Hosts: Nancy Hecht, CFP®, AIF® and Joe Bert, CFP®, AIF®
Well good morning everybody it’s another Saturday at 9:00am and that means it’s time for On the Money, Certified Financial Group 96.5 WDBO. We have Joe Bert and Nancy Hecht live in the studio, good morning, everyone.
Good morning!
Joe, what are we here for?
We are here to take any questions that our listeners might have regarding their personal finances. As we say we go through life trying some of this, trying some of that, wake up at 55 years old and look across the kitchen table to Loretta and say Loretta, paycheck’s going to stop someday and how are we going to continue this wonderful lifestyle we have? And that’s what we do at Certified Financial Planners, day in and day out at the Certified Financial Group. Monday through Friday we charge a fee but on Saturday morning it is absolutely free so if you’ve got any questions regarding your personal finances as it might relate to questions about stocks, bonds, mutual funds, real estate, long-term health care, IRAs, annuities, reverse mortgages, all that and more, Nancy and I are here to take your calls. And the good news for you, there is absolutely nobody in line because we just started the program.
I just unlocked their phones.
So there we go! So if you have any questions about anything just pick up the phone and dial these magic numbers, and you don’t even need to use your real name, you can pretend you’re Jack or Daphne or Laverne or anybody.
Oh, Sofia, we’re just waiting for Sofia, we had a Sofia last week, just wanted to call and call himself Sofia.
And Luigi.
And Luigi, that’s right.
Let’s see if we get a Luigi here.
Or Angelo.
Angelo’s out on a boat this morning and will not be calling.
844-220-0965. 844-220-0965. The text machine is up and running as well, 21232. We ask you to just keep it to about 160 characters, that’s all we can see on our screen so let’s just keep that there nice and simple, simple questions there, if we have to make two or three texts that’s when you just need to call in.
<Inaudible> bounce back.
We’ve gotten some novels on the text line before and said nah nah nah you’ve got to call in for that one. All right, topic of today, Nancy, don’t do this to your family, after three years the estate will finally be settled.
Right, that’s it, yes. My father-in-law was a wonderful man, he spent his life and his career in the world of art, and was not business minded concerned at all. Sadly the last five years of his life predominately under home health care or hospitalized due to Parkinson’s refused to sign a will, a living will, or give anybody durable power of attorney, so the hospitalization then after he passed away in 2014 it became a nightmare. So here we are three years later. His estate consisted of a retirement account, a bank account and a house, not a huge estate. Had a wife, who is still alive, she’s in an assisted living ever since he’s been in the hospital so my husband has had to petition the court to become executor, financial guardian, physical guardian, so after all of the legal costs which were significant we’re looking at an estate of about $135,000, finally again three years later it’s being settled. $77,000 of it going to the State of New Jersey.
Wow. Ouch.
So had they been organized and signed these documents which they had —
But he refused to sign them.
None of that would happen. Well, him refusing to sign it was sort of pushed by my stepmother-in-law, a great title. She was afraid she was going to lose, well, by her negligence she’s lost a big chunk of it to the State of New Jersey. So anybody who does not want to do this to their family please feel free to e-mail me at nancy@financialgroup and I will send you a financial organizer. We have a wonderful financial organizer that has all kinds of information in it from who to contact where all the important papers are, where you want to be buried, what you’d like to be said at your funeral, everything. It’s really easy to use, you can have everything in one place, and not put your family through all this anguish that we’ve gone through for three years.
Wow. That stinks.
Well that’s what happens. You know, we go through life and then we don’t expect that day to ever come and then you get ill and then you can’t think about it, don’t want to think about it and you think if you don’t do it it’s not going to happen and —
You’ve got to trust some other family members and then they start thinking different ways, and–
It’s unreal, and I contend from 30 some odd years in business weddings and funerals bring out the worst in people and when you do dumb things–
<Inaudible> yeah, okay, all right, yeah–
I have a wedding coming up in five months.
Every one of my family members!
We’re in the wedding part of it right now but anyways please be kind to your family, let them know your intentions and e-mail me. I’ll send you the financial organizer.
And that’s not a slight on my Italian friends because I’m half-Italian, so I know what it’s like.
Well if you have a question about that or anything for Nancy or Joe, 844-220-0965, again the number, 844-220-0965 and we’ll start off our conversation in Orlando with Judy! Judy, go ahead you’re on the Certified Financial <Inaudible>
Judy, welcome.
Thank you very much. My husband and I we both have two joint brokerage accounts and we have both of us have two IRAs with the stock market at an all-time high is there anything we should be doing to protect ourselves when it falls? I mean, we have some real stocks, should we kind of sell the real stock and put it into bonds? I mean, our sons are mostly in mutual funds and municipal bonds but we do have some real stock.
Judy, I love your question because Joe and I were discussing this just before we went on the air. I have a question for you first. You said you had joint accounts and you both have IRAs. Do your joint accounts have anything like transfer on death, payable on death, any kind of designation like that after naming you and your husband as owners?
Yes, they’re all —
And you have primary and contingent beneficiaries, right?
Uh, yes.
All right, perfect, okay. So as we are doing regular reviews and updates for our clients we’re looking at exactly what you’re asking about and if there are days and areas you might want to take some of those gains off the table and re-allocate, rebalance your portfolio, rebalancing and re-allocating is something that we do frequently. Can’t be afraid to take gains and move them into maybe something a little bit more conservative because that’s how you hang onto them. However you want to be tax aware. You know something’s going to be a capital gain and certainly going to be taxable rate at an ordinary income. And a lot of people now are looking at their portfolios as you are saying wow the markets have been up so much and this is so great, and I have five things that are doing phenomenal in that, a couple things that are doing okay, and okay last year when the markets were flat or in 2015 when the markets were negative people were happy to have maybe a five, a seven, an 8% annualized return, so looking at your portfolios as a whole based on your time horizon, your risk tolerance and as you’re asking maybe taking some gains off the table and rebalancing your portfolio is a great thing to do.
Judy, but what I want to be sure is, is you’re not trying to what we call, time the market. In other words you’re not looking at the market in your portfolio and saying boy it’s really up there, I think I’m just going to cash out now and sit on the sidelines because I know when the inevitable correction is going to come. This is the biggest mistake that every investor makes because you can get in and then you have to figure out when to get out. Now you should be doing that if your time horizon, if this money is really for long-term investing. If you’re going to need some of this money or all this money in the short-term, first of all you shouldn’t be invested to begin with because you can never tell when that correction is going to come and all of a sudden your portfolio is down 15%. Investing requires time. Time is a great healer. Time will lead to the volatility out of a portfolio assuming you’re well-diversified with quality investments and once again the mistake that we see time and time again is people think the stock market is a casino. The stock market is not a casino. There’s no magic formula that tells you when to get in and when to get out. The real key is as Nancy said, is knowing your time horizon, when you’re going to need the money, and how much you’ll need and when you will need it, and to be well diversified with quality investments. And that really leads to what we do at Certified Financial Planner professionals and that’s planning and looks at where you are today, your time horizon, and how conservatively you can invest your money and still have a high probability of not running out of money when you’re 93 years old but you’re doing what virtually everybody does out there until they’ve met with a professional and you’re trying to get the best return that you can without any thought as to how you’re allocated and what your needs are in the way you’re going to need these funds. Now if it sounds like I’m preaching I am, because that’s really what you need to do to be successful investor and unfortunately in fact there’s an article <Inaudible> the Sentinel or the Wall Street Journal, about how many– I think he said age <?> Sentinel, about the retirement crisis that we have in this country. Fewer and fewer people are saving for the future and as generations go on we see it– don’t you see it, Nancy, with clients?
Yes, yes. Judy, my question for you is are you working with somebody?
No.
So first of all I would invite you to take advantage of a complimentary consultation if you wish, which could consist of doing a full financial plan or something as simple as a second opinion on your portfolio.
Okay.
So maybe take a little bit of the questioning out of your allocation on your investments.
And all I would need to bring in all the summaries, all the year ends?
Please. Yeah. I mean most people are getting their quarterly statements now so the most recent statements would be great for second opinion, full financial planning requires a little bit more data gathering but that’s– we offer complimentary consultations to everybody so you can take advantage of coming in and talking about your situation, where you’re at now, where you want to be, and as I have said get a second opinion on your portfolio.
Wonderful. Thank you very much, I appreciate all the information.
Thanks for calling, Judy.
All right, thank you so much, you want Judy’s line, it’s 844-220-0965, 844-220-0965. And here’s the radio show, and the complimentary consultation is also the workshop that the Certified Financial Group offers to their new clients and current clients.
We surely do.
So what have we got coming up on that schedule in the workshop category?
We have on November 11 from 9:00 to 11:00, hosted by Gary Avely, health care options in retirement, becoming more and more of an issue.
And November 4?
Oh, I meant to say November 4.
Oh, November 4. Ah.
And I’m a lefty, so–
The fourth, the 11th–
Sometimes I read stuff backwards on the page. The next one, 11/11/2017 also from 9:00 to 11:00, everything you wanted to know about mutual funds, hosted by Gary Avely. On January 6, 2018 Retire with Confidence, hosted by Gary Avely, and then the last one on the books for right now, also hosted by Gary, is March 3rd from 9:00 to 11:00, financial basics for life. If you go to our website, financial group.com, click on the workshops, you can see the dates, the descriptions, and register.
Well the next one in two weeks so today 9:00 to 11:00, Saturday morning at our office in Altamont Springs, this one is a big hit because people are getting that Medicare information, what do I do about Medicare, plan B, C, D, E, F, which is right for me, and–
By the time I retire they’ll be on Z and AA.
<Inaudible> expert on that, so if you want any clarification on that he’s not going to try to sell you into something, he doesn’t sell Medicare supplements, but he is very very knowledgeable about those options. So once again as Nancy says, go to our website, that’s financialgroup.com, financialgroup.com, click on workshops, you can make a reservation right there.
All right, there we go, just like that, if you want to call the show it’s 844-220-0965. 844-220-0965. The text machine is up and running as well, 21232. We are planning tomorrow today with the Certified Financial Group. Tell me the three big things you need to know.
Well, welcome back, this is On the Money with the Certified Financial Group, here on News 96.5, WDBO, we are taking your phone calls at 844-220-0965. With Joe Bert and Nancy Hecht of the Certified Financial Group, again 844-220-0965, let’s get back to our phone lines before we get to the latest news, weather and traffic which is three and a half minutes away to talk to Afan in Port St. John. Afan, go ahead, you’re on Certified Financial Group here on WDBO.
Good morning, Afan!
Hi!
Thanks for calling, how can we help you?
Morning! I have a question. Me and my wife, we just had a baby <Inaudible> about yesterday, he just turned one yesterday. So I wanted to know what would be the best options to invest for his future would be and what would be the minimum I can start with?
Well are you talking about for education, for college?
It can be anything, education, like an investment for him, yeah, education would be the best <Inaudible> for him.
What I would look at is the Florida prepaid college program. And that opens up here now and do you know how that works, Afan?
Yes, I work for the University, so–
Okay, cool. All right.
Yep.
So that is the way to guarantee that — no that doesn’t guarantee that he will get into college, but it guarantees that you won’t pay any more than the current rate and it locks down today’s rates and if you could do it for modest amounts of money there are lump sum or a monthly investment plan, and I would look at that as a starting point, as kind of the foundation. And as you probably know you can do a two year plan, four year plans with tuition, with room and board, you can buy the whole enchilada, and you can have your relatives contribute to it as well to keep that fund going and that will consume a good part of most people’s disposable income. What did you want to add, Nancy?
No, it sounded like he had another question. You said education and.
Education that I kind of– I was also thinking on a side, some investments, like besides his education like buy some shares. I don’t know.
Okay, but <Inaudible> I guess an investment account or the benefit of your son, you know uniform transfer of riders happen of the State of Florida is the title, that you can invest and under age 14 anything earned is going to be taxed to you over at age 14 will be taxed to him or you can do 529 accounts and everything that will accumulate in there will be tax free if used for higher education if you pull the money out say part of it out when he’s 16 for a car or something then you would pay taxes on those dollars but you would have had all those years of money accumulating on a non taxable basis.
Okay so can you send me the name one more time–
Uniform Transfer to Minors Act, so that’s an account that’s owned by Mom and Dad and uncle, anybody for the benefit of a kid, or the 529 college savings and then Joe of course mentioned the Florida prepaid. So one thing that you might want to think about 529 or the Uniform Transfer to Minors act if it’s owned by somebody other than you and your wife and your son is eligible for grands of scholarships, anything that’s not owned directly by you is not going to have to be reported on financial statement when it comes for college. So if you have a sibling or parent or somebody that you can use as the custodian for the account.
But if you’re going to do outside investing you want to use mutual funds as opposed to trying to pick individual stocks, individual stocks with a high risk high reward proposition and <Inaudible> most people shouldn’t be picking individual stocks because they don’t have the time or the expertise to really do all the due diligence that’s necessary. And that’s why mutual funds are there and it’s what we recommend to our clients in the most <Inaudible>
Well especially if you’re investing smaller amounts the mutual fund would get you a piece of many, many companies versus one.
Well, Afan, thanks so much for the phone call, if you want Afan’s line it’s 844-220-0965, 844-220-0965. We’ve got Ed and Sue coming up right after this. Right here, the news, here on News 96.5, WDBO. Almost forgot what we were going to do in there. News 96.5, WDBO.
You don’t know what I’ve got.
Welcome back, this is the second half of On the Money, Certified Financial Group, 844-220-0965 is the number to chime in, with your question for Joe or Nancy, we are Certified Financial Planning professionals at Certified Financial Group and each and every Saturday they take time out of their busy weekend to come in and answer your questions to let’s not waste it, let’s do it. 844-220-0965, we want to get back to our busy phone lines here because we got a lot of great questions and want to get them answered for you. Let’s start off with Ed in Eustace, Ed go ahead you’re on the Certified Financial Group here on WDBO.
Can you hear me?
Yes, hi Ed, what’s your question?
Hello?
Hi!
We can hear you.
What can we do for you, Ed?
I can’t hear you, can you hear me?
You need to turn your radio off!
Well we’ll call on Ed down there in just a second, let’s put him on hold. And ladies and gentlemen, let this be a lesson to you that you got to turn your radio off when we call on you, otherwise you’ll get a little feedback, that’s all <Inaudible>.
<Inaudible>.
So we’ll get on hold, we’ll take him in a minute, let’s go to Sue in Orlando. Sue, go ahead, you’re on with Certified Financial Group here on WDBO.
Hi Sue!
Thank you for taking my call.
Sure.
I have a quick question. I have a will and had it done in Illinois when I lived up there. And we moved down to Florida. Do I need to have a new will? I was told that I would need to.
Yes. You should get it reviewed and you should get it updated and if it’s more than I would say five years old estate laws have changed but yes, you know the rules for every state are different, and it’s something that you should do. And if you do not have access or know of an estate planning attorney if you want to contact us we’d be happy to refer you to some.
Thank you very much, that answers my question.
You’re quite welcome. Welcome to Florida.
Bye.
Simple enough.
Bye, thanks so much, Sue. David in Orlando, again, if you want one of our phone lines, it’s 844-220-0965. 844- 0965. 844-220-0965. Dave in Orlando, go ahead, you’re on the Certified Financial Group here on WDBO.
Morning Dave.
Good morning.
Hi.
I’ve got like a three part question here, and it’s all to do with individual retirement funds. I currently — I’ve had for years a 401k, and my current employer offers me a 401a with an employee match. They also offer a 457.
It sounds like you work for a government entity, right?
Yes, a government entity I work for. Very good one, by the way. My question is what’s the maximum amount I can put into the fund, and what’s the difference between a 401a and a K?
Well, as you just described, the A is generally offered by governmental entities, and the 401k is by private corporations. The contribution limits often times are the same. Your investment choices sometimes are a little bit more limited in the 401a. The rules on withdrawals are about the same in terms of penalties and so forth. The specific plan may or may not allow loans, you have to check that out, but they operate pretty much the same.
And the 457 is the deferred compensation plan. So you’re deferring some of your compensation now so you can take it sometime in the future.
Right, and I’m currently doing that, and what I’m concerned about is my maximum, as I’ve overheard different programs, and I think I’ve heard on yours a couple weeks back, about a maximum amount I can put in. Now, does the deferred count towards my 401a as my maximum, and I’m coming up on 55 and I’m trying to put away as much as I can for retirement.
The 457, the deferred compensation plan, works separate from the 401 and does not impede you saving the max into the 401.
Okay, so the 401, my max would be as I’m 54 right now, and is — does that include what my employer match is, or is total a year or not?
No. Your own compensation, which is what, $24,000 this year. And it’s going to go up a little bit next year.
It’s going up by — next year $500 on the employee side. So 24,500 is the max.
For 2018.
But that’s just my side, whatever they’re matching doesn’t count towards that?
That’s correct.
No, it does not.
Okay, that’s what I was trying to clarify in my own mind.
Okay.
Well, thank you guys, have a good day and I enjoyed the show. Glad to see you guys got your web — because I work a rotating type shift, I usually catch your show and I’ve seen you missed a couple last month there, not getting them on your website there. I enjoy listening to all your podcasts, so you check your site you’re missing a couple weeks there.
Well, thanks for that info, Dave.
Thanks for telling us, we’ve got to get with our webmaster <Inaudible>.
Well you missed a couple shows cause of the hurricane.
That’s true, yeah, we did.
We missed a couple shows during the hurricane in September.
Yeah.
Yes, no I checked it the other day, they were — every show was up there that you did.
Are you responsible for that?
No.
But there was two weeks in a row where <Inaudible>.
Yeah, exactly.
Over and out, Bob, that cleans up all of our phone lines. 844-220-0965. If you’ve got a question for the panel, 844-220-0965. Text machine is up and running, 21232, <Inaudible> about 160 characters. That’s all we can see on our screen. 21232, and texts to <Inaudible>. Joe, what do you think about Bitcoin investing?
I think it’s very speculative, it’s not really investing. It’s speculation, because it’s — I don’t want to say — it’s unregulated by any government entity, which is kind of the attraction, but.
And it’s also hard to value because of that.
The swings in the value of it are dramatic. It’s a high risk, high reward proposition. I always believe in don’t invest in what you don’t understand, and I don’t want to take the time to try to understand some speculative investments.
Well, and if you’re going to put money in it, you have to put in money that you’re prepared to lose 100% of it, which leans more towards the gambling kind of attitude versus an investing kind of attitude.
I feel my rule of thumb is this something Warren Buffet would consider, and the answer is no. So if it is kind of an investment that would not be used by investors who know how to invest, it generally doesn’t make sense. It’s usually attracted by people that want to speculate. You’re like trying to find that get rich quick, that lottery ticket, if you will, to make up for all the poor savings and investments they haven’t done all their life and find a winner. Bitcoin may or may not be it, but as far as I’m concerned I wouldn’t put any money in it.
Again, you have to — if somebody wants to put dollars in it, I hate to use the term invest in Bitcoin.
Speculated.
Right, you have to say I’m going to commit, I don’t know, whatever your comfort level is, $2,000, and see where it goes. And if it goes away, I can live with it, and if we’re wrong and it happens to over years become worth tens of thousands, then that person made the right bet.
Right, exactly.
But it is a bet.
Exactly.
Alright, well we’ve got a couple of calls now. I want to give out the phone number again, 844-220-0965. Jeff in Orlando is up first. Jeff, you’re on the Certified Financial Group here on WDBO.
Hi Jeff.
Hi, good morning. I have a question about a realty question. I am going to do a relocation and I’ve been in my current house for about 10 months now, probably a year by the time I sell it, and I’m wondering how the capital gains taxes would work on that.
Well, you’re going to have to pay gains on it if it’s not your primary residence for two of the last five years under current law, so you’ll have to — it’s not your mortgage, if you paid 200,000 and you sell it for 250, you’ll have to pay gains taxes on $50,000 of the gains. It could be as high as 20% or as low as 0%, depending on what your total income is.
Okay, and if I reinvest that into the next home, does that matter at all?
No.
You haven’t met the two year threshold, that’s the problem. It’s two out of five years to be considered a primary residence.
What you’re thinking of is the old rule where if you took the proceeds from this property and rolled it into a new house, that’s what it used to be before this $250,000 exclusion for a single taxpayer came into play. People used to say just take all the profit, roll it into a new house, have no taxes, and years ago that’s the way it used to be. But today your primary residence is two out of five years. As a single individual you can have profit now over and above what you paid for it of $250,000. A married couple is $0.5M under current law. Of course that’s all subject to change with what’s going on in Congress right now.
Alright, great, thanks guys.
Okay, good luck to you.
Thank you, bye, bye.
Bye Jeff, thanks so much. Get on Jeff’s line, it’s 844-220-0965. Got a question on the text line here for you Joe. Have you heard the recent rumor of the U.S. government wanting to significantly lower the pre-tax 401k —
Yeah, that is a trial balloon, that’s part of the tax proposal that’s in there now. They’re considering it as a way of raising revenue, there was an article yesterday in the Wall Street Journal about that. Who knows if it will make the final cut. I think it’s a huge mistake. <Inaudible>
Yeah, anything done to —
But that’s real though.
Oh, it’s real.
Hold it, it’s not final. <Inaudible>
Not final, but the rumors are true.
I’m not in favor of things that reduce the ability for people to pay for themselves.
Well, in that case I’m going to call my Congressman and say uh-uh.
No. Stop that.
It makes no sense. In fact that article I alluded to earlier said the generation upon generations they’re finding their savings less and less. If you start taking away tax incentives to do that, you make it even worse.
Worse, yeah.
What we hear often from people is that I’m contributing the full contribution.
Or maxing out.
Up to the max that the company does, so as we spoke to Dave, $24,000 is the max, not 4% of your pay.
Whatever the matching is.
Matching is gravy as far as I’m concerned.
Alright, well let’s get back to our phone line, let’s talk to Paul in Deland. Paul, you’re on the Certified Financial Group here on WDBO.
Morning Paul.
Hi Paul.
Good morning guys.
Good morning.
My girlfriend and I bought a house together a few years ago. We just had our wills drawn up last year, and we had a will has been <Inaudible> by the survivorship. So we were both <Inaudible> the way it’s set up now, her daughter gets half the value of that house and my boys — I’ve got three sons, they get the other half, because we have <Inaudible> all the siblings get a quarter, 25%. <Inaudible> normal.
So, it’s less up to your kids to divide the amount.
The way it is now, her daughter gets half the house, and my boys get the other half. I’d have to <Inaudible>.
Well, I mean —
It’s what you agree to.
Yeah.
There’s no right or wrong here.
If you decide that you want — you feel like your boys are going to get 1/3 of 50% and that’s not quite equitable, that’s actually between you and your girlfriend. And if you want to change it so everybody gets 25%, again, you have to decide what’s going to be fair, equitable, comfortable for you and your children. There is no right or wrong answer. I commend you for having succession listed as opposed to just leaving the two of you joint and that’s it, but how you split it up really depends on family relations.
There’s no rights or wrongs here. I’m sure you have provisions in there, what happens if her only child dies, what happens to that one half share that she would get, does that go to your boys, does that go to her family, and what happens if one of your sons isn’t there when both of you are gone?
Do you have grandchildren?
Yes, we do.
Okay, so there’s a term called per stirpes, so it would go down family lines. So God forbid something happened to one of your sons, his portion would be maintained through his direct family line.
But financially there’s no right or wrong in that, it’s really a matter of family dynamics and what you and your girlfriend have decided. If she contributed equally, you contributed equally, you love each other, her family should get her half and your family should get your half. That’s how I would look at it.
Okay, just maybe we’re looking at it too. I had it <Inaudible> this morning <Inaudible> as I’m drinking a cup of coffee I’m thinking about it. When we’re both gone, it doesn’t really matter anymore.
Well, that’s true.
I’ve already done <Inaudible> basically my boys and her girl, leave <Inaudible>.
Yeah, you have to have it all spelled out. And, we’re getting ready for Thanksgiving, if everybody’s happy and healthy I think this is a great time to discuss estate planning kind of stuff. So if you’re all getting together for Thanksgiving you can just let them know as part of the conversation between football and food. This is what we’ve done, and just so you know this is how we feel and it’s comfortable now, and it’s all done, it’s in place.
Okay, sounds like a plan, yeah, it sounds like a plan.
Alright Paul, thank you for the call.
Hi Paul, appreciate it, thanks so much. If you want Paul’s line, it’s 844-220-0965. 844-220-0965. It’s your last chance to get your question answered, so call right now because we’re going to come up against our break and we’ll have our last segment, so call right now if you have a question. 844-220-0965. Or you could text it, we’ll get some of the text questions coming up here in a minute. 21232. Right now it’s time to get the three big things you need to know.
Alright, it is the final segment here of On The Money with the Certified Financial Group, so let’s get right back to our phone lines at 844-220-0965. Talk to Ed in Deland. Ed, go ahead, you’re on with Joe, Bert, and Nancy at Certified Financial Group here on WDBO.
Hi Ed.
Morning Ed.
Good morning, thank you very much for taking my call.
Sure.
We went to the Social Security office a couple weeks ago for our spousal benefit on my side. 72, and my wife just turned 66. We went in and asked if she had any pensions, and yeah, she does, she’s getting a pension from the State of Florida as a teacher. She had been in the Social Security since 1960 until 1988. He said that she would be taxed on the amount that she will be withdrawing from spousal benefit amount. Is that correct?
You’re going — depending on what your income is, yes, that Social Security is taxable.
I understand that, but on her amount that she will be receiving each month, hers would be reduced.
Because she has —
Because of the winfall provisions, right. And if you look up winfall provision, it will explain to you clearly. I don’t have time to go into all of it right now, but it’s provisions for people who have had employment where there was non-Social Security contributions. That’s that little part that your wife falls into for the State of Florida. But look up winfall provisions.
It’s not a win, but you’re a loser in this case. That’s the way it is.
Social Security is a way of offsetting government pensions.
Ed, thanks so much for the call, we appreciate it. Let’s get to Phillip in St. Cloud. Phillip, you’re on with Certified Financial Group here on WDBO.
Morning Phillip.
Good morning, thank you. My question is I have a lump sum commencement, I’m going to take that out for my IRA. I haven’t earned any money this year other than what I’m going to take out. It’s $39,000, they’re going to tax it at a 20% rate.
Mmm, okay.
My question is when I file taxes with the tax form, am I going to pretty much take a <Inaudible> on that money or am I going to <Inaudible> some of that.
Have you taken the money yet?
No.
Okay, so what you want to do is move it from your corporate plan, roll it over to an IRA. The full 39,000 will go there. Then when you withdraw from the IRA you can con troll how much is taxed from 0% up to 20% if you choose. If money is coming directly from a corporate plan, it’s an automatic 20% withholding. Roll it over to an IRA first, then take your withdrawal.
I see, so <Inaudible> when I took that over into my private financial institution, then I have the control of taking what percentage of tax I want out of there.
Exactly.
<Inaudible> why are they allowing me to do that?
That’s the way the rules are.
Because those are the tax law rules.
If it comes out of a corporate plan, by law, they are required to withhold 20% if they send the check to you. If they send the check to an IRA account, there’s no withholding, and as Nancy said, you can determine what you want, when you want it, and at age 70 and a half you have to start making withdrawals.
Yeah, wow. Really interesting. Well, thank you for your time and thank you for your answer.
Thanks for calling, Phil.
Alright Phillip, thanks so much. Yeah. Depends on where the money’s going to, <Inaudible>. We’re about out at a time out, if you have been hanging on the line you’ll get a private consultation off the air from Joe and Nancy, but real quick before we get out what are the next workshops?
Workshops, two weeks from today? November 4th.
Yeah, November 4th, from 9:00 to 11:00, healthcare options in retirement. November 11th, everything you want to know about mutual funds, also from 9:00 to 11:00. Those are the last two for this year, hosted by Gary Abley. Go to our website, financialgroup.com, click on workshops, and reserve your seat.
Hope to see you there, thank you.
Alright, that’s going to do it this week’s edition. We’ll be back next Saturday at 9:00am. We have been <Inaudible> tomorrow right here on News 965 WDBO.
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Dictation made on 10/24/2017 5:46 PM EDT.
