December 13th, 2025 - The Year-End Checklist

This week on the Van Wie Financial Hour, the hosts covered a range of topics, including market conditions, the impact of AI on stocks, retirement planning, and tax strategies. Listener engagement is encouraged through trivia questions and live calls, allowing the hosts to provide tailored financial advice.

Transcript

Steven H Van Wie 0:00

It's Saturday morning, it's 10 o'. Clock. This is the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 0:05

I'm Adam Van Wie.

Joey 0:06

And I'm Joey Loss.

Steven H Van Wie 0:07

We are all together once again for an action packed hour. There's always things to talk about, but it seems like this year and this month and this season, all of it just multiplies it. Things are kind of goofy out there, but I guess that situation normal for this business anyway. So we got topics, of course, unlimited. My stack of stuff gets bigger instead of smaller every week. We'll see what we can get to today. Anyway, for the regulars, welcome back. Thanks for always being there. You keep listening, we'll keep talking as I say. And if you're new to the show and found it by accident or somebody told you about it, try to stick around for the whole thing. I promise you some things in life, not very many, but one of them is that you'll learn something. Can't promise you'll ever be able to put it to work, but you can't know enough. I say over and over that the most interesting people that I ever meet know a lot about a little and a little about a lot. So no matter what subject comes up, you should be well versed enough to talk about it. It's like raising your kids to be good enough to accept a date on a golf course or a bowling alley or tennis court or anything. The more well rounded you are, the more you can make friends and keep them. Just a little observation for this time of the year. Anyway, we'll get to all of that shortly. We'll be doing the market wrap. Of course, right after the first break we'll be having a trivia question and then we'll get into what we want to talk about. And if you want to talk about what you'd rather talk about, then all you got to do is pick up the phone down 904-222-8255

Steven H Van Wie 1:53

or 222-talk

Steven H Van Wie 1:55

and we will put you to the head of the class and see what's on your mind. So that all said, it is the Christmas season. Had a wonderful time last night. Went down to the Florida theater to see the the local production, all volunteer local production of the Nutcracker which, which had Adam's Daughter in it, which made it fun. And of course the music, especially in the second act, the music is music that we've all grown up being accustomed to and that's really more fun than the ones that I don't know as well. But it, it was just outstanding. The people were nice. The place is fantastic. I hadn't been in there since their last remodel. It's just unbelievable and cozy. Know it's not real big, not real small. So it was great. I'll let Adam sing his own praises for raising a kid that's that good rather than me continuing to do it. So take it away.

Adam Van Wie 2:51

Yeah, I had nothing to do with that. That's all her, her dedication. It's crazy. But yeah, it was good. There's two more shows today if anyone's interested. Noon and 7:30. I think tonight. So really worthwhile to go see it if you like the Nutcracker and you like watching local people perform ballet at a very high level. But anyways, let's get back to what it is we do here and talk about what happened in the stock market this week. It was kind of a mixed week. The large cap dow moved about 500 points higher but the tech sector came under some selling pressure and it was trading down about 1.6%.

Adam Van Wie 3:30

The broader market S P was down 6/10 of a percent. And so now for December, the Dow is the only index that's positive. Nothing, nothing crazy, it's just down a little bit. But except for the small cap. Russell2000, I didn't look at that one. So yeah, that is true. Yeah, I saw that. That was, that was, that's positive. That's a positive sign for the underlying market. That index has not performed very well over the last five, 10 years. Yeah, it's been pretty ugly. So what I guess the question on everyone's mind is is the tech worries about tech and AI Is that enough to kill a Santa Claus rally? Really? No way to predict that will be interesting to watch. The retail shopping season is supposed to be very strong this year and unemployment is very low, which is usually a good setup for December. But that doesn't mean the market's going to do what you think it'll do. So definitely will be. Will be something to keep an eye on. There was some news this week, but it wasn't a huge news week. So instead of doing that I thought I would put together a little list, a little checklist about things to look for at the end of the year because 2025 is fast coming to a close. I mean we are right around the corner from 2026 and there's a few things that you need to do if you haven't done them already. The first one and the most important one is that if you are age 73 or older and you have a 401k or an IRA and you haven't done so yet, take your rmd. That is the required minimum distribution.

Steven H Van Wie 3:48

And actually set a new record yesterday.

Steven H Van Wie 3:55

Exactly.

Joey 5:13

It.

Adam Van Wie 5:13

It's usually calculated by your custodian at the beginning of the year, and it's based on your closing balance on December 31st from the prior year. So the RMDs are calculated on. On the balance from December 31st from 2024 for this year. If your custodian doesn't provide it for you, it's pretty easy to calculate. You simply look up the IRS RMD table, and then you divide your balance on that date by the factor that they provide that corresponds with your age. This is the amount of money that must be removed from your account by December 31st. Inherited IRAs have the same basic. They work basically the same. You divide the total balance by a factor. But it's a very different factor table, and you'll have to look that one up separately if you have an inherited ira from which RMDs are due. And that is another confusing point. Not all inherited IRAs have RMDs. So if you have questions about this, please call the show today. We can walk you through the somewhat complicated

Joey 5:55

The.

Adam Van Wie 6:17

nature of inherited IRAs

Adam Van Wie 6:20

and sort of go into more detail about that. The reason that this is the first on the list and it's so important is that the penalty for not taking an rmd, well, it has come down recently. It is still very high at 25% of what you were supposed to remove. So, for example, if you have a $10,000 RMD and you don't take it, the penalty on that alone is $2,500. That is painful. Don't do it.

Joey 6:45

And you still owe the tax when you do get to it. So that's. That stinks.

Adam Van Wie 6:47

That's right. Yeah, yeah, yeah. It really does. Another way to satisfy your RMD is through a QCD or a qualified charitable distribution. And instead of taking the cash directly out of your IRA as a taxable event, instead you let the custodian know that you want to send a portion or all of your RMD to charity, and they send it directly from your IRA to the charity of your choice, this counts towards satisfying your rmd, but it is not a taxable event to you. And

Adam Van Wie 7:20

if you are of RMD age and you're already giving to charity, you don't. And you don't need the money from your rmd. You should definitely switch over to a qcd. Instead of just taking the money out and then giving it to charity, it's a way more tax efficient way to give to your, to whatever charity is that you support.

Steven H Van Wie 7:39

A word of caution there. Do it immediately. You need some days between you and the end of the year to make sure it's done.

Adam Van Wie 7:47

We're not at the cutoff yet, but just to be safe, I would submit it as soon as possible.

Joey 7:52

Yeah, I mean, by the next show, if we were to give you another reminder, you might be out of time. Some of the custodians cut it off like the 19th.

Adam Van Wie 7:58

They do pretty early. Yeah.

Steven H Van Wie 8:00

Right after the break, we'll talk about the option of delaying the RMD if you're 73 this year and what, what happens to you next year and I'll give you a really good reason or two to do it this year. All right. We will take a short break and pay some bills. Don't go anywhere. Right back. This is the Van Wie Financial Hour. 

Steven H Van Wie 8:13

Welcome back to the Van Wiee Financial Hour. I'm Steve Van Wie. 

Adam Van Wie 8:15

I'm Adam Van Wie

Joey 8:26

And I'm Joey Loss.

Steven H Van Wie 8:41

And we do have, as usual, a trivia question today brought to you as usual by Paul Lloyd at First Coast Alarm. You can call Paul at 904-636-7888. We've been talking about RMDs and retirement plans, that kind of thing. So today let's do a retirement plan trivia. About 70% of private sector workers have access to 401k style retirement plans. Now that could be a 403B or something like that, but I use 401k kind of generically because everybody knows what they are. Out of that 70%, how many of them actually participate in their company plan? What percentage?

Adam Van Wie 9:12

Good question.

Steven H Van Wie 9:13

It is a good question.

Adam Van Wie 9:14

I know it's been going up due to the automatic enrollment feature that's been added to a lot of plans.

Steven H Van Wie 9:20

What the man says is true. People so think that way. So it was such a simple thing, wasn't it? You had to opt in before and now you only have to opt out, Right? Of course people are going to get caught up in it. It's brilliant in its simplicity. I would say definitely.

Adam Van Wie 9:23

Yeah.

Adam Van Wie 9:27

Yeah.

Joey 9:27

Yeah.

Adam Van Wie 9:39

I. Didn't someone win a Nobel Prize for that in economics, I think.

Steven H Van Wie 9:43

I don't know. It was for that one.

Adam Van Wie 9:45

Well, it might have been the guy who, who.

Steven H Van Wie 9:47

Yeah, the father of the 401k.

Adam Van Wie 9:49

No, it was like. It was a, a behavioral economics guy. I think he's in Europe and he wrote a Book about nudges. And it was simple things like this that can make a huge difference. Yeah, I, I'll have to look it up another time, but it's just sort.

Joey 10:03

Of a hilarious experience. Exposure of the human nature of inertia. Whatever you automatically do for me, I'm just not going to bother it.

Adam Van Wie 10:07

Yes.

Steven H Van Wie 10:11

Yeah, we're gonna, we're gonna go back to Adam. He's got more to say on this. But I want to mention also I want to mention some things about the Australian superannuation system. They do some things that would be probably very controversial here, but it's wildly successful. So we'll leave you with that thought. Canada, similar to. Okay, but first. Good morning, Greg.

Greg 10:39

Good morning, gentlemen. Merry Christmas.

Steven H Van Wie 10:40

How's. Same to you.

Greg 10:44

Yeah, thank you. Hey, you know, the markets were last couple of weeks been pretty interesting. I noticed in last week the advanced decline on one day would be three to one positive, then the next day would be three or the other way around. And I was kind of looking at that and I was like, looks like the market's a little nervous. So I did a little back of the napkin kind of research and I just want to throw this out at you guys and get your thoughts. First of all, last week the transports reached a high and we had a front page indicator that was triggered last week. You know what that is?

Steven H Van Wie 11:35

I don't think so.

Adam Van Wie 11:36

I'm not familiar with that term.

Greg 11:37

Yeah, well you, you will now. Time magazine put on the front cover architects of AI.

Joey 11:45

Oh, I know where this is going.

Greg 11:47

Yep, Forbes and Fortune magazine, Forbes or Fortune had Jensen Hong on the front page. And last week the Fed cut and they announced the end of

Greg 12:05

qt and although they didn't admit it, they're actually doing qe And I'll get to that in a minute. The similarity is back In May of 2000 the transport index hit a high. The front page indicator was John Chambers and at the time Cisco was the highest valued company. In 2000 the market made a high on 10 of October of 2000. And it was right after that that it topped out and broke down. The first rate Fed rate decrease was in January of 2001. And the market finally turned around in I think roughly October of 2002. Now bringing the Fed into the picture. And I don't know how closely you follow the repo market, but here's a few interesting points recently. About a month ago the repo rate was higher than the Fed rate. And that's the problem because it should be the other way around. I Think it's come back in a proper alignment but the repo is collateralized and it was causing the financial liquidity pipeline to begin to back up, which had the potential if it was left unchecked to freeze up. What we don't know at this time right now is whether the Fed is ahead of the curve or not. We'll just have to wait and see on that. And then finally the Fed stopped QT and started qe. But they, they haven't really acknowledged that and I don't know if you caught this but last week I think it was Powell said in his news conference that they are going to just let the 30 year bonds roll off and start purchasing two year treasuries. And of course they're using the Treasuries now to fund the government. My observation at this point point today is that the debt burden is oscillating quicker and that's I want you to think about, imagine if you had to refinance your home every two years, what that would look like. So

Greg 14:21

you know I kind of like look at cycles. I like to look at the history of the markets. I do think that they repeat and I just noticed last week that the market or I noticed recently that the market reached a high this past couple of weeks. They haven't been able to, to confirm the high and I noticed that and this doesn't mean anything right now, but it's something to be watched that the NASDAQ broke below a key point and it was the first reversal bar of that type that I've seen since maybe April. And I'm just not sure what we're looking at moving forward but I just think it's something to just keep in the back of everyone's mind. There are similarities here. Not saying it's going to happen, but it's something worth noting.

Steven H Van Wie 15:21

Couple observations back in the 90s when Newtown took over as speaker and they actually had a, what I'd call it a mathematical

Steven H Van Wie 15:32

budget balancing. It was a little bit of smoke and mirrors but they actually stopped issuing 30 year bonds in because the rates were much higher, was a steep curve and they, they went to lower rates and lower, lower replenishment rates on that. It didn't last all that long but it's been tried and I would call it a dismal failure. Also the Fed has been talking lately about going to a 50 year bond. I don't know what status that holds right now but I'm not sure that they actually have a really good handle on what they're Doing that's, of course, you know me, I am so biased against the Fed. I wish it just didn't exist and I'm never going to get my way on this. But it'll keep me enthusiastic about the possibility. So I think there's a big change coming, perhaps a sea change coming in the leadership of the Fed. It looks to me like one of the two Kevins is going to wind up in, in that role, and either one of them would be a fantastic relief. And they might even be a little too willing to do some things, but at least they're going to be willing to try. In other words, I don't have the faintest idea where this is all going and I don't think anybody else does just yet either that the, the market itself, that the NASDAQ was being driven by the Magnificent Seven and they fell out of favor a little bit like Oracle got a little overzealous in, in their capital spending. And it's not a meltdown exactly. It's still very important. There's a lot of money being spent on it, but I think it needed a breather, whereas what's going on now is construction. And construction favors a whole different set of industries. Hence the transports hitting a high. I think railroads will do real well. There's going to be a lot of construction materials being sold. In other words, I think we're shifting our focus in the market to more traditional businesses. And I can only think that that's a very good thing because they're built on solid ground. What to do about it? One suggestion, instead of buying the, the S&P 500 index by the equal weighted, because that'll, that'll tamp down the influence of the Magnificent Seven, and perhaps some of these little ones on the shorter end of that will start making a bigger play. And it's just one way to look at the future. What do you guys think?

Joey 18:09

Yeah, I mean, Greg, I think there's a lot of really thoughtful observations in what you shared. I think, for one, it's worth noting it's just a human nature tendency when it comes to investments to try and find where in the storyline we are. And look, you can pull together a sea of data points that say this is very similar to 2002. This is very similar to any, you know, any other set of events that have happened in history, because it creates a sense of comfort and knowledge and control of where we are and what we should do about what we're seeing. The challenge is what is the opportunity cost if that doesn't play out the way it did the last time. And I think that's where investing becomes a discipline of decisions we've made in the past instead of trying to adapt constantly to whatever it looks like is happening right now. I know that's not a very prescriptive answer, but I think it's sort of a philosophical investment observation that responds.

Steven H Van Wie 19:06

Makes a lot of sense to me. We're back to having successful 60, 40 portfolios now three years in a row in double digits. To me, that's a positive. I don't like the leveraged,

Steven H Van Wie 19:20

very sharp increases that we've been seeing because of the Mag 7. I'd much rather have a more normal environment then, then the influence of something. For instance, if they decide Cisco will break down or, or Nvidia is going to break down, then you don't feel it much. But if you own a bunch of it, you'll feel it really badly. So think about some things like that. And I'm not running away from the market, but I'm sure not looking to increase my risk profile.

Adam Van Wie 19:49

I, I kind of like where the market is right now better to minority. But I, I can explain it after the break, but, but I, I'm not afraid of the market right now.

Steven H Van Wie 19:58

I'm. I like the interest rates right now too. I think they're, they're conducive enough without being ridiculous. All right, we. We have to run. Thank you. I appreciate the call. And we'll be right back after a short break. 

Steven H Van Wie 20:14

This is the Van Wie Financial Hour. Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 20:16

I'm Adam Van Wie.

Joey 20:17

And I'm Joey Loss.

Steven H Van Wie 20:18

And I want to get right back to Greg who wants to take a shot at our trivia.

Steven H Van Wie 20:24

Thank you for holding on.

Greg 20:26

Yeah, no problem. Thank you. So. Well, let's repeat the question, make sure I understand it completely.

Steven H Van Wie 20:34

Only about 70% of American workers have access to a 401k type plan. Out of that group that has access, what percentage of them actually participate?

Greg 20:47

Okay, what percentage are actually participating?

Steven H Van Wie 20:50

Yes.

Greg 20:52

I'm gonna say. I'm gonna throw. It's gonna be,

Greg 20:57

I'm gonna say maybe around 87%.

Steven H Van Wie 21:02

Well, I'll tell you what, it's either 85 or 86, depending on whose advice you take. And I made the range 85 to 87 to account for any errors, which means. Ding, ding, ding. We have a winner.

Greg 21:17

Awesome.

Steven H Van Wie 21:23

Now, I think Adam's little hint was a good steering to get us that way.

Adam Van Wie 21:30

I wouldn't have guessed that High, though? Yeah, I would have guessed in the 60s, probably.

Joey 21:31

No, I would have been way off.

Steven H Van Wie 21:34

I first read from somebody that it was only 50%, and I. I said that is incorrect information. So I went and studied it this morning and came up with two different. Two different people saying it's 85 and 86, and both credited the automatic enrollment feature for it being so high. Yeah, it's wonderful. All right, I'm going to put you on hold, and we'll get Roger to pick your information, and Adam will send you a little something early in the week.

Adam Van Wie 21:55

That's incredible.

Greg 22:07

All right, guys, thank you so much for taking my call.

Steven H Van Wie 22:10

Thanks for calling and Merry Christmas.

Greg 22:12

You too. Merry Christmas.

Steven H Van Wie 22:15

That was fun. I was like it when people take a stab at something and hit. Doesn't happen real often.

Joey 22:22

I also love focusing on a successful piece of policy. A simple change that helped people.

Steven H Van Wie 22:25

Yeah.

Adam Van Wie 22:28

The government did something good. We have to give credit where it's due. And you won't hear that very often yet.

Steven H Van Wie 22:33

You really kind of owe it to yourself and everybody because it happens so rarely. In fact, I've started organizing my show notes into piles. I've got one that says good things, good ideas, then one that says bad ideas, and one that says discuss. So depending on my mood, I'll pick one off of the pile. And if I feel like I'm. I'm getting a little surly, then I'll. I'll do a good one.

Adam Van Wie 22:37

Yeah.

Joey 22:58

So it brings me back, if anyone's curious. Uh, I'm sitting here looking at the piles. The good news pile is a lot smaller.

Adam Van Wie 23:07

Yeah.

Steven H Van Wie 23:07

And then I got another one called priority, which we'll get to shortly. Adam, you want to say something more about.

Adam Van Wie 23:12

Yeah, we've got a few more things in my checklist for the end of the year. Um, Roth conversions. If you're considering a Roth conversion, it's now time to get those done. Another Th. This one you can probably do right up until through the New Year's week, but I would not wait that long. You just want to make sure you get these things done within a reasonable time and that you're. That you don't run into any snags with your custodian.

Adam Van Wie 23:38

The Roth IRA is different than a contribution. Basically, what happens is you take money from a traditional IRA and you move it over to a Roth ira. It is a taxable event to you at your marginal rate, and it is. And then it goes into the Roth, where it can grow tax free forever, and it is not subject then to RMDs later on. So lots of good reasons to do a Roth conversion. There's no limit to how much you can convert, but it generally makes sense to do it in the lower tax brackets and not in the higher tax brackets, because you end up running, you end up paying more in tax than you'll get back in return. Potentially

Adam Van Wie 24:19

the best way to do this, run a tax projection for 2025 based on what you know. And what you know at this point is most of your taxable situation because the year is almost over. And so you can do that through. Through, like, whatever software you use for doing taxes. You can go into Quicken and just not file a return. But go and put in all your information and it will give you a very accurate idea of what your taxable situation is this year. So just be really careful when you're doing this. Jumping from the, say, the 12% to the 22% bracket isn't always just a 10% increase in your marginal rate. It can actually be higher than that. But because every time you move up a bracket, there are other things that may happen. In this case, you could actually get taxed on some capital gains that were previously not taxable. And so that makes your marginal rate creep higher than just that extra 10%. So lots of little tricks to look out for. Be very careful. And planning is absolutely key here. So do your tax planning.

Adam Van Wie 25:27

Technically, your IRA deposits for 2025 are not due until tax day, but you really might want to think about getting those in by the end of the year. There's no technical reason you have to do that, but there are some reasons for just, just that you might want to. You get a little bit of extra time in the market, and the limits for contributions for next year are changing. And so if you do monthly contributions, you're going to want to start upping those. And you don't want to get screwed up between your 2025 and your 2026 IRA contributions. So if you have the money, go ahead and move it over before the end of the year. It's not going to hurt you.

Steven H Van Wie 26:05

Well, you know, you're not going to make one classic mistake. If you get it in this year, it's not going to get mislabeled as a next.

Adam Van Wie 26:11

We had that happen, actually. I had to go back and have it re. Relabel 2024. Yeah. And Schwab was really good. They did it in just a couple of days. But then we were. We weren't allowed to do our 2025 contributions because they had been mislabeled by Schwab. They switched it and then we were able to do it. So that does happen for IRAs. You are actually getting an increase to $7,500 next year. That's $625 a month if you're over 50. This is interesting. It goes up to 8,600 or $716.67

Adam Van Wie 26:47

a month. 401ks are also increasing up to 24,500

Adam Van Wie 26:52

or 32,500 for those over 50. And if you're 60 to 63 years old next year you get a special catch up of another $11,250

Adam Van Wie 27:03

or almost or $937 a month. That's. That's a lot of money to put away in your 401k for a few years.

Steven H Van Wie 27:09

Yeah. And if you're 65 and still contributing to IRAs, that's a good thing. They used to cut you off. They don't anymore. Just another thing to think about.

Adam Van Wie 27:19

No.

Adam Van Wie 27:22

But go ahead and change your 401k contribution for next year if you've already made your last deposit for this year. Just so you don't miss out some of those January contributions being at the lower rates or the lower maximums. Just make sure that you get it all sorted out for next year and do that now if you've already made your last one for this year. A couple other things. If you have a taxable account with gains and losses, do some tax loss harvesting. Harvesting. If I could talk. That just means sell some of your losers and use those losses to offset some gains. That'll help you out in the future. You can also deduct $3,000 in losses on your taxes anyway. So if you have that, go ahead and harvest those and use those for your for your tax return for 2025. Check your HSA and FSA funds. If you have a use it or lose it, type fsa. Go ahead and get that split spent by the end of the year or sometimes they give you a grace period into next year and make sure that your hsa that limit's going up next year too. So if you want to max that out, go ahead and change the amount that you get withheld now and then. Lastly, this is always a good time to think about rebalancing your account. We've had a great year every almost everything is up, but some things are up more than other. If you have gold and silver, you're probably sitting on huge gains from this year. May want to look at selling some of that and buying something that hasn't done quite as well this year.

Steven H Van Wie 28:48

I sold a little personally yesterday for 181 profit.

Adam Van Wie 28:53

Yeah, they're huge gains. Silver's up more than 100% I believe this year. And so, yeah, just a good time to look at a rebalance and get things back to where they should be.

Steven H Van Wie 29:02

Another reminder too. If you're a W2 employee who earns more than $145,000 a year, you your catch up contributions in your 401k change over to mandatory Roth starting January 1st. Don't do that unless you've got so much money that you can fully fund your Roth IRA first. Or if you can't do it because of income. Talk about a backdoor. But just let it be known a Roth IRA is a much better place to have your money than a Roth 401K. And your employer may or may not have that system set up, but if not, then you can't do anything. So if you have any questions about those on a technical basis, call us at the office or, or shoot us an email on the website and we'll, we'll dig into it for you a little bit. But there's some complexity there.

Adam Van Wie 29:53

If you're a high earner though, and you have a 401k and you also have IRAs, this is actually an opportunity to sort of force you to put some money in a Roth, which you wouldn't be allowed to do otherwise. So it's not a bad thing, it's just a different, it's a change in the way you think about contributing to your, your 401k. You know, most high earners don't do Roth because obviously the traditional makes more sense in, in getting that tax deduction now.

Steven H Van Wie 30:21

Yes, especially for high earning people.

Adam Van Wie 30:22

But if you can't do it and you can get some money into a Roth, it's not a terrible idea.

Steven H Van Wie 30:27

No, I like it. Be, you know, just be of the mind where you figure out how much you can put in and really try your best to get it all in there. I know it can be a burden on people, but nobody else is going to take care of you nearly as well as you do.

Adam Van Wie 30:45

You only get one chance to save for retirement and if you don't do it, you're going to be working for a long time.

Steven H Van Wie 30:51

And if you're supporting your kids, as we discussed last week, the average person supports them to the tune of about 18,000 a year. And you're not maxing out your own retirement, you're doing it wrong. Plain and simple, you're doing it wrong.

Adam Van Wie 31:02

Yeah.

Joey 31:05

Just a closing note on that general thought with. Regarding the retirement accounts, something that we've noticed is custodians vary widely in how clear they are in their communications about what kind of money you have. When you go to do a rollover, it's not always obvious that there's a pre tax pot. There's a Roth pot. There can sometimes be a third pot that looks like after tax, which is somewhere in between. It's really a good idea if you have a big rollover and you're just not 100 confident about where the money goes to go talk to somebody for an hour who's really confident. Because the worst thing you could do is take Roth money that you've already paid taxes on for your working years and accidentally put it in an IRA where it's going to get taxed again.

Karen 31:26

Between.

Steven H Van Wie 31:44

And you might not even know that you made some contributions on a non deductible basis.

Joey 31:49

Yeah. And the IRS isn't going to say, hey, this doesn't make any sense.

Steven H Van Wie 31:52

Nope. You've really got to be careful. That's call a certified financial planner or three. We'll give you the number. We'll be right back. Don't go anywhere. This is the Van Wie Financial Hour. 

Steven H Van Wie 32:04

Welcome back to the Van Wie Financial Hour. I'm Steve Van Wie.

Adam Van Wie 32:06

I'm Adam Van Wie.

Joey 32:07

And I'm Joey Laws.

Steven H Van Wie 32:08

We've been going through some high level intellectual discussions about IRAs and 401ks and so on. And I'm telling you, if you think you know the rules, I'll tell you a little secret. We as certified financial planners know more about the rules for, for Roths and regulars and IRAs and all that stuff than most accountants and most other people. And we don't know everything. We have to look up how many times a month you look up a rule because they change a lot. And I'm not going to trust my memory on a detail that could affect a client. That's for sure. So we'll get it right. But we, we know one thing. We know what is possible. And that is very important because once you understand that it's possible, you can look and see if it applies to you.

Joey 32:56

Yeah. And I think I'll. If I could adjust the comment a little bit, it would just be that we have a good sense from the application standpoint of actually facilitating things that depend on tax comprehension. But we have had multiple instances where it takes a village to get the thing done properly. And we like working with CPAs because their angle of attack is different than ours, and it's important that both are at the table.

Steven H Van Wie 33:18

Absolutely.

Steven H Van Wie 33:23

All right. Karen has a question. I got one quick. Just a note. There's a new bill that's been introduced by Bob Latta, Republican of Ohio, that would allow Social Security recipients to contribute to HSAs. For those people who aren't on B yet, but they've automatically been placed in A. So if you're like that and you're still working so you don't have B, then remember that you can look at an hsa. If this goes through, it'll require some changes to be made. Good morning, Karen.

Karen 33:55

Good morning.

Steven H Van Wie 33:56

How's everything?

Karen 33:57

I'm fine. And how are you?

Steven H Van Wie 34:00

Never better, thank you. What's happening?

Karen 34:02

Good. I've got a question concerning Roth. I have a Roth, and I

Karen 34:11

got, you know, got it out of, like, a regular type situation, and I've paid the tax on it, all that stuff. My question is, the husband is 73. I'm 69. If I were to go first, how does that all work? Does it stay in that Roth? Is there anything that he would have to do?

Steven H Van Wie 34:36

Retitle it to make it his Roth?

Joey 34:38

Yeah. Spouse. Spouses have the best situation. Obviously, you hope you don't find yourself in that situation, but if you do, the spouse just basically recreates the Roth wrapper in their name, and the assets move into that account. And roths never have RMDs, whether it's a spouse or inheritance inheritors. So otherwise it's the same. So the tax benefits remain.

Steven H Van Wie 35:02

You can treat a retirement account as an inherited account of your spouse, but you can also just change it if you'd rather, just change it over to your name. And that. That usually depends on the exact age of the people who passed and the exact age of the people who are inheriting.

Adam Van Wie 35:17

Just. Just make sure you have your beneficiary designation up to date, and it has his name on it, because that is the most important piece. Piece of that whole transaction.

Karen 35:27

Yeah, that. That's already in play.

Steven H Van Wie 35:30

Perfect. Then you. You have nothing more to do except hope it never happens.

Greg 35:35

Yep.

Karen 35:35

Okay. The other thing is, if. If we're both gone, whatever. The other beneficiary would be my daughter. Now, that would be a different. Handling of that.

Steven H Van Wie 35:45

Yes.

Adam Van Wie 35:47

Yes.

Joey 35:48

So the tax. The tax benefits remain, but if it goes to your daughter, the only rule that starts to apply is by the end of the 10th year following your passing, the money has to be out of the account, and the Guiding strategy. There is. It's a tax free account. There's never going to be RMDs for every one of those 10 years. So just let that money grow tax free until the 10th year. Pull it out and use it or reinvest it.

Steven H Van Wie 36:13

Yeah, or anytime if it's needed. For daughter decided she had a major exposure expenditure she wanted to make. She just tapped the account with no tax penalty whatsoever.

Joey 36:22

Right.

Karen 36:23

Okay, now I have one other thing and I don't know if this would be in Yalls wheelhouse or not

Karen 36:31

if. Oh my God. Sorry. In your moment. Forgot.

Steven H Van Wie 36:35

It.

Adam Van Wie 36:37

Happens to the best of us.

Karen 36:40

Yeah, but that was the most important thing I wanted to know. And I know as soon as I hang up. I'll probably remember.

Steven H Van Wie 36:45

Well, we're here. You know the number. If it comes through the process of hanging up, call us back.

Karen 36:53

Okay. Well, thank you so much and you guys have a nice holiday.

Adam Van Wie 36:57

Thank you too.

Steven H Van Wie 37:00

The one thing I got to say about the government's treatment of unequal treatment of people who inherit a retirement plan, it makes a lot of sense. Look at that. We said something nice about the government again. But having your spouse be treated better than everybody else, I have no problem with that.

Adam Van Wie 37:21

No, that's a good rule. And, and the, the Roth rule, I mean the inherited rules changed a while back. You used to be able to just stretch it over your lifetime. And that going away was a. It hurt some people. But honestly it's not a terrible rule.

Steven H Van Wie 37:36

But we analyzed that pretty thoroughly when it happened and we came out with it's a net positive. Unless you're one of the unlucky people, of course, then it's a net negative.

Adam Van Wie 37:45

Right, but, but allowing everyone, allowing an inheritor to let Roth money grow for 10 years, that's like a gift from the government, isn't it? That's one of very few ways to get tax free money in this world.

Steven H Van Wie 37:58

And never tax into growth on it. As of right now, it is still that big pool of always untaxed money. You know, they're looking for a way to get it. They haven't found it yet.

Adam Van Wie 38:00

Right.

Adam Van Wie 38:08

Yeah. If you're, if you, and if you're in a, like a situation where you have several siblings and you get an inheritance from your parents and there's several pools of money and you see that Roth money, you can just volunteer, go ahead and volunteer to take the Roth money.

Joey 38:25

Yeah. So you'll do that for them.

Adam Van Wie 38:27

Yeah. That's the money that you want.

Joey 38:29

Yeah.

Steven H Van Wie 38:29

It's very good. You're Right. All right. Mentioned something last week. We got just enough time to cover a little bit. A new bill would allow charitable IRA rollovers,

Steven H Van Wie 38:42

key rollovers to donor advised funds. And as I said last week, you guys know more about donor advised funds than I do, but this really sounds to me like a potential windfall for your particular charities that you're looking for. Would you guys explain a little bit about what it is and what it would mean to people?

Adam Van Wie 38:59

Yeah.

Adam Van Wie 39:03

Yeah. So I thought it was that you could leave it as a beneficiary on your ira, is that right?

Steven H Van Wie 39:09

Well, this one, I think you can do that too. Under current law, QCDs must be made directly. The IRA charitable rollover facilitation and Enhancement act would give older donors more flexibility and they're underutilized. So basically what we're looking here at is allowing a QCD type qualified charitable donation to a donor advised fund, which makes your giving more flexible, as I understand it does.

Joey 39:40

Yeah, I think that's great because one of the challenges of QCDs, if, you know, there's so many opposite sides, excuse me, so many upsides, but one of the few downsides is people like to give regularly to things like their church or any community that they're involved in that involves a nonprofit.

Steven H Van Wie 39:55

Bingo.

Joey 39:57

QCDs are a little bit administratively heavy. And, and so people tend to do that in a chunk once a year just to get it done and get the tax benefit. If you can move that to a QCD and then at the client level or the retail person level, any individual out there can just cut checks from their donor advised fund as they please. Then it starts to feel regular. But you also got the tax benefit. That's the best of both worlds.

Steven H Van Wie 40:18

So the people who run the fund, the donor advised fund, have to listen to what you want to do. That money you put in.

Adam Van Wie 40:26

Yeah. Yeah, they, they call it a recommendation, but it's, it's.

Steven H Van Wie 40:30

They have to do the recommendation. You better follow.

Adam Van Wie 40:34

Yeah.

Joey 40:34

You're the sole grantor.

Adam Van Wie 40:36

Yeah, it's the donor advice advice. Funds are really cool. We just had a situation where we have a client that inherited a large sum of money. They wanted to give a bunch of. They're young, youngish and they wanted to give a bunch of it to a, to their church in a lump sum. And they were just going to sell some things and don't. And donate the money. They're very charitable. That's great. I said, no, we're not going to do that. What we're going to do is open a donor advised fund we're going to transfer some highly appreciated stock into the fund, and then we're going to make the same donation out of your fund. So that way they got that. They still got the tax deduction for the contribution to the donor advice fund, but they also eliminated a bunch of future capital gains and didn't pay any capital gains this year.

Steven H Van Wie 41:24

So that falls under that sort of hard and fast rule. Don't give your highly appreciated stock a chance to get taxed by selling it. Instead of that, you go through this or a direct contribution or whatever, especially if it's going to a charity.

Adam Van Wie 41:34

Right.

Adam Van Wie 41:40

It's a win. Win. Yeah.

Joey 41:41

Gifting stocks is one of those silver bullets. That's just not.

Steven H Van Wie 41:44

Yep. I'm. I'm always kind of upset when I hear stories like that. Well, I. I targeted this money for my grandson, so I sold the stock and gave him the money. Well, no, you just paid the tax on it. So either you got to pay the tax out of your pocket or consider it having given him more money or something like that, but you just wasted all that effort, and it wouldn't be necessary. So very often, you know the old expression, look before you leap, right? And at a time when stock markets are very high, like right now, a lot of people are sitting on a lot of gains out there. Don't. Don't be afraid to come in and talk to us. Anybody can get an hour free. Bring up whatever you want to bring up, and we'll. We'll sit there and. And tell you what we think, and at least it'll give you that. That kind of direction. We never tell you what to do, except if you're like Adam. He says, no, that's not what we're going to do.

Adam Van Wie 42:00

Yeah.

Joey 42:17

Yeah.

Adam Van Wie 42:47

Happens once in a while. Well, they could have said no. Yeah, they wanted to, but they were all. All about that idea.

Steven H Van Wie 42:52

But our whole. Our goal in all of this is not to tell you what to do, but to teach you what's available to be done. Because if you don't know how to ask the question questions, there's a very small chance that you'll ever get it right.

Joey 43:06

Yeah. And if you can't tell, when it comes to tax opportunities like that, we just get excited. That's why he's like, that's not what. Never met because it's so cool, and I'm dying to do it.

Adam Van Wie 43:13

We'Re going to do.

Steven H Van Wie 43:17

More dedicated to helping our clients save tax money than these right here. All right, well, we'll be back again next week. Obviously, the hour kind of flew by thanks to all the callers having those questions come up. You never know what direction it's going to take us, but it's always fun. That is the the fun part of talk radio as far as I'm concerned. If you're live, you can change your course. If you're recorded, you can't sleep on that one. See you next week. Thanks for listening. This is the best.