Gordon Rorison, AKA Big G, and his wife

Gordon Rorison, aka Big G, is originally from Scotland where golf is an integral part of life. He grew up playing his golf at the World famous Turnberry, which boasts 4 Open Championships. From a very early age Big G was exposed, not only to the game of golf, but also the World of caddying. [...]


Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Andi Last

Andi Last brings over 30 years of broadcasting, media, and marketing experience to Pure Financial Advisors. She is the producer of the Your Money, Your Wealth® podcast, radio show, and TV show and manages the firm's YouTube channels. Prior to joining Pure, Andi was Media Operations Manager for a San Diego-based financial services firm with [...]

Published On
October 4, 2022

As the financial markets fall and then surge, Joe and Big Al talk about market timing, reallocating retirement contributions, and portfolio rebalancing. Plus, your questions answered on estimated taxes, Roth conversions, and the logistics of inheriting IRAs and passing assets on. Finally, how is a financial advisor like a golf caddie when markets get volatile? Joe and his Pebble Beach golf caddie buddy, Big G from the Real Life Caddie Podcast, discuss how their professional knowledge and experience can help the rest of us avoid big mistakes.

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Show Notes

  • (00:56) I Know Market Timing is Bad. What About Reallocating Retirement Contributions? (April)
  • (05:50) How to Rebalance Bonds and Stocks in This Volatile Market? (Mick, Davis, CA)
  • (14:25) Does the IRS Care If I Haven’t Paid Estimated Taxes Before Roth Conversion? (Carl Spackler, FL)
  • (17:28) How Do Assets Pass to My Spouse in an Equitable Distribution State? (Jack, Central Florida)
  • (23:42) Inherited IRA Strategies Now That the Stretch IRA is Gone (Heather, Irvine, CA)
  • (32:51) How a Financial Advisor is Like a Golf Caddie with Big G from the Real Life Caddie Podcast

Free financial resources:

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Download the Bear Market Survival Guide

Bear Market Money Mistakes | Your Money, Your Wealth® TV Season 8 Episode 12

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Listen to today’s podcast episode on YouTube:


Today on Your Money, Your Wealth® podcast 398, as the financial markets fall and then surge, Joe and Big Al talk market timing, reallocating retirement contributions, and portfolio rebalancing. Plus, your questions answered on estimated taxes, Roth conversions, and the logistics of inheriting IRAs and passing assets on. Finally, how is a financial advisor like a golf caddie when markets get stressful? Since Big Al spent most of last month vacationing in Italy, we brought in our first YMYW guest since 2019: remember Joe’s Pebble Beach golf caddie buddy from episode 390, Big G, from the Real Life Caddie Podcast? We wrap things up today with Joe and Big G discussing how their professional knowledge and experience can help the rest of us avoid big mistakes. I’m producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

I Know Market Timing is Bad. What About Reallocating Retirement Contributions? (April)

Joe: People are freaking out. A lot of emotions out there lately.

Al: Yeah. Market’s been kind of strange, right?

Joe: Yeah. And as soon as you get that tipping point where you’re like, you know what, I got to get the hell out? Guess what happens?

Al: It changes again.

Joe: It turns around.

Al: Actually after you sell, that’s-

Joe: Exactly, right after. So we got to be strong. We got to be resilient. All right, let’s get in and hopefully we can calm some nerves here today.
We got “Arg. Arrg, could not ask question online.” Okay, so what does that mean? Arg?

Andi: So April just emailed us directly rather than filling out the form.

Joe: Okay, but Arg, what does that mean? She’s upset about it?

Andi: That’s frustration.

Joe: Frustration.

Andi: She’s annoyed.

Al: Like a pirate term.

Joe: Arrg. Got it. So what, our website sucks, is basically what you’re saying?

Andi: I guess that’s kind of what it comes down to, yeah.

Joe: Got it. “So please give this to Joe and Al. I know that market timing is not a good idea, but what if you leave your current diversified 401(k) investments as is? But change your current weekly 401(k) contributions to take advantage of market’s current sale prices, i.e. both large and small growth funds are down a significant amount, at the beginning of the market’s correction bear market, I change my contributions to 50% large growth, 20% large value, 20% small cap, and 20% international. I’m almost 70, have no intentions of leaving my job anytime soon, have not taken Social Security yet, and hoping RMD age requirements are pushed back far enough for the market to recover. All right, thanks for your insight. Love the show. Look forward to every new episode. April.” Okay, April. April is grinding. She gets frustrated quickly.

Al: Right. We know the Arg.

Joe: Still working at 70, no intentions of retiring. But if you’re 70- oh, “I’m almost 70”.

Al: Yeah, not quite.

Joe: Not quite, all right. I love her idea. And this is what everyone should be doing right now as they’re saving into their 401(k). Change your contributions to the most volatile asset class possible. Because you’re dollar cost averaging in. Make sure the balance, of course, is diversified and have a strategy of whatever that you want in regards to your asset allocation. But yeah, as your contribution’s going in, I don’t know if I would continue to change it, but I would look at small value, small caps, value stocks because they’re more volatile. Over time, you will get a higher expected return. But as you’re putting your $200 or $500 in every month or every two weeks or every week or whenever you get paid, as the markets go down and up and down, up and down, the more volatile it is, the better off you’re going to be because you’re going to dollar cost average those prices in your favor.

Al: Yeah. And that works in your favor, right? Because especially when the market dips, you’re getting more shares and it’s those volatile asset classes where that works. And I think you would say that this is good in any market, not just down markets, up markets, any market. Be a little bit more aggressive on your contributions. Have your main core rebalance as appropriate for your situation, but be a little bit more aggressive on the contributions.

Joe: Yeah, without question. And then you’re just rebalancing annually. Right. So you’re going to put your $24,000, $27,000 into whatever asset class. Maybe you split it. She likes maybe international emerging markets and small value. So there you go. Let her rip. And then at the end, then you just rebalance to say, all right, well, maybe I’m overweighted now in these particular asset classes, so maybe then you can kind of- that’s how I do my 401(k). So I like to take advantage of the volatility in my favor as I’m dollar cost averaging it.

Al: And the reason that works is because two out of 3 years, the market goes up. Right. So you’re getting lower cost stocks and watching it go up. Now, in years when markets go down, you might question that strategy, but there’s no way of knowing. And even at this point, markets have dropped quite a bit. Will they rebound? Will they go down further? Nobody knows.

Joe: Yeah, who knows?

Al: Yeah. So it’s a good strategy to be buying stocks while they’re cheaper. And so it’s especially a good strategy right now. But I think, as I said, you would say anytime is good with this strategy. And that’s because markets go up more than they go down.

Joe: April is smart because- just her terminology, she likes the sale prices. The stock market is on sale.

Andi: She’s probably heard that from you.

Joe: I say that all the time.

Al: It’s possible.

Joe: It’s like constant.

How to Rebalance Bonds and Stocks in This Volatile Market? (Mick, Davis, CA)

Joe: Where do you want me to go? What page?

Andi: Page 13, if you have it.

Joe: You got it. We got a lot of stuff to go through.

Al: Yeah, we got a lot, don’t we?

Joe: All right, so let’s go here. “Joe, Al and Andi, thank you for your podcast. It helps us make better decisions as my wife and I transition to retirement. This is Mick from Davis, California. We are both 65. I’m mostly retired from my career as a clinical social worker. I used to specialize in children and their families. Now we support graduates, students, social workers in their field placements and do ethic consultations for colleagues on a very part time basis. My wife is a serial entrepreneur-“ pretty close, huh?

Andi: Pretty close. I think you only miss one R.

Al: I’ll accept it. I knew what you meant.

Joe: Got it. “-who now works full time by serving on company boards and consulting with startups.” It’s like I’m reading a bio.

Al: A lot of big words here.

Joe: Mick. Come on, you’re killing me. Just ask me a question already.

Andi: Hey, you asked for the details, he’s got details for ya.

Joe: I love the details. I’m just diving in. This is like really complicated stuff, though. “In our almost 45 years of marriage, we have always had one cat and two dogs. Currently, our 16-year-old cat is more aloof than ever since we both started working from home.”

Al: I wonder why.

Joe: “Our small 12-year-old Heinz 57 dog, Daisy, still runs every morning with my wife and snuggles in the evening. We adopted our 6-year-old half Peke-“

Andi: Pekingese-

Al: Pekingese?

Joe: Pekingese. “-Pekingese guard dog, Nutmeg, during the pandemic.
Who knew that Pekingese were guard dogs? Carwise, I drive an original two-seater, 3 cylinder, 68 mile per gallon, 2003 Honda Insight.” Wow. “My wife enjoys her 2021 Kia Nero plugin Hybrid.” All right. Little Kia plugin. “We barely drink.“ Yeah, because you just write.

Al: He needs to keep clear in his writing.

Joe: He just writes letters.

Al: Every night.

Joe: The specificy-

Al: -the specificy? Is that a word?

Andi: That was great.

Joe: His specifics is just- “On Friday night, we share a Boot Amberly Ale.” Boot. You ever had a little Boot?

Al: No, I haven’t.

Andi: I’ve never even heard of that one.

Al: But anyway, so they do drink on Friday night.

Joe: Yeah, on Friday night.

Al: They share beer.

Joe: They share a beer.

Al: Yep. You got it.

Joe: Perfect. “I have concerns about the 35% bond component of our $6,000,000 retirement savings. Usually when the stock market goes down, the bond market is flat to slightly up, so I can rebalance and buy more stocks on the dips. This time, the bond funds seem to dip at the same time as the stock market. So when I rebalance on the dip, should I sell the bond funds with a higher 5 year duration? Or is this similar to selling the total stock market and replacing it with a value fund? Should I try to keep the same range of bond fund duration, ultra-low to moderate, that I started with before this year stock and bond dips? Or switch to all ultra-low money markets until we get back to the 2008 interest rates? And as we approach a bear market, should we consider our allocation and shift from 65/35 to 70/30? Appreciate your spitball and informed opinions. Thank you and take care.


Andi: And I added, he’s got his little bicycle there.

Joe: Yeah, what is that?

Andi: That is part of his signature and it’s all in the characters. That’s pretty cool.

Joe: So, PhD. PhD MBA.

Al: Right. That’s-

Joe: Way smarter than-

Al: What a combo.

Joe: -both of us combined.

Andi: Such that he can actually draw a bicycle in text.

Al: Just that is amazing. So Mickey, you should be doing the show.

Joe: His name is Mick, not Mickey.

Al: I’m calling him Mickey.

Joe: Oh, got it.

Al: We go way back. We’re Southern Californians.

Joe: Yeah, and I knew he was smart, just reading his little email here. Okay, so, good question. So he’s got a 60/40 or 70/30 split, whatever, it doesn’t necessarily matter. But what he’s realizing this year is that it’s like, wait a minute, when stocks go down, usually my bonds stay flat or they go up a little bit.

Al: Sure. And that’s usual.

Joe: It’s called negatively correlated. And so when that happens, you can sell the bonds and you can rebalance and buy more stocks-

Al: – or vice versa.

Joe: Right. Or stocks go up and you’re like, okay. Or maybe small companies go down and large companies go up. You sell large, companies, buy more small, right? You’re selling high and buying low. But he’s looking at his portfolio, he’s like-

Al: – everything’s down.

Joe: – everything’s low.

Al: What do we do?

Joe: What the hell do I do now? My whole strategy is out the window. So I would be careful with any type of quick movements in this environment. Because let’s say if he already has moderate or somewhat high duration bond funds, those bond managers are still holding the bonds. When they come to maturity, it’s going to come back. So you’ve got to be careful if you’re selling low and trying to shift your strategy just because you’re looking at timing and thinking, all right, well, when interest rates get back to this level, I’d be careful with that type of thinking. If you have asset classes that you want to rebalance, but if everything is down, then it’s like, okay, what is your overall strategy? What is the money for? Then you might have to rethink your overall financial plan. So I would change my investment strategy based on my planning and income needs versus a rebalance strategy?

Al: Yeah, and I think the other thing that people do is maybe they’ll have just two or 3 or 4 investments. Maybe they have a total stock market fund, maybe they got an international fund, maybe they have a bond fund. And all 3 of those are down right now. Now, if you had a little bit more, maybe you had a small and value fund and an emerging markets fund. These are going to probably move a little bit differently and then you actually can rebalance to take advantage of lower prices, ones that have gone down more than other ones, which will likely over the long term recover. So that might be something to do. I also agree with you. You do have to be careful because everyone wants to make changes during markets like this. And the whole point is to do your financial planning beforehand so that you know you’ll be fine when this happens and we all know it’s going to happen. This is not unusual. And in fact, it was, I think, 2008 where every single asset class went down. It’s not normal, but it happens. And that’s the environment we’re in.

Joe: Yeah, and I agree with his analogy. It’s like, I don’t know if I would want to sell my bond funds with a higher 5-year duration and buy ultra-short at this point. You already bought the risk. There’s a reason why you get a higher expected rate of return in certain asset classes just because there’s more risk involved. And as markets go down, you bought that risk because you’re anticipating a higher expected return in the future. So should I sell that and buy something else? Is it like selling a value fund and buying a total US. Stock market fund? Yeah, kind of, I think so. If you’re buying on the dips, I would have a more calculated strategy on my rebalance. When am I going to rebalance and how am I going to look at it and what percentage it needs to deviate for me to make a move. Right. But looking at this- I have no idea what else to say here, because I have no idea what he has.

Al: Yeah, we just know what kind of beer he likes on Friday.

Joe: All right, thank you, Mike or Mick and the little bicycle guy.

Download the Bear Market Survival Guide from the podcast show notes at YourMoneyYourWealth.com and watch the companion YMYW TV episode to learn the impacts of a bear vs. bull market on your portfolio, signs of the bear market, bear markets vs. recessions, market timing, staying invested to beat the bear, and some strategies that will help you put a long-term strategic plan in place to withstand bear markets and beyond. Click the link in the description of today’s episode in your favorite podcast app to go to the show notes, watch Bear Market Money Mistakes, and download the Bear Market Survival Guide.

Does the IRS Care If I Haven’t Paid Estimated Taxes Before Roth Conversion? (Carl Spackler, FL)

Joe: We got Carl Spackler again from Caddyshack.

Andi: That groundskeeper has a lot of money questions, doesn’t he?

Joe: Yeah.

Al: Right.

Joe: “Hi, Andi. I didn’t fill out the online questionnaire as it failed me in the past-” OK, that’s two.

Andi: That’s two for two.

Joe: Good for the website. Killing the game. We manage $4 billion of client assets, don’t you think we could get-

Al: -can’t get a website to work.

Joe: We can’t get a website to-

Al: – ask a couple of questions, doesn’t work.

Joe: “-hopefully this works just as well. If I do a $50,000 Roth conversion in December, will the IRS care that I did not pay estimated taxes throughout the year? Can I just pay $12,000 or so on the 4th quarter 1040 estimates? I didn’t anticipate making this move, so it doesn’t seem fair that they would tax me earlier than when I actually made the taxable transaction. Not that the IRS cares about being fair. Thanks, Carl.” Al?

Al: Yeah, so that’s- Carl, that’s a great question. And the IRS doesn’t care because you got the income in the 4th quarter, and so you only have to pay that estimate in the 4th quarter. However, you have to fill out form 2210, which is the IRS penalty form. Page 3 allows you to put your income in the 1st quarter, 2nd quarter, 3rd quarter and 4th quarter. And so therefore, you’ve got this extra income in the 4th quarter. You’ll only have to pay that estimate in the 4th quarter. But just make sure you fill out that form, otherwise you will be penalized. But that’s the mechanism for not having to pay estimated payments earlier. No problem.

Joe: If you did it in the 3rd quarter, what happens?

Al: 3rd quarter is fine. I mean, as long as you do it before it’s required. So, in other words, if he does this in December, that’s in the 4th quarter. So the estimated payment would be in due in January. He would essentially have lower income 1st quarter, 2nd quarter, 3rd quarter. And that’s what you show on that form 2210, the higher income is in the 4th quarter, which requires that estimated payment in the 4th quarter.

Joe: Well, doesn’t the $120,000, $125,000 rule kind of come into play depending on what you made the previous year?

Al: Well, sure. I’m assuming that this goes over that because it’s maybe a bigger amount, but yeah. So the estimated tax rule essentially is if you pay in 100% of last year’s tax or 110% if your income is over $150,000, you’re not going to be penalized no matter what. Or if you pay in 90% of this year’s tax, you’re not going to be penalized. Assuming that this doesn’t fall under either of those, then you fill out the form 2210 and avoid penalty by annualizing your income.

Joe: All right, Carl. Caddyshack 2 was probably one of the worst movies of all time. Such a disappointment. But Carl wasn’t in that one.

Al: First one was great, though.

Andi: They made a movie without Carl for Caddyshack? Wasn’t he the star of the show?

Joe: Caddyshack, sure. Caddyshack 2 the star of the show was stupid puppet golfer.

Andi: Ahhh-

How Do Assets Pass to My Spouse in an Equitable Distribution State? (Jack, Central Florida)

Joe: Let’s see. Jack from central Florida. I used to live in central Florida.

Al: You did. Didn’t you?

Joe: Yes. Oviedo.

Al: That’s where you lived?

Joe: I did.

Al: Oh, okay.

Joe: Never heard of it?

Al: No.

Joe: Yeah, it’s right outside of Orlando. “Hello, Andi, Joe, Big Al. Just listened to episode 394.” Such a good episode.

Al: I remember that like I did it yesterday.

Joe: Oh God. Just loved that episode. “And Butch from the Bait Shop had a-“ Butch from the Bait Shop?

Al: Shack.

Joe: Oh, yeah. I vaguely remember Butch. “Butch from the Bait Shack had a scenario similar to what my wife and I have. It’s related to how retirement accounts pass to a surviving spouse. I’m 62. My wife is 50. We don’t have kids. The men on my side of the family usually don’t have longevity. So most certainly my wife will outlive me sooner than later.” Wow, it’s just depressing.

Al: That’s sad, right?

Joe: He’s 62.

Al: Already thinking about it.

Joe: He’s not 82.

Al: How do I pass my assets?

Joe: Come on, Jack. Sooner than later. “With that in mind, I’m also wondering how my 401(k) and Roth IRA will move to my wife, which is the sole beneficiary of both. Additionally, Florida is an equitable distribution state, not a community property state. Question one, so how would it pay out for my wife if I were to pass before she reached 59 and a half? She also has a Roth IRA. Would my Roth 401(k) and Roth IRA pass directly to her Roth IRA? Or would they both go into a single or two separate inherited Roth IRA accounts?” Should we answer that first there?

Al: Yeah, let’s do that. I think you’re good at that question, so why don’t you take that.

Joe: Jack, couple of things. If you pass before your wife turns 59 and a half and she needs the money, then she would set up a beneficiary IRA.
So what that means is that, it would say Jack deceased on whatever date that you died for the benefit of your lovely wife. And she would have access to the money at any point. So she’s 52 years old because you’re going to die sooner than later. So I’m picking at 64, Jack, that’s your demise. She’s got full access to the money if she keeps it in an inherited IRA.

Al: Yeah. So it’s because you’re older that works. Actually, it doesn’t even matter.

Joe: It doesn’t even matter.

Al: It doesn’t even matter. Because it’s a beneficiary IRA.

Joe: Correct. Or because she’s your spouse, she can move it directly into her own account, right? So where mistakes happen is that children think that they can move their parents retirement accounts into their account just to consolidate. Or if a non-spouse beneficiary inherits a retirement account, they try to consolidate and try to put it in their own. You cannot do that. That’d be a full distribution, fully taxable. Spouses, however, have this special rule where they can consolidate. So you pass away. She could put everything into her own Roth account and everything into her own IRA account if she chooses to. So just to keep it simple, right, because if you have multiple accounts, let’s say you keep it in your 401(k), and then you keep it in your Roth 401(k), then there would be RMDs in a Roth 401(k). You don’t want that. You want to roll it into a Roth IRA, because that eliminates the RMDs when she turns 72 or 75, depending on what the rules go to. But if she needs the money, keep it in your name as her the beneficial owner of it. If she doesn’t need the money, then it would go directly into her own accounts. Or she could keep it in your accounts, too. But to me, that just doesn’t make any sense.

Al: Now, could she do some of both, right?

Joe: Sure.

Al: If she wanted to.

Joe: Sure, without question. Let’s say that Jack passes before she turns 59 and a half and she needs access to the cash. She could roll some of it into her own and keep others into Jack’s name, right? That’s the amount of cash that she would need to live off of until she turned 59 and a half. But yeah, good question. But that’s easy. Spouses are easy. The non-spouse beneficiaries, that’s where it gets a little bit more complex. Okay, question two. “My taxable brokerage account is in a living trust, which my wife is the sole beneficiary of. Will those funds pass to my wife tax-free? Thanks a lot, guys. Jack from Central Florida. I drive a 2015 Ford F150. My drink of choice is Johnny Walker Red over ice. Yeah, I like it rough.” Wow, Jack.

Andi: Yeah, that sounds pretty rough.

Joe: Johnny Walker Red. So if I drink Johnny Walker Red, am I rough? Or was he talking about something completely different that he likes it rough?

Al: No, I think it’s the drink.

Joe: Got it.

Al: I think the drink is maybe it’s a little hard to get down, I don’t know. A little rough drink. So, first of all, Jack, the funds would pass to your wife tax-free, so that’s not a problem. The real question is, does she get a step-up in basis in them or not? And Florida, you’re right, is an equitable distribution state. And now I’m not an attorney, but this is my knowledge, I’ll just put that out. So if this is your asset, if this was money that you made even during the time you were married, then it’s your account. She would not get a step-up in basis unless you put those assets in a community property trust in Florida, which then allows the step-up in basis. So you might want to think about that. But there’s no taxation when she receives the assets, only when she sells them. And if she gets the full step-up with a community property trust, that might be worth looking into.

Joe: Yeah, I would definitely probably look into that.

Inherited IRA Strategies Now That the Stretch IRA is Gone (Heather, Irvine, CA)

Joe: All right, let’s go to Heather from Irvine, California. “Hi Andi, Big Al, Joe. Big fan of the podcast.” So she’s emailed you directly, I’m guessing the website’s down?

Andi: Probably.

Joe: “I’m hoping that you might be able to help brainstorm some ideas for my family. One of my stepsisters passed away a few years ago, and she left her IRA valued at $160,000 to my older- to my other stepsister’s son. When she first set up her account, she only had one nephew. The family grew, and she ended up having another niece and nephew prior to her passing. My sister knows that she would have wanted to leave equal shares of the IRA to all 3 children. She passed away prior to the change that requires withdrawal to 10 years. So they are able to leave the money in until RMD age, which is 2039.”

Al: That’s false.

Joe: So Heather, we got some work to do here. So she passed away prior to the change that requires withdrawal in 10 years. So she passed prior-

Al: -to 2018.

Joe: -18, the SECURE Act.

Al: Yep.

Joe: So no. If they haven’t taken an RMD, there are some issues here. So there’s still an RMD, but they take it out over their life expectancy.
So if there hasn’t been any RMDs on the non-spousal beneficiaries- see it’s the non-spouse beneficiaries is where I told you it’s a pain in the ass.

Al: -yeah, it’s where it gets tricky.

Joe: The nephew or the niece needed to start taking RMDs. So if they hadn’t, it’s a 50% penalty for each year that they haven’t taken the RMD. The RMD is based on that person’s age.

Al: Right. And so you could be two years old and still have to take a required minimum distribution. These were the old rules, and that was called the stretch IRA. Right. So you stretch it over your lifetime. So if you’re two years old and you’re supposed to live till age 80, let’s just say, then you’re taking a really low percentage out. Now, if you’re 75, you’re going to take a much higher percentage out, but you’ve got the required minimum distributions based upon the age that you’re at. Now, the rules are totally different now, which means if you receive an inherited IRA right now, you got to take it out within 10 years.

Joe: Yeah. And you don’t have to take anything out. You could take it out all-

Al: -all in 10th year.

Joe: -in the 10th year. “The kids’ ages are 24, 21, and 15.” So the RMD is based on the 24-year-old because I guess the 21 and 15-year-old weren’t born yet.

Al: Well, but they don’t get any because they weren’t beneficiaries.

Joe: Exactly. So the 24-year-old is the beneficiary. The 24-year-old needed to take RMDs when she inherited or he inherited. I forget if it’s a niece or nephew. Son.

Al: Yeah, nephew.

Joe: Okay. So “The oldest son is going to college for the next couple of years and working part time. We are trying to figure out how to split the money between the kids. Since he isn’t making much money now, would it be better to pull it out now and set up accounts for the other kids? I’m not certain if he could just pull out their shares and leaves his in? The other issue is not wanting to hand over such a large sum of money to young people that might not know how to manage it and the tax implications on the trust fund don’t seem like a great option. Could it be better to leave the money in the IRA until RMD age and then have him give the money to the other two siblings every year? They would most likely be prime earning years, so the taxes might not be favorable. Is it possible to put the IRA into a trust that their mom manages? Everyone is at a loss about how to handle the situation. Hoping you have some ideas. I appreciate you taking the time to read this and for your spitball. I live in Irvine and enjoy a good Moscow mule. I drive a 2015 Maserati.

Al: That’s pretty good, Heather.

Andi: A Ghibli. With a smiley face.

Joe: Maserati. Cost $198,500. I lost my license. Now I don’t drive. Okay, so this is a pain in the-

Al: So the first thing I’ll say, this comment, “my sister knows that she would have wanted to leave equal shares of the IRA to all 3 of the children”, that doesn’t carry any legal weight whatsoever. So, really the money is the nephew’s, and it’s his money. I mean, if he wants to share it, great, but it’s not up to you guys to say ‘you got to share it with your siblings’. That’s the legal ramifications of what she did.

Joe: Right. So, yeah, that’s the issue. The beneficiary trumps all. It’s a conversation with the nephew. So, first off, there are mistakes going on right off the bat, is that the nephew needs to take RMDs. All right? So let’s say you take out- you can’t split the IRA up.

Al: No.

Joe: You can’t say, all right, now we’re going to make 3 different IRAs and have 3 different owners.

Al: No, you can’t do that. You can disclaim IRAs, but that has to be within 9 months after receiving it.

Joe: It sounds like this is a little later.

Al: A little longer.

Joe: Square one is that the nephew needs to take RMDS. Secondly, you need to talk to the nephew and say, hey, listen, you inherited this $160,000. And I know that your aunt really probably wanted it to go to all 3 kids. What are your thoughts on that? And then he’s going to say, well, sounds good. Let’s figure it out. Or, you know what? Go pound sand.

Al: It’s my money.

Joe: Talk to my attorney. Man, I’m going to college. Peace out. Well, maybe I don’t go to college now. I got $160,000. I’m going to get a Maserati. So how you split this thing up is, it’s going to be ugly. Because you’re going to have to take a full distribution on the $160,000. It’s going to be taxed at the nephew’s rates. Which is going to be 24%.

Al: And if he’s okay with that, if he’s okay with it, then he’s basically paying the tax on it and then gifting the money out. So I assume he gifts out the net. I don’t know how you’d work this out.

Joe: You look at $160,000 and there’s probably $70,000- so it’s probably $100,000, $110,000, after tax. Give or take. But then you got to include the penalties because they didn’t take the RMD. We’re assuming that.

Al: Well, we don’t know that for sure, but yeah.

Joe: But let’s just say it’s $112,000 or $100,000. All right, so each kid gets $33,000 and some change.

Al: Yep.

Joe: So I guess it’s like, all right, but then he’s going to be like, I got $160,000. I don’t want $33,000.

Al: This is my money.

Joe: This is mine. I don’t see any other niece or nephew on the beneficiary. Do you, Heather? Aunt Heather? No? I didn’t think so. So let’s get the hell out of here. So, yeah, that’s the issue. Sorry, Heather, I wish we had better news.

Al: But if the nephew goes along with the plan, then great. Maybe you just do a distribution in full while he’s not in very high taxable income. You pay the tax, you split it up, and you go from there, you’re done with it.

Joe: Yeah. So I guess this is a really good point to everyone that has retirement accounts, is that you have to really understand how they work at death, right? Because it’s so different than any other asset that you have. So if you’re naming your trust as the beneficiary of your retirement account, I highly recommend you don’t do that. Because the only reason why you would want to name a trust is the beneficiary is if you want to control the money from the grave. And it’s probably not a great idea because a lot of it’s going to just get eaten up by taxes. Then you might have people on your beneficiary form that you don’t want to be a beneficiary anymore. So always check that. That’s one of the most important estate planning documents that you own. So everyone that listens to this show, all 5 of you, please check your account beneficiary forms because it’s really important.

Visit YourMoneyYourWealth.com and click Ask Joe & Big Al On Air to send in your money questions as an email or a priority voice message. Lan, Patrick and Jackie and many others, thanks for your patience, listen for answers to your money questions in next week’s episode. In the meantime this episode has proven that there are a lot of moving parts to your financial future, and a lot of ways you can screw it up, especially when the markets get volatile. Click Get an Assessment button at YourMoneyYourWealth.com to schedule a free financial assessment with an experienced financial professional on Joe and Big Al’s team at Pure Financial Advisors – they’re a fee-only fiduciary. Now let’s talk about they can help you.  

How a Financial Advisor is Like a Golf Caddie with Big G from the Real Life Caddie Podcast

Joe: Big Al is out so we got a fill-in. We needed another someone with Big.

Andi: – and that seems to be a podcast thing. You got your Big Al. And now we’ve got Big G. Big G from the-

Joe: The Real Life Caddie Podcast.

Big G: Yeah. It’s called the Real Life Caddie Podcast, Andi. Thank you for having me.

Andi: So Big G, your website is GlorifiedDonkey.com.

Big G: GlorifiedDonkey.com. Exactly. That’s what my wife calls me.

Andi: So that’s brilliant because that’s basically what a caddie is supposed to do, right? You carry the bag.

Big G: Correct. Now, the older you get, the more effort you do putting people on golf carts. Are you going to be drinking cocktails? You like to listen to music? We could throw it all in a cart. I’ll drive it. You can walk whenever you want to walk. And then we have a place for your drinks and your music. Done.

Andi: So what else does a caddie actually do for a golfer?

Big G: Where we work is a resort course, so probably like financial planning., you have all sorts of different portfolios, every golfer is different. Are they there for fun? Are they grinders? Do they really want to have the best score of their life. Pebble beach is a very expensive golf course, so it’s a huge investment for people. So I would say that number one, get people in the course. Like the golf knowledge, when you walk around a golf course 10 times, 12 times, I’ve probably done it 2000 times around here and know it like the back of my hand. That’s very easy. That information is easy. I know- somebody said something to me about 6 months ago that was once you break it down, you don’t realize how much you know about what you know. And once you break it down, as I say, it’s incredible. Yes, I know a lot about golf, so it comes very naturally. After that, it’s then about for me, hopefully they’re up for a laugh and it’s entertaining. We can have a good old laugh. And you try and encourage people when they’re not playing very well and congratulate them when they do things well. And generally just guide them around to make their round of golf as fun, entertaining as possible.

Joe: How many strokes do you think a caddie saves a golfer in a particular round?

Big G: People will say I saved them 8 or 10 on the greens alone.

Joe: Without question, I would say that.

Big G: But we have to then differentiate- there’s good caddies and there’s bad. I would say, I’ll tell you, I don’t know at what point you become a good financial advisor, but I think it took me 21 years to really be spot on, and it might be the same thing. There’s a reason that someone is going to come and ask for financial advice. So respect, if you don’t like it, keep it to yourself and move on. But people like to blame. So I’m sure if someone’s invested in something and maybe it goes down, they complain, but we get blamed a lot. But I think that tells you more about the people than anything.

Joe: If you look at your role, I think you add so much value in regards to the game, very similar to how an advisor would. Because let’s say a client right now, markets are volatile and they might want to do something that they probably shouldn’t do, right? So markets go down. What do most people do?

Andi: They go to cash. I got to pull everything out.

Joe: I got to sell. I want to get out.

Big G: Panic.

Joe: Yeah, I’m panicking. I’m losing my strategy. Because when you’re working with a professional, it’s like, all right, we have a game plan here. This is what our game plan is going to look like and I’m going to keep you on track for that game plan. And if we have to pivot or if we have to make moves or make changes, let’s do it logically versus emotionally. And same with me. It’s like when a client gets scared or fearful because of the overall markets, it’s like, okay, well, no here’s our game plan. Let’s get back on track. And if we have to make any moves, there has to be other significant things that have to happen for us to change our overall strategy. And so when I asked the question of how many strokes do you think you actually add, I would say it’s significant. We can call me Joey Hack because you know how big of a hack I am until the 18th hole. Here’s Big G. He’s like oh, my God, I thought you were a total hack until the 18th hole. I peered a couple.

Big G: A good caddie is probably going to save, could be 10, 12 shots. One thing that would be interesting, I wonder if this is a crossover between what you do and what I do, is you’re in a par 3. This happens every single day. Let’s say there are four Johnny Hacks, a quartet of them, and the 21 handicap hits first, but he blades it. So a wee par 3. It’s 100 yards and he catches it thin. In the golfing world, we call it catching it thin. It’s nowhere near the sweet spot. And he goes long. He hits at 120 and then Bobby turns and goes, ‘oh, should I change clubs?’ So do investors, because their buddy, their next-door neighbor, is selling up or cashing in, he’s doing the same thing. Just like lemmings, like sheep.

Joe: Right. A lot of people get their financial advice from friends or family that are probably not necessarily qualified. It’s just the advice that they’re getting is totally flawed. And sometimes you get lucky, right? You can have a really bad swing and get lucky. Some individuals, they might pick a stock and get lucky and then they pick the right stock and it goes up 100%. And now they’re geniuses.

Big G: Yes.

Andi: You got all these hacks there. But meanwhile, you’ve got a professional that’s got years and years of experience, and that is the person that you should be asking.

Big G: Professional. I never thought about caddying as professional, but yeah, I guess you’re right. I’ll tell you what, there’s a beauty of a story about 3 months ago, and I was working with an old timey caddie. He’s been doing it for years. He’s really quirky, and some people don’t like that. But the first couple of holes, they’ll be turning, looking at each other going, what do we have here? But once they realize, they’re like, oh, this guy knows what he’s talking about, they buy all in, right? And he’s got a very interesting way of talking about it. So they get to the 16th hole, and he’s trying to tell this guy, I think his name was Big Al- it’s a really fast putt, left to right, big old slider. And this guy says, ‘are you sure?’ His name’s Mack and he turns to me and he says, ‘really? 15 holes, 16 holes, and you’re still asking me, Sure? Mackie Boy’s sure.’ So he talks- anyone that talks about himself in the third person, I love that. So this guy says – he talks to himself in the third person. So the boy, of course, doesn’t believe him. He runs 15 feet past. Now the other boys want to putt, but the caddie is having none of it. He goes, ‘let’s do that again. I want to show you something. Come on, come on’. And the guy’s like, ‘no, it’s fine. It’s fine’. And it’s not fine. And it’s like, why are you going to pay the guy and ignore him? He’s been right for 15 holes, and now you don’t believe them and you ignore it? What’s wrong with this person? Is it too many cocktails? Probably. And then Mackie Boy, he actually says, ‘Mackie Boy wouldn’t lie to you.’ And he says, ‘roll the putt’. And the guy goes, ‘no, it’s fine’. I let these guys go. And he goes, ‘Fine. Enjoy being a 12 handicap for the rest of your life.’ Mic drop. It was beautiful. The guy collapsed the ground. He was laughing. He’s like, there’s nothing to say.

Andi: So Joe, do you ever have to say something like that to an investor?

Joe: Well, we do it every week on this show.

Andi: Yeah, pretty much.

Joe: So this show, Big G, is my release, because I can’t see anyone. And sometimes I just feel like it’s just Andi, Big Al, myself. And we get all these really awesome people write in, and they have these questions about their spitballing. And some of the questions we get is just like, are you kidding me? You actually made me read this email. I feel sorry for myself for reading it. I feel sorry for our listeners for having to listen to it. But it makes the show fun. And then you can kind of make fun of it. It’s just like, hey, we’re here. What we’re trying to do is just sit around the table as we’re just kind of shooting the stuff and having a cocktail, if you will, and talk about finances and try to make it as interesting and fun as possible so people will continue to hopefully listen, but second, make better decisions with their money.

Big G: I think it’s therapy, isn’t it? The show is therapy.

Andi: It definitely is. I think, for Joe and Big Al. Yeah.

Big G: You’re absolutely spot on.

Joe: All right, hey Big G. We got to end with that.

Big G: Lovely.

Joe: If they want to listen more stories, if they want to hear about the Glorified Donkey, where do they find you?

Big G: So we have a website, GlorifiedDonkey.com. It’s called the Real Life Caddie podcast that’s on all of the platforms and the social media stuff, YouTube, the Twitter, et cetera. That’s Glorified Donkey. Probably mostly just got golfers that listen would enjoy it. We try and just keep it fast paced, not too serious. Entertain, educate, relate.

Joe: Very good. Very good, my friend. All right. That’s Big G, folks. Find them at GlorifiedDonkey.com. The show is called Your Money, Your Wealth®.


More of our conversation with Big G, on video, will be coming to our YouTube channel soon, so make sure you’re subscribed – find the link in the podcast show notes at YourMoneyYourWealth.com. 

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