Podcast Episode - Your Questions About Suze’s Roth Five Year Rule Masterclass

Many of you had some new questions after Suze’s Roth Five Year Rule Masterclass, so KT picked out a great sample and Suze answers them.

Listen to Podcast Episode:

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Podcast Transcript:

Suze: September 18, 2025. Welcome everybody to...

KT: The Women and Money podcast, and everyone's smart enough to listen.

Suze: Ding ding ding ding ding. Anyway, it is September 18th, right? KT? Is there anything special on today?

KT: I don't know.

Suze: I don't think so.

KT: But it's a nice number. It's a lucky number. It adds up to 9.

Suze: Do you all know that 9?

KT: Is Suze's lucky number. KT's is 8.

Suze: Yeah, but I want you to think about this. September is a 9, 18 is a 9, and 2025 is a 9.

KT: Yeah.

Suze: So this is a—

KT: —triple 9 day.

Suze: So everybody, it is a lucky, lucky day, especially for money, just so you know. OK, there you go. But this is also special because it is Ask KT and Suze Anything, and KT is in the studio, and I know that makes you all — or the majority of you anyway — so, so happy.

KT...

KT: Wait, tell everyone how to send a question to KT so that I can pick it up, pick it out.

Suze: But we have so many, but anyway, send your question into asksuzepodcast@gmail.com. And if KT likes it, it will be read on this podcast and answered, but don't be surprised if I answer you directly, OK.

KT: Are we ready?

Suze: No.

KT: OK.

Suze: I'm not quite ready yet because so many people wrote in and said how surprised they were, how quiet you were on Sunday. They were so disappointed when they didn't hear you because you said you were going to be there and then you pop in at the very end.

KT: Because I was, I was condemned to silence. No, Suze said the only way I can do my Sunday school, which is about Roth and it's complicated, is if you don't interrupt me. So I did not interrupt her. I was as still as a mouse. However, following that, we got lots and lots of emails with questions that you all have about that masterclass.

Suze: So we thought, why not complete it today and make sure that none of you are confused.

KT: All right, I have some really great questions here, but here we go. Are you ready?

Suze: I'm always ready.

KT: All right, dear KT and Suze, thanks for the most recent Suze School on the five-year rule of Roth. I want to convert from a traditional IRA to a Roth. I know I will pay taxes, but the only way I could accomplish this at this stage of my life is to have my financial planner withhold the taxes from the sale and transfer the remaining.

Suze: So you can stop right there, right there you can stop right there.

KT: So who's the name of this person?

Suze: Julie. Julie, Julie, if that's the only way you can do it, and you know that's the only way you can do it, you don't have the money to convert. Don't do it. Don't do it. Don't do it. Next question, KT.

KT: She's 52, just so you know.

Suze: Don't do it, Julie. So for all of you, when you convert, you owe taxes on the money that you converted that year. If you don't have money outside of a retirement account to do so, don't do it because if they withhold the money for you to pay your taxes, there's going to be a 10% penalty on it because number one, you are not 59 and a half years of age. You're going to owe ordinary income tax on that money as well. It makes absolutely no sense whatsoever.

KT: OK, so next question is from Pam. She said, Dear Suze and KT, after listening to last Sunday's Suze School, I think I made a boo boo. I have had a Roth for over 20 years. I'm 68, retired, and decided it would work well to convert yearly for the next five years money from my traditional IRA into a Roth. My boo boo was I opened a new Roth instead of converting to the old. Now I realize after the show I should have just converted into my original Roth, which was well over five years old. My question is, can I now transfer the new Roth conversion into my old Roth without causing any trouble?

Suze: Pop quizzy.

KT: Oh...

Suze: You sat here the entire day on Sunday. You said—

KT: OK, yes.

Suze: Yes what?

KT: Yes, you can.

Suze: And does she need to?

KT: No.

Suze: Why?

KT: Because the five-year rule's passed. Way passed.

Suze: And so?

KT: That's not fair. Stop asking me. I answered it. I said yes. So now you take over. That's not fair. You take over.

Suze: Oh, I see.

KT: You keep asking me questions like I know all the answers.

Suze: You said last Sunday — all of you are my witness, right? — that she sat there and she said, now I know everything there is to know about Roths.

KT: Most, mostly, mostly — but not all the spaces in between.

Suze: All right, first of all, Pam. We'll tell all of you, if you happen to know Pam, that I actually answered her directly.

KT: All right, so Pam, give us... tell us... write back in and tell us the damn answer.

Suze: So like I said, sometimes I answer and I felt so bad for her because she felt like she made a boo boo and the fact of the matter is she did not.

KT: I was right. I was right with my answer.

Suze: KT, but you don't know why you were right. And when you don't know why you've done something, you are not right — you are a guesser. Not somebody... anyway, forget about it. No, listen to me, everybody, seriously. Your first Roth that you open — the date of that first Roth follows you everywhere. So in this particular case, truthfully, Pam, because you are older than 59 and a half and because you had a Roth IRA opened for more than five years, you can convert all you want, pay the taxes on it, and take that money out any time you want.

Because you have literally done two things: you've had a Roth for five years, and you're over 59 and a half years of age. So it doesn't matter. Just pay the taxes and all of that money is available to you whatsoever. So the truth of the matter is, you don't really need to keep a five-year time clock because that clock has already run because of your first Roth IRA that you opened 20 years ago.

You do not have to ever use that Roth IRA again. You can open one new Roth, one new Roth, one new Roth — all conversions — and they're all dated back to the first one. So you didn't make a mistake.

It could be easier, however, now just for you to transfer — because it's not a conversion anymore — you might want to transfer all these accounts that you have into just one Roth IRA. And it doesn't have to be the first one that you opened, but you just might want to even transfer that one and all the ones that you opened into one Roth IRA now. And guess what — it might be a whole lot easier for you.

KT: This next question is the same category. Ready for this? This is Rebecca. She said, Suze, on the Ultimate Roth Five-Year Rule Masterclass, you mentioned there are two different kinds of Roth accounts — a converted Roth and the other being a contribution Roth.

Suze: Contributory, yes.

KT: Contributory. So the question is, can a contributory Roth and a converted Roth be held in the same account?

Suze: Absolutely, without any problem. So a lot of you feel like, oh my God, I have a Roth IRA, now I'm going to do a rollover from a 401(k) and I need a separate account for that. And no — everything can go into one account. Absolutely.

KT: So this next question from Anne. This is interesting, Suze, because I think this is a great question — because I don't have a clue if there's a limit.

Suze: That's very funny, everybody. KT doesn't have a clue.

KT: If there's a limit — ready, everyone, listen, listen. When you do a Roth conversion, are you allowed to put in more than $8,000? Two people wrote to you, Suze, that they put in $50,000 and $100,000 in one year.

Suze: And you honest to God don't know the answer to that? I need you to think deeply for me.

KT: I think you can put in any amount because you pay the taxes on it all.

Suze: So why did you say you don't have a clue?

KT: Well, it was interesting because for some reason there's all these limits on many different things, but not on a converted Roth.

Suze: No. Contributory Roths are Roths, everybody, that you contribute to every year with after-tax money, period. You're limited to the annual amount depending on your age — $7,000 if you're under 50, $8,000 if you're 50 or older. When you are converting, you can convert any amount of money that you want. Just know, whatever you convert — oh, you are going to owe ordinary income taxes.

KT: Pay taxes on it. So that's why she was confused. So Anne, there—

Suze: We don't know — you don't know why she was confused.

KT: She was, because she said, Hey—

Suze: KT, stop it. Go to the next question.

KT: OK, the next question is Scott. This is, I am one of the men smart enough to listen, and I really appreciate all the help you have given my wife and me. Are the five-year rules the same for Roth 401(k) conversions as they are for the Roth IRA conversions?

Suze: Here's the scoop, Scott. They are and they are not, and this is the reason why. You worked for a company for five years. You had their Roth 401(k) for all five years. You quit. You go to a new employer that has a Roth 401(k), and you transfer from the old to the new. Your old time clock — the five years there — comes with you to the new one, so your new employer's retirement account takes on the clock of your first one. Just that simple.

However — listen closely — when you go from a Roth 401(k) to a Roth IRA, the clock does not come with you. Even though you're transferring from a 401(k) that's a Roth to a Roth IRA — both after-tax — does not matter. The Roth IRA will replace the time clock of your Roth 401(k). That is why you want to start a Roth IRA today, so that the time clock is running. So when you do finally go from a Roth 401(k) to a Roth IRA, you've taken on the time clock of the Roth IRA that has been opened. If there isn't one that's been opened, your five-year time clock starts the day you transfer.

One more thing, Scott — a Roth IRA, you can take out your original contributions any time you want without taxes or penalties regardless of your age or how long the money has been in there. Your Roth 401(k) does not work like that, so there is another difference there. Which is why truthfully, after the point of the match in a Roth 401(k), you're far better off taking that money and having a Roth IRA. Once you've maxed out your Roth IRA, go back to your Roth 401(k) — unless you can fully max out both at the same time.

KT: Yeah, this next question is similar to that as well. This is from Janet. She said, after listening to your very helpful podcast on Roths, one thing I'm not totally clear on: My husband, aged 73, and I, age 68, each have a Roth IRA from contributions from our working years that date back much more than five years ago. In recent years, we've been doing Roth conversions into a new Roth account for each of us held at different brokerage houses. Does the five-year rule still no longer apply if our Roth conversions are in totally different accounts than our original Roth accounts, or do you have to do the conversion into the original to have the five-year rule no longer apply once you are over 59 and a half?

Suze: So, I obviously did not do a very good job on the masterclass because a lot of you seem to be confused. First of all, my dear Janet, your husband is 73, you are 68, you've had a Roth IRA opened way long ago. The five-year rule doesn't even apply to you on any level whatsoever, so you don't need to worry about it.

They don't have to be different accounts. They can be different accounts. They can be the same accounts. You shouldn't even think about it because of your age and you had a Roth more than five years ago. Just that simple. It doesn't matter. You can do anything you want and you're going to be fine.

KT: OK, so the magic takeaway, Suze, is 59 and a half.

Suze: Yes.

KT: All right.

Suze: And five years.

KT: Yes.

Suze: Yeah. After that it just doesn't even matter. It's like the five-year rule doesn't apply.

KT: OK, good. It's gone.

KT: This is from Lynn. She said, I just received your Ultimate Retirement Guide for 50+. I'm really wishing I had used it years ago. We always hear that. Now I need your advice — possibly changing my traditional IRA beneficiary. I am 71. My husband is 90. My traditional IRA balance is approximately $780,000. My husband's is $335,000. Is it prudent for me to designate him my 100% beneficiary? I am seeing in your distribution table that if I pass before him, the combined RMD would be $91,000 this year. So there you go.

Suze: You should see KT's face reading this. Well, so he's 90 years old, you're 71, and really you could very well pass before him — you never know what can happen in life. In my opinion, all of you are just too freaked out about these RMDs. Stop it, everybody. Your job in life is to make sure that your husband is taken care of in whatever way he needs, and there are different rules when you leave a retirement account to a spouse versus when you leave it to a non-spouse. And therefore, you want to make sure that he has access to that money, he can do anything he wants with that money.

So if it were me in this situation, I would absolutely leave it all to him. I would not think about the RMDs. The truth of the matter is, he's probably going to need to take out that money — for a nurse, for somebody to take care of him, maybe he goes into a skilled living facility or just an assisted living. He's going to need that money anyway. Leave it to him and don't worry about those stupid RMDs.

KT: Next question, Suze, is from Steve — another smart man. I'm Steve and I'm one of those people smart enough to listen. I'm 60 and retired with a pension covering current expenses. I have about $1.2 million in a traditional IRA and $300,000 in my Roth, both at the same institution. I'm going to do some conversions from my traditional to my Roth. My portfolio is about a 65/35 balance. Do I keep the 65/35 balance on the conversions or convert the 65 equities first so the future biggest growth happens in my Roth?

Suze: She's smiling again. How old is he?

KT: 60.

Suze: What's funny is that men — you know how they ask the question, 65/35.

KT: Well, no, it's 65 stocks, 35 bonds.

Suze: Here's what I would tell you, Steve. Simple: convert the equities first because they have a better chance of going far higher than bonds right now, even though I do think bonds are going to continue to go up a little bit because interest rates are going to go down. So get the stocks out of there and into the Roth sooner than later.

KT: Next question from Marie, and Marie has another RMD dilemma. She said, Suze, first thank you for all the advice and knowledge you so freely give to those of us that need it. I'm 72, so the dreaded RMDs are on the horizon. Can I use the money from my RMD to open a Roth for my adult children? This would get the Roth clock started for them. Thank you, Marie.

Suze: So Marie, listen to me. In fact, everybody listen to me. I hope that's true, don't you, KT?

KT: Yes, they better listen.

Suze: When you take out a required minimum distribution, you obviously have to pay income tax on it — just that simple. After you've paid income tax, you can do anything you want with that money. So if you want to take that money and use it to fund your adult children's Roth IRAs, OK — but you have to make sure that they have earned income. Because if they don't have earned income, you can't put any money into their Roth. And you can only put a maximum — let's just say they're under 50 — a maximum of $7,000 a year each or whatever their earned income is, whichever is less. So if their earned income is only $3,500 a year, you can only put $3,500 a year into their Roth. So that's how it works, my dear Marie.

KT: So Suze, why do you think people are so afraid of their RMDs?

Suze: Because first of all, if they had listened to me years ago and you had done a Roth, everybody, you wouldn't have to take out RMDs. Even if you had a Roth 401(k), you don't have to take out RMDs, and that's a new law. However, required minimum distribution means you have to take money out whether you need it or not and pay taxes on it. That money, KT, counts towards the taxation of Social Security and Medicare B premiums. So people don't want to have to take it out if they don't have to.

Like we have to take it out and we don't need it, and it counts towards everything. However, that's why I'm just going to say it again: if you don't do a Roth retirement account on your own — an IRA, a Roth 401(k), TSP, or 403(b) at work — you are making the biggest mistake in your life. Don't be stupid, everybody. OK, go on.

And I say that, KT, because everybody now writes and they say, why didn't I do this 20 years ago? I never thought my contributions would add up to $1.2 million, to $2 million and everything. Of course you didn't — but I think it for you. So just listen to me, especially if you're younger out there. Go on.

KT: This is from Katie. She said, I'm a new listener to your program and I love it. I'm finally understanding the Roth — I think — but I have a question after listening to your podcast on Sunday. I opened a Roth IRA at a bank several years ago with a one-time deposit. I'm now over 59 and a half, so I know I can access the contribution penalty-free if needed, which luckily I doubt I need to do. My question is: I'd like to open another Roth at Vanguard and start contributing on a regular basis. Does my five-year rule apply here for the new account, or will the five-year rule already be met?

Suze: You've already met the five-year rule. If you're over 59 and a half, everybody, and you have had a Roth IRA opened anywhere for over five years, the five-year rule no longer applies to you. However, Katie — get it, KT, when I said you have something in common because her name is Katie and you're KT.

KT: It's not what you meant.

Suze: It's what... OK, well— But you all know what I meant. Listen, you say that you opened up a Roth IRA at a bank several years ago with a one-time deposit. If I were you, I would absolutely, if you're opening up a new Roth IRA at Vanguard, can you just transfer your Roth IRA at the bank into Vanguard? I think you'll have a far better return on your money in the long run. All right, go on.

KT: So one of the listeners sent three questions. Can I ask all three, and we'll see if you can get through them before we run out of time? So, does it make sense for me to continue down the path to max out on the traditional 401(k), or should I convert to a Roth 401(k)?

Suze: Absolutely convert to a Roth. Do not be — you know what I said before — the S word.

KT: Stupid.

Suze: That's the first time I've ever heard her say that word.

KT: If the Roth 401(k) is a recommendation, when converting, what percentage should I try to convert per year?

Suze: Whatever amount of money makes sense tax-wise. Check with your CPA so that you don't go into a higher income tax bracket. Next.

KT: All right, Suze, this is the last question from this listener, and then this is a wrap. Can I continue to contribute the $7,000 per year to my backdoor Roth IRA if I have a Roth 401(k)?

Suze: Pop quizzy.

KT: Oh. Yeah, you can.

Suze: Why do you say "oh?"

KT: I just — because every time I hear the word quizzy, I'm like, Oh, KT, don't get it wrong, don't get it wrong.

Suze: Ding ding ding ding ding ding. KT, don't be so afraid of being wrong.

KT: That is a wrap. I'm not afraid. I'm not afraid. I'm like, come on already.

Suze: OK, no problem. All right, everybody, until Sunday with Suze School that I have no idea what it's going to be.

KT: But it's going to be a whole lot easier than last Sunday.

Suze: I think that masterclass — even though it doesn't seem like it given so many questions that have come in — it's a great, great masterclass.

KT: Maybe you should do real estate.

Suze: On what?

KT: On Sunday school.

Suze: I'll think about it. All right, but until then there's only one thing that we want you to remember, and it's this: People first, then money, then things. Stay safe, stay healthy, stay secure, and we'll see you soon. Bye bye.