Podcast Episode - Ask Suze & KT Anything: Mortgages, Annuities, Rollovers and Trusts


401k, Must Have Documents, Podcast, Retirement, Roth IRA, Trusts


June 30, 2022

Listen to Podcast Episode:

On this edition of Ask Suze & KT Anything, Suze answers questions about paying off mortgages, closing credit cards, annuities, retirement account rollovers and more.


Podcast Transcript:

00:00:07

MUSIC: (MUSIC IN)  

00:00:34

Suze: June 30th 2022

00:00:37

KT: Why are you laughing Suze? Good morning. It's too early. It's way too early, you know? Don't they have a show called Way Too Early with Willie?

00:00:45

Suze: No, it used to be. No. Willie doesn't do that. That's on MSNBC.

00:00:49

KT: Who does Way Too Early?

00:00:51

Suze: Truthfully, I don't know.

00:00:52

KT: There's a show called Way Too Early. This is way too early, Suze. But today is the 30th of June. The last day of June, and it's also a great day. Suze has a lot of work to do today. Everybody, she's gonna be on at two o'clock Eastern

00:01:11

KT: doing a live great webinar.

00:01:14

Suze: With Alliant Credit with Dennis President, President and CEO.

00:01:20

KT: He's great. And the two of them are really, really fun together. Very informative.

00:01:25

Suze: So if you haven't registered yet, just go to myalliant.com/webinar and you can register for free.

00:01:34

KT: Free free free.

00:01:36

Suze: We always start talking before we even welcome people.

 00:01:40

KT: Good morning everybody and welcome to the KT and Suze podcast.

00:01:46

Suze: Ask Anything.

00:01:47

KT: Oh ask us anything.

00:01:49

Suze: Anything.

00:01:49

KT: They can ask us just about anything.

00:01:51

Suze: Anything! 00:01:51

KT: Anything. Just don’t ask her about fishing. It'll take

00:01:55

KT: like hours.

00:01:56

Suze: Wait. But before we begin, I do have to say, you know, on the Women & Money app. And if all of you are not participating with the Women & Money app, which you simply download for free at Google play or Apple apps. Right.

 00:02:14

Suze: I just posted KT's final

00:02:19

Suze: garden. That's finished now and her planting. And she was showing everybody everything that's in it and she happened to mention that she has

00:02:28

KT: Mint. A little little bit of mint.

00:02:31

Suze: growing and on the app.

00:02:33

KT: The app exploded with comments. Everyone saying KT don't put mint in your garden. It's going to go crazy. And while

00:02:41

Suze: Actually only two people,

00:02:42

KT: so I'm gonna take it out, i’m gonna take it out two people.

00:02:46

Suze: But here's the point when somebody says something, we do listen sometimes. All right, KT, so 00:02:55

KT: Suze, I'm gonna start. We have a lot of questions, a lot. And some of them are

00:03:01

KT: like fast fire questions.

00:03:03

Suze: You want to do a rapid fire today?

00:03:05

KT: I'd like to do a rapid fire if you can. I can, but I don't know about you. But the first one I'm starting with is not a question. It's actually fan mail. I'm gonna start my podcast on Thursday now with fan mail.  

00:03:16

Suze: Oh, now it's your podcasts, KT.  

00:03:20

KT: Because it starts with this, this is from Gayle everyone. And she starts with Love KT. Oh, and love Suze too. She said,

00:03:33

KT: I don't have a question. Just a big thanks to both of you. Suze, your kindness and caring is greatly appreciated. These are wild times. Hearing your perspective helps keep me calm. Thank you for all the education. I've listened to some of your Suze Schools multiple times.

00:03:53

KT: And KT,

00:03:54

KT: you're such a good sport. I root for you on every quiz. Thanks again and keep it going, you two.

00:04:02

KT: So that's my that's my first one.  

00:04:04

Suze: What made you choose that one?  

00:04:05

KT: bBcause it's fan mail and I like it. And

00:04:08

Suze: KT, we get lots of fan mail.

00:04:10

KT: Well, that one said I was a good sport.

00:04:12

Suze: I knew it.

00:04:13

KT: All right, wait, ready. Here comes the next question from Linda.

00:04:16

Suze: Right, now let's do rapid fire.

00:04:19

KT: If we can. Ready?

00:04:20

KT: This is from Linda. Hi Suze and KT. Can you tell me what are your thoughts about a 30 year fixed loan

00:04:28

KT: versus 30 year with a seven year arm?

00:04:33

Suze: So obviously Linda, you are thinking about purchasing a home, and interest rates are too high if you were to get a straight 30 year fixed rate mortgage. So many people now are looking for adjustable rate mortgages  

00:04:48

Suze: where the interest rate would be fixed for seven years. It's still amortized over 30 years, but your interest rate would be fixed for seven years and then it just sees what happens at that point in time where interest rates happen to be. Personally I think interest rates might be lower again in seven years but you never know.

 00:05:09

Suze: Are you going to be living in that home for longer than seven years? If not you plan to sell in four or five or six years.

00:05:17

Suze: Those are great. I am not a fan of adjustable rate mortgages. I'm just not. Because you never know what the future can bring. So I'm somebody who does the known versus the unknown. Next KT.

00:05:30

KT: Okay, this is from Gaylynne.  

00:05:33

KT: Occasionally I have extra money to put down on the principal of my mortgage. It's typically $800 a month.

00:05:41

KT: I've been told by friends it's better for me to pay $400 twice a month rather than 800 just once. Any truth to this?

00:05:51

Suze: What do you think of that?

00:05:52

KT: I don't know. I think maybe there is truth to it if it counts as as payments.

00:05:58

Suze: Of

00:05:58

Suze: course it counts as payments.  

00:06:00

KT: But I mean, you know how? I don't know.

00:06:02

Suze: She doesn't know. But ding ding ding for not knowing.

00:06:05

Suze: But you were right. Right. And the reason is, if you send in $800 a month, that's 12 months of payments.

00:06:15

Suze: If you break it up into two payments a month, you actually get extra payments in there. Believe it or not, you'll do more than the twelve 800 payments. So you're better off doing it that way, believe it or not. It will cut some years off your mortgage.

00:06:32

KT: Great. Next one is from Raja.

00:06:35

KT: Hello Suze. I'm a great admirer of yours, and I've listened to your advice for the last 25 years.

00:06:44

Suze: So that makes me feel old.  

00:06:44

KT: Wait. But this question, if he's been listening for 25 years, I don't know why this question is coming up. Will closing bank account savings

00:06:54

KT: and checking accounts hurt my credit score? I have quite a few of them.

 00:06:59

Suze: No, no, no. Easy answer. Next KT. We're going to get through all these.

00:07:04

KT: This is from Julie. Hi Suze. I'm 64, my student loan is in forbearance since the pandemic.  

00:07:12

KT: I want to retire. I'm concerned that the money I still owe on my government student loan

00:07:18

KT: will be taken off my Social Security. Do you know if that's something that may happen?

00:07:24

Suze: Not only may it happen, it probably most really will happen. So you have to deal with that. A student loan is not something that you can just ignore. Because they're hoping that you ignore it

00:07:37

Suze: because it is growing and growing and growing with interest.

00:07:41

Suze: So as soon as it gets to an amount that's big enough,  

00:07:45

Suze: 20,000 goes to 40 goes to 80 goes to 160 whatever it is, that's when they come after you. So be careful.

00:07:51

KT: You need to do a Suze School on loans, on paying for college on 529s, all of that.

00:07:58

Suze: You keep telling me no.  

00:07:59

KT: She needs to do that.

00:08:00

Suze: I have to do different ones first.

00:08:03

KT: So this is from Dee Dee. Are you still offering your book for $10?

00:08:08

Suze: What do you think? Am I?

00:08:09

KT: Yeah baby. If so how can I order it? Love your podcast. Just discovered it. Okay Dee Dee get ready. Write this down.

00:08:17

Suze: Just go to Suze, S-U-Z-E by the way. SuzeOrman.com/ultimate.

00:08:25

Suze: And the reason it's ultimate is the name of the book is The Ultimate Retirement Guide for 50 +. That $10, it's for a hardback edition. It includes shipping and it's just our way of saying if you want this book

00:08:39

Suze: we can give it to you.  

00:08:42

KT: No, it's our way of saying you will all need this book whether you're 50 plus or not.  

00:08:48

Suze: just

00:08:49

KT: Take advantage.

00:08:50

Suze: I always like to give you things or let you have ways to buy things far cheaper than whatever it is on Amazon, which I think it's $17 or so. Go on.

00:09:00

KT: Okay, this is from Gina. Suze, if I do not have any capital gains this year, can I apply capital loss from the sale of the stock

00:09:08

KT: to offset taxes from a Roth conversion?

00:09:12

Suze: Oh very smart. What do you think? Right, so, Gina, the answer to that question is no, you cannot. When you have a capital loss, meaning you bought a stock,

00:09:27

Suze: you sold the stock, and you have a loss on it.

00:09:30

Suze: You can only offset that with other either capital gains, or carry forward $3,000 a year at most that you can then offset through income. But you cannot use it to offset the taxes that you are going to owe when you convert a traditional IRA to a Roth, which you will owe ordinary income taxes on it. You cannot do that. Alright.

00:09:57

KT: Okay. Next question is from Tino. I love that name.

00:10:02

Suze: You love all names.  

00:10:03

KT: Love that name Tino. Alright, ready. Here you go. Suze, can I buy $200 worth of an I bond?

00:10:10

Suze: That's so sweet.

00:10:12

KT: Can I answer? Sure you can Tino. Why don't you buy two?

00:10:17

Suze: No, no, KT, let's see how much you know. Here's a spontaneous Suze quizzie.  

00:10:23

Suze: Tell me the amounts of I bonds, which stands for inflation bonds, series I bonds, that you buy at treasurydirect. gov.

00:10:32

Suze: What's the smallest amount you can buy?  

00:10:35

KT: I think 100 and the greatest is 10,000.

00:10:38

Suze: The smallest is $25.  

00:10:40

KT: Out. But the highest is 10,000.  

00:10:44

Suze: 10,000 per year per person. Unless you have a trust

00:10:49

Suze: and or a business that each one of those can buy 10,000 as well, which is why you and I both have $30,000 each. And if you happen to get a tax refund you can buy an additional $5,000 of paper series I bonds.

00:11:07

Suze: So just so you know, check it out everybody at TreasuryDirect.gov, and listen to the April 17th podcast where I give a masterclass on series I bonds.

00:11:19

KT: Okay, next question is from Patty. Hi Suze, what do you think about a three-year fixed rate annuity for 3%,

00:11:28

KT: no fees, and the interest can be taken monthly. It would be with my money. That is in an IRA account.

00:11:36

Suze: I hate that idea.

00:11:37

KT: It sounds like a sale.

00:11:39

Suze: I hate that idea because here's the thing, I don't know how old you are, but why would you ever buy a tax deferred investment, which is what an annuity is, within a tax free or tax deferred vehicle such as a traditional IRA or a Roth IRA. 3% fixed for three years is not that big of a deal truthfully. If you want to do it, okay. But

00:12:08

Suze: I just I don't - I'd rather see you do other things than that. Okay.  

00:12:12

KT: This is from Carol. Suze, I recently rolled over my retirement to a variable annuity account but heard on your PBS show it's not the best way to invest.

00:12:24

KT: Please advise how to invest this sum of money and the best investment to pursue.

00:12:30

Suze: Problem is that Carol you already rolled over your retirement to a variable annuity.

00:12:38

Suze: So it's probably too late because I'm sure that variable annuity and for those of you who don't know a variable annuity is a contract with an insurance company and they invest your money into mutual funds. So the only difference is if you did it outside of a retirement account

00:12:58

Suze: it's tax deferred to all of you

00:13:00

Suze: so that you don't pay taxes on it until you take the money out. But you pay taxes as ordinary income. Once again, annuities should not be in retirement accounts unless you're doing some special deal with them. And so, I don't know if there's anything you can do right now with that because I bet that there is a surrender charge

00:13:21

Suze: that if you came out of that variable annuity right now, they would probably charge you a five or 7% surrender charge.

00:13:30

Suze: If that's not true, come on out and then within your IRA,

00:13:35

Suze: you know, invest the money that way. But people please don't buy variable annuities period, especially inside a retirement account.

00:13:44

KT: Okay. Next question is from Dina. You mentioned to max out my Roth IRA first if my 401K Roth doesn't match.

00:13:54

KT: What's the reason, Suze?

00:13:56

Suze: What's the reason? KT, what's the reason? KT?

00:14:01

KT: Tell everybody why.

00:14:03

Suze: Sing a song for me?

00:14:05

KT: No.

00:14:06

Suze: Come on.

00:14:06

KT: Everyone didn't. They didn't like my singing.

00:14:09

Suze: They liked your singing summertime, right? They liked it.

00:14:14

KT: Okay, ready. It's a beautiful morning. Uh that's what we sing to each other in the morning when we wake up. Okay, answer that question.  

00:14:25

Suze: Already forgot what it was. No, I didn't. I'm joking with you.  

00:14:29

Suze: Because it’s a Roth IRA, a contributory Roth IRA where you can put in six or $7,000 a year depending on age,

00:14:38

Suze: you can withdraw any amount of money that you originally put in without taxes or penalties, regardless of how long that money has been in there. So a Roth IRA gives you a tremendous way to get your money back. If you happen to need it,

00:14:56

Suze: number one, number two, you also have a variety of investment options with a Roth IRA, if you open one up at a discount brokerage firm versus a Roth 401k plan. You cannot take your money out any time you want. And you're limited to the investment choices that are within your 401k plan. That's why.

00:15:18

KT: So this next question is from Cat.

00:15:21

KT: Hello, Suze and KT. I've heard you say several times that you should only work to pay off your house if you're sure it's going to be your forever home. Why?

00:15:34

Suze: It's well the reason that normally that's true and everybody, you should all remember

00:15:40

Suze: that there's always exceptions to everything that I'm saying

00:15:43

Suze: depending on your individual situation.

00:15:47

Suze: So Cat, the reason is this. Your home is going to go up in value whether you've paid off the mortgage or you have not.

00:15:57

Suze: The reason to pay off the mortgage is that if you are going to be retiring and still living in that house,

00:16:05

Suze: and you've paid it off by the time you retire, then your largest monthly expense has gone away. It's not there. So you don't need as much money in retirement accounts to generate income to pay a mortgage that you have already paid off.

00:16:22

Suze: That's the reason that I want you, if you're going to keep the house,

00:16:25

Suze: to have your home paid off by the time you retire. 00:16:28

KT: Plus you feel great.

00:16:30

Suze: You feel great about it. If you're not going to keep that house,

00:16:34

Suze: Depending on the interest that you are paying on your mortgage.

00:16:38

Suze: So especially if it's a low interest rate, you got in when interest rates were 2.5 or 3%.

00:16:46

Suze: Maybe that money is better used to do what? Dollar cost average into the markets. To pay down your other debts. To pay down whatever else. Maybe to build up an emergency fund for yourself.

00:17:00

Suze: So usually it's better if you're not going to keep a house to not pay off the mortgage unless you have so much money, you've done everything else. You don't know what else to do with it and then you pay it off. But normally it's not as advisable as if you're going to keep it forever.

00:17:16

KT: Okay next is from, but we still have a big stack here. Christine asks this question. Suze, I’ve been working hard to close credit card accounts especially store cards shamefully I had too many. They have small balances, but I think I closed at least five or six in the last two weeks. However now I received an email from my credit company

00:17:43

KT: that said it may be a mistake and gave a couple of reasons. This is opposite of what you say. Suze, can you please clarify.

00:17:51

Suze: Actually it is not opposite of what I say. My dear Christine. If you've listened closely over my entire career actually I've always said

00:18:03

Suze: that 30% of your FICO score, your credit score,

00:18:08

Suze: and 30% is a lot that counts towards your total score. Is made up of your debt, what you owe, to your credit limit ratio. If you close down credit cards that have a credit limit on it,

00:18:24

Suze: then you're also closing down your credit limit.

00:18:27

Suze: When you close down your credit limit,

00:18:30

Suze: if you owe money on a credit card, then your debt to credit limit ratio goes up.

00:18:37

Suze: And you never wanted to be above 30%.

00:18:41

Suze: So you would never close down credit cards that have a credit limit on it, that don't have any annual fee. You wouldn't close them down. You just cut them up and not use them. I personally do not like store credit cards at all.

00:18:58

Suze: For many reasons they count very differently than regular credit cards because of the high interest rates. So I do not have a problem at all if you close down store credit cards but regular credit cards

00:19:12

Suze: if you don't pay a fee on it I would not be closing them down.

00:19:17

KT: Ok. Suze this is from Anne. Hi Suze I'm moving money from a rollover annuity at 1% to a rollover IRA where I can invest in mutual funds. I want to dollar cost average. Can I move chunks of money at a time

00:19:33

KT: or do I have to move it all at once?

00:19:36

Suze: You have to move it all at once. And the reason is if it is going from uh IRA to an IRA. The same IRA to the same IRA that you're transferring to, you're only allowed to do that once a year.

00:19:52

KT: You can't?

00:19:52

Suze: Yeah, it's only once a year that you can do that. So just do it all at once.

00:19:58

Suze: I

00:19:58

KT: I didn't know that. That's good advice.

00:20:00

KT: Okay, next question is from Sharon. Hi, Suze and KT. Happy birth month. Suze. It's almost over. This is the last day of your

00:20:11

KT: birth month. 00:20:12

KT: Okay, ready. I live in Florida and I own a home titled in a Ladybird deed. What's that.  

00:20:21

KT: With my two Children as remainder. Never heard of that either. All my accounts have been beneficiaries listed and I have a will.

00:20:31

KT: Do you think I still need a trust?

00:20:33

Suze: Yes.

00:20:34

KT: What the heck is a Ladybird?

00:20:35

Suze: Yeah, a Ladybird is a very simple way truthfully, to avoid probate. Especially, they're also known as life Estates, KT. Where if you die, let's say we own this

00:20:49

Suze: house in a Ladybird trust.

00:20:51

Suze: If I died, but I didn't want you to inherit this house. I wanted Sofia our niece or Alexis, our niece or both of them to inherit this house. But I wanted you to be able to live in this house for as long as you wanted to. But upon your death,

00:21:10

Suze: they they got it anyway. Right. So most people use Ladybird trusts to do that. They're far less expensive than most living revocable trust. Unless you do our Must Have Documents which are less expensive than a Ladybird trust. But the answer to that question is this.  

00:21:30

Suze: You have a living revocable trust. Not because you just want to avoid probate.

00:21:36

Suze: You also have a living revocable trust that has an incapacity clause in it.

00:21:42

Suze: So that in case you are incapacitated, you get sick,

00:21:47

Suze: then you've named somebody as successor trustee to pay your bills to disperse money to take care of you. A Ladybird trust will not do that because it only goes into effect. A will only goes into effect if you have died.

00:22:06

Suze: Now, maybe you have a power of attorney for finances, but most power of attorneys for finances

00:22:11

Suze: become null and void in case there is an incapacity.

00:22:15

Suze: So it's really, really important that you do have a living revocable trust. Now, if you stay the way that you are okay is it the most horrific thing that you've ever done? No, it works. It only works in four or five states by the way. It doesn't work KT in all

00:22:34

Suze: the states. So she's probably from Florida or a state like that.

00:22:38

KT: I have, let let me keep going here, Suze. Because these are all Must Have Document questions and at the end, let's tell everyone where to get them. That must have documents that we we have, which is a great program.

00:22:51

KT: Okay. Hello, Suze. I have a living trust

00:22:55

KT: drawn by an attorney years ago and I would like to make some changes. Can I use your

00:23:02

KT: Must Have Document trust program to make those changes, or do I have to create a new trust?

00:23:09

Suze: Yeah. If you're going from a trust that's already been drawn up for you and probably cost you $2,500 or $3,000 to do, and now you want to make changes, normally you go back to the attorney

00:23:22

Suze: that drew them up,

00:23:23

Suze: pay him or her $500 or another $1,000, and there you go. With the Must Have Documents, you would actually start all over. But you would keep the name of the trust that it was originally assigned when you did it with your attorney.

00:23:41

Suze: But it's so simple. The Must Have Documents are so simple

00:23:45

Suze: and they're not just a living revocable trust. They’re also a will, an advanced directive and durable power of attorney for healthcare, and financial power of attorney. So you can do all of them at once, update everything for far less than one call to your attorney will be. And then from that point on every time you update something or when we update something

00:24:09

Suze: you get to do it for free.

00:24:10

Suze: You also get

00:24:11

Suze: to share it with your family members.  

00:24:13

KT: Let me keep going. I have so many about trust. So this is from Sean

00:24:17

KT: Suze. I have a living revocable trust. Will my trust still have to go through probate after I pass?

00:24:27

Suze: No Sean, the reason that you do a living revocable trust is to make sure that that your beneficiaries get to have everything without going through probate, which is a lengthy court procedure that in many states costs thousands and thousands of dollars. And that could take a year, two, or three to settle. But it's not your trusts that goes through probate, unless your trustee is also the beneficiary.

00:24:56

Suze: The trustee or actually the successor trustee who takes over after you have died

00:25:01

Suze: is the person who makes sure that all of your beneficiaries get the money or the assets that you want them to get. So just know there's a difference between the trustee and beneficiary.

00:25:13

KT: And then this last one is from Harrish.

00:25:18

KT: Hi KT and Suze.

00:25:20

Suze: What is this? That everybody is saying, KT first?

00:25:23

KT: Because this is the KT and Suze ask, this is the KT who asks Suze

00:25:28

KT: everything

00:25:29

KT: podcast. Hi KT and Suze, Love the podcast. And I listen to it all the time.

00:25:36

KT: I have a question about living revocable trust. Once you fund the trust, how do I file taxes on these accounts? Is it filed under the trust, or my social security number? Please advise.

00:25:51

Suze: Yeah, that's the great thing about when you create a living revocable trust, it doesn't change anything in your life at all.

 00:25:59

Suze: Except it makes your life a whole

00:26:02

Suze: lot easier. In case of an incapacity, illness, or on death. You file your taxes just like you've always done. Does it increase your property taxes on your home? It does not, it does nothing except make your life easier.

00:26:20

Suze: So Harrish, you do not have to worry on any level of making your life complicated with a living revocable trust.

00:26:27

KT: And just one more Suze. Only because

00:26:30

KT: we really need to tell people the difference if they keep asking. But listen to this.

00:26:36

KT: This is from Franco, which trust should I get? A revocable or irrevocable?

00:26:44

Suze: Yeah. I don't know why there's such confusion, KT.  

00:26:47

KT: I can tell you why. I think a lot of people go to lawyers and the lawyers often set up an irrevocable trust.

00:26:55

Suze: Why would a lawyer do that?

 00:26:57

KT: I don't know. You tell them the difference.

00:26:59

Suze: Yeah. No I don't I'm not exactly sure KT. That that's why. Because truthfully, most lawyers, they don't want to set up a trust at all because they want to take the estate through probate because they make far more money going through probate than they do on the one or $2,000 to set up a trust. But the difference is very simple.

00:27:19

Suze: Think of the name

00:27:21

Suze: revocable versus irrevocable. When something is revocable, you can change your mind. When something is irrevocable, you cannot change it on any level. The only reason you would do an irrevocable trust, would be if you wanted an asset protection trust,

00:27:42

Suze: because you wanted everything out of your name and into the name of the trust in case you were sued. But most people do it truthfully KT, because they have so much money,  

00:27:54

Suze: they have over the $12 million dollars that you can now leave to somebody estate tax free, they want that money out of their estate, into the irrevocable trust. So it's not included anymore in their taxable estate and it grows in the irrevocable trust, and upon the death,

00:28:14

Suze: then it goes to their beneficiaries, all estate tax free for that amount of money versus staying in your estate.

00:28:23

Suze: Now, the reason that you and I, okay, she's giving me this look.

 00:28:30

Suze: And the reason we don’t, that's not besides the fact that that's true, the majority of our money is going to charity.

00:28:40

Suze: So

00:28:41

Suze: when it goes to charity, there are no estate taxes for the charities that are going to get it. We're obviously leaving the estate tax limits from both of us to beneficiary, family members and everything. But after that amount, sorry, Charlie.

00:28:59

Suze: So if any of our relatives are listening, you aren't getting that much money, I'm telling you right now. You're gonna have to work for it. We're doing what? We're leaving it to charity. One of our favorite charities is what KT?

00:29:11

KT: Oh, Marlo.

00:29:13

Suze: Yeah, St. Jude.

00:29:14

KT: St. Jude Marlo Thomas, we love you. We love St. Jude. My daddy loves St. Jude. That was his

00:29:21

KT: charity

00:29:22

KT: and he had no money. He would always send his little check

00:29:25

KT: every year.

00:29:26

Suze: It's one of our very, very favorite charities.

00:29:30

Suze: Now, KT, before I even do your quizzie.

00:29:33

KT: I don't know what she's gonna ask.

 00:29:34

Suze: Can you believe I went through all of those questions?

 00:29:37

KT: How we doing on time?

00:29:38

Suze: We're doing good? Okay.

00:29:39

KT: Go for it. She did a lot. We did a lot.

00:29:42

Suze: We did pretty good, right? Yeah.

00:29:45

Suze: But I want to say something here because

00:29:48

Suze: you know at the end of this podcast

00:29:52

Suze: you'll be able to listen to

00:29:54

Suze: everything you need to know about the ultimate opportunity savings account. But I even want to stress more and more and more

00:30:03

Suze: that

00:30:04

Suze: the ultimate opportunity savings account with Alliant Credit Union is a must have for all of you

00:30:12

Suze: and at the end of this podcast you'll hear exactly how it works. But if you're starting out with small amounts of money,

00:30:21

Suze: All you have is maybe $100 a month that you can put away and save.

00:30:27

Suze: And if you were to do that every single month

00:30:31

Suze: that at the end of those 12 months if you open up an account by going to myalliant.com, that's M- Y-A-L-L-I-A-N-T .com.

00:30:42

Suze: You open up account, you become a member that won't cost you anything with the Alliant Credit Union. You put in $100 a month starting that first month, you do it every single month for 12 consecutive months. And you have $1200 at the end

00:31:01

Suze: of those 12 months.

 00:31:03

Suze: Alliant is gonna give you $100. Besides the fact that currently you're making 1% and don't be surprised if that

00:31:11

KT: interest rate goes

00:31:12

Suze: up shortly here. Um maybe tomorrow or something like that. They will go

00:31:17

KT: up as

00:31:18

Suze: interest rates go up. But

 00:31:21

Suze: do you know that you would need

 00:31:23

Suze: approximately $10,000 in a savings account today

00:31:28

Suze: to make $100 of interest at 1%?

00:31:33

Suze: So here you're going to make the 1% plus

00:31:36

Suze: $100 for just $1200 at the end of one year. So

00:31:44

Suze: check it out everybody. Go to myalliance.com and look for me. It's for new members only. If you already have an Alliant Credit Union account, sorry you don't qualify for this. But we have so many great things coming up in the middle of this month

00:32:02

Suze: as well as hopefully a sweepstakes where we give away a nice sum of money. So play with us there.

00:32:09

KT: today.

00:32:10

Suze: Yeah,

00:32:12

KT: today today today.

00:32:14

Suze: And then you can see Dennis the CEO and President of Alliant Credit Union yourself. And you'll see, you can tell when somebody's a great

00:32:24

Suze: guy, a great woman and you'll see that. All right, it is now

00:32:31

Suze: quizzie time for you Miss Travis. And here's the thing.

00:32:38

Suze: Everybody I keep saying this is KT's quizzie but it really is for all of you because it's really important that all of you start to be able to answer these questions on your own. So this is KT's time to see if she can do it or not. KT just think about it before you answer

00:33:00

Suze: so that everybody else can think about it before they answer.

 00:33:07

Suze: Hi KT and Suze. Love you ladies, a fan since can I afford it? Your wonderful advice has helped me out over the years. My employer allows rollovers of a percentage of my 401K.

00:33:25

Suze: I can roll over $103,000. I'm 57.

00:33:32

Suze: Should I roll over into a Roth IRA so I'll have more investment options?

00:33:40

Suze: So again, KT, Brenda, who this is from, is still working at her place of employment.

00:33:47

Suze: She has a 401k that she contributes to that obviously is a traditional 401k, a pretax one because she did not say that it was a Roth 401K.

00:34:00

Suze: Which would be after tax.

00:34:02

Suze: Her company is allowing a partial rollover, which many companies do before she retires,

00:34:10

Suze: of the amount of $103,000 into a rollover, which is she wants to put it into a Roth IRA. A

00:34:21

KT: 57?

00:34:22

Suze: She's 57.  

00:34:25

Suze: Should she? Or shouldn’t he?

00:34:29

KT: I think she should.

00:34:30

Suze: Why?

00:34:31

KT: Because it's a Roth IRA. And if she needs that money

00:34:35

KT: she can get it.

 00:34:40

Suze: ERRRRRR. I mean if I could give you a quadruple, ERRRR.

 00:34:44

KT: Why?

00:34:45

KT: Shouldn't she do it now? She's she's still going to be working for a long time.

00:34:49

Suze: Because my love.

00:34:55

KT: KT you're such a good sport when she goes ERRRR.  

00:34:58

KT: So wait wait a minute. She's 57, she's going to be working, why wouldn't she do

00:35:02

KT: it?

00:35:04

Suze: She is converting money or rolling over money

00:35:08

Suze: from a traditional 401k to a Roth IRA. When she does so, she is going to pay ordinary income tax on $103,000, at the same time she has income coming in,

00:35:26

Suze: so she's probably already in a pretty high tax bracket.

00:35:31

Suze: So she's gonna have to pay ordinary income tax on that money.

00:35:35

Suze: That makes no sense at all. If she just waited until she no longer was working,

 00:35:42

Suze: did not have income coming in,

00:35:45

Suze: maybe then she could roll over some of it to a Roth

00:35:51

Suze: because then she wouldn't have to pay so much taxes, but you would never convert or roll over a six figure amount of money into a Roth

00:36:01

Suze: because that immediately puts you into a really high tax bracket.

00:36:05

KT: Can she do it after she stops working?

00:36:08

Suze: That's what I was just saying. However, but not 103,000.

00:36:12

KT: So see the employer allowed a certain amount, right?

00:36:16

Suze: Well the employer allowed probably 50% of the money that she may have in the account. But the real point is,

00:36:24

Suze: what you could do Brenda is you could do an IRA rollover

00:36:29

Suze: to a traditional IRA,

00:36:32

Suze: and then once it's in the traditional IRA,

00:36:36

Suze: you could still invest it and do all kinds of things in it there, but little by little if you wanted to convert $10,000 at that point to a Roth IRA you could, and little by little you could do that.  

00:36:50

Suze: One other reason and I just have to say this we may go a little long on this but it's okay and but it's an important thing for

00:36:57

Suze: everybody to know. There is an IRS rule it's 72T to be exact.

00:37:05

Suze: That says if you have money in a 401k, a 403B, a TSP,

00:37:12

Suze: and you leave service you leave your employer any time

00:37:18

Suze: that you have turned 55 or older, you can take any money you want out of your retirement account that's with the employer

 00:37:30

Suze: without a 10% penalty. So we're going into recession

00:37:36

Suze: possibly, as I've told you I think probably.

00:37:40

Suze: And you may, let's just say, be laid off or you decide you don't want to work anymore. Money that is in a 401k,

00:37:49

Suze: if you leave service in the year that you turn 55 or older any money in your 401k, 403b, TSP,

00:37:59

Suze: you can withdraw without the 10% penalty even though you are not 59 a half years of age. That is a big deal everybody. So don't go rolling over a whole lot of money if that is the case. Just something for you to know.  

00:38:16

KT: You should do a Suze school on 72.T

00:38:19

Suze: I just did one.

00:38:20

KT: Yeah, but I mean like another one on Sunday.  

00:38:23

Suze: KT you want you know, somebody wrote in and said to me Suze, can you make your Suze Schools like one hour every Sunday?

00:38:32

KT: Oh my goodness.

00:38:33

Suze: And I'm like I don't think so. I don't think so

00:38:36

Suze: because I don't know if you could take an hour of me. Alright everybody. You know what else today is KT?

00:38:45

KT: It's the last day of June.

00:38:46

Suze: What else?

00:38:48

Suze: Come on, think hard.

00:38:49

KT: Okay, right after the Alliant webinar we are rushing down to the airport to pick up Lynn. Lynn comes today. Lynn

00:38:59

Suze: is my twin sister. And I just want all of you to image that I'm going to have two KTs in this household

00:39:09

Suze: for almost a week.

00:39:11

KT: Why don't we make, why don't we put Lynn and I as little guests um just short so they can hear us talk on Sunday’s podcast.

00:39:20

KT: Do you all

00:39:21

KT: want to listen to Lynn and I? Yeah, let's do that.

00:39:25

Suze: All right,

00:39:25

KT: So listen to the Alliant webinar live

00:39:28

KT: two o'clock today.

00:39:30

Suze: You can watch it. They don't listen. They watch it. Come on. My favorite black jacket that I paid $5 for.

00:39:39

KT: Once we're done we're going to rush down to the airport and pick up Lynn.

00:39:42

Suze: Alright everybody. So until Sunday what do you want to tell everybody?

00:39:48

KT: It's time to be safe, strong and secure.  

00:39:52

Suze: See you t hen sweethearts. Talk to you soon. Bye bye.

00:39:55

MUSIC: (MUSIC OUT)


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