely needs this money for her living "expenses, can she legally make personal use of it?

"It's a difficult consideration, but I must view "my wife's comfort in her senior years above our desire "to help our grandchildren.

"Thank you so much for your advice."

- Well, you are most welcome.

And I want to thank you for being sensitive to the bigger picture.

And as a financial adviser now, with so many years in service, I am often trying to counsel, trying to point people in the direction of making sure they place themselves and their spouses as their highest financial priority.

So many, particularly widows, young ladies who come to us having lost their spouse and their intent, their highest priority is not themselves.

They want to start giving money as quickly as possible to their children and grandchildren.

And I often am in the position of trying to slow that process down a little bit to make sure that they have what all of us wish for our parents and grandparents, a long, healthy life, and fully financially independent the entire length of their life.

Getting some dollars from grandma or mom is nice, of course, but knowing that she was healthy and financially independent, not dependent on anyone else, not going, as they used to say, "hat in hand," asking their kids or grandkids for help.

That should be their highest priority.

I commend you.

You are putting your priorities exactly where they should be.

I am pleased to report that you have a very correct understanding of the 529 plans, and for lots of folks out there, they find this surprising that you can give money away and still have it.

You can take it out of your estate completely and still control it.

It's one of the very few assets where you can do exactly that.

You can set it up with the full intent, as they have, of benefiting their grandchildren, but if necessary, if necessary, mom can bring that back to herself.

Yes, modest penalty, 10%.

But depending on her circumstance, and let's be clear, if indeed she would need that money, it is highly likely that her circumstances have become very modest, that her income has become quite modest, perhaps even dropped into the zero-tax percent range, so that while pulling the money out may incur a small penalty, there may be little or no income tax.

So taking the money out still might come out at $0.90 on the dollar.

Not a tread... terrible thing at all.

I try to say dreadful and terrible at the same time.

That didn't work either.

So bottom line is, you are correct.

You can push as much money as you wish into the 529 plans.

Pennsylvania State gives us a deduction up to a limit, but a reasonable deduction, on your tax return for contributions to 529 plans.

The federal government does not, but that's okay.

They allow us to grow that money tax-deferred.

Tax-deferred, meaning we don't know yet whether it will be taxable or not until we take it out.

And if it's taken out for educational purposes, tax-free.

If in this circumstance, it comes back to mom, to grandma, then it will be taxable, but hopefully at a very modest rate.

So you understand this completely.

You've got done very, very well.

Please make sure that you enlist your wife in the same plan so that she understands exactly what your intent is and isn't reluctant to carry out these plans when the Good Lord calls you home.

Excellent.

Megan, next?

- Our next question is about the IRS, which I know those are always fun.

This one says, "I have a question about making a payment "for an estate income tax bill.

"I am the executor of my late father's estate.

"There are no federal estate tax due, but there is an estate "income tax due from earnings earned by the estate "since his passing.

"I mailed in both his personal income tax form and the estate "income tax form with the banking information for direct "withdrawal from the estate account.

"I couldn't e-file either return.

"I am thinking that maybe I should have either sent in an "estate check with the forms, or maybe made the estate "payment online to the IRS.

"I don't want to get a notice of a penalty for late payment "because they are so behind in handling manual forms.

"My thinking is that they wouldn't have cashed in a check "until they opened the envelope anyway, though.

"What do you think?

Thank you in advance, "and also, thank you for your awesome weekly show."

- You're very, very kind.

And you're very detailed.

Good for you.

Good for you, for folks who have never gone through this, resolving an estate, even a modest estate can be very challenging, both emotionally, of course, spiritually, perhaps, financially, for sure.

And these kind of seemingly simple questions are not simple at all.

This young lady has exactly the right concern.

If I send in a check and they don't open it, they haven't cashed the check, I'm penalized because they didn't "receive it".

And we say, "Oh, please, it's the IRS.

"They're pretty efficient."

No, they're not.

No, they're dreadful.

They're dreadful.

And the idea that has recently been, what proposed of adding 80,000-plus IRS agents, good!

Maybe they can do their job now, because at the moment, they're not.

At the moment, even a professional tax preparer, if they need to reach the IRS, will make a phone call and be prepared, be prepared for sitting on hold for an hour-and-a-half to two hours before they speak to someone.

And have been told more than once, "Yeah, it's probably here.

"It's probably sitting on somebody's desk.

"We haven't opened them."

And yet, the computer automatically sends out the "you owe us more money" stuff.

The letters go out automatically because it wasn't entered into the computer as received.

So the IRS is sitting back on, "We'll talk to you when we want "to talk to you, when we get to you.

"If we don't open it, it's still your fault."

So what you did is logical.

Will it prevent the letter from going out?

Nope.

I'm sad to report that if they have not opened these returns, it won't matter that you're paying electronically because they won't have identified that you're paying electronically.

Once they open the returns, paying electronically works very well.

It's likely the better way to go.

It's likely the way I would have recommended that you go, just to keep things as clean as possible.

And the fact that you had an estate account set up so that this isn't interfering with your own personal financial accounts?

Perfect.

You have done everything that you have in front of you.

You've done it all correctly.

Now, the only thing I can add that you should do is, a little, pray that they get it, get it squared away, and there's no more fuss or muss.

I confess, I'm not confident.

That's why the prayer.

Ah...Megan, the first answer was so good.

The second answer?

Not so much.

Maybe we'll meet in the middle on this one.

- I think we have to pray ourselves.

This one says, "I am 68 and retired, currently not taking "any distributions from my retirement accounts.

"I know how to handle distributions from my "traditional IRA to calculate the taxable portion "of distributions.

I plan on starting distributions other "than Roth conversions when I am 73 and need to take RMDs.

"My 401k has about 4% of after-tax contributions.

"My question is, do I handle the distributions from the 401k "the same way as the traditional IRA with respect to "calculating the taxable portion of the distribution?

"I couldn't find any information on this question "on the IRS website.

Thank you for your help."

- Very good.

There are a couple of pieces of this question that I think some folks watching are scratching their heads, going, "I'm not clear why he would need to calculate the taxable "part of his IRA distribution.

"Isn't that always 100% taxable?"

And the answer is, it's 98% taxable.

Always taxable.

That didn't come out right, but you know what I mean.

There are, from decades ago, some remnants of IRAs where the contributions had already been taxed.

So some small piece of that is coming back to the taxpayer without tax.

I'm not reading this email, hearing this email that way.

I'm hearing this email as this individual wants me to know that they're quite capable of understanding that everything that comes out of their IRA is taxable.

I think that's what they meant by the word "calculate".

So if you're taking money out of a standard IRA, pretty simple, it's all taxable!

The 401k is a very different item.

And again, the 401k description is causing some people out there, some of you perhaps to say, "I don't get that.

"401k contributions are tax-deductible when they "come out, they're taxable, just like an IRA."

Not really.

And in this case, the number drops to about 70% because there are many, many people who have used within the 401K, they have used several pieces.

The standard 401K, tax deductible during your lifetime.

Taxable when you take money out in retirement.

A Roth 401k, which is not tax deductible when you make the contribution and not taxable when you retire.

That might be the 4% he's talking about.

Or many years ago, decades ago, there was an opportunity to put into your 401k more money than was "allowed".

Allowed, meaning there is a maximum you could put in and get a tax deduction.

But if you wanted to save more for your retirement, you could, and you could put in excess, it would not be tax deductible, and when you retire, it would not be taxed.

Hmm.

Interesting.

Bottom line is, in this case, it is a one of two choices that this individual can make.

You can have this be nettlesome for the rest of your life, or you can clean it up once and never worry again.

I'm thinking you're going to want the second choice.

So how do we clean this up?

We identify that 4% in the 401k that is either a Roth or an after-tax contribution.

And we peel that out, we split that off from the 401k and drop it into an IRA.

You can certainly rollover over your entire 401k as long as you do it into those two pieces.

But it's not even required that you do that.

Can you keep everything in your 41k just the way it is?

If that is your preference, if that meets your needs, sure.

And just peel out, just roll over the 4% that is nettlesome.

Now, when you take your 401k distributions, 100% taxable.

Now, when you take your distributions from your rollover IRA, if it's a Roth, 100% tax-free, if it's after tax, there will be a percentage that can be easily calculated.

So make your life simpler, easier.

Make sure that you look at your 401k, split that piece off and drop that into a rollover IRA.

And while you're there, take a close look at your 401k investments and see if they still meet your needs.

If you're looking at them going, "I really like them, "I'm getting good returns, the fees are really low, "I've got no reason to leave," leave it right where it is.

If, on the other hand, you're going, "Last year really stunk and.

this didn't do any better "than the markets so I'm really not gaining any advantages," or perhaps your needs have changed, or your goals have changed now that you're in your late-60s, perhaps you would like to carve out a piece of this 401K and put it into something that's not available in your 401k, like a SPIA, Single Premium Immediate Annuity, where you can generate immediate income, perhaps a variable annuity with guaranteed lifetime benefits, perhaps buffered ETFs, Exchange Traded Funds, that have options that provide downside protection, perhaps CDs, currently, gosh, way over 4.5% for short-term CDs, FDIC-insured, structured notes...

There's an extensive list of investments that may not be available in your 401k that if you looked carefully, you would say, "I would rather be in those types of "investments than rolling the entire amount into a 401k and "to an IRA, splitting it from the standard and the Roth," and you're off to the races.

So just something to think about if you're looking at, gosh, mechanically, how do we do that?

Make sure you sit with a trusted financial advisor experienced in these things, should take just literally less than an hour.

Easily done.

I like the "easily done" wrap-up to a very complicated question.

I hope I helped.

Megs, can we help somebody else?

- I think so, I think our prayers worked pretty good for that last one, too.

This one says, "I am a retired federal employee.

"My wife and I currently meet our expenses with my pension "and thrift savings plan savings.

"She has a traditional IRA account with a "$178,000 balance.

"She has eight years before she'll have to start RMDs.

"We're wondering if it would make sense to start converting "this to a Roth IRA?

"If we started converting $25,000 per year, most, "if not all, of the balance would be converted prior "to RMDs kicking in.

"In our current bracket, we'd be paying 12%, "$3,000 in taxes per year on the converted funds.

"We don't think we'll need to make withdrawals from this "account for the foreseeable future, as my pension and "other savings should meet our needs.

"Would this make sense for us?

Thank you for your help."

- Yes.

Next question.

No, I'm kidding!

You have thought through this beautifully.

You have really thought through this wonderfully well, very accurately, very correctly.

The idea in the scenario that you've laid out fits perfectly for this idea.

The idea is, do you have enough income to cover your expenses?

You answer, "Sure.

Yes, we do.

We're absolutely fine."

Do you need the cash flow from this IRA?

"Currently, no, we absolutely don't."

And we've got eight years.

So we've got a good long period of time before your wife is forced to take the money out.

And when you're forced to take the money out currently at age 73, it also blunts your ability to do the Roth conversions.

So this is a ideal time, ideal scenario, and then, you want to put icing on the cake.

I think carrot cake is right up there, really, really good.

If you want to put cream cheese icing on the carrot cake, yes, 12% tax bracket.

That is a beautiful tax bracket!

You've already taken a look at the tax brackets you're in.

And by pulling out in this case, it's going to end up being 20,000 or so, it keeps you in that 12% bracket.

I believe you will always look back and say, "That was a really good idea."

Even if the brackets stay exactly the same for the rest of your life, I still think you'll look back and say, "That was a really good idea, gave us lots more options.

"We paid a little extra tax upfront, but we saved a ton on "the back end in terms of the Roth distributions."

And potentially, you'll never spend the Roth distributions, and that'll end up going to your heirs, and they won't have any tax.

I am impressed.

I'm very impressed with your thought.

I'm very impressed with your vision, how you're integrating your retirement planning with your tax planning.

I bow to your superior strategy.

I think it's fantastic, and make sure you do that.

If you have questions about the mechanics, and sometimes that can be challenging, some IRA custodians make it so easy, and others make it really, really hard.

So if you have any questions at all, please follow up with an email.

We can just tweak that and make sure that mechanically, logistically, you're on the right track.

But gosh, from a strategy standpoint, well done, sir.

Well done, indeed.

Wow, that was really good.

Megan, let's see if we can continue on a high note.

- Our next question says, "My wife turned 64 in September "and retired end of October.

"She left with a monthly pension of $441 and a "vacation pay that takes her to January.

"Social Security estimates are $1,585, January 23rd, "and $1,877 at Fri, May 25th.

"Break-even point appears to be at age 60-76-and-a-half.

"She is leaning towards taking the earlier date.

"Could you please offer your opinion on this?

"We really enjoy your program and appreciate "your sound advice."

- Well, you're very kind.

My opinion is has two parts.

The first part is, I'm concerned that your numbers are incorrect.

That's my concern.

My concern is that the differential over a very short period of time appears to be $300 a month.

And Megan, I'm looking at the numbers you gave me, $1,877 if she waits, $1,584 if she doesn't.

If for some reason I've got those numbers right, speak up now or forever hold your peace.

- Nope, you're good.

It's $1,877 and $1,585.

- Very good.

Perfect.

So tremendous difference, very short period of time.

In my experience, that doesn't make a lot of sense.

There may be a reason that I'm not familiar with, and if that is the case, then taking her money now, January, February, whatever, and giving up $300 a month, $3,600 a year for the rest of her life, plus cost of living, that's a dreadful idea.

And I get, "Break even at 76, so?

"I'm not really impressed by that."

The only thing that would cause me to hesitate this much, and less than half of 1%, is that if your wife sadly has dreadful health and doesn't expect that she will be with us for very long, if that's the case, take it now.

Spend it, spend it, spend it.

But if that's not the case, if she has a normal life expectancy, even if break-even is 76, her normal life expectancy is another nine years beyond the break-even.

That means she's going to make a ton of extra money.

So if these numbers are correct, please wait.

Please wait.

Please wait.

And by the way, you may have noticed, if you're watching our show for the very first time premiere airing, that these dates are kind of behind us.

It's because some emails come in and they don't air until after some deadlines, in this case, if indeed they have already taken the Social Security, and if indeed these numbers are correct and they hear me and they go, "Oh, we messed up," there is a do-over.

If you make a selection from a Social Security standpoint and you've made an incorrect selection, so to speak, you have a 12-month window to request a do-over.

So if, indeed, you've already done that, then make sure that you request your do-over and do it over.

Megan, a short one to end the show?

- I think so.

This one says, "I just watched an episode of your show where you advised "one writer about getting a good financial adviser, "estate planning attorney, or tax professional.

"I'm wondering, how do you go about finding this person?

"I've recently been talking to two financial planners, "and their fees are 10% of my portfolio.

"I think that's a lot of money.

"Also, the man who handles the buying and selling on "my portfolio has offered to give advice.

"My will was written about 15 years ago, my sister is "the executor and only heir.

"I have a living will, but no power of attorney.

"I've been told by friends that my preparations for the "disbursement of my fortune on my passing and the results for "my sister and the government are woefully dismal.

"Who should I go to get advice?

"And how can I find a reliable, honest person?

Thank you."

- It is a challenge.

There's no question about it.

More Than Money, advisors, of course, serve their clients at a very high level and very trusted.

My recommendation to everyone with the same concern is referral.

Talk to people.

Talk to friends of yours that are in similar circumstances.

See who they use.

If you're looking for a financial advisor, talk to your attorney.

See who he or she might recommend.

If you're looking for a CPA, talk to your financial advisor.

See who he or she might recommend.

You see the idea.

And if you don't have any of those, talk to somebody perhaps in your church.

Maybe social hour after Sunday service is a good time to talk money and get a good referral.

Talk to two or three.

Follow your intuition, and pick one that you trust, and then follow their lead.

Speaking of following their lead, you've got to follow our lead maybe to the next show.

We've just got seconds left in this edition of More Than Money.

I hope you learned a lot.

I hope you picked up some ideas that are useful right away.

But if they weren't specifically useful to you, send us your emails, Gene@AskMTM.com.

Ask the questions that are specific to you, because we want to answer those live on air and continue to be the most relevant financial show on television today.

I hope you'll return.

I'll be back here right behind this desk next week when we have another edition of More Than Money Goodnight.