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Hi, I'm Rob West. Yes, there's one place in the Bible where God specifically tells us to test Him, and it shouldn't surprise us that it involves money. Ron Blue joins us today to talk about a situation where some folks may be afraid to test God, and then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. Well, it's a pleasure to have Ron Blue with us on the program. Ron is co-founder of Kingdom Advisors and a prolific author on biblical finance, and he's always one of our favorite guests. Ron, welcome back. Good to be here, Rob.
I always enjoy it. Thank you. Ron, of course we're talking about Malachi 3-10. Let me read it. Now, God isn't just telling us to test Him with our giving.
He's perhaps challenging us to test Him, do it, and see what I will do. What do you make of this passage? Well, I think, first of all, it's Old Testament, and people denigrate it because it's Old Testament, but I believe it's still appropriate. And we can call the storehouse the church, and so I personally practice bringing my tithe into the church and believe in that. But I think that, you know, most people are afraid even to give because it's the lowest priority of their financial life, if you will. They live and they pay off their debt and pay their taxes and so forth, but they're afraid of not having enough money, and so the first place to go is my giving, and I reduce it.
And that, in fact, is a priority decision. And I believe that giving should be the first thing that you do, because giving recognizes God's ownership, and it breaks the power of money in my life when I do that. Yes. And the third thing, you know, there's a word that is used in the Bible a lot that you don't hear very much about, and that word is greed. And greed is we envy somebody or we want something that we don't have.
So lots of reasons why people don't give, and a lot of really good reasons that they should. Yeah. Now, clearly, in this passage, we should point out God isn't promising to make us wealthy because we give generously, right?
No. And that also is a mistake to attach, because when you give it, you need to give up ownership of it. You give it. And what happens after that is up to God. God doesn't promise that he's going to return a multiple fold. He does many times, but he doesn't promise it.
Yeah, that's right. Now, there's one particular question I know you've been asked a lot over the years as a biblical financial teacher, and I think it gets to the heart of trusting God. And it has to do with those who are in debt wondering if they should decrease their giving in order to pay off the debt. How do you answer that?
Well, I've been asked that question a thousand times, okay? And I hope I have one answer. And my one answer is that I believe that you should always give, even if it's a little bit. When you're in debt, keep giving, because that helps establish your priorities. And I believe that if you're going to not give or drop your giving dramatically, that the wisest thing to do is to do that with accountability.
And by that, I mean I make that commitment and let me be accountable to someone to help continue to honor that commitment. And I found so many instances where people maintained their giving, but they still were paid off their debt, and God honored that. And I think giving is so important to the Christian life. That's why there's over 2,000 verses dealing with money, because money is where my heart is.
That Bible says that. So I counsel people, keep giving. Maybe not as much, but keep giving and establish some accountability to get out of debt. Ron, this is so good. We need to continue to exercise that muscle of giving and perhaps even look for ways to pay down debt that don't involve reducing our giving.
Maybe there's an opportunity in decreasing our lifestyle. I know you've taught us that as well. Always appreciate your insights, my friend. Thanks for stopping by. You bet. I enjoyed it, Rob. Thanks for asking. That's financial teacher and author Ron Blue.
You can find all of his books wherever you buy books, and you won't go wrong with any of them. Your calls are next. 800-525-7000.
That's 800-525-7000. And if you prefer not to call, keep in mind, you can always send us an email at AskRobAtFaithFi.com. I'm Rob West, and this is Faith and Finance.
We'll be right back after this break. as part of their practice. You can find a local CKA professional in your area by going to FaithFi.com and clicking Find a CKA. on a well-known biblical parable about a very rich man with a very big problem. Request a copy of the Rich Toward God Study today with your gift of $25 or more by going to FaithFi.com slash give. So thankful to have you with us today on Faith and Finance.
I'm Rob West. All right, it's time for your calls and questions today. 800-525-7000.
That number, 800-525-7000. You know, once we give our lives to Jesus, we surrender our lives to Him and place our trust and our faith in Him for salvation because of His shed blood on the cross, paying the penalty for our sin, reconciling us to the Father so we're in our right standing before the Lord. And from that point forward, it's about stewardship. What have we done with what we've been given? Recognizing God's Word tells us to whom much is given, much is required. We're to be stewards of all God has entrusted to us. Yes, our time and our talents and our relationships and God's Word. And that also includes our management of God's money. So here on this program, we want to help you be that wise and faithful steward of God's resources. We do that when you call with your questions and we take you back to God's Word, talk about the big themes in Scripture, but also help you with some practical answers. All right, we know you have questions today and I want to try to help you with some answers. So let's dive in. We're going to begin today in Arizona. Sharon, you'll be our first caller. Go right ahead. Oh, thank you so much.
I appreciate you taking my call. I have looked online and I thought I understood this answer, but I'm not sure and I wanted to check with you. I know that you can combine the RMDs you owe if you have more than one IRA and pay it just from one IRA and it covers the rest of them. Does that also apply to a small inherited IRA? If I take more than is required for the RMD from that, does it apply toward the RMDs required for my other regular IRAs? Yes, that is true. So for inherited IRAs, often they can have a different required minimum schedule, the minimum amount that has to be withdrawn by the survivor, in some cases the surviving spouse or other person.
But the total required minimum distributions that you have to take for the year, including your inherited IRA plus any other tax deferred accounts that have RMDs, as long as you take out enough to cover the required minimums for the total, it doesn't matter whether you pull it from one account or multiple accounts. Does that make sense? Yes, it does. I just wasn't sure because the inherited rules are different, so I just wasn't sure it was the same in that case. Yes, that's exactly right.
So as long as you know what that inherited required minimum is, you can add that amount to any other required minimums and then you can pull it from the account of your choosing. That's wonderful. Do you have time for a second question? Yes, ma'am.
Go ahead. Is it preferable when you want to move a stock from an IRA to a street account to cover the RMD, is there any difference moving it when the stock is up or when it's down? Yeah, well, if you're taking the RMD not from, let's say, a money market or the cash portion of your IRA, but you're having to sell a stock, it, I think, is helpful to think about what stock you're selling in order to do that. So are you liquidating an individual stock position in order to free up the cash to pull that money out? No, you're allowed to just transfer the stock.
Oh, I see what you're doing. Yeah. So you're actually just going to move it to a taxable account, is that correct? Yes. I see. Yeah. So in that case, no, it doesn't matter because really, you know, what you're going to be doing here is, you know, taking that distribution based on the value of the security at that point, that's going to be a taxable distribution. And then from that point, you'll pay capital gains.
So that's less of a concern in the way that you're doing it. One line open, 800-525-7000. Let's go to Grand Rapids. Hi, Susan, go ahead.
Hi. So my situation is my parents had annuities as investments, and they have both passed away now. And so we closed those accounts. Some of these are listed as non-qualified, some of them are listed as Roth IRAs. So how does it work with taxes if it's an annuity that's a Roth IRA, and then they're all inheritance, and it seems like I'm being told that all of us children are going to have to pay some of these taxes?
Yeah, yeah, very good. You are correct. So with qualified money, whether you receive it as a traditional IRA, 401k, or annuity that's tax deferred, meaning it went in pre-tax, then as you take it out, you will pay the tax on it. I would get with your CPA to determine for each of you, your portion, how quickly that money needs to come out.
And if you're not looking to get the money right now, and you want to minimize taxes, you could spread out those payments over time, often over five years could be even longer than that could be even stretching it out over the rest of your life. So that's where you'll want to talk to your CPA. There is such thing as a Roth IRA annuity. And it's where you fund an annuity with after tax Roth IRA contributions, which means that you're putting after tax dollars and it grows tax free and therefore, it would come out tax free. And so you are going to want to use that tax professional to determine first of all, what do I have? What types of annuities are they? And is this, was it funded with after tax money through a Roth IRA? Was it funded with pre-tax money?
And then based on my age, life expectancy, and so forth, how quickly do I need to take this out? And what portion of it would be subject to tax? And they'll be able to tell you all of that. The CPA should be able to tell me on that?
Yes, absolutely. Because it's, these are all IRS rules and regs. So the IRS says, over what time period do you need to take it out? And that's, you know, dealing with the IRS. That's where a certified public accountant is most skilled in that area. And then depending on what types of annuities these are, and the annuity company will furnish that and how the money went in, that will tell the CPA how to plan for the taxes that will be due, if any, on the money as it comes out. So this is all under the purview of a CPA.
Okay. But we closed all of the accounts and put them into the trust because my parents had set up a trust. So we closed it all, put it into a trust. So we got the 1099s and everything. And then the investment company, some of them, they're saying amount taxed is not determined. And that's unlike some non-qualified of the annuities.
So Okay. Well, you know, almost any property can be placed in a trust. And that, you know, includes annuities. And so, you know, just because it's in the trust that will dictate after the passing of the grantor who set up the trust, who receives what portion of the trust, but the assets inside it, you know, may be subject to taxes as the money comes out. And that's where you're going to need a professional to determine exactly what you have in there. What are those assets that have been placed in the trust?
And then how are they going to be taxed as they come out? So you're going to need a professional here, this is not something we're going to be able to solve over the radio, it really is going to require a professional to look at what are the assets in the trust, who received what portion, and then as the assets are distributed, what taxes are due, based on what types of, you know, assets are being held in the trust. And that's where having a professional to really nail all this down, whether that's an existing person you're with, or somebody who has a bit more skill and expertise in this area to help you decipher what's there and what tax liability you'll have.
Ultimately, anything that you will owe to the IRS as a result of these assets that you've received through the inheritance would be able to be determined by a CPA in concert with whatever, you know, in the case of the annuities with the insurance company that provided the annuities that can provide all the necessary documentation. So I think that's your next step, Susan, as you work through all of this, you'll be able to figure it out. But this is where wise counsel is obviously really important. We appreciate your call today.
All the best to you in the days ahead. Well, folks, we're going to take a quick break, we come back more of your questions. And we've got some lines open. So if you have a question, we'll try to give you an answer 805257,000. You can call right now this is faith and finance.
We'll be right back. If you enjoy this radio program, you're going to love all of the many different resources waiting for you at faithfind.com and the faith find app. You'll find powerful wisdom, free podcasts, articles, videos and more from leading voices such as Randy Alcorn, Howard Dayton, Ron Blue and our own Rob West. Grow in wisdom and knowledge by connecting with a community of thousands of Christians striving to be good and faithful stewards at faithfind.com.
Or by downloading the faith by app. So glad to have you with us today on faith and finance for taking your calls and questions today on anything financial. I've got two lines open. You can call right now and get through at 800-525-7000. That's 800-525-7000.
Let's go to Tennessee. Hi, Angela, how can I help you? Hello, thank you for taking my call. I appreciate it.
I enjoy your show very much. Thank you. My question today is should we pay off our home mortgage or keep the savings toward a new vehicle? We may have to sell the home in a year or two because of an aging parent in which we would have to sell and move in with the parent.
Yeah, very good. Angela, I love the idea of you all getting out of debt, especially if that's a conviction of yours. I think that God's Word affirms that. I don't think debt or borrowing is a sin, but I do think it can. It does mortgage the future. It predetermines our future spending when we borrow. It may deny God an opportunity to work in certain cases, but I think there are productive uses of debt. A home is a great example where you're borrowing for an appreciating asset and it's also where you live. I like that. I also love the idea that you would make a goal to be completely out of debt. I think there are a variety of ways you can go about that.
The timing matters because we don't want to deplete you of all of your liquid reserves. In this case, you're thinking about a home mortgage versus buying a car. You also have this potential home move. That's less of a concern to me at this point because even if you were to decide to put 100% into the home and you were to pay it off, that's okay because you're going to get that equity out when you sell it. Then you could decide either to put it into the next property or if you're moving in with someone to care for them and you are going to hang on to that equity, you could put it in savings or you could even invest it depending on the time horizon. That's less of a concern than whether or not it makes sense for you to go ahead and pay it down or off now versus saving for the car.
Let's run through a few of these options. What is the home worth today to the best of your knowledge? $180,000. What do you owe on it? $37,000. What's the current interest rate on that?
5.5%. Tell me about the car purchase that you're going to have to make. How much are you looking to spend on that? Anywhere from $35,000 to $40,000. Would this be a new vehicle or a used?
Hopefully used if you can find them nowadays, but probably a new one. I understand. All right. Rates are high right now, so that's the challenge. Even for new vehicles, you've got some that are offering some incentives, so you could certainly look for that. But the average new car rate today is still at 7%. Even for somebody with a 660 credit score and higher, all the way up to 780, used cars are pushing 10%. So I like the idea of you prioritizing the car payment first, going ahead and buying that car with cash, because we're going to save money on interest. You're certainly going to be paying more in interest than you are on the mortgage. And if you're itemizing, you can deduct that interest on the home, not to mention the fact that the car is a depreciating asset. So I think, assuming you keep an emergency fund in place, I'd prioritize buying the car versus paying off the mortgage, and then just try to do that out of current cash flow along the way. Maybe you'll look at sending an extra payment a year or something like that. Pam, you've been waiting very patiently there in Arkansas.
How can I help? I recently retired in January. I'm 65 years old. I have a deferred comp that I put money into when I was working. I have like $15,000 in there. I was wanting to know if it would be okay to leave that in there and use it as a burial plan for me and my husband when we need it, because I know if I draw it out now, I'll have to pay taxes on it. And I also had a question about whether I should keep it in stock. I have stock and national fixed in it, and I can keep it in there until I'm 73.
Okay, very good. After retiring, it's usually a good idea to use your deferred comp first for living expenses if that means you can delay Social Security benefits, which will increase by 8% a year. Have you already taken Social Security, or are you planning to? Yes, yes, I've already retired. Okay, and so you're collecting benefits now? Yes, I don't need the money right now. I don't need it to live on. Okay, the deferred comp or the Social Security?
The deferred comp. Okay, well since you've already taken Social Security, then what you can do is just roll that over to an IRA, which would give you more investment options, and then absolutely, you could just let that continue to grow. Now at some point, you're going to need to start pulling that out as what's called a required minimum distribution, but that's not going to happen until age 73 or beyond, depending on your birth year. And you could use that as money, whether it's staying in the IRA or it comes out and as a part of a required minimum distribution, and you put it in, let's say a savings account, you can absolutely earmark that for the cost of burial and funeral expenses. You could do some pre-planning so that that's easier on your loved ones because all the decisions have been made, and then you've got that money earmarked specifically for whoever's going to handle that.
So I think that makes some sense. The only question would be kind of what do you do with it in terms of the investments? You know, you've got a couple of options there if you roll it out to an IRA, you could use one of the what are called robo-advisors because this is not enough money to have an advisor manage it directly, you could choose like the Schwab intelligent portfolios or Betterment. And basically you'd answer a series of questions about your age and your risk tolerance and the purpose of the money, and then it would automatically build a very low cost, diversified portfolio for you and it would constantly keep reinvesting dividends and it would rebalance it over time as it gets out of line with the original objective. And so it would be largely bonds with a smaller allocation to stocks, but it would be a hands-off type solution where you're not having to make those decisions and it would continue to grow for you over time. The other option is you leave it right there in the deferred comp. I think the only question is just looking at that investment mix.
So you probably don't want more than let's say 40% of the investments in stocks, I'd probably have more like 60% in bonds at your age, just so that you don't have quite as much volatility, you protect what you have, but that 40% in stocks would provide a growth component to it so that it would increase in value over time. And then you would have that money available and then you could name a beneficiary on the account, which would be the person that would be responsible for paying for those burial and funeral expenses so they could immediately get access to the money without waiting for probate. Does that make sense? Yes, that's what I wanted to do, just leave it in there for a burial. For me and my husband, when we needed it, but I just wanted to make sure I didn't need to leave it in stock or put it in the national fixed. I think I got it at 40% in the national fixed and the rest of it, or maybe the other way, I'm not sure. Okay.
Yeah, I probably have more like 60% in the fixed income portion and 40% in stocks at your age. That would be my recommendation. Okay. Okay.
All right. Very good, Pam. You're welcome. Thank you for your call today. We appreciate it. I hope you found something today helpful and encouraging. I want to say a big thanks to my team today, Taylor and Pat and Devin. I'm Rob West. I hope you'll come back and join us next time for another edition of Faith and Finance. May the Lord bless you. .
