1 00:00:02,940 --> 00:00:02,960 Music: Music (in) 2 00:00:28,690 --> 00:00:35,000 Suze: June 25th, 2023. Welcome everybody to the Women and Money 3 00:00:35,009 --> 00:00:40,159 Suze: podcast as well as everybody smart enough to listen. Suze 4 00:00:40,168 --> 00:00:45,849 Suze: School today and Suze school today is going to have 5 00:00:45,860 --> 00:00:50,680 Suze: to do with the first question that KT asked me 6 00:00:50,689 --> 00:00:54,139 Suze: on Thursday, which was from a woman by the name 7 00:00:54,150 --> 00:00:55,340 Suze: of Alison. 8 00:00:55,529 --> 00:00:59,689 Suze: And she was asking me about this new law that 9 00:00:59,700 --> 00:01:04,679 Suze: passed that allows you to take $35,000 from a 529 10 00:01:05,309 --> 00:01:08,330 Suze: plan that you have not used and put it into 11 00:01:08,339 --> 00:01:13,179 Suze: a Roth Ira. And she was asking me questions about 12 00:01:13,190 --> 00:01:13,480 Suze: it 13 00:01:13,849 --> 00:01:19,750 Suze: and this is a very, very complicated procedure that all 14 00:01:19,760 --> 00:01:22,410 Suze: of you should know about, by the way. So, on 15 00:01:22,419 --> 00:01:26,629 Suze: that podcast, I said no, no, this is a Suze school. 16 00:01:26,639 --> 00:01:29,289 Suze: So I am going to do the Suze School on 17 00:01:29,300 --> 00:01:33,059 Suze: that today. So get out your little Suze notebooks because 18 00:01:33,069 --> 00:01:37,400 Suze: this really, especially if you have children, you have grandchildren. 19 00:01:37,830 --> 00:01:43,080 Suze: This is something that you should absolutely know about. But 20 00:01:43,089 --> 00:01:47,268 Suze: before I go into that, I know, I know, I know. 21 00:01:47,760 --> 00:01:50,319 Suze: I know that a little bit ago that the Feds 22 00:01:50,330 --> 00:01:54,129 Suze: didn't raise the interest rate, the fed funds rate for 23 00:01:54,139 --> 00:01:58,709 Suze: the first time in over 10 raises by the feds. 24 00:01:59,150 --> 00:02:02,540 Suze: They did say however, that they expect to raise it 25 00:02:02,550 --> 00:02:06,419 Suze: twice again, probably a quarter of a percent. 26 00:02:06,720 --> 00:02:10,850 Suze: But why haven't I said anything about it because there's 27 00:02:10,860 --> 00:02:15,809 Suze: not a lot to say about it. Everybody, inflation is 28 00:02:15,820 --> 00:02:20,399 Suze: definitely starting to come down. Is it coming down as 29 00:02:20,410 --> 00:02:22,130 Suze: fast as they want? No, 30 00:02:22,970 --> 00:02:26,570 Suze: but we've talked about that. That's one of the reasons 31 00:02:26,580 --> 00:02:29,889 Suze: I didn't want you to buy new Series I Bonds 32 00:02:29,899 --> 00:02:32,440 Suze: and that there would be probably better things to do 33 00:02:32,449 --> 00:02:38,038 Suze: with your money. What it does mean however, is that 34 00:02:38,110 --> 00:02:41,240 Suze: the interest rates that you're going to pay on mortgages 35 00:02:41,250 --> 00:02:44,369 Suze: most likely are going to stay where they are, the 36 00:02:44,380 --> 00:02:47,179 Suze: interest rates that you are going to be paying on 37 00:02:47,190 --> 00:02:50,000 Suze: credit cards will probably stay where they are. 38 00:02:50,258 --> 00:02:53,329 Suze: The interest rates on home equity lines of credit will 39 00:02:53,339 --> 00:02:58,008 Suze: probably stay exactly where they are. But interest rates on 40 00:02:58,020 --> 00:03:02,728 Suze: treasuries and CDs and things like that will also probably 41 00:03:02,740 --> 00:03:08,769 Suze: stay where they are for whatever reason, against all odds. 42 00:03:08,779 --> 00:03:11,429 Suze: This is a resilient economy. 43 00:03:11,779 --> 00:03:16,059 Suze: People are still spending, I don't actually understand how or 44 00:03:16,070 --> 00:03:21,750 Suze: why we see real estate not going down but also 45 00:03:21,758 --> 00:03:24,169 Suze: not really going up either. 46 00:03:24,580 --> 00:03:27,820 Suze: But it's still solid in many different ways. And what's 47 00:03:27,830 --> 00:03:31,759 Suze: keeping people from buying are the interest rates for the 48 00:03:31,770 --> 00:03:35,270 Suze: new mortgages that people are getting. So real estate hasn't 49 00:03:35,279 --> 00:03:39,949 Suze: been damaged. The stock market has had a fabulous return 50 00:03:40,080 --> 00:03:44,130 Suze: whether it stays there or not, no way for anybody 51 00:03:44,139 --> 00:03:48,279 Suze: to know. But I do know one thing when it 52 00:03:48,289 --> 00:03:49,630 Suze: comes to investing 53 00:03:50,339 --> 00:03:58,160 Suze: that artificial intelligence, artificial intelligence more than any other investment 54 00:03:58,270 --> 00:04:03,789 Suze: that we have heard of lately, whether it's crypto Bitcoin, 55 00:04:03,800 --> 00:04:05,679 Suze: whatever those things are, 56 00:04:06,630 --> 00:04:07,389 Suze: you know, 57 00:04:07,990 --> 00:04:14,440 Suze: artificial intelligence is going to absolutely change our way of life, 58 00:04:14,449 --> 00:04:18,719 Suze: our way of doing anything and everything. 59 00:04:19,410 --> 00:04:25,609 Suze: And I think more money will be made in artificial intelligence, 60 00:04:25,619 --> 00:04:30,019 Suze: in the stocks that invest and create artificial intelligence than 61 00:04:30,029 --> 00:04:35,019 Suze: almost any other area. So I think that in the 62 00:04:35,029 --> 00:04:36,339 Suze: years to come, 63 00:04:37,450 --> 00:04:41,540 Suze: it should be lucrative for us. We've also learned that 64 00:04:41,549 --> 00:04:47,709 Suze: it's really, really important to continue to dollar cost average 65 00:04:47,720 --> 00:04:49,700 Suze: into the stock market, 66 00:04:50,500 --> 00:04:54,469 Suze: something that we've been doing for a long time now. 67 00:04:54,600 --> 00:04:59,630 Suze: So let's now switch to Suze School. So like I said, 68 00:04:59,640 --> 00:05:05,089 Suze: take out your notebooks because this is really a topic 69 00:05:05,130 --> 00:05:10,230 Suze: that everybody should know about and how they worked. But 70 00:05:10,238 --> 00:05:17,829 Suze: to begin with, let's talk about what is a 529 plan. 71 00:05:18,678 --> 00:05:24,320 Suze: So a 529 plan is simply an educational savings plan 72 00:05:24,390 --> 00:05:29,730 Suze: that's designed to help families save for future educational expenses. 73 00:05:29,738 --> 00:05:35,250 Suze: Just that simple everybody. And so the name 529 comes 74 00:05:35,260 --> 00:05:39,609 Suze: from the section 529 of the internal revenue code, you know, 75 00:05:39,619 --> 00:05:42,440 Suze: which governs these plans. I always tell you that because 76 00:05:42,450 --> 00:05:44,079 Suze: it seems like you want to know. 77 00:05:44,519 --> 00:05:51,169 Suze: Now every single state or state agency or whatever has 78 00:05:51,178 --> 00:05:57,279 Suze: a 529 plan. There are two main types of 529 79 00:05:57,290 --> 00:06:00,959 Suze: plans that you need to know about. One is the 80 00:06:00,970 --> 00:06:06,909 Suze: prepaid tuition plan and the second one is the college 81 00:06:06,920 --> 00:06:10,768 Suze: savings plan. Are you writing this down 82 00:06:11,678 --> 00:06:17,368 Suze: Now, prepaid tuition plans will allow you to prepay 83 00:06:17,959 --> 00:06:24,209 Suze: the future tuition costs at today's prices. I love prepaid 84 00:06:24,220 --> 00:06:27,940 Suze: plans because it takes all the guess work and investment, 85 00:06:27,950 --> 00:06:32,709 Suze: work out of it. So it's a good option if 86 00:06:32,720 --> 00:06:36,339 Suze: you are pretty certain that your beneficiary is going to 87 00:06:36,350 --> 00:06:42,089 Suze: intend an in state public college or university, 88 00:06:42,738 --> 00:06:49,308 Suze: that's when you want to look into prepaid plans. However, 89 00:06:49,320 --> 00:06:50,369 Suze: on the other hand, 90 00:06:51,119 --> 00:06:56,808 Suze: college savings plans are really just investment accounts that offer 91 00:06:56,820 --> 00:07:00,529 Suze: you various investment options so that you can grow your 92 00:07:00,540 --> 00:07:05,329 Suze: contributions over time. Now, these plans I have to tell 93 00:07:05,339 --> 00:07:09,070 Suze: you are more flexible and can be used for a 94 00:07:09,079 --> 00:07:16,209 Suze: much larger range of educational expenses such as tuition fees, 95 00:07:16,220 --> 00:07:20,350 Suze: books supplies, and even room and board. 96 00:07:20,880 --> 00:07:26,570 Suze: It's not how a prepaid plan works. So what you 97 00:07:26,579 --> 00:07:31,549 Suze: need to really understand, however, is one of the significant 98 00:07:31,559 --> 00:07:37,609 Suze: advantages of putting money into a 529 plan 99 00:07:38,279 --> 00:07:43,859 Suze: is the potential for the tax benefits that this plan 100 00:07:43,869 --> 00:07:47,910 Suze: offers you and the beneficiary of this plan, which is 101 00:07:47,920 --> 00:07:52,190 Suze: usually your child or grandchild or the person that's going 102 00:07:52,200 --> 00:07:54,570 Suze: to be going to a university. 103 00:07:55,230 --> 00:08:00,920 Suze: So even though you cannot not deduct the money that 104 00:08:00,929 --> 00:08:05,880 Suze: you put into a 529 plan on your federal tax 105 00:08:05,890 --> 00:08:06,799 Suze: return 106 00:08:07,519 --> 00:08:11,570 Suze: the earnings in the account though are going to grow 107 00:08:11,579 --> 00:08:16,390 Suze: tax free. Did you hear me? That means you won't 108 00:08:16,399 --> 00:08:21,730 Suze: have to pay federal taxes on the investment gains as 109 00:08:21,739 --> 00:08:28,250 Suze: long as the funds are used for qualified educational expenses. 110 00:08:28,779 --> 00:08:36,849 Suze: Now, qualified educational expenses typically include tuition fees, oh, books 111 00:08:36,859 --> 00:08:42,750 Suze: supplies and equipment for enrollment or attendance and an eligible 112 00:08:42,760 --> 00:08:49,489 Suze: educational institution. It's essential that you note that if you 113 00:08:49,500 --> 00:08:54,900 Suze: withdraw funds. However, for non qualified expenses, which is what 114 00:08:54,919 --> 00:08:56,590 Suze: Alison wants to do, 115 00:08:57,349 --> 00:09:03,260 Suze: you'll likely face taxes and penalties on the earnings portion 116 00:09:03,270 --> 00:09:07,718 Suze: of the money that you put in another advantage. Just 117 00:09:07,729 --> 00:09:13,080 Suze: so you know, of 529 plans is the high contribution 118 00:09:13,090 --> 00:09:17,559 Suze: limits that you can put in in. It may vary 119 00:09:17,679 --> 00:09:22,390 Suze: state by state. They're really high often reaching like hundreds 120 00:09:22,400 --> 00:09:25,219 Suze: of thousands of dollars per beneficiary. 121 00:09:25,510 --> 00:09:30,239 Suze: So this provides you really with an opportunity for substantial 122 00:09:30,250 --> 00:09:34,320 Suze: savings to cover educational costs. Now, I just have to 123 00:09:34,330 --> 00:09:38,000 Suze: say one or two more things now about 529 plans 124 00:09:38,010 --> 00:09:42,580 Suze: since you know about them, or you're learning about them. 125 00:09:42,599 --> 00:09:48,919 Suze: All right. Now, you just heard me say that 529 126 00:09:48,929 --> 00:09:53,439 Suze: plans do not offer a federal tax write off. 127 00:09:54,109 --> 00:10:00,179 Suze: However, there are over 30 states that currently offer a 128 00:10:00,190 --> 00:10:07,299 Suze: state income tax deduction or tax credit. So you need 129 00:10:07,309 --> 00:10:11,840 Suze: to check that out. Usually it's about $5000 per person 130 00:10:11,849 --> 00:10:14,598 Suze: or maybe $10,000 for a married couple. 131 00:10:15,130 --> 00:10:18,179 Suze: So just check that out. But you need to know 132 00:10:18,190 --> 00:10:23,020 Suze: that in most cases that you have to contribute to 133 00:10:23,030 --> 00:10:28,979 Suze: your home state 529 plan to qualify for a state 134 00:10:28,989 --> 00:10:31,280 Suze: income tax benefit. 135 00:10:31,789 --> 00:10:37,539 Suze: But there are approximately nine states that will offer a 136 00:10:37,549 --> 00:10:43,929 Suze: state income tax benefit regardless of what 529 plan you 137 00:10:43,940 --> 00:10:50,390 Suze: contribute to. So just know that now another benefit of 138 00:10:50,400 --> 00:10:54,799 Suze: a 529 plan is flexibility. 139 00:10:55,690 --> 00:11:00,859 Suze: You need to know this if the beneficiary decides not 140 00:11:00,869 --> 00:11:07,640 Suze: to pursue a higher education or they receive scholarships. So 141 00:11:07,650 --> 00:11:12,238 Suze: in such a case, you can change the beneficiary to 142 00:11:12,250 --> 00:11:16,218 Suze: another family member such as a sibling or a first 143 00:11:16,229 --> 00:11:23,400 Suze: cousin without facing any taxes or penalties. Got that? 144 00:11:24,239 --> 00:11:30,380 Suze: Let' address one of your biggest concerns. However, about 529 plans, 145 00:11:30,679 --> 00:11:37,630 Suze: the impact on financial aid eligibility when applying for a 146 00:11:37,640 --> 00:11:43,909 Suze: need based financial aid such as grants or scholarships, the 147 00:11:43,919 --> 00:11:49,530 Suze: value of a 529 plan is generally considered an asset 148 00:11:49,539 --> 00:11:53,349 Suze: of the account owner, usually the parent. 149 00:11:53,840 --> 00:11:56,699 Suze: So this means to you, listen to me because you're 150 00:11:56,710 --> 00:12:00,500 Suze: all getting this wrong when you're writing me, this means 151 00:12:00,729 --> 00:12:06,909 Suze: it has a smaller impact on eligibility compared to accounts 152 00:12:06,919 --> 00:12:11,368 Suze: owned by the student, such as accounts to a unified 153 00:12:11,380 --> 00:12:16,010 Suze: gift to minors act account that will hurt your child 154 00:12:16,020 --> 00:12:23,010 Suze: more for financial aid than money in a 529 plan. 155 00:12:23,750 --> 00:12:27,739 Suze: All right, you've got to know that and the reason 156 00:12:27,750 --> 00:12:30,739 Suze: is you also have to know is that in the 157 00:12:30,750 --> 00:12:35,909 Suze: year that you take money out of a 529 plan 158 00:12:36,309 --> 00:12:42,500 Suze: and it's used for educational purposes. It's not counted as 159 00:12:42,510 --> 00:12:49,119 Suze: income in the subsequent years for financial aid calculations. So 160 00:12:49,130 --> 00:12:51,559 Suze: there are all kinds of ways that you can use 161 00:12:51,570 --> 00:12:52,510 Suze: money in a 529 162 00:12:53,869 --> 00:12:58,580 Suze: and really qualify for financial aid. But you have the 163 00:12:58,590 --> 00:13:02,739 Suze: option of many states, all of that, but that's how 164 00:13:02,750 --> 00:13:03,859 Suze: they work. 165 00:13:04,719 --> 00:13:09,320 Suze: However, what you need to know is that your kid 166 00:13:09,330 --> 00:13:14,109 Suze: doesn't go to school, you don't have any other beneficiaries 167 00:13:14,229 --> 00:13:18,489 Suze: and now you have all this money in a 529 plan. 168 00:13:19,119 --> 00:13:23,609 Suze: Anything that you earned above the money that you put in. 169 00:13:23,619 --> 00:13:27,530 Suze: So your earnings, if you go to take that money out, 170 00:13:27,679 --> 00:13:31,429 Suze: you're going to have a 10% penalty and pay ordinary 171 00:13:31,440 --> 00:13:33,848 Suze: income taxes on that money. 172 00:13:34,770 --> 00:13:37,320 Suze: That's how it works. 173 00:13:38,130 --> 00:13:43,369 Suze: Now, here's where the lesson really begins 174 00:13:44,219 --> 00:13:50,349 Suze: Recently, there was a bill passed Secure Act 2.0 that's 175 00:13:50,359 --> 00:13:57,030 Suze: starting in 2024. So not till then if you have 176 00:13:57,039 --> 00:13:59,789 Suze: a 529 plan 177 00:14:00,940 --> 00:14:04,530 Suze: and you have a balance in there that you can't 178 00:14:04,539 --> 00:14:09,710 Suze: use transfer or anything, how you can transfer that money 179 00:14:09,849 --> 00:14:13,179 Suze: to a Roth Ira. 180 00:14:13,909 --> 00:14:21,210 Suze: And recently some financial publications just did massive emails saying 181 00:14:21,270 --> 00:14:25,219 Suze: just know if you have a 529 plan and there's 182 00:14:25,229 --> 00:14:29,640 Suze: money in it, we can then transfer $35,000 to a 183 00:14:29,650 --> 00:14:34,250 Suze: Roth Ira. Learn about it. And that is why last 184 00:14:34,260 --> 00:14:41,309 Suze: Thursday Alison wrote in because she has money in three 529 185 00:14:41,929 --> 00:14:42,780 Suze: plans 186 00:14:43,190 --> 00:14:46,150 Suze: that she is not going to have to use for 187 00:14:46,159 --> 00:14:51,200 Suze: her kids' college education because her ex spouse is paying 188 00:14:51,210 --> 00:14:56,869 Suze: for them. So she wants to know can she transfer 189 00:14:56,880 --> 00:15:01,559 Suze: that balance for each one of those accounts to her 190 00:15:01,570 --> 00:15:06,099 Suze: Roth Ira? Now, one would think that you might be 191 00:15:06,109 --> 00:15:12,000 Suze: able to, but it doesn't work that way on any level. 192 00:15:12,890 --> 00:15:16,440 Suze: The first thing that you need to know is that 193 00:15:16,450 --> 00:15:22,760 Suze: this bill does allow the custodian to convert it, but 194 00:15:22,770 --> 00:15:25,260 Suze: it can only be converted 195 00:15:25,969 --> 00:15:32,979 Suze: to the beneficiarie's Roth Ira. It cannot be converted to 196 00:15:32,989 --> 00:15:39,979 Suze: the custodians, Roth Ira. It has to be converted to 197 00:15:39,989 --> 00:15:46,479 Suze: the beneficiaries. Roth Ira. Note that first, next, none of 198 00:15:46,489 --> 00:15:51,780 Suze: this takes effect by the way till 2024. 199 00:15:52,739 --> 00:15:56,219 Suze: Here's what's important for you to understand 200 00:15:57,109 --> 00:15:59,640 Suze: the 529 plan 201 00:16:00,570 --> 00:16:08,770 Suze: must have been maintained by you for 15 years or longer. 202 00:16:09,719 --> 00:16:13,729 Suze: It's not like you started a 529 plan three years 203 00:16:13,739 --> 00:16:16,789 Suze: ago and now the kid is not going to college 204 00:16:16,799 --> 00:16:19,750 Suze: and now you want to convert that money to the kids. 205 00:16:19,760 --> 00:16:21,609 Suze: Roth Ira. Nope, 206 00:16:22,349 --> 00:16:29,200 Suze: it has to have been maintained for 15 years or longer. 207 00:16:30,210 --> 00:16:35,150 Suze: Next. You have to know that any contribution that you 208 00:16:35,159 --> 00:16:42,400 Suze: make to the 529 plan within the last five years 209 00:16:42,409 --> 00:16:48,539 Suze: and the earnings on those contributions are ineligible to be 210 00:16:48,549 --> 00:16:52,280 Suze: moved to a Roth Ira. 211 00:16:52,929 --> 00:16:56,150 Suze: So don't go out there thinking, oh, I'm going to 212 00:16:56,159 --> 00:17:00,219 Suze: fund a 529 plan and then I'm gonna be able 213 00:17:00,229 --> 00:17:04,339 Suze: to move it to a Roth Ira for my kid. No, 214 00:17:04,349 --> 00:17:06,699 Suze: it doesn't exactly work that way. 215 00:17:07,630 --> 00:17:13,859 Suze: Any contribution that you made to a 529 plan within 216 00:17:13,869 --> 00:17:16,579 Suze: the last five years 217 00:17:17,520 --> 00:17:20,949 Suze: before you want to change it to a Roth Ira 218 00:17:20,959 --> 00:17:27,099 Suze: are ineligible and that includes its earnings, write it down 219 00:17:27,109 --> 00:17:29,829 Suze: because I know you're gonna forget it 220 00:17:30,819 --> 00:17:35,449 Suze: next. What you have to understand is in the very 221 00:17:35,459 --> 00:17:36,910 Suze: same way 222 00:17:37,560 --> 00:17:40,000 Suze: that I would tell all of you if you have 223 00:17:40,010 --> 00:17:44,329 Suze: a 401k plan, that's a Roth. Please make sure that 224 00:17:44,339 --> 00:17:48,260 Suze: you open up a Roth Ira even if you just 225 00:17:48,270 --> 00:17:50,290 Suze: fund it with $1 226 00:17:50,949 --> 00:17:55,599 Suze: so that you could convert the Roth 401k to a 227 00:17:55,609 --> 00:17:59,380 Suze: Roth Ira and not have to worry about the five 228 00:17:59,390 --> 00:18:03,659 Suze: year rule. If you opened up the Roth Ira more 229 00:18:03,670 --> 00:18:08,879 Suze: than five years ago, the same is true with the 230 00:18:08,890 --> 00:18:15,680 Suze: Roth Ira for the 529 plan. So what all of 231 00:18:15,689 --> 00:18:17,239 Suze: you should be doing 232 00:18:17,699 --> 00:18:21,920 Suze: is opening up a Roth Ira and just so you 233 00:18:21,930 --> 00:18:27,270 Suze: have it in the beneficiary's name. If you're going to 234 00:18:27,650 --> 00:18:35,479 Suze: ever do this, as long as the beneficiary has earned income. Remember, 235 00:18:35,489 --> 00:18:38,130 Suze: you only need to open it up even if it's 236 00:18:38,140 --> 00:18:40,569 Suze: worth $5. 237 00:18:41,359 --> 00:18:45,109 Suze: Make sense. Maybe. Yes, maybe, no. But that's something you 238 00:18:45,119 --> 00:18:46,329 Suze: should do. 239 00:18:47,000 --> 00:18:50,169 Suze: The next thing you need to know, you have to 240 00:18:50,180 --> 00:18:54,670 Suze: have a beneficiary that is actually working in the exact 241 00:18:54,680 --> 00:18:58,890 Suze: same way again that you can only contribute money to 242 00:18:58,900 --> 00:19:03,270 Suze: a Roth Ira or a traditional Ira is you have 243 00:19:03,280 --> 00:19:06,010 Suze: to do it with earned income. 244 00:19:06,979 --> 00:19:10,770 Suze: And the maximum that you can put in under 50 245 00:19:10,780 --> 00:19:16,810 Suze: for instance, is $6500 this year or whatever you earned, 246 00:19:16,819 --> 00:19:19,459 Suze: whatever is less. 247 00:19:20,319 --> 00:19:26,169 Suze: So, the same is essentially true for a 529 . 248 00:19:26,180 --> 00:19:30,109 Suze: If you're going to transfer it to a Roth Ira, 249 00:19:30,439 --> 00:19:40,270 Suze: the beneficiary has to have earnings otherwise it can't be transferred. 250 00:19:40,469 --> 00:19:41,329 Suze: All right, 251 00:19:42,609 --> 00:19:51,410 Suze: the maximum lifetime transfer to the beneficiary is $35,000. 252 00:19:52,349 --> 00:19:58,879 Suze: So you cannot put $35,000 in all in one lump sum. 253 00:19:59,959 --> 00:20:03,630 Suze: What has to happen is the maximum that you can 254 00:20:03,640 --> 00:20:04,438 Suze: put in 255 00:20:05,050 --> 00:20:08,780 Suze: to a Roth plan from a 529 256 00:20:10,579 --> 00:20:15,270 Suze: is limited to the amount of the contribution limit for 257 00:20:15,280 --> 00:20:17,989 Suze: Roth Iras that year. 258 00:20:18,689 --> 00:20:24,130 Suze: So if the Roth Ira limit is only $6500 that's 259 00:20:24,140 --> 00:20:28,000 Suze: the maximum that you can put in from the 529 260 00:20:29,150 --> 00:20:35,359 Suze: into the Roth. Now, if the beneficiary has been putting 261 00:20:35,369 --> 00:20:39,579 Suze: money into a Roth or into a traditional in their 262 00:20:39,589 --> 00:20:40,619 Suze: own name, 263 00:20:41,780 --> 00:20:47,189 Suze: then whatever they have put in is subtracted from what 264 00:20:47,199 --> 00:20:51,510 Suze: you are allowed to put in to the Roth Ira 265 00:20:51,520 --> 00:20:54,339 Suze: from the 529 . 266 00:20:55,140 --> 00:20:59,089 Suze: Now, one great thing is Roth Ira income limits do 267 00:20:59,099 --> 00:21:03,650 Suze: not apply. So there is no adjusted gross income here. 268 00:21:04,010 --> 00:21:08,819 Suze: But you understand, this is far more complicated than most 269 00:21:08,829 --> 00:21:11,109 Suze: of you have any idea. 270 00:21:11,479 --> 00:21:14,989 Suze: So, don't go thinking that you're just gonna be able 271 00:21:15,000 --> 00:21:19,510 Suze: to transfer $35,000 in one lump sum and a 529 272 00:21:20,109 --> 00:21:24,589 Suze: plan to your kids, Roth Ira because that money was 273 00:21:24,599 --> 00:21:28,939 Suze: left in their 529 plan. They didn't use it up. 274 00:21:29,140 --> 00:21:36,189 Suze: I don't think so. So remember the beneficiary must have compensation. 275 00:21:36,430 --> 00:21:41,179 Suze: The 529 plan must have been maintained for 15 years 276 00:21:41,189 --> 00:21:42,680 Suze: or longer 277 00:21:43,439 --> 00:21:47,689 Suze: any contribution to the 529 plan within the last five 278 00:21:47,699 --> 00:21:52,139 Suze: years and the earnings on those contributions are ineligible to 279 00:21:52,150 --> 00:21:54,329 Suze: be moved to a Roth Ira. 280 00:21:55,069 --> 00:22:00,280 Suze: The Ira is subject to the contribution limit for whatever 281 00:22:00,290 --> 00:22:04,000 Suze: it is that year of the Roth, less any regular 282 00:22:04,010 --> 00:22:10,920 Suze: traditional Ira or Roth Ira contributions annually. The maximum lifetime 283 00:22:10,930 --> 00:22:17,510 Suze: transfer to a beneficiary is $35,000. The money must be 284 00:22:17,520 --> 00:22:23,000 Suze: moved directly from the 529 plan to the Roth Ira. 285 00:22:23,479 --> 00:22:26,750 Suze: The Roth Ira receiving the funds must be in the 286 00:22:26,760 --> 00:22:30,729 Suze: name of the beneficiary of the 529 plan 287 00:22:31,520 --> 00:22:38,020 Suze: and 529 contributions and earnings go into the Roth Ira 288 00:22:38,030 --> 00:22:42,670 Suze: in like kind. What that means is if you have 289 00:22:42,680 --> 00:22:45,770 Suze: investments in your 529 plan, 290 00:22:46,810 --> 00:22:53,699 Suze: those exact same investments will transfer over to the Roth Ira. 291 00:22:54,020 --> 00:22:58,170 Suze: That's how it works. Aren't you glad Alison asked that question? 292 00:22:58,369 --> 00:23:01,179 Suze: But it's really important for you to know all of 293 00:23:01,189 --> 00:23:05,560 Suze: this because I would bet you that nine out of 294 00:23:05,569 --> 00:23:10,879 Suze: 10 of the people out there don't have a clue 295 00:23:10,930 --> 00:23:15,879 Suze: to anything that I just told you about. 296 00:23:16,900 --> 00:23:22,030 Suze: So write it down, keep the number of this podcast 297 00:23:22,150 --> 00:23:26,959 Suze: because undoubtedly there is going to come a time when 298 00:23:26,969 --> 00:23:31,270 Suze: you have money left over in a 529 plan and 299 00:23:31,280 --> 00:23:33,659 Suze: somebody is going to tell you, oh, just put it 300 00:23:33,670 --> 00:23:36,949 Suze: in a Roth Ira for your kid and you're gonna go, ok. 301 00:23:38,530 --> 00:23:41,839 Suze: Unh unh, come back to this podcast or to your Suze 302 00:23:41,849 --> 00:23:46,260 Suze: notebook and then you'll know exactly what you can and 303 00:23:46,270 --> 00:23:50,020 Suze: can not do. All right, that brings us to the 304 00:23:50,030 --> 00:23:54,680 Suze: end of this Suze School. We are almost halfway through 305 00:23:54,689 --> 00:24:00,760 Suze: everybody of Robert gallivanting around the United States to see 306 00:24:00,770 --> 00:24:07,438 Suze: his favorite band. And so he's having a fabulous time, 307 00:24:07,770 --> 00:24:10,959 Suze: but it really puts a time crunch on all of 308 00:24:10,969 --> 00:24:17,379 Suze: these podcasts. But kudos to Robert, because he does these 309 00:24:17,390 --> 00:24:22,040 Suze: on the road with his little laptop. So he wants 310 00:24:22,050 --> 00:24:25,329 Suze: you all to have new podcasts. He didn't want to 311 00:24:25,339 --> 00:24:29,339 Suze: just do Ask Suze Anything with KT the whole time. 312 00:24:29,349 --> 00:24:33,438 Suze: He didn't want to run best of. So because of 313 00:24:33,449 --> 00:24:37,099 Suze: extraordinary effort by Robert, 314 00:24:37,569 --> 00:24:44,140 Suze: we get to hear these brand new podcasts and Travis, 315 00:24:44,150 --> 00:24:48,599 Suze: my nephew, who I love so much. It is your 316 00:24:48,609 --> 00:24:55,619 Suze: birthday day. So happy, happy birthday. 317 00:24:56,410 --> 00:25:01,680 Suze: So never forget everybody today. Wherever I go, I will 318 00:25:01,689 --> 00:25:07,119 Suze: create a more peaceful, joyful and loving world. And I 319 00:25:07,130 --> 00:25:10,359 Suze: promise you, if you say that every single day and 320 00:25:10,369 --> 00:25:10,958 Suze: do it, 321 00:25:11,719 --> 00:25:16,300 Suze: you will be unstoppable. 322 00:25:21,199 --> 00:25:22,520 Music: Music (out)