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More than Money Newsletter - October 2019

More than Money

with Gene Dickison


October 2019

Dear Friends,


“Real Life Questions – Real World Answers”

We’ve lived in our home for almost 30 years.  Now we’re moving and have it under contract for sale. Our problem is our property has our home and also a small shop – all on the same deed.  Over the years we’ve made a nice side income from the shop.

Our sales price is $435,000 which means we’re well under the limit for selling without paying taxes.

I’m worried the shop is going to trip us up?

Income taxes certainly can trip us up – and this is a good example. 

The IRS will likely view your sale as two sales.  The first is your home.  The second is your shop.  The first appears to be income tax free as it is under the $500,000 of residence profit a couple can realize and pay no capital gain taxes.  The second may very well trip you up.

If you treated your shop as the base of operations for your business (tax deductions, depreciation, etc.) you will need to report that separately.  You will need to determine (appraisal most likely) the portion of the sales price ($435,000) should be attributed to the shop.  If, for example, that value is $150,000 you will need to report that as the proceeds from the sale of a commercial/investment property.  To the extent the $150,000 exceeds the cost basis attributed to your shop – taxable gain!

Do not consider this a DIY project!  Work with an experienced tax professional and document your numbers as completely as possible.  Done correctly, this shouldn’t be terribly painful.

My husband is a teacher and will be retiring at the end of this school year.  He has been in PSERS since he started teaching in 1987.  We went to a conference to review his retirement options.  He has many different options to give him income and then something to me as well when he passes.  We’ve got that part pretty well figured out.

He also has almost $250,000 that he can either take out or leave it.

Which should we do?

 It depends.

We see many circumstances just like yours as we assist lots of folks (teachers and other state employees) each year with pension decisions around their PSERS choices.

Leaving the $250,000 in your plan will increase the monthly guaranteed income your husband (and you) will receive over your lifetimes.  If you need (or simply wish) additional guaranteed income – this is a good thing.  If your budget requires additional income – this is your only choice.

Sadly, the down side of this additional income is . . . when you go so does your money.  If your financial goals include leaving some or all of this money to your children, grandchildren, charities, friends, etc. – this will not happen.  At your deaths the money is gone - back to the state.

Rolling the $250,000 into an IRA preserves your ability to pass these funds (if any are remaining) to your chosen heirs at your passing.  Additionally, it provides you with a vast array of investment options to meet your financial goals.  If guaranteed income is attractive to you, you may choose to use a portion or all of the funds in some form of annuity that will provide income to you and leave a legacy to those you love.

So, you see, it depends.  It all depends on your financial needs and wishes.  Once you’ve identified what you most wish this money to do for you, the decision on what to do will become much, much easier.

If you wish to project out your retirement needs over your lifetime, contact our office, schedule an appointment with Mark Belcak who will assist you with our retirement planning program JourneyGuide.

Thank you for your show.  I’m sure you help a lot of people.  I heard you tell a listener last week that they could put an annuity inside an IRA.

I’ve always heard that is a very bad idea because the IRAs are already tax sheltered.

You might want to correct your answer.

Thank you for your email.

I might want to correct my answer.

I don’t, but thanks for the offer.

One of the reasons a financial advisor’s work is so challenging is that he or she must combat lots of “I’ve always heards . . .”.  There are bunches of them.  Most of them start with a kernel of truth and then reach an unreasonable conclusion that – somehow – sounds kind of right.

Your hearing is not better – or worse – than anyone else’s.  What you’ve heard has a kernel of truth.  Both IRAs and annuities are both tax sheltered – that part is true.  And if the reason for investing in an annuity is for tax-deferral than using IRA funds would be (likely) unsuitable.  If the only valuable attribute annuities had was tax deferral than you and I are close to agreement.  However . . . there’s much more to the story.

Annuities come in many flavors.  The broad categories, Fixed Annuities, Equity Index Annuities, and Variable Annuities each offer an investor certain advantages.  And, of course, they also offer certain disadvantages.  While they all offer tax deferral, each offers very different investor experiences.

We do not have the space to provide a complete list of all the reasons why someone might choose to use IRA funds to invest in an annuity.  We can give you one example and encourage you (or someone considering this action) to meet with a qualified advisor who can give a complete and personal analysis of the suitability of such an investment.

Annuities are one of the few investment platforms that can offer guaranteed lifetime income.  If an investor sees guaranteed lifetime income as a high priority then investing IRA funds in an annuity may well be the best solution.

There are even a number of well-respected financial experts who advise clients to specifically invest their Roth IRA funds in annuities.  Their advice is based on the expectation that these Roth IRAs would then provide a lifetime of guaranteed and tax-free income.  If your goal is a lifetime of guaranteed and tax-free income – this idea might fit you.

Be clear.  Annuities are recognized by all worthy financial advisors as complex financial instruments and platforms.  They have advantages and disadvantages.  They must be carefully evaluated to determine the proper (or not) fit for any individual. 

Annuity salesmen (listen to the radio all weekend long) want you to believe that everyone should invest their money in an annuity.  They are salesmen.  Enough said.

Professional advisors want you to believe in the value of careful examination, patient education, and personal evaluation before you select where to invest your hard earned money.

Our More than Money advisors have exceptionally careful, patient, and personal systems to assist you in making the financial decisions that are in your best interest.  Feel free to contact our offices to receive the benefits of their thoughtful advice.


More than Money Radio and Television

Have Breakfast with Gene every Saturday Morning at 8:06 as

More than Money with Gene Dickison airs on AM790 WAEB.

Two Full Hours – 8:06 through 10:00 AM.



Words are Powerful Tools for American Freedom

Sometimes ideas won’t leave you alone.  Sometimes words keep coming at you from unexpected directions.  Sometimes God gently guides you to a certain way of thinking.  Sometimes he pours it on you without relenting.

Here I share some ideas that started with the word ‘free’. 

“Politician has become a reviled word among thinking, patriotic, hardworking Americans.  And, for good reason.  Bad politicians (oxymoron?) offer our children and grandchildren everything for free.  Good politicians (contradiction in terms?) stand on the sidelines hoping their silence will insure their reelection to their ‘club’ - Congress.

Everything for free.  Free college.  Forgive all student debt.  Free health care for life.  Free money without the ‘need’ to work.  Freedom from all responsibility.  And they ask nothing in return.

But that isn’t true.  They ask for the very worth of our children and grandchildren.

Hard working Americans receive more than a wage, health care, and their bills paid.  Hard working Americans take pride in their work.  They take pride in their freedom.  They can take pride in overcoming challenges and adversities.  They take pride in paying their bills, getting out of debt, and saving for their families and themselves.  They take pride in sharing their success by helping others in their families and communities that need their help.  They take pride in teaching their children the values of hard work, perseverance, and integrity.

And, at the end of their lives, these ‘normal’ Americans have the pride, self-worth, and freedom that comes from taking on life’s challenges head-on – themselves.  They do not ask for guaranteed outcomes – for they know the true cost of such ‘guarantees’.  They simply ask for a level playing field on which to compete and – with God’s help – succeed.

Politicians will never say it out loud, but what they want from our children and grandchildren is their very self-worth.  Their pride in a job taken on and accomplished.  Pride in paying their own way.  Pride in providing for their families.

They want the self-worth of our children and grandchildren to be so degraded that they feel themselves unworthy of freedom, choice, and self-reliance.

Only a nation that has been told repeatedly that it is unable and unworthy of the freedom of managing their own affairs and stripped of their pride and self-esteem would bow to the altar of socialism and accept ‘free’ everything.  Only a nation where a small minority can force the grand majority to remove God from the very fabric of our governance and can substitute the halls of Congress for the churches of the free and the brave.

Sadly, many of our young people have been ‘educated’ to believe they are unworthy of the freedoms America has so long stood for.  Their lack of self-worth is seen in the rising tide of addictions and suicides.  Their lack of self-esteem is seen in their willingness to accept the policies of their socialist icons that are most obviously intended to destroy America as we know it and relegate it to second-rate to the more ‘acceptable’ regimes on the world stage.

Is all lost?

Not on your life.

I’m certainly not aware of an ‘easy’ road back to American freedom, but I do have three ideas that might help.

(1)   Vote as if the future of America depends on it.  It does. Term limits would be a solid step in the right direction. Constitutional Convention of the Citizens.

(2)   Pray for the future of your family, your community, and your country. Prayer really does work – especially when we also work.

(3)   Fight for everything that raises the self-worth of our children and grandchildren. And fight against everything that looks to rob them of their self-worth, their freedom, and their futures.

Thank you for allowing me to share.”

All of this started with the word ‘free’.  I pray it ends with the word ‘freedom’.

Please allow us to serve you and those you love.

Thank you,


P.S.  What ideas would you share to help America bring self-esteem, self-worth, and pride to all our children?

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