- And good evening.

You've got More Than Money.

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

What a pleasure to be with you this evening.

It's always a pleasure to serve you and answer your questions because you are the reason that we are the most relevant financial show on television today.

Bar none, coast to coast, north and south, we are it, and we are it because we're answering timely questions that you are asking.

So how much fresher, more relevant can it possibly be than taking it right off the vine, taking a big juicy bite and then digging in and helping you get from point A to point B?

It might be a retirement question.

It might be Social Security or Medicare.

It might be an income tax question, deductions and exemptions and 401(k)s and Roth IRAs.

It could be an estate question.

Gosh, guardianships, "Who will take care of my children if I'm not here?"

It could be an executor question or a settlement question or business.

Gosh, we answer lots and lots of questions about how to set up a business, how to start a business, how to run a business.

And then maybe even, as we have on many, many occasions, help folks liquidate a business so that they can transition into that part of their lives that they have been looking forward to, that retirement era.

So, fantastic, great opportunities for us to be of service.

You honor us with your email.

So if you are out there going, "Emails?

"This is new to me", all you need do is frame your question in an email, send it to me, gene@askmtm.com, and our entire team is at your service.

And when I say team, our More Than Money world headquarters is packed full of really, really smart folks who are there to help.

We answer every single question back, every single question, even the silly ones, even the ones who, folks, are not very cooperative, even the ones that are really, really hard.

We answer all those questions back to you.

And if, I would say, if you're lucky, we select your question to be part of a future show.

As a matter of fact, we're going to show you exactly how that works just in a moment or so.

And when we do, you'll be greeted by our financial correspondent, Megan Smale.

And, Megan, we'll start our show with...?

Megan, what's our first question?

- Hi, Gene.

To start our show off, we have not a question but two comments.

This emailer says, "First, I enjoy catching your show.

"I've learned a lot and just today worked "with a financial advisor to transfer "an existing lower interest annuity via a 1035 exchange "to a much higher interest rate "good for the next three years, when I can reevaluate.

"Second, recently, you focused on how important it is "to accomplish gifts in a timely way because of, "for example, estate consequences, "if death happens before a donee cashes a check.

"I enjoy giving our adult children "a couple of monetary gifts annually "for their birthdays and Christmas "but gave up a long time ago thinking that "these millennials would prioritize cashing my checks.

"We all have USAA bank accounts, "and now I simply transfer the gifts electronically.

"This is way easier and much more efficient.

"Thank you for your educational and helpful program."

- Well, no.

Thank you for your educational and helpful email.

Wonderful suggestions, excellent suggestions.

And, Megs, don't take it too personally, the whole millennial thing.

It's kind of... And the reality is that there are different generational approaches to money in general.

So this young lady's experience with, "Here's the check, here's the money, please cash it."

and then months later, it's not cashed, this is not unusual.

This is not something that we, as a little more senior folks, have found, gosh, shocking.

It's not.

What a wonderful suggestion.

You eliminate all the problems by that electronic transfer.

The fact that they're all with USAA, very, very fortunate.

Most folks are not that fortunate, but I'm certain you can still do electronic transfers.

I'm sure you can do Vendpal or Paymo, or... Megan's laughing right now.

I did it intentionally.

I get it, I get it.

I'm sure that there are electronic ways where you can just Venmo the money, and all of the sudden, it's there and life is grand.

But wonderful suggestion.

Outstanding suggestion.

You also made another suggestion without even intending it.

I don't think you intended, but you did.

And it's a very useful one.

You mentioned exchanging from an annuity that had a lower interest rate to one that had a higher interest rate locked in for the next three years.

Lots of folks who have had a vaguely negative sense of the word annuity or have had annuities in the past for many, many years and kind of maybe let them go to the back burner, they don't pay as much attention to them as perhaps they should.

Annuities have changed radically in the last 24 months.

Interest rates that even 24 months ago, for a short period of time, a three, four or five-year period, were at 1.5%, 1.7%, 1.8%, are now at 4%, 4.5%, 5% or higher.

So if you have an annuity and you don't wish to cash it in, so to speak, you certainly don't wish to pay the taxes if you don't have to, you can exchange from one, tax-free, into a new annuity that perhaps - obviously, do your homework - will offer you a higher interest rate.

And even if you're going from a 3% to a 5%, two extra percentage points, in that case, is 40...

..I'm sorry, is 67% higher income than what you're currently getting, two more points over 3%.

So, simple math, big numbers.

You should explore it.

If you have existing annuities and you haven't looked at them in some time, this excellent suggestion says you should.

If you have them and you're going, "I don't know what it is, "I don't know how to read this," they can be confusing, they're very challenging, make sure you reach out to us.

We have partners that can analyze any annuity, tell you exactly what you have and tell you exactly what your options are, either to stay put and enjoy what you have or to go elsewhere and maybe, maybe benefit even better.

Excellent suggestions.

Our audience not only relevant, super smart, really helpful.

And, look, always trying to help our entire audience, not just saying, "Hey, I'm okay, "I'm just going to keep it to myself."

I appreciate that very much.

And as you listen to our shows, if you're going, "Hey, you know what?

What Gene said was good..." Obviously you're going to say that!

"What Gene said is good..." "What Gene said is very, very good, "amazing, like almost genius, "but here's a little extra, here's a little something," just as this young lady did.

We appreciate that.

Anything that helps our audience, we're all in.

Speaking of helping our audience, let's help somebody else, Megs.

- Well, I was laughing when you said that I was laughing about your comment, but I'm also very impressed that you knew Venmo and PayPal enough to reverse them and make a joke.

- Thank you.

- And I also love going to the bank to deposit checks, unlike other people, because the tube is so fun.

It's the whole... - Sucky tube!

- Yeah, the sucky tube.

It's the best.

Our next question tonight says, "I have an old 401(k) "that keeps getting kicked around from pillar to post "with different firms.

I'm getting tired of that "and would like to have a local professional "money manager and fiduciary "see if they can achieve some fast growth.

"It's a pretty good chunk of change.

"I am 63 and a half.

I really like what I do.

"I do IT support in support of cancer research.

"And while I try to cut back to PT, "I'm the type who would get bored in full retirement.

"I don't golf, but I do love to fish.

"Thank you for your help."

- Well, lots of good information there.

First of all, IT support in support of cancer research, god bless you.

Our prayers are with you.

We want you to be skilled.

We want you to give them all the support they need, make advances.

Just in my lifetime, what we've seen happen has been miraculous.

Folks who even a generation or two ago would have been lost in short order now living long and productive lives.

Fantastic.

Good for you.

And, yes, retirement, full time retirement, going home, sitting on the Barcalounger, popping a can and watching Oprah, not healthy, not a great idea, in my opinion.

Obviously, you would agree.

Part time, yeah, that works out really well.

Give you a little extra time to move around, perhaps, a little fishing time.

But I get your point.

401(k)s that have been kicked around a little bit, they need attention for two reasons, one that you've already mentioned, "Hey, we're not really getting the kind of attention, "we're not really getting the money management "that we're hoping for."

And the word fiduciary, we'll circle back to.

Very, very important.

So that's the first reason.

So, yes, sit with a trusted, experienced financial advisor that can take charge of this 401(k) and help you in so many other areas of your life.

At 63 and a half, you're still working.

You have not yet faced Medicare choices, options.

You have not yet faced Social Security choices, options.

You have not yet, maybe, completed your estate planning documents or reviewed your insurances or thought about long term care.

And a fiduciary, a financial advisor who is both legally and morally bound to act in your best interest, will not only manage the funds inside of a 401(k) wonderfully professionally, to their best result, in your best interests, but they will offer all these other services as well to advance you, to get you going in the right direction and keep you going in the right direction.

63 and a half?

Sadly, you may only have 35 or 40 more good years on this planet.

From my lips to God's ears, that'd be fantastic.

And if that is true, this is not a, "Hey, can you get that squared away "and I'll call you later?"

No, this is a 35, 40, hopefully longer relationship that you're looking for, so pick your advisor carefully.

The other issue that I referenced in passing was our experience that in many cases, more than you would think, these 401(k)s that have been kicked from pillar to post are lost, somebody forgets they have it.

Somebody doesn't get their statements in a timely fashion.

Perhaps there's a glitch with the 401(k).

The address gets changed.

Nobody notices for years.

It ends up being sent off to the unclaimed property part of the state of Pennsylvania or whatever state that you're in.

Or if passes away very unexpectedly and their beneficiaries are not aware that there was a 401(k).

So, easily lost.

Having a relationship with a financial advisor you trust, teaming up with that financial advisor, also gives you that added layer of protection for your family, for yourself and your family, that assets that you worked very hard to accumulate won't be lost, won't be pillar to post lost in the shuffle.

Can't have that happen.

Can't have the government end up with even an extra dollar that they don't deserve.

So you're on the right track.

And, of course, if you need referrals, make sure you reach out to us.

We'll do everything in our power.

Excellent.

Very, very good.

Megan, what's next on our agenda?

- Our next email says, "Hi, Gene.

"I love to watch your TV show "and I will listen to you on Saturday mornings "when I get the chance.

"My question for you is what would be a good Vanguard fund "to invest in this year?

"I have roughly $70,000 invested in the health care fund.

"I would like to stay with Vanguard to keep things simple.

"I am 67 years old and still working, "so I would like to invest the max "in a better performing fund.

What would you suggest?"

"Thank you in advance."

- Well, thank you very much for the kind words.

And for lots of folks watching our show, Saturday mornings, yeah, there's a More Than Money radio show as well, so check us out on our website.

You'll learn all about that.

Bottom line for this gentleman is... His question seems so simple.

And with Vanguard, what would be a good fund?

Hmm!

I'm going to give you an analogy.

It sounds a little dramatic, but it's not.

It's very appropriate.

"Hey, doc, what kind of drug do you think is a good thing "for me to have?"

The doctor would look at you quizzically because you're asking the wrong question.

You must start with, "What am I attempting to accomplish" - in a medical case - "what health impact am I looking to have happen "with any drug or treatment?

In the financial world, it's, "What do you want this money to do for you?"

Because your definition of what would a good Vanguard fund be might be very different than my definition.

It certainly, at age 67, would be very different from perhaps a person who's asking the same question, exact same idea, but I'm 37.

It absolutely would be different if you are immediately retired or you need income for your retirement or if your plan is, "I'm going to work until I'm 77, "I don't need the money for ten years.

"Let's make sure that we push this off "and we don't have a lot of taxes along the way."

So you see where the question, as simple as it appears to be, is nearly impossible, in my opinion, professionally impossible, responsibly impossible to answer without more information.

My phrase, it depends.

One that I use quite a lot absolutely applies here, "It depends."

I'll make it a little more "It depends"-able... You'll figure that out.

I'll make it a little more palatable, in terms of what direction I would take with a typical, "Here's my $70,000.

"I want to stay within this family of funds."

My opinion not necessary, but okay.

Keep it simple.

I would not pick one fund.

If I did pick one fund, it almost inevitably would end up being a... ..not a bland fund, but it would have to be very middle of the road-ish because we don't know over time what direction the markets will go, what direction interest rates will go, what direction inflation will go.

So if you're picking one fund, it kind of has to be all things to all people.

Now, fortunately, Vanguard has a fair selection of those kinds of funds, whether it's a balanced fund or whether it's a target date fund.

But the reality is for most folks, for most folks who have asked this very similar question, I would say there isn't one fund.

As good as Vanguard is, there is no one good Vanguard fund.

There are good Vanguard funds that do many different kinds of things, and I would tend to blend them together.

I would tend to look at 70,000 as probably... ..somewhere, five, six, seven different pieces and I would use five, six, seven different funds to create, to craft a portfolio, not a fund, but a portfolio of funds, all of which are contributing in some way, shape or form.

So I may have a piece that's a large company value stock fund, I may have a piece that's a mid-size fund, I may have a piece that's an international stock fund, I may have a piece that's a commodities fund or a precious metals fund or a real estate fund.

You get the idea.

Lots of different flavors of investments blended together so that the end result is really, really pleasing.

And not having all one's eggs in one basket is likely, in almost every case, a really good idea.

So exploring this not as a on-off switch, I want to either say yes or no to a fund, but as a smorgasbord, and you've got your plate and you want to pick out five, six, seven different items from the smorgasbord, obviously nicely balanced, obviously flavors that go together well and flavors that fit you.

Very, very important.

That's the key issue.

Anything that you pick has to be helping you reach your financial goal.

So in this particular case, as we answer back this gentleman, what do you wish this money to do for you?

And the issue of simplicity can be satisfied by having everything at Vanguard.

It can also be satisfied by having everything in a brokerage account, where you might invest in Vanguard, you might invest in T Rowe, you might invest in Treasury bills, you might invest in CDs, you might invest in a whole universe of investments, not all of which are available through one fund family.

Good question.

Good for you.

Stay on top.

And if you need a little extra help, obviously reach out.

We'll be glad to help.

Excellent question.

Megan, an excellent one in the wings, I'm sure.

- Our next question is short and sweet, but we'll see if the answer is.

It says, "Are Roth IRAs also taxable "to the beneficiaries?

Thank you for your help."

- Yeah, Roth IRAs, even though they've been around for a long time now, still bring a lot of confusion, misunderstanding, concern.

In this particular case, the question is, "I have a Roth IRA.

"It's tax free, should I take that money out."

"If I pass away and I leave it to my three daughters, "will they pay taxes?"

The answer's no.

Is that always the case?

The answer is no.

There are serious rules around how Roth IRAs are...mechanically, how they're handled, how money gets into them, how money comes out, how long the money has to be there before it is fully tax free.

What things can be done with an inherited Roth?

What things can't be done with an inherited Roth?

For whom will the inherited Roth IRA be tax free and for whom won't it be?

So this is a very short question with a lot of components to it that, all of which - virtually, all of which - will be answered by the question, "Who's your beneficiary?"

Not "Who's your daddy?"

"Who's your beneficiary?"

Because Daddy leaves it to three daughters tax free.

If the beneficiary is outside the family, it may or may not be.

So you've got to look very, very carefully at how you construct these things.

Lots of folks are aware they need an estate plan.

Lots of folks are aware a will, for sure, power of attorney, medical directive, maybe even a trust.

These are all valuable tools.

But inside your estate plan, there also must be very important, very serious attention paid to the investment accounts that you have and how they're structured.

From an IRA standpoint, who is the beneficiary and is it the correct beneficiary?

If it's an annuity, same idea, beneficiary designation.

Life insurance, beneficiary designation.

401(k)s, 403(b)s...

There are so very many pieces of your investment puzzle that are determined in your estate by the beneficiary, not by your will, not by your will.

And we have on occasion bumped into that situation with a family where that shock - shock being the correct word - is the realization when they read the will and everybody got smiles because they all got a slice of the pie, "You get this, you get that."

Ten people get 10% apiece and they're already spending the money, only to find out that all the assets, all the major assets - annuity, IRA, Roth IRA, joint account with joint tenants, with rights of survivorship or transfer on death - everything has already been sent out to the beneficiaries.

What comes into the estate is very little, in some cases absolutely nothing, so a good estate plan set up to send out a lot of money to a lot of people might very well be empty.

Fascinating.

You didn't think I was going there when it was a one-line question about "Are...tax free Roths taxable?"

But there you go.

Megan, what's next?

- I knew you would surprise me.

This question says, "I really like your show.

"I think the inheritance tax in PA is 15% for non relatives.

"I'm wondering, can someone who is leaving their estate "via a will to a non relative "avoid having the beneficiary pay this tax "by adding the beneficiary's name on the assets?

"Would that be sufficient or would the joint with rights "of survivorship on the accounts be a better way?

"Please advise.

Thank you so much."

"Okay.

Goodness.

There's a little bit to unpack here.

So, yes, if my estate is going to my best friend, first of all, my wife might have something to say about that.

I'm sure my girls would.

But bottom line is, I want to send it to my best friend.

No, I'm not going to say who is my best friend is, because that's going to make all my other best friends really angry.

No, we're okay.

I'm going to send it to my best friend.

He or she is going to pay $0.15 on the dollar Pennsylvania inheritance tax.

Unless my estate is over $11 million, there's no federal tax.

If it is, there's federal tax as well.

So this individual is saying, "Wait a second, is there a way "around that?

If I have this account "and I take my best friend's name and I put it "as transfer on death, "does that eliminate the tax?"

No.

If I make my best friend a joint tenant with rights of survivorship - translation, I give him or her half of my account... Let's use real numbers.

Let's say we have an account that's worth $200,000.

Our first attempt to avoid estate taxation is to name a transfer on death designee, in this case my best friend.

Does that help?

No.

No.

The account is still included as the estate asset, as an estate asset on the estate inventory for reporting for Pennsylvania inheritance taxes.

So the entire amount, $200,000, is taxable - 15%, 30,000 bucks.

Joint tenants' rights of survivorship is a little different.

It says, "We're enjoying tenancy."

I am in essence giving my best friend, while I'm alive, half the account.

So during my lifetime, I set it up so that now we're both on the account.

We both own the account.

And with rights of survivorship means, when I pass, it automatically goes to him or her.

When he or she passes, it automatically comes back to me.

Rights of survivorship means the survivor is the person who gets it.

It does not go outside those two people.

Is this going to help?

The answer is, yeah, it's going to help a lot.

In essence, then, at my passing, I only have $100,000 in my estate.

The first 100, I've already given away, because I have added this person as an owner to my account.

I have made a gift.

As a result, my 30,000 - his/her 30,000 check - is now 15,000.

Pretty cool.

Pretty cool, indeed.

Nice way, easy way to save a lot of money.

Hmm.

Why wouldn't everyone do this?

Well, there are some risks.

My best friend now has ownership of my account.

And if my best friend were so inclined, could he or she take the money and run?

Yes.

Legally.

Could they give instructions to my investment advisor and mess the whole thing up?

They could.

They absolutely could.

So, obviously, the idea, very good idea to save money on estate taxes, needs to be tempered with a very realistic, very honest assessment of what the risks really are.

Is it possible this person will take the money?

Is it possible they will go through a divorce and have to give up money?

Is it possible they will be sued and have to give up money?

Is it possible that they will declare bankruptcy and have to give up the money?

The answer is sure.

The risks of all those things are either very large - "Don't do it" - very, very tiny - "Sounds like a good idea" - or somewhere in the middle.

And these are decisions you have to make.

We had some really, really good questions this evening.

I hope you learned a lot.

I hope it kind of stimulates some ideas for you that you can apply in your own life.

But if it didn't, tonight, stimulate the idea or provide the idea that answers your questions, send me your questions.

Allow us to continue to serve you and continue to be the most relevant financial show on television today, coast to coast and north and south.

gene@askmtm.com.

G-E-N-E @askmtm.com works beautifully.

We promise we'll answer your questions back to you and help you in any way that we are able.

Thank you so much for spending part of your time.

I hope you enjoyed it at least enough that you'll come back and join us again when we're here behind this desk on our next edition of More Than Money.