Podcast Episode - Ask Suze & KT Anything: Series I Bonds, Taxes on IRAs and Doing What’s Right For Your Family


Credit Score, Debt, Investing, IRA, Must Have Documents


October 20, 2022

Listen to Podcast Episode:

On this episode of Ask Suze & KT Anything, Suze answers questions from you all about taxes on IRAs, freezing your credit reports, Series I Bonds and more.


Podcast Transcript:

00:00:31

Suze: October 19th, 2022. Welcome everybody to the Ask Suze Anything Show, by the way, if you have a question for us, there's two ways that you can submit it. One: just simply go to ask Suze S-U-Z-E podcast at gmail dot com or download the Women & Money app

00:00:58

Suze: and you can ask it there and it's easy to download the app. Just do it at Apple app or Google play. KT, I know you have all your questions. They're ready for a lot of questions, but before you go to the questions, okay? Now she's looking at me. I'll tell you what's on my mind. You know how at the end of every Ask Suze & KT anything podcast, I give KT a quizzie?

00:01:28

Suze: I'm thinking maybe I'm going to give you a quizzie right from the start.

00:01:34

KT: Okay. Go for it. Wait, this isn't just for me. It's for all of you.

00:01:38

Suze: No, this one is just for you.

00:01:40

KT: Oh boy. Alright, go for it.

00:01:42

Suze: All right.

00:01:44

Suze: In a football game. How many chances? How many downs? (KT says "4")

00:01:51

Suze: How many points if somebody gets a touchdown?

00:01:55

KT: Six.

00:01:55

Suze: How many points if somebody kicks the after point?

00:01:58

KT: One.

00:01:59

Suze: How many points if they kick a field goal?

00:02:03

KT: Three.

00:02:04

Suze: Oh my God, you got them. All right.

00:02:05

KT: 'Cause I watched Sunday

00:02:07

KT: football with Suze all day long. Most of the day.

00:02:13

Suze: The truth is KT...

00:02:14

KT: Suze loves football.

00:02:15

Suze: KT has been watching football with both me and Colo for forever. Right and forever. She sits there and goes, how many what...

00:02:25

KT: I got it wrong on the weekend. She said KT, how many more chances does he have? I said I think eight.

00:02:31

Suze: So I just...

00:02:33

KT: Now I really memorized.

00:02:34

Suze: But here, KT, you know what?

00:02:37

Suze: You wanna know what you got them? (Suze makes the "Correct Answer sound). All right. All right. What do you got for me today?

00:02:43

KT: Okay. So we've got a real variety. But many people wrote in about I bonds which I'll get to in a moment.

00:02:49

Suze: And they should be writing about I bonds

00:02:51

KT: Because it's the season!

00:02:52

Suze: It's not just the season. I want all of you. If you want to buy an I bond to do it before the end of this month. Alright.

00:03:01

KT: Alright. Let's get on with it. So the first question is from Meredith.

00:03:06

KT: I like the way she opened it. You ready for this? My fellow and I

00:03:11

KT: when do people call them my fella?  

00:03:15

Suze: You're my "gala"

00:03:16

KT: Here's what she says, my fellow and I are planning to marry. We currently have six children between the two of us, his and hers. And for many reasons we have chosen not to blend the family at this time. So we live in separate homes and keep separate finances. I am a teacher. He is an attorney. We look forward to the day with great anticipation when we will

00:03:41

KT: merge our lives. Here's my question. I would like to gradually convert my traditional IRA to a Roth before he and I marry but I'm not sure where the money to pay the ordinary income tax should or will come from.

00:03:57

KT: I currently have an eight-month emergency fund with no debt other than my home. I'm 45 as I'm writing this, I have 106,000 in my traditional IRA and 78,000 in my Roth. I've owned the Roth for over 10 years. Should I use the principle in my Roth to pay the taxes from the conversion?

00:04:22

Suze: Oh boy.

00:04:23

KT: So that's from Meredith, what are we going to tell her?

00:04:25

Suze: Meredith. First of all, we're coming up to the end of the year. So if you are going to do a conversion, don't do it all this year. Remember you could do some this year and some next year and then split the taxes right? Because that's one way you can do it.

00:04:44

Suze: I'm really hesitant for you to take it out of your Roth to pay the taxes to convert to a Roth. And everybody just so you know when you convert from a traditional IRA and that IRA holds money that you have never paid taxes on and you convert it to a Roth IRA, you owe income taxes on any amount of money that you converted.

00:05:13

Suze: So what I would be telling you is that I rather see you take it from your emergency fund believe it or not

00:05:22

Suze: because if you ever really got in trouble then you could go back to your Roth IRA and take it from there because another law, all of you should know is any money that you originally contributed to your Roth IRA, you can take out at any time without taxes or penalties regardless of your age or how long that money has been in there.

00:05:45

Suze: So Meredith if you are going to do this I would pay the taxes from my emergency fund knowing that I could replace that money from my Roth IRA.

00:05:57

KT: Next question Suze is from Lana. How to lower taxes if I work at two jobs.

00:06:06

KT: That's the question.

00:06:07

Suze: So here's the thing about taxes. Everybody I know most of you hate paying your income tax.

00:06:16

Suze: So I remember when I went from making $5,000 a year as a waitress at the Buttercup Bakery which I made for seven years till I was 30. And then I was a financial advisor at Merrill Lynch and I started to make a lot of money.

00:06:34

Suze: Rather than thinking oh my God look at how much money I owe in taxes. I adopted the attitude of the more taxes I owe, obviously that means the more money I make. So my goal was to owe more and more taxes because then I was making more and more money. So if you have to be working two jobs, what that says to me is that you need more money.

00:07:04

Suze: Otherwise why are you working two jobs? So I want you to not concentrate on, how do you lower your taxes. I want you to concentrate on, how do you make more at the jobs that you happen to be working at right now.

00:07:19

Suze: How do you increase your income and you increase your income by you really going for it? And making those that you are dependent on a paycheck for dependent upon you. Next question, KT.

00:07:34

KT: Okay this is from Nadira.

00:07:38

KT: Hi Suze. I followed you for more than 15 years. You were amazing. My question.

00:07:44

Suze: So True. So True. (Laughs)

00:07:46

KT: I bought $10,000 of Series I bonds in November 2021. Can I buy more Series I bonds before November one this year - 2022?

00:07:58

Suze: Pop quizzie KT. Why can she?

00:08:04

KT: Because, because she can.

00:08:08

KT: You answer that Suze,

00:08:10

Suze: You don't know do you?

00:08:12

KT: I know that you can.

00:08:14

Suze: She bought $10,000 worth November of 2021. We are now in 2022. Could she have purchased another 10,000 in January 2022?

00:08:29

KT: I don't think so. I think she had to wait like six months or so. So she couldn't.

00:08:36

Suze: You so flunked that pop quiz. No, your initial question meant nothing because you guessed at it. Alright. Here's what you have to get everybody. You can only buy as an individual up to $10,000 per year. But that is a calendar year. So that is from January 'til December.

00:08:59

Suze: If you bought $10,000 right now of a Series I bond January 1st, you could buy another $10,000 because we are in another...

00:09:12

KT: ...calendar year

00:09:14

Suze: You did not know that. So, don't look at me like you knew it.

00:09:16

Suze: You didn't. So, so anyway, doesn't matter. She's looking at me like, see I knew that. No, KT, of course you can buy another one. So again, it's a calendar year. It's not one year from the time that you purchased it. Next.

00:09:35

KT: This is from Gretchen and I hope you have this list available

00:09:39

KT: because Gretchen wants to know Suze, how does she search your site for all the last I bond details? Every search bar does not lead to these past podcast. Lets give her a list of which ones exactly to go to.

00:09:55

Suze: Somehow I knew that this was gonna happen because many people were writing me that.

00:10:01

Suze: There are many podcasts that I did just on the topic of Series I bonds. Starting with April 17, I did a masterclass on it.

00:10:11

Suze: Then the May 5th podcast, the May 12th podcast, the July 7th podcast, the July 21st podcast, the August 22nd podcast. Just the other day. Last Sunday KT, I did another one on I bonds. So those are some of the podcasts that you can go to.

00:10:29

KT: All this year.

00:10:30

Suze: All this year to learn more about.

00:10:32

KT: Maybe you can put that list of dates. Where would you post it?

00:10:35

Suze: I could post it on my Women & Money podcast app. All right,

00:10:39

KT: Let's do that.

00:10:40

KT: Hi, Suze and KT. I feel confident in saying that. I don't think you have answered this question about I bonds. I purchased them when the rate was 3.62% and have enjoyed the increase ever since. If I were to take the money out between years two and five is the interest that comes out for the penalty at the initial

00:11:04

KT: rate or when I take it out, I believe it is the initial rate, which means that the money I put in recently will cost me more than twice as much to take it out if I choose it to do so in the future. Thank you for all your guidance. So is she right or is she wrong?

00:11:24

Suze: I would give you that is the quizzie but I don't wanna see you get it wrong anymore. Right. So here's the thing, my dear Penny,

00:11:35

Suze: you are wrong. And the thing is this.

00:11:41

Suze: You get an interest rate when you buy an I bond. Like right now if you purchased an I bond it would be at 9.62% annualized or 4.81% for the six months. Then six months from now you go to 6.48%.

00:12:00

Suze: And then we see what it is after that after one year, if you want to come out, it's based on the current interest rate that they happen to be crediting. So if that interest rates start to go down. It's at that rate. It would not be at the 9.62% rate that you would be getting right now if you purchased it. So no it's not at the initial rate. It's at the current interest rate

00:12:29

Suze: that the bond is earning.

00:12:32

KT: All right Suze. This next question is I like to thank you before the question. So let me read this. Thank you so much for putting the Suze Orman show on Freevee. Educating us on the importance of interest rates and financial decisions and encouraging us to stand in our truth.

00:12:51

Suze: So tell everybody about that.

00:12:53

KT: Okay so the Suze Orman Show, all 600 odd episodes are on

00:12:58

KT: Freevee. Available for you. That we're actually unloading the episodes across the next few months. But you can go to Freevee, which is on Amazon and watch the Suze Orman show all over again.

00:13:13

Suze: For free.

00:13:14

KT: So here's the question.

00:13:16

Suze: Wait, so the other day, as you know, I've told you in the past

00:13:21

Suze: that I very seldom if ever have watched the Suze Orman show or my appearances on Oprah or anything like that.

00:13:29

KT: She never used to watch the show.

00:13:32

Suze: So the other day we were wondering let's go see see if they're on Freevee. Let's look ourselves. So we went and we pulled up a show and I watched the whole thing.

00:13:46

Suze: I was so good. I can't even stand it. I don't think I'm that good anymore. But this one I think it was in the year 2015. Oh my God it was fabulous.

00:13:57

Suze: So take it from me. You should go watch my show.

00:14:00

KT: It's they're great. They're fun to watch all over again and very very relevant. The information is very evergreen. So this is the question would freezing one's credit affect his or her ability to get competitive rates for insurance meaning for a car or home. I can answer that.

00:14:20

Suze: Go on.

00:14:20

KT: Absolutely.

00:14:22

Suze: Why?

00:14:23

KT: Because you have... because they can't check your score. Your your FICO or your credit score.

00:14:27

Suze: Alright, so now here's what you need to know. Normally

00:14:33

Suze: it's not really what an insurance company is supposed to do. Your FICO score should have nothing to do normally with what with your insurance rates

00:14:45

Suze: you get something known as an insurance risk score, and that is the score that they usually look at. However there are some companies that don't care about what they should or shouldn't do and they do look at your FICO scores. So if you freeze your credit reports, there is no way then to generate a FICO score

00:15:09

Suze: because everything is frozen including from those who want to check it like an insurance company. So all you have to do is unfreeze it, let them check it and freeze it back. The process is very simple. It is not worth not freezing your credit reports simply to easily check your FICO score or get more credit. All accounts. If you ask me should be frozen. All right.

00:15:36

KT: Yeah, we freeze ours.

00:15:37

Suze: Of course we do. Well, we have so many guards on ours. It's not even funny. But but you know, the truth of the matter is you freeze your credit with Trans Union, Equifax, Experian. Just do it. All right,

00:15:51

KT: Suze, this next question is from Jean

00:15:53

KT: and it's a little sensitive. Maybe you need to talk to him a little bit about this. Hi Suze, thank you for your podcast today. I have your must-have documents. I started to fill it out and I had to stop because it was too sentimental for me. It's really a mental situation as opposed to a financial one.

00:16:15

KT: How can you help me overcome this?

00:16:18

Suze: Yeah. You know,

00:16:21

Suze: one of the hardest things that we ever all have to do in life, it's planning for the time when we're going to be facing death

00:16:31

Suze: and making decisions, who gets what, who does this? Who's gonna take care of everything. And even in my own family, I have to tell you, I don't mind. You know, you tell me everything about yourselves. I don't mind talking about my own family. You know, in my own family, my eldest brother refuses to deal with this situation

00:16:55

Suze: And he's almost 80 right now. He refuses and I call him and I talked to him and I say to him if something happens to you and it's not going to be if it's a when. Who is going to take care of everything for you, you know, it's going to come back on me. So therefore I don't even know your address. I don't even know where a key to your home is. I don't know where any of your accounts are. I don't know who you want to get anything

00:17:24

Suze: and he refuses to deal with it. He keeps saying to me, it's too emotional. I don't want to deal with it right now.

00:17:35

Suze: And I'm just sitting there and I just, I'm so mad. So I write him back and I go, alright, but I just want to tell you you are the most irresponsible human being I've ever met in my life by taking that position and I haven't talked to him since.

00:17:53

Suze: But KT is looking at me because it's true. However, here's what I want to say to you, Jean it's not an "if" you're going to die, it's a "when" and if you think that you are having an emotional time deciding now or it's too sentimental for you now to decide what's going to happen. Imagine if you were to die today,

00:18:19

Suze: what kind of mess have you left all of those that you love, that you're sentimental over? What kind of mess is it possible that you have left them in.

00:18:31

Suze: I told this story a long time ago on this podcast about a friend of ours, Bill who died. And the problem is he died without a will without a trust. Nobody knew where his accounts were. Nobody knew anything and he had everything on auto pay. So his rent for almost one year

00:18:55

Suze: continued to be paid, his electricity continued to be paid his car payment continued to be paid, all of this money that was meant to go to his family members

00:19:10

Suze: kept being paid for things that weren't being used anymore.

00:19:15

Suze: It took them one year to figure out where it was to get the authority to actually stop everything and settle everything.

00:19:25

Suze: It was a horrific nightmare for them. So all of us listening right now,

00:19:33

Suze: it's not easy for KT and I to make decisions either trust me and as you know, I changed my mind all the time. And the reason that I changed my mind all the time is because it is sentimental. It is emotional,

00:19:47

Suze: you know, money and your assets and everything that you have worked an entire life for.

00:19:54

Suze: It's hard to decide who gets this, who gets that. You know, even little things like who gets my Emmy awards, who gets my Gracie awards, even things that don't have a financial value to them.

00:20:06

Suze: All I ask you to do is remember how I'm feeling right now towards my brother,

00:20:13

Suze: who I love very much and who is absolutely the most brilliant person I've ever met in my life and for some reason he can't do this. One thing. Think about how that's making me feel and I can tell you and then I'll wrap this up that I have dealt now over my lifespan of doing this. Thousands of people

00:20:36

Suze: whose loved one died not having done something.

00:20:41

Suze: And you don't even want to know the things that they felt about that person having done that to them. Just wanted you to know that. So I want you

00:20:53

Suze: to get strong, face this and just do it. That's all. Just do it. All right, next KT.

00:21:02

KT: Well this was this is another part to that same topic but this one I find a little bit amusing but also true. This is from an email. It's called House Hunter. That's the identification. But it said my question today is I plan, Suze, on purchasing your must-have document kit.

00:21:23

KT: I know you mentioned that the software is updated when it need be. My question is, and I'm so sorry to ask, when you pass, what type of support and software updates will be provided?

00:21:39

KT: So that's a very interesting question.

00:21:42

Suze: Oh not me. Everybody else is gonna die but me. No. Just joking. I actually think that's a great question. Just so you know and what you need to understand is that right now by the way we are working on a fabulous update that will make the must have document kit so different. I can't even tell you. Again all of you who have purchased it now and in the past you will automatically get that update

00:22:09

Suze: and that will come out sometime next year. Right and again remember updates are always free but if I were to die today,

00:22:19

Suze: there is a whole team of people really behind me at Hay House. There is a group of people. I don't even know how many...

00:22:31

KT: engineers.

00:22:34

Suze: And this has been structured in such a way that this will go on forever or for a long, long time. Updates will still be done by Hay House

00:22:48

Suze: and everything will be fine. So I think you will be good. However, let's say I didn't do any updates. Let's say this was it. No more updates. The way the program is written right now. It will be valid forever and a day. The updates have nothing to do with the actual documents.

00:23:11

Suze: The updates are simply how do you use the program easier? Like how can it help you with more artificial intelligence and all of that. But it has absolutely nothing to do with the documents. And why is that?

00:23:28

Suze: Those documents, the state-of-the-art documents that are good in all 50 states are absolutely perfect the way they are. They will never need to be changed. So that's my answer to you. For all of you who don't know what the must-have documents

00:23:47

Suze: are, simply the documents you must have. They are a Will, a Revocable Living Trust, an Advanced Directive and Durable Power of Attorney for healthcare and Financial Power of attorney. If you want them all you have to do is go to SuzeOrman.com /offer. They are now currently $99. If you get them through that offer, if you go on to my own website to get them,

00:24:16

Suze: there are $198. So that is how I would do it. If I were you, you can also get them on the Women & Money app. You can purchase them there as well.

00:24:27

KT: Ok Suze, that's a wrap!  

00:24:32

Suze: No, it's not quite a wrap, I do have another quizzie for you.

00:24:33

Suze: So KT, somebody wrote in and they said,

00:24:40

Suze: because there's so much information in these podcasts, it would really be great to have a recap at the end.

00:24:51

Suze: So there was like you know how you used to do Cliff's notes when we were younger of, of a book rather than reading the book, you could just read the Cliff's notes of it. Or now there are many people that just do the like Cliff's note versions of books that I've written or whatever. So I decided to kind of do a review of it

00:25:11

Suze: in the form of a quizzie.

00:25:14

Suze: Some of the questions that I answered today. Right, so I was writing these down as you happen to be asking them to me. So everybody, you should be able to answer these questions as well.

00:25:31

KT: This quizze is not just for me. It is for all of you.

00:25:38

Suze: First question - I bought an I bond last November, can I buy another one now?

00:25:46

Suze: (KT says "yes.”) And why is that?

00:25:47

KT: Calendar year.

00:25:48

Suze: Good Ding Ding Ding Ding. Number two. Is it true

00:25:53

Suze: that if I cash in an I bond between years two and five, the three-month interest penalty is based on the initial interest rate when I first bought it. Is that true? Yes or no?

00:26:10

Suze: Oh she's looking at me. I just answered this.

00:26:15

KT: Yes.

00:26:16

Suze: No way.

00:26:19

KT: Okay.

00:26:20

Suze: You don't listen when I answer

00:26:23

Suze: because

00:26:23

Suze: you're already on to reading the next question. Alright. So everybody, you should know that when you buy an I bond, years two through five if you come out before the fifth year because after five years you can take any money out that you want.

00:26:40

Suze: That the truth of the matter is the three-month interest penalty that you will have to pay is based on the current interest rate that's in effect at the time on your I bond, not the initial rate. All right. Now.

00:26:56

Suze: Since you weren't getting questions KT that I've already answered, let me ask you some questions that I didn't answer today about I bonds.

00:27:07

Suze: You

00:27:08

Suze: ready? Right. She is not liking this everybody. Rather than buying one $10,000 I bond. Is it better to buy five

00:27:20

Suze: $2,000 I bonds? It's still $10,000, KT. But they're buying $2,000, they're buying individual bonds. So when and if I need $2,000 before the five years is up, I can just cash in one bond while the others continue to earn interest. Yes or no.

00:27:47

KT: I don't think so. I think you can take any amount out when you have that $10,000.

00:27:54

Suze: Yes. So just because you have purchased a $10,000 I bond does not mean that if you need money and you need to redeem it that you have to redeem all of it.

00:28:07

KT: Just take what you need.

00:28:08

Suze: You take you redeem what you need. Now this one's a little tricky. What are the most number

00:28:16

Suze: of I bonds one can buy in one year. Not the amount. And I'm now talking about an individual person. Is there a number of I bonds that somebody can max out on in one year? All right, let me give you...

00:28:34

KT: Wait, wait, I can figure this out. So if the minimum I bond purchases $25

00:28:42

KT: then I think you can do. Let's see, let me do the math...it would be 400 of them.

00:28:48

Suze: Oh you're so smart. Now. Ding Ding Ding ding.

00:28:50

KT: Smart, but I remember the minimum. So you get 400 of these separate I bonds. Right.

00:28:56

Suze: Fabulous. So that's true. That was just I was just having kind of fun with her. Alright. And one last one: I bought my son two bonds. Two I bonds as a gift of $10,000 each.

00:29:12

Suze: And now I was told the most I can buy was $10,000 in one year for him. Is that true or false?

00:29:22

KT: I believe it's true.

00:29:25

Suze: Positive?

00:29:26

KT: Well if she bought this for her son...

00:29:30

Suze: As a gift, she bought it. She didn't deliver it to him though.

00:29:33

KT: Oh okay. If she bought them and she's just holding on to them and they're not yet in his account or name then I think it's okay.

00:29:43

Suze: So

00:29:45

Suze: you can buy as many gift bonds for one person and one year as you want since interest rates are so high right now 9.62%,

00:29:58

Suze: KT and I both individually bought $10,000 worth. We also bought $10,000 in our trust and we also each bought $10,000 in our business. So we were each able to buy $30,000 of I bonds, or $60,000 in total. In addition to that everybody, we also gifted each other

00:30:26

Suze: many $10,000 worth right now, of I bonds.

00:30:32

Suze: Now, how were we able to do that? You can buy as many gift bonds for somebody in their name,

00:30:39

Suze: but you cannot deliver it to their account

00:30:44

Suze: if they themselves have personally purchased $10,000 worth of I bonds that year. If next year I decided not to buy $10,000 more of I bonds,

00:30:59

Suze: then KT could deliver to me one of the $10,000 of I bonds that she bought for me this year.

00:31:09

Suze: So again, there's a difference between purchasing them in somebody's name and you just keeping it for them

00:31:17

Suze: and delivering that bond to them in their account. So if you bought two I bonds for your son this year, that's fine. As long as you did not deliver them or did not deliver more than one if he hadn't purchased it himself. Well, how was that today?

00:31:40

Suze: Why

00:31:41

Suze: do you hate being wrong so much?

00:31:43

KT: Well, I just have a block against Roth.

00:31:47

Suze: We weren't talking about Roth. We were talking about I bonds. Oh, never mind.

00:31:54

Suze: Why do I even go there? I don't know. All right everybody,

00:31:59

KT: 'till Saturday night. Date night with Suze!

00:32:03

Suze: How does that song go that I love?

00:32:05

KT: (SINGS) Another Saturday night and I ain't got nobody.

00:32:09

Suze: Yes, but how do I sing it?

00:32:10

KT: (SINGS) Another Saturday night and I ain't got no money.

00:32:14

Suze: That's not how I sing it. How do I sing it?

00:32:17

Suze: (SINGS) Another Saturday night and I have lots of money. Anyway. Alright, everybody until Saturday night.

00:32:28

Suze: What do we want to tell everybody?

00:32:29

KT: Stay safe.

00:32:32

Suze: Strong

00:32:32

KT: and secure.

00:32:34

Suze: See you then

00:32:35

KT: Have a great week.

00:32:36

Suze: Alright, bye bye.


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