OTM Transcript for website: TRANSCRIPT FOR THE JULY 29, 2017 “ON THE MONEY” SHOW

Hosts:  Aaron Bert, CFP®, AIF® and Joe Bert, CFP®, AIF®

Well, good Saturday morning to you, everybody, I am Kyle Fitsantra and this is On The Money with a Certified Financial Group here on News Honey 65, WDBO’s Ask the Experts Weekend.  It’s a family affair today, Joe Bert and Aaron Bert are here in the studio taking your phone calls at 844-220-0965.  Good morning gentlemen.

Good morning.

Hey, how’s it going?

How are you guys today?

Okay, how are you?

Did you miss me?

We did?

On vacation?

Yeah, you were gone.


<Inaudible> did a good job <Inaudible> but we’re glad you’re back.

Alright, well appreciate.  Well, even though Laurel was here and even though I’m back, the experts are still who they always are and they’re still taking your phone calls and text questions.  Joe, what can the audience call you about today?

Once again, Aaron and I are here to take any calls that might be on your mind regarding your personal finances as we oftentimes say, we go through life trying some of this, trying some of that, wake up at age 55 years old and find out what we have is a collection of financial accidents and one day those paychecks stop and you have to turn hopefully to savings and investments that you’ve accumulated over your working lifetime into a steady stream of income.  How do you do that?  Well, that’s what we do day in and day out, Certified Financial Group for a fee, but on Saturday morning, we are here absolutely free.  So if you have any questions regarding your personal finances, what you need to do now so you don’t look back five or ten years from now and say gee, I wish I would have known or gee, I wish somebody would have told me.  That’s why we’re here this morning.  So if you have any questions about your personal finances as they revolve around questions on your mutual funds, about your 401k, about your IRA, about stocks, bonds, real estate, long-term health care, IRAs, annuities, life insurance, reverse mortgages, or anything like that, we are here in the good news for you, the lines are absolutely — well I should take that back — we already have a call, but we still have a lot of lines.

Yeah, we’ve got plenty of lines.

All you have to do is pick up the phone and dial 844-220-0965, 844-220-0965.  Text machine is up and running as well.  21232.  Just keep it about 160 characters, that’s all we can see on our screen.  21232.  Today’s topic, kicking it off today: What you need to know before you apply for Social Security.

Well, Social Security is a very, very important part of retirement planning because it is for many people the only source of what we call guaranteed income.  Now, despite what you might hear in the newspapers or reading newspapers or hear in the radio or television about the demise of Social Security, Social Security will be there and you have to plan for what that means to your retirement income and what you need to do to get the maximum benefit that you possibly can.  What Aaron and I see oftentimes people make the wrong decision and they claim too early or don’t claim when they should claim, and forgo a lot of benefits and one of the major things is is claiming at age 62 when maybe you don’t really need to.  Some people think well, I’m going to get it now because I’m not — <Inaudible> I think it will be there when I get my full retirement age and they continue to work, and then you’re penalized because you have to give back $1 for every $2 that you earn over about $17,000.  Now, you get that on the back-end, but why get it now and then have to give it back?  Another thing is deferring your Social Security if you possibly can until age 70.  Because what’s the benefit of that, Aaron?

Well, right now you defer an additional 8% for every year you defer from age 66 until 70, so technically by waiting, you’re going to get a 32% larger benefit by waiting until 70, plus any cost of living adjustments that you get.  So there’s a lot of strategies that go into Social Security and that’s one of the things that we discuss with our clients when we sit down and do personal financial planning with them.  Because we try to figure out a way to maximize their benefits so that they have more guaranteed income through their retirement years.

What we oftentimes recommend is that they use some of their assets between their retirement age and age 70.  But people look at us sometimes like we have three eyes because why should I not take my income?  Well, if you’re in reasonably good health, what we like to do is guarantee as much income as we can in those out years because you never know how savings and investments is going to turn out when you’re 75 to 80 years old.  You want to build up that guaranteed income.  Plus, the surviving spouse oftentimes ends up with a higher benefit if the principal worker was collecting and then the surviving spouse takes over his or her benefit.  So there’s a lot of stuff that goes into Social Security and we do that day in and day out.  And we’ve got a call this morning, let’s take it.

Absolutely, we can get straight to our phone lines this morning, 844-220-0965.  844-220-0965.  Those are the numbers.  Hayden Windermere dialed up.  Hayden, go on, you’re on with the Certified Financial Group here on WDBO.

Good morning Hayden.

Good morning, when I retired a couple of years ago I rolled over a 401k to a IRA and my 401k was with Fidelity, so I just rolled it over to Fidelity IRA and it was all pretty simple.  But my wife has a 457, she’s retired, with ICMARC <?>, and she also has a traditional IRA with Vanguard, so I was thinking about rolling the 457 into the Vanguard account, keep it fairly simple, and I’m just curious about the 457 if there’s an precautions or differences in rolling over say a 457 than a 401k.

How old is your wife?


Okay, and do you plan on taking distributions from the account right away?

No, I’ve been taking distributions out of my IRA but not really hers.  We don’t really need to.

Yeah, <Inaudible> in your particular case you can do that, roll the 457 into the IRA, and just treat it like an IRA and then you have to take your required distributions at age 70 and a half out of the IRA.

Now, for our listeners out there who are wondering why I’m asking about age, if you’re younger than the 59 and a half then it obviously you may not want to roll it into an IRA because then you could take money out of the account and not have to pay that 10% penalty.  So that’s why I asked the question about her age and whether they’re taking distributions.


But if she’s over 59 and a half, there’s no reason not to be able to roll it right into an IRA and <Inaudible> basically consolidate your account.

There is a provision for 457s to avoid that 10% penalty I believe if it’s — if you’re 50 or 55 — I have to research that but I know there’s something that applies  specifically to 457s about that.  Do you remember if it’s 50 or 55 Aaron?


See, if we were in our office we’d look it up immediately.  But we are smart enough to know that that’s an issue, that if you came in with a 457, we would want to talk about.  But you have another question, go ahead.

Well, it’s related to that but when you initiate the rollover, do you do it from the originating end or the — where the money’s going to, would I go to Vanguard and say, start a rollover from this ICMA account or do I have to go to ICMA and initiate a rollover that way?

You would need to go to ICMA and initiate it because it’s a retirement plan so they’re going to have to verify that she’s actually separated from service to allow for the rollover to occur.  I would contact your ICMA representative or call the 800 number, whatever local number they have for you.

Alright, well thank you.

Alright.  Thanks for the call.

I appreciate it Hayden.  Thanks so much.  If you want Hayden’s line it’s 844-220-0965.  It’s 844-220-0965.  Talk to Aaron and Joe Bert here in the studio today.  457s, they are —

Just like a 401k.

Just like a 401k.

Generally used in the government entities, school teachers have them, municipal employees have them, yeah, 457.

So if you’re a government employee and you don’t have a 457 and you’re looking at all this and saying okay, what are these numbers mean?  Where, they’re similar to an actual 401k.

Yeah.  There are different types though.  They’re generally referred to also as a deferred compensation plan, another term, and there are some that when you initially sign up, you’re contractually obligated to withdraw some sort schedule in the back-end.  But with the government plans it’s not usually the case.

Yeah, you’ve got to be careful because there’s a lot of those legacy 457s out there that Aaron said that when it comes to retirement age, <Inaudible> it locked in, they want to not give you a lump sum but do you have to take it out over a certain period of years and those are pretty much going by the wayside.  But those plans are still out there.  So we have 401ks, 457, 401a, 403b, all those things with fours in them usually relate to deferred plans where you can have the money coming in your paycheck on a pre tax basis and let it accumulate — a tax deferred basis but when you withdraw it, of course, it is taxable to you.

Alright, well we got our next caller here at 844-220-0965, Mary Lou in Orlando.  Mary Lou, you’re on with the Certified Financial Group here on WDBO.

Mary Lou, good morning.

Hi, I’m 55, I can retire in five years from my federal job but I don’t want to do Social Security until 70.  So then I’m going to be at the point do I stay at a higher income job for a shorter period of time or do I switch over to a lower income job and do that for 10 years.  How do you calculate out so you can figure out what’s the best thing to do.  And my higher income job is stressful.  I would like to drop the stress.

So your question is if you stick with a higher income job does it benefit you for Social Security purposes?

Just the retirement overall because I do want to stress and wait and take my Social Security at 70 but I don’t want to work at the higher income job until 70.

So you want to retire from your stressfull high income job at 60 and then basically work part time until 70, delaying Social Security as long as possible, is that what you’re —


Well, you are actually — I don’t know the answer to that.  You are what we call the perfect case for financial planning.  Because really, it depends on what your lifestyle is and what your spending habits are and what debts you have and what other assets you’ve accumulated, and all those things go into making that determination about whether or not you can stop when you want to stop and go to a less stressful part time job from 60 until 70.  A big thing in that too is going to be health insurance as well, so we have to make some assumptions about what you’re going to do from 60 until you go onto Medicare age unless you have health care through your federal job, I don’t know the answer to that.

I do.  So the health care is off the table, I’ll be good with that.

That’s super, that’s super.  So again, it’s going to depend on what your assets are and your spending and whether or not that the lower income job is going to be able to to help get you to age 70 or maybe you can spend down some of your assets in the process as well. I’m assuming you’re going to have a pension as well from your federal job.

Yes, I will have some pension.

Mary Lou, you are, as Aaron said, a prime candidate to really have this laid out before you make that decision to drop that high income.  You, like most of us, get in your later years and you’re in your prime earning years like an athlete and you walk way from that income too soon and I can tell you in the number of plans that we’ve done over nearly four years, the difference of socking away some extra money in those — in your high earnings years makes a huge differences when you’re 80s and early 90s.  So what I’m saying is that if you can do that, that could be worth several thousands of dollars to you, a multiple of what you’re earning in your later years.  So really what we want to look at is what is your spending, what do you plan to do in your retirement years, in those golden years, how about travel, buying cars, what impact does taxes and inflation have on that decision and how long will your money last.  Then most importantly, how conservatively can you invest your money and still have a high probability of not running out of money at your life expectancy.  The toughest cast that we work on is I’ve said before is folks that made the — back of the envelope financial planning and only estimated what their spending and what they’re going to get from Social Security, in your case, a pension, and they walk into our office for the first time, six years into retirement, and the wheels are coming off because they forgot about a lot of stuff.  The other dangerous thing to do is go online and do these do it yourself calculators because the assumptions that you plug in there sometimes are difficult to discern as to really what they’re asking, and sometimes they’re not detailed enough to generate the right numbers that you need to have.  They’re kind of fun to play with and get you in the ballpark, but I wouldn’t bet my retirement years on something that you do online by yourself.  So that’s what we do day in and day out, Mary Lou.  There’s several certified financial planner professionals in the Orlando area.  We’d love to talk to you.  You can find our website at financialgroup.com.  Come in, we’ll offer you a complimentary consultation, and we’ll tell you what our fees to do this analysis for you and then when it’s done you’ll have a higher degree of confidence and make that decision that you’re going to be okay.  Appreciate the call.

I appreciate it.  Thanks so much Mary Lou.  If you would like Mary Lou’s line, it’s 844-220-0965.  844-220-0965.  Joe Bert and Aaron Bert are certified financial planner at the Certified Financial Group.  What’s the best number to reach you at during the week, guys?

You can call our office or better yet, go to our website, financialgroup.com, but if you are unable to get to the Internet, our phone number 407-869-9800, or 1-800-execute, as if you’re executing a financial plan or a legal document.

There you go.


Now the best thing is our website.  You can put <Inaudible> all about us, see our smiling faces, learn about upcoming workshops.  We’ve got one coming up here in — when is it?

Next workshop we have on the calendar actually is the Countdown to Retirement, that would be — we’ll, actually I guess that’s ones past.  We’re going September, Financial Basics.  It’s September 16th from 11:00 to 1:00 at our office at 1111 Douglas Avenue, which is right in Altamonte Springs at the corner of 434 and Douglas right of I-4.

This is a lunch time workshop, 11:00 to 1:00.  What’s the date?

September 16th.

September 16th, as hosted by Gary Abely, CPA, certified public accountant professional.  He will be hosting that in our office.  Once again, leave your checkbook at home, he’s not going to try to sell you some product and convince you that that’s the end all, be all to retirement years.  He’s going to give you good information to help you avoid those pitfalls that we often see people fall into as they try to make decisions as to what to do with their retirement assets.  So once again, go to our website, financialgroup.com.  That’s financialgroup.com, and click on there and you can make a reservation right online.

Alright, we’ll we got a couple of text questions in here, 21232, if you text them we’ll answer it <Inaudible> we get.  The three big things we need to know.

Welcome back to On the Money with the Certified Financial Group right here on News 965, WDBO’s Ask the Experts Weekend.  We’ve got Aaron Bert and Joe Bert here from the Certified Financial Group taking your phone calls at 844-220-0965.  That’s 844-220-0965 or your text questions 21232.  We are about three minutes away from latest news, weather, and traffic with Dave Wahl in the News 965 Newsroom, so let’s get back to your text questions here.  Let’s see here, let’s start with the first one here:  I’m 44 with a 401k, 30K for the last five years, what can I do to be more aggressive in max return in 20 years?  For a max return in 20 years I’m sure.

Well, it’s really depends on what options you have available within your 401k plan.  We always talk with people who have 401ks that there’s two things that will make you successful within your 401k plan and that’s having quality and being broadly diversified.  So what we generally recommend for people is that they don’t try and choose individual investment options within their 401k or try and build their own portfolio, so I would turn to either a target-date fund within that 401k plan or a model portfolio, a risk based portfolio if they have those options available.  And if you want to be aggressive, choose the aggressive one.  And if you want to do the target-date option, chose the date that is the furthest out because that’s going to be the most aggressive now and get more conservative as you approach that date.  So really, those are the two options within your 401k plan to be the most aggressive.  Now, whether that’s appropriate for you, obviously I don’t know because I don’t know your situation.  I have 150 to go off of here.

That’s it.

But the other thing you can do to maximize your return in the next 20 years is to maximize your contributions to your plan.  Because you have to put money into the plan, you can’t just rely on it, $30,000 to grow over 20 years.  Yes, it’s going to grow and it will be a nice sum of money, but if you want an even nicer sum of money, you need to maximize your contributions.  So at age 44, the maximum you can contribute under current law is $18,000 a year and then when you hit 50, the government says you don’t have much time, and they allow you to put $24,000 in under current law.

Alright, Aaron.  I have another one for you here regarding the 8% increase per year on delaying Social Security, does it increase pro rated each month or each year?

It is monthly.

Simple enough.  Can I lend $50,000 to a relative for 12 months without charging interest?  Does this have to be reported to the IRS?

Well there’s — yes — the answer’s no.  It’s —

The answer’s no.

Well, really what happens is that if you lend somebody money and don’t charge interest, and if you’re audited, the government’s going to come back and do what’s called the imputed interest, which is a — they’re going to tell you what the interest rate is based on the circumstances of that loan.  Is it a secured loan, yada, yada, yada.

So it depends on what it is you’re trying to accomplish here.  If you’re trying to not charge this person interest, then the way to do that is to charge them interest and then to gift that interest rate interest back to them.

Oh, back to them.

Now, if you — once again, if you charge somebody interest you have to recognize that interest has income and you have to pay taxes on it.  Then just gift it back to them and you’ve eliminated that.  Another way depending on what it is you’re trying to accomplish — I wish we had this person on the phone — but there’s another way around this depending on what the family situation is and if you’re lending it to your son and his wife and you and your wife want to do this, you can give $14,000 a year per person.  So let’s say you want to — let’s say this is your son and his wife and you and your wife want to give them — they can give them $56,000.  And it’s not a gift and its not — don’t have to pay taxes on it.

<Inaudible> as a gift.

Yes.  Well, you don’t have to report it as a gift, just <Inaudible> — it is not a loan.  So that’s a way around it depending on what circumstances are.

We’ll continue this on the other side.  Texter, if you want more information, give us a call, along with anybody else.  844-220-0965.  Got a nice long segment to answer all your questions.  844-220-0965.  Text machine is up and running as well.  21232.  We are planning tomorrow —

With the Certified Financial Group on News 965 WDBO.

Welcome back to On the Money with the Certified Financial Group here on news 965 WDBO’s Ask the Experts Weekend.  Joe Bert and Aaron Bert are here in the studio today taking your phone calls at 844-220-0965.  <Inaudible>.

We’re here to answer any questions that’s on your mind regarding your personal financials.  We go through life trying some of this, trying some of that, making financials decisions, without really any idea how it impacts our long-term financial security.  That’s one of the worst things you can do.  So we’re here to clean up the mind fog if you will and the good news for  you, the lines are absolutely wide open so you can jump right to the head of the line because there is no line.

That’s it.

And I keep saying all you an do is dial these numbers, we don’t dial the phone any more.  That’s an old habit that’s hard to break.

No, no, no, technically you do dial on your cell phone.

Is that what this <Inaudible>

You still dial.


Well, you don’t dial around the rotary, but technically by pressing the dial tones, you are dialing.

I’ve been corrected.


Alright, here we go.

Good idea <Inaudible>.

Dial these numbers: 844-220-0965.  844-220-0965.  Just because we don’t use the rotary any more, I think technically now with all the changes when you press something on a dial tone, you’re dialing.

You’re dialing.

I had to change that a little bit.  Things can change.  Text machine’s up and running as well.  21232.  We have a texter before we went to the break here, talking about giving somebody a loan.


And <Inaudible> created a lot of things, so we just wanted to clarify on some of those things before we go.

This individual wanted to know if they could give — make a loan to a family member, it makes no difference, for 50,000 The difference for $50,000 and not charge interest. Now, you can do that. Unfortunately, you have to deal with what’s called imputed interest. The IRS assumes that nobody’s going to do this for free, and they will tell you how much interest you should’ve charged, and you have to recognize the interest income on your tax return. However, if your intention was because you didn’t want to recharge this individual interest, you can charge them interest and then just gift them back the interest that they paid. However, you have to recognize that interest is income. Then as long as the gift that you’re giving back is under $14,000 per individual, you’re okay. Now, if your intention is to just make this a short-term situation, and if it’s — I used the example of mom and dad want to give son and daughter-in-law $50,000, they can each give $14,000 per individual times two, up to $56,000 and not have any gift tax implications or income tax implications. Then if it’s a short-term deal, then son and daughter-in-law can turn around and gift the money back to mom and dad.


So, there’s a way to get it back and not have any taxes, and not have any gift taxes to deal with. So, depending on what your situation is, there may be a way around it. That’s what we do as financial planners, day in and day out, try to figure out strategies to keep you from falling in those pitfalls, pit holes, or whatever. Fox holes, or problems, or whatever. Right?

Pot holes.

Pot holes, that’s it. That’s what we’re talking about.

Don’t want to fall in a fox hole.

Okay, fox hole. We’ve got a workshop coming up here, one time here in September.

We’ve got one coming up in September that’s the financial basics, and then the next Social Security workshop, actually, is October 19th in our office. That’s an evening one from 6:00 to 7:30. That one’s hosted by Denise Kovatch and Nancy Hex. That’s an evening, October 19th, where they’re going to talked about Social Security claiming strategies. That’s another very popular workshop that’s coming up in our office in Altamonte Springs.

So, for more information, just go to our website, financialgroup.com. That’s financialgroup.com, click on Workshops, and then you can make your reservation right there. We hold this in our big classroom. We save our video equipment and audio equipment, and seat about 25 people comfortably, so just come on by.

Alright, we’ve got the phone callers in here. Again, 844-220-0965. Start off with Austin Longwood. Austin, you’re on the Certified Financial Group here on 96.5.

<Background Noise>

Hey, good morning. Thanks for taking the call. Hey, so, we listen to your show quite a bit, and we’ve gotten a ton of advice from you guys from this show, and we really do appreciate it. But my wife and I — mid to late 30s — and as much as advice as we do get from you, we were just talking that it might be time just to come in and make an appointment with you guys to come in and start talking about 401s, and Roths. You know, we — it’s just all very confusing with everything changing, and how much money will we need when we retire in 30, 40 years? But my question is, when you get new clients such as us, mid to late 30s, how much time do you usually tell your clients to come in? Like how often do we meet, typically with a financial planner, and how long will those consultations typically, but — how often do we come in? Is it once a month? Is it once a year? How does it work?

Well, the starting point is to have you come in and look at how complex or straightforward your situation is. What you’re after, you talked about retirement, so what decisions you need to make now in terms of accumulating assets, where should we invest it, how aggressively it should be invested based on what your time horizon is to begin with drawing from those funds. We have you come in, we look at your situation, and then we’ll put you in all-in one-time fees to do the planning for you. Then what happens is that you have an objective. You know what you need to do, and we give you this plan. We walk you through it, and we say you need to do X, Y, and Z. Then we presume that you’re going to continue doing that. Now, we know as life goes on, good stuff happens, bad stuff happens. Then if you were a planning client, we want you to pick up the phone and come back and see us. It’s like going to your doctor. You get your first physical. You’re in good shape. Here’s what you need to do, maybe take these blood pressure medication, or exercise, or diet, or whatever it might be, and we presume that you’re following what the doctor has prescribed. Now, if you find out that — heaven forbid, you have a stroke or that something happened that really changes or disrupts, either good or bad. Because we’ve had lottery winners as clients as well. Pick up the phone, come on in. You’ve got to make big decisions about buying a house or that kind of stuff, come on in and we will update your plan. Now, if you are what we call a wealth management client, that you have then hired us to manage your money going forward, then there is no charge to that update. So, you are welcome to come in and see us as need be. We take calls every day from our clients that have questions and family issues they have to deal with, but we serve as your pilots, if you will. We’re flying the airplane. We know where we want to go. We know how to get you there, and we’ll get you there through good times and bad. Do you want to add anything to that?

I mean, if you’re comfortable and nothing’s changed in two years, do I need to come in? No, I mean, as long as you’re doing what you should be doing —

As long as I’m doing that!

Yeah, and then as we said, stuff happens. Good stuff and bad stuff. If you want to fine tune your plan, then usually the best time to do that is on a regular basis every three to five years if nothing’s happening.


And particularly, as you’re getting close to the retirement years, making those big decisions.

I mean, we know what your income is. We set up savings goals, and we know what you’re going to spend, and then basically as long as you’re meeting your savings goals and the accounts are invested appropriately, things will drag along.

Things will be good.

There’s not a need to come in every month to see if you’ve really met your budget for that.

You wouldn’t go see your doctor every month. Even though your account is going to go up and down, there’s no reason to come in. I don’t know if that helps you, Austin.

Yeah, I mean. But the last question is, I mean, we hear a lot of the callers that you guys get. Are we behind the eight ball now?

No! No, no, no.

Okay, okay.

No, you’ve heard the stories that have come in, so —

No, you’re in the sweet spot. Because of your age, you’ve got the greatest asset, which is time. The thing is, most people don’t realize what an asset that is until they get in their 50s and say, I’m running out of it!


So, you have time and time is a great asset if you use it wisely.

Yeah, the earlier you start, the easier it becomes.

And you would really be the exception. We’re seeing more and more younger clients today, but the bulk of our clients are those folks that the kids have gone off, they’re married, and the college is all done, and they’ve had the weddings and all this stuff, and now mom and dad are, like I say, sitting around the kitchen table. And they’re looking at each other, 55 years old, and what are we going to do?

And their 20-something children are watching that conversation take place and go, I am not going to let that happen to me.

You know, that’s what I hear, too, from the younger ones. You know, I see what my parents are doing and how they might be struggling, and how they made bad decisions. I don’t want to have that happen.

Right. It’s interesting that you see more younger people, because I think — even around here, I’ve got more 19 and 21-year olds interested in retirement plans than I’ve ever seen. It’s really interesting.

Let’s get back to our full lines here, talk to Ken! Ken, you’re on the Certified Financial Group on WDBO.

Good morning, Ken.

Good morning, thank you for taking my call.

Of course.

My question has to do with a real estate transaction and taxation, and if you guys aren’t comfortable talking about this — it might be a CPA question — then I’ll understand.

Well, we’ll try it. Go ahead.

Okay, so a bit involved. December of 2012, I bought a house primarily for my youngest son. At that time, I did not want his name on the deed or the mortgage.

Okay, so you bought the house, it’s in your name, and the mortgage is in your name?

That’s correct.

And he’s just living there?

He’s living there, right, and we signed a lease purchase agreement at that time, stipulating that in perpetuity, that he could execute the purchase agreement. But all of the lease payments he made to me would apply towards the principal balance of the home.


So, now we’re four years later and I want to sell the property to him. I’m hoping that the way we’ve done this is, we can set the sale price without an adverse tax consequence because the home was purchased at a bargain four years ago, and now it’s worth a lot of money. My question is this. If I sell him that property now, and if I sell it to him for the same price I purchased it for, understanding that that price would be less than its value in the market today, will I incur a tax consequence on that gain just the same, or will he have the tax consequence — an adverse tax consequence. Later on, it’s going to be his primary residence if he sells the house.

The liability is going to be on your end, because basically what you’re doing: Let’s say you bought it for — just to make  this dramatic here — let’s say you bought it for $10,000 and say it’s worth $1M, and you want to give it to him for $10,000, okay?


That, right up front, doesn’t pass the smell <?> test. So what’s going to happen is if you’re ever audited, the IRS is going to come along and look at the fair market value, the comparables, and determine that you have in fact made a gift to your son of that difference. Now, the good news is there’s some way around that. That takes a bit of creative planning, but that’s where you want to get together with a CPA. There is some strategies that you can use, but there is a way around it. To answer your question bottom line, there could be some tax implications if you just sell him the house based at what you paid for, assuming it’s gone up. Okay?

Okay, yeah, thank you very much. I really appreciate your help in that.

Thanks for the call. Bye, Ken, thanks so much. What we do on Ken’s line, it’s 844-220-0965.

I was just thinking, too, that if you just gifted it to him, which you could always do, again — he’s going to inherit the basis for which you purchased that property. So if you sell it to him — and if you sell it to him for what you bought it for, obviously that’s going to be his purchase price, too, for his basis for owning that property. But Joe is right, the difference between the fair market value and whatever it is that you sell it, if it’s under market value, it’s going to be considered a gift in the eyes are the IRS.

Yeah. Now, here’s an option. You could gift in the house at fair market value. Alright, now you have to file a gift tax return. You wouldn’t have to pay a gift tax because of the exemption that’s involved, and let’s redeem it with multi-millions here. Then, you could have him pay you and your wife $28,000 per year, if he’s married, between him and his wife, $56,000 a year, or some lesser amount until it’s paid off. If you gift him the house, the house is his free and clear. He could go out and get a mortgage, and do what he wants to do in that regard. So, there is some strategies that are available to you, but I don’t want you going out just gifting it to him, as you plan, because you could end up running afoul of the tax consequences.

Alright, 844-220-0965 is the number to join us. We’ve got one more segment left. We are coming up again to the break here to get the three big things you need to know. Text is up and running as well, 21232. What’s the best number to reach you guys during the week?

Best number is 407-869-9800 or better yet, go to our website, financialgroup.comfinancialgroup.com.

Yeah, you can join Austin, who’s going to make an appointment to come see us.

There you go.

Alright, time to get the three big things you need to know: We are planning tomorrow —


— the Certified Financial Group on WDBO.

This is news 96.5, WDBO.

This is the last segment of On The Money with the Certified Financial Group here on News 96.5 WBDO. It’s your last chance to get your question answered at 844-220-0965. Joe Bert and Aaron Bert, here live in the studio, taking your phone calls and your questions. Joe, you wanted to circle back to one of our callers, right, we had right before we break.

Yeah, I’m going to circle back to Kent who had the question about gifting a house to his son. We had an astute caller text us, and the caller is right because I totally overshot that fact that they had a lease purchase agreement. If he has a lease purchase — Kent, I hope you’re listening — and you had locked down the price at that point, that’s what the sales price is, regardless of if they found oil on that property. Your son was the lucky winner. So if your agreement was to sell it to him at that price, I think you’re okay.

That doesn’t mean that that’s fair market value four years ago, too, right?

Well, yeah — yes, yeah, which I think was the case.


So, once again, I want to thank our listener that texted us. Kent, I hope you’re listening, and I hope that didn’t confuse our listeners too much.

Alright, no worries. Alright, let’s get back to our phone line here. Hayden has been hanging on. Hayden, go ahead —

Sorry about that.

— You’re back again with the Certified Financial Group on WDBO.

Good morning, Hayden, welcome back.

Hi, thought I’d get my money’s worth today about Social Security. My wife and I both turned 62 today, but we both have a pension and we can withdrawal from our full IRA, so we’re going to delay taking the Social Security. I had a couple of analyses done I thought I’d run by you their results. They showed, as a higher earner, I should delay until 70 and maximize my benefit than a survivor benefit for my wife eventually. But for her, the lower earner, they showed her maximize a lifetime benefit by her collecting at 66, and then at 70, when I collected, she would get an additional spousal benefit. So, instead of both of us delaying until 70, they said she should collect at full retirement age around 66, and then I would delay until 70. I wanted to see what y’all thought about that strategy.

That sounds correct, so I’m assuming that her benefit is less than half of your benefit. Correct?


Yeah, okay.

That was one — yeah, her benefit is 66 with about 1,100. Mine is about 3,500 at age 70 is what it’s showing.

Now, she’s going to collect half of what you would have collected at 66, not at age 70, so she’s not going to get half of your age 70.


I mean, that makes sense. Unfortunately, you’re passed the point where you’re — they changed the laws regarding Social Security claiming strategies a couple years ago, an you are unable to take advantage of, really, most of them except for this particular one where you just claim on your own benefits, and then she’s going to get a bump when you go claim at 70. So, yeah, that sounds accurate to me.


If you can afford to do that, it always makes sense for the higher earner, assuming your health is good, to delay as long as possible. For you, that would be age 70. Then there’s no advantage for your wife not starting at age 66, so she ought to do that as well. So yeah, you’ve got some good advice there.

Alright, appreciate Hayden. Thanks so much for the phone call. We’ve got one last text question here: Parents want to give me 5K against mortgage principal annually. Wants to write check to bank, not me, how does that figure as a gift?

They don’t have to worry about it. As long as they’re under <?> $14,000, you can write that check to pay down the mortgage and it’s fine.


No gift, no income, no <Background Noise> right?

Oh, piece of cake. That was easy.


Yeah, alright.

We like easy.


Well, now we’ve got 50 seconds left, so now you’ve got to plug some more workshops here. For workshops, we have a September workshop coming up, Countdown to Retirement, Planning for Retirement. That’s going to be a daytime workshop, 11:00 to 1:00 in our office in Altamonte Springs just south of 434.

Yeah, that’s the Financial Basics, September 16th. That’s with Gary Abley, again, 11:00 to 1:00 at our office, Financial Basics. And again, all these can be found on our website if you go to financialgroup.com. We’ve got a little workshops thing, and all of the workshops are there as well. Gary’s also going to be hosting a Healthcare Options workshop, so if you’re interested in claiming strategies for Medicare or any other health care questions, that’s November 4th, and that’s from 9:00 in the morning to 11:00. I believe that’s a Saturday.

Mmhmm, there we go. Alright, just like that, that’s going to do it for this week’s addition of On The Money with the Certified Financial Group. We have been planning —

Tomorrow and today.

Oh, tomorrow I missed, sorry.

Come on, <Background Noise>

I forgot tomorrow! Man, I almost got it! Ah man.

We’re planning tomorrow today.

Tomorrow, today!


And we’ll do it again, next Saturday at 9:00 right here on News 96.5 WDBO.

Dictation made on 8/1/2017 12:23 PM EDT.

Translate »