1 00:00:40,240 --> 00:00:46,028 Suze: February 4th 2024 Suze O here. Welcome everybody to the Women 2 00:00:46,040 --> 00:00:50,348 Suze: and Money podcast as well as everybody smart enough to listen. 3 00:00:50,630 --> 00:00:53,159 Suze: You know, as I was saying that date February 4th, 4 00:00:53,168 --> 00:00:56,349 Suze: it dawns on me that one month from now, KT 5 00:00:56,360 --> 00:01:00,099 Suze: and I will be in Abu Dhabi and that will 6 00:01:00,110 --> 00:01:02,409 Suze: be the first time in a long time 7 00:01:02,799 --> 00:01:05,849 Suze: that I am going to take the stage and I 8 00:01:05,860 --> 00:01:11,809 Suze: will be speaking live. So that date has finally come 9 00:01:11,930 --> 00:01:16,629 Suze: for me to do that. However, there is something that 10 00:01:16,639 --> 00:01:19,539 Suze: I need to do today and that is to clear 11 00:01:19,550 --> 00:01:21,289 Suze: up a lot of confusion 12 00:01:21,650 --> 00:01:25,729 Suze: about what's known as the five year rule when it 13 00:01:25,739 --> 00:01:30,730 Suze: comes to Roth retirement accounts. And what's known as the 14 00:01:30,739 --> 00:01:36,550 Suze: five year rule only applies to a Roth retirement account, 15 00:01:36,610 --> 00:01:40,790 Suze: whether it is a Roth IRA or a Roth 401k 16 00:01:40,800 --> 00:01:44,339 Suze: A Roth 403 B or a Roth TSP, 17 00:01:45,059 --> 00:01:50,519 Suze: even a Roth 457 plan. So you need to just 18 00:01:50,529 --> 00:01:51,199 Suze: know that. 19 00:01:51,860 --> 00:01:54,349 Suze: I'm not exactly sure why all of a sudden I'm 20 00:01:54,360 --> 00:01:57,599 Suze: getting so many emails on this topic, but what I'm 21 00:01:57,610 --> 00:02:00,989 Suze: happy about is I have a feeling that many of 22 00:02:01,000 --> 00:02:03,160 Suze: you have wisely chosen now 23 00:02:03,870 --> 00:02:07,580 Suze: to actually start investing in a Roth 401k over a 24 00:02:07,589 --> 00:02:09,199 Suze: traditional 401k. 25 00:02:09,479 --> 00:02:13,580 Suze: And when I say traditional, traditional simply means you have 26 00:02:13,589 --> 00:02:17,928 Suze: funded it with pre tax dollars. A Roth means you 27 00:02:17,940 --> 00:02:21,380 Suze: have funded it with after tax dollars. So as I 28 00:02:21,389 --> 00:02:24,559 Suze: was saying, a lot of you now have wisely taken 29 00:02:24,570 --> 00:02:28,978 Suze: my suggestions and you're opening up a Roth 401k over 30 00:02:28,990 --> 00:02:33,779 Suze: traditional 401k, you're bypassing the tax write off 31 00:02:34,070 --> 00:02:38,289 Suze: the same with a Roth IRA versus a traditional IRA. 32 00:02:38,350 --> 00:02:42,250 Suze: You are bypassing the tax write off and you are 33 00:02:42,258 --> 00:02:45,610 Suze: bypassing it because you want to know that what you 34 00:02:45,619 --> 00:02:49,369 Suze: see in your Roth retirement accounts is what you get 35 00:02:49,380 --> 00:02:50,410 Suze: to keep. 36 00:02:51,288 --> 00:02:55,350 Suze: And that is a big deal. Everybody in comparison to 37 00:02:55,360 --> 00:02:59,429 Suze: traditional IRAs, what you see there, the numbers on the 38 00:02:59,440 --> 00:03:00,109 Suze: paper 39 00:03:00,899 --> 00:03:03,339 Suze: does it mean that's what you get when you go 40 00:03:03,350 --> 00:03:06,478 Suze: to withdraw the money because it will always be taxed 41 00:03:06,490 --> 00:03:11,399 Suze: to you as ordinary income at whatever tax bracket happens 42 00:03:11,410 --> 00:03:15,899 Suze: to be in effect at that time. But what you 43 00:03:15,910 --> 00:03:19,600 Suze: do need to know is that the five year rule, 44 00:03:20,839 --> 00:03:25,339 Suze: which simply is that any money that you have in 45 00:03:25,350 --> 00:03:29,360 Suze: a Roth retirement account, no matter what kind it is, 46 00:03:30,119 --> 00:03:34,759 Suze: the Roth retirement account has to have been opened for 47 00:03:34,770 --> 00:03:40,690 Suze: at least five years and you have to be 59 and a half 48 00:03:40,699 --> 00:03:45,490 Suze: years of age or older for you to withdraw all 49 00:03:45,500 --> 00:03:46,169 Suze: the money 50 00:03:46,839 --> 00:03:52,729 Suze: from that Roth retirement account without any taxes or penalties. 51 00:03:52,740 --> 00:03:54,740 Suze: What so ever 52 00:03:55,820 --> 00:03:56,990 Suze: just that simple. 53 00:03:57,850 --> 00:04:02,389 Suze: However, the way that it works for a contributory Roth 54 00:04:03,259 --> 00:04:06,369 Suze: is different than a Roth 401k 1. Again, when I 55 00:04:06,380 --> 00:04:10,669 Suze: say Roth 401k, I am also referring to the Roth 56 00:04:10,889 --> 00:04:16,079 Suze: TSPs and Roth 403 Bs. Ok. So they are different 57 00:04:16,089 --> 00:04:20,920 Suze: and how it works is different. So let's start with 58 00:04:20,928 --> 00:04:22,760 Suze: the contributory Roth. 59 00:04:23,238 --> 00:04:26,539 Suze: And what you need to know is that for me, 60 00:04:26,549 --> 00:04:33,649 Suze: the contributory Roth is my favorite kind of retirement account bar. None. 61 00:04:34,470 --> 00:04:40,410 Suze: And the reason is that any money you contribute to 62 00:04:40,940 --> 00:04:43,260 Suze: a Roth IRA 63 00:04:44,089 --> 00:04:48,070 Suze: simply means that you plan to put money in every 64 00:04:48,079 --> 00:04:49,190 Suze: single year 65 00:04:50,519 --> 00:04:52,429 Suze: and you can do so or you don't have to 66 00:04:52,440 --> 00:04:55,769 Suze: do so. But once you have contributed, even if it's 67 00:04:55,779 --> 00:05:01,480 Suze: just a dollar to a contributory Roth IRA, the time 68 00:05:01,510 --> 00:05:06,219 Suze: clock has started, it's now ticking. 69 00:05:07,130 --> 00:05:09,969 Suze: You put money into a Roth IRA and let's just 70 00:05:09,980 --> 00:05:13,868 Suze: say you put in $7000 a year. 71 00:05:14,519 --> 00:05:17,170 Suze: Let's say you are 30 years of age and you 72 00:05:17,178 --> 00:05:18,058 Suze: are doing that 73 00:05:18,750 --> 00:05:23,649 Suze: and you put in $7000 this year, 7000 next year, 74 00:05:23,660 --> 00:05:30,730 Suze: 7000 a year after that, you have contributed $21,000 over 75 00:05:30,738 --> 00:05:34,660 Suze: these next three years and you are now, 33 years 76 00:05:34,670 --> 00:05:35,450 Suze: of age, 77 00:05:36,260 --> 00:05:44,339 Suze: however, that $21,000 has grown to be $25,000 and now 78 00:05:44,350 --> 00:05:47,429 Suze: you want to withdraw money, maybe you want to buy 79 00:05:47,440 --> 00:05:49,909 Suze: a car, who knows what you want to do. If 80 00:05:49,920 --> 00:05:52,369 Suze: I were you, it's a mistake to ever take money out. 81 00:05:52,380 --> 00:05:54,109 Suze: But let's just say you want to, 82 00:05:55,190 --> 00:06:00,549 Suze: you can take out any amount of money up to 83 00:06:00,559 --> 00:06:04,920 Suze: the $21,000 that you originally contributed 84 00:06:05,660 --> 00:06:09,678 Suze: without any taxes or penalties, even though 85 00:06:10,369 --> 00:06:13,459 Suze: that account has been only open for three years. 86 00:06:14,309 --> 00:06:18,070 Suze: And you are not 59 and a half years of age. 87 00:06:18,880 --> 00:06:23,640 Suze: That's why I love contributory Roth IRAs, it is the 88 00:06:23,649 --> 00:06:28,839 Suze: $4000 that your money has earned 89 00:06:29,619 --> 00:06:34,988 Suze: that you cannot touch until that account has been open 90 00:06:35,000 --> 00:06:42,269 Suze: for at least five years. And you are 59 and a half years 91 00:06:42,279 --> 00:06:43,670 Suze: of age. 92 00:06:44,420 --> 00:06:48,359 Suze: So that's really, really important for you to understand. 93 00:06:49,299 --> 00:06:53,899 Suze: Remember you have to have had that account open for 94 00:06:53,910 --> 00:07:00,078 Suze: at least five years, let's say, however, you are now 95 00:07:00,140 --> 00:07:01,880 Suze: 60 years of age 96 00:07:02,859 --> 00:07:07,540 Suze: and you have funded your Roth Ira for the very 97 00:07:07,549 --> 00:07:11,739 Suze: first time. You never had opened a Roth IRA before 98 00:07:11,750 --> 00:07:12,279 Suze: this 99 00:07:13,000 --> 00:07:18,679 Suze: and you funded it with $8000 this year. Remember for 100 00:07:18,690 --> 00:07:21,130 Suze: this year, if you are under 50 the max you 101 00:07:21,140 --> 00:07:24,100 Suze: can put in is 7000 a year. If you are 102 00:07:24,109 --> 00:07:28,269 Suze: 50 or older, it's 8000. So here you are 60 103 00:07:28,279 --> 00:07:34,079 Suze: years of age, you're past 59 and half. So you can access 104 00:07:34,089 --> 00:07:38,820 Suze: any money within any retirement account without the 10% penalty. 105 00:07:39,510 --> 00:07:43,899 Suze: But here you are, you put in $8000 and now 106 00:07:43,910 --> 00:07:48,399 Suze: it's worth $10,000. You invested in these stocks and they 107 00:07:48,410 --> 00:07:52,609 Suze: just skyrocketed and you have $10,000 in there. 108 00:07:53,290 --> 00:07:56,670 Suze: And now you think to yourself, I'm going to take 109 00:07:56,679 --> 00:08:01,140 Suze: out all $10,000 it's all tax free because I'm over 110 00:08:01,149 --> 00:08:03,190 Suze: 59 and a half years of age. 111 00:08:04,589 --> 00:08:08,209 Suze: If you take out all $10,000 112 00:08:09,369 --> 00:08:15,519 Suze: you will owe ordinary income tax on the $2000 of growth, 113 00:08:15,779 --> 00:08:19,630 Suze: not the 10% penalty because you are over 59 and a half. 114 00:08:20,450 --> 00:08:25,619 Suze: But you have not had the Roth Ira opened for 115 00:08:25,630 --> 00:08:28,670 Suze: at least five years. 116 00:08:29,820 --> 00:08:35,039 Suze: So the sooner you can open a Roth IRA, even 117 00:08:35,049 --> 00:08:40,239 Suze: if you fund it with $1 and you never contribute 118 00:08:40,250 --> 00:08:46,280 Suze: to it again. You have started the fiveyear time clock 119 00:08:46,289 --> 00:08:48,750 Suze: moving ticking 120 00:08:49,489 --> 00:08:53,760 Suze: if you had started a Roth IRA five years ago, 121 00:08:53,770 --> 00:08:55,710 Suze: even with just a dollar. 122 00:08:56,599 --> 00:08:59,940 Suze: And now here you are 60 you wanted to take 123 00:08:59,950 --> 00:09:05,738 Suze: out all $10,000 you could take out all 10,000 without 124 00:09:05,750 --> 00:09:09,179 Suze: taxes or a penalty whatsoever. 125 00:09:09,820 --> 00:09:14,679 Suze: Right. So that's a contributory Roth. Now, a lot of 126 00:09:14,690 --> 00:09:19,080 Suze: you have already opened up when I'm calling a contributory 127 00:09:19,090 --> 00:09:23,439 Suze: Roth IRA one that allows you to contribute to every 128 00:09:23,450 --> 00:09:24,200 Suze: single year. 129 00:09:25,030 --> 00:09:30,929 Suze: However, you also have money in a traditional IRA 130 00:09:31,729 --> 00:09:35,919 Suze: and you want to convert it now and you wanna 131 00:09:35,929 --> 00:09:41,270 Suze: put it into the Roth IRA that you started years ago, 132 00:09:42,580 --> 00:09:50,760 Suze: write this down if you convert money from a pre-tax 133 00:09:51,390 --> 00:09:52,718 Suze: IRA 134 00:09:53,900 --> 00:09:57,119 Suze: or from any pre taxed retirement account. 135 00:09:58,340 --> 00:10:04,329 Suze: So if you convert money to your Roth IRA, the 136 00:10:04,340 --> 00:10:08,640 Suze: time clock for the amount of money that you converted 137 00:10:09,429 --> 00:10:13,210 Suze: has nothing to do with how long your Roth IRA 138 00:10:13,219 --> 00:10:19,039 Suze: has been open, that converted money has its own time clock. 139 00:10:19,729 --> 00:10:22,270 Suze: So even though you could access 140 00:10:23,070 --> 00:10:27,690 Suze: the original contributions of your Roth IRA, any time you 141 00:10:27,700 --> 00:10:28,250 Suze: want 142 00:10:29,349 --> 00:10:31,630 Suze: without taxes or penalties, 143 00:10:32,289 --> 00:10:37,789 Suze: when you convert, even though you have paid taxes on 144 00:10:37,799 --> 00:10:39,500 Suze: the conversion, 145 00:10:40,780 --> 00:10:46,159 Suze: the time clock for the five years starts all over 146 00:10:46,169 --> 00:10:49,039 Suze: again for that amount of money. 147 00:10:50,549 --> 00:10:55,570 Suze: Was that clear? Now, it is very important that if 148 00:10:55,580 --> 00:10:59,679 Suze: you have a contributory Roth that you are contributing to 149 00:11:00,650 --> 00:11:06,099 Suze: and you have a traditional IRA or a traditional 401k 150 00:11:06,320 --> 00:11:12,059 Suze: and you convert the money from there into the contributory account, 151 00:11:12,390 --> 00:11:16,869 Suze: you write down the year and the amount of money 152 00:11:16,880 --> 00:11:19,390 Suze: that you converted in there 153 00:11:20,349 --> 00:11:24,919 Suze: because that is really important. You need to meet the 154 00:11:24,929 --> 00:11:27,770 Suze: five year rule for that 155 00:11:28,679 --> 00:11:35,700 Suze: along with 59 and a half years of age. So that is important 156 00:11:35,750 --> 00:11:37,299 Suze: for you to understand. 157 00:11:40,320 --> 00:11:44,460 Suze: Next, you need to know that if you keep converting money, 158 00:11:44,840 --> 00:11:48,299 Suze: let's say you have a lot of money in a 159 00:11:48,309 --> 00:11:54,059 Suze: traditional Ira or even a traditional 401k and little by 160 00:11:54,070 --> 00:11:54,700 Suze: little 161 00:11:55,500 --> 00:12:00,229 Suze: you convert into your Roth IRA that you already have 162 00:12:00,239 --> 00:12:06,119 Suze: had open every year that you convert. It starts a 163 00:12:06,130 --> 00:12:12,950 Suze: new time clock for that conversion. So you could have many, many, 164 00:12:12,960 --> 00:12:18,469 Suze: many different time clocks for the five year rule running 165 00:12:18,770 --> 00:12:24,390 Suze: if you convert every single year or whenever you do convert. 166 00:12:24,750 --> 00:12:27,049 Suze: So you have to understand 167 00:12:28,010 --> 00:12:34,109 Suze: that a conversion always triggers a new time clock for 168 00:12:34,119 --> 00:12:37,030 Suze: the amount of money that you converted. 169 00:12:37,799 --> 00:12:40,859 Suze: Shake your head. It's just how it works. 170 00:12:41,789 --> 00:12:45,809 Suze: Now, let's talk about a Roth 401k. 171 00:12:46,919 --> 00:12:50,659 Suze: If you have a Roth 401k 172 00:12:51,799 --> 00:12:54,789 Suze: and you have a Roth IRA 173 00:12:55,989 --> 00:12:59,229 Suze: that you opened up years ago, it's already met the 174 00:12:59,239 --> 00:13:00,968 Suze: five year rule 175 00:13:02,229 --> 00:13:06,159 Suze: and you roll it over, you don't convert it because 176 00:13:06,169 --> 00:13:12,619 Suze: it's already a Roth retirement account. Remember, conversion means you 177 00:13:12,630 --> 00:13:13,880 Suze: have converted 178 00:13:14,739 --> 00:13:21,270 Suze: a traditional or pre-tax retirement account to a nontaxable retirement account. 179 00:13:21,799 --> 00:13:26,059 Suze: And when you do that, you owe ordinary income taxes 180 00:13:26,070 --> 00:13:29,679 Suze: on it in the year that you converted 181 00:13:31,099 --> 00:13:34,559 Suze: when you have a Roth 401k 182 00:13:35,260 --> 00:13:40,650 Suze: and you already have a Roth IRA started five or 183 00:13:40,659 --> 00:13:41,919 Suze: more years ago 184 00:13:42,590 --> 00:13:48,650 Suze: when you roll that money from a Roth 401k into 185 00:13:48,700 --> 00:13:54,799 Suze: your Roth IRA. It now takes on the time clock 186 00:13:54,809 --> 00:14:01,090 Suze: of when you started that Roth IRA. So even if 187 00:14:01,099 --> 00:14:06,650 Suze: your Roth 401k has only been open for two years 188 00:14:07,919 --> 00:14:10,020 Suze: and now you roll it 189 00:14:10,940 --> 00:14:17,359 Suze: to the Roth IRA, it qualifies for the five year 190 00:14:17,369 --> 00:14:21,880 Suze: rule again, you have to be 59 and a half years of age 191 00:14:21,890 --> 00:14:25,520 Suze: or older to take it out without the 10% penalty. 192 00:14:26,219 --> 00:14:32,159 Suze: But now you can do your original contributions without any 193 00:14:32,169 --> 00:14:37,520 Suze: taxes whatsoever. It will still possibly be the earnings within 194 00:14:37,530 --> 00:14:40,719 Suze: that Roth IRA that you cannot touch 195 00:14:41,750 --> 00:14:47,880 Suze: until you are 59 and a half years of age or older without 196 00:14:47,890 --> 00:14:54,359 Suze: the 10% federal penalty. Remember everybody, certain states also charge 197 00:14:54,369 --> 00:14:57,049 Suze: a state tax penalty as well. 198 00:14:57,690 --> 00:15:01,150 Suze: Did that make sense to all of you? Your Roth 199 00:15:01,159 --> 00:15:06,640 Suze: 401k when you roll, it takes on the time that 200 00:15:06,650 --> 00:15:09,630 Suze: the Roth IRA has been open. 201 00:15:10,510 --> 00:15:15,500 Suze: So it is essential that if any of you have 202 00:15:15,510 --> 00:15:20,809 Suze: a Roth 401k, that you open a Roth Ira again, 203 00:15:20,820 --> 00:15:23,590 Suze: I don't care if it's just for a dollar, you 204 00:15:23,599 --> 00:15:29,330 Suze: open a Roth Ira and start the time clock moving. 205 00:15:30,179 --> 00:15:35,590 Suze: However, if you have a traditional 401k 206 00:15:36,469 --> 00:15:38,369 Suze: and now you convert it 207 00:15:39,150 --> 00:15:41,369 Suze: to your Roth IRA, 208 00:15:42,780 --> 00:15:46,429 Suze: the amount of money that you converted, obviously, you owe 209 00:15:46,440 --> 00:15:50,479 Suze: taxes on that year. But the time clock for that 210 00:15:50,489 --> 00:15:51,219 Suze: money 211 00:15:51,909 --> 00:15:57,450 Suze: again has started the year that you converted it. So 212 00:15:57,460 --> 00:15:59,010 Suze: therefore make sure 213 00:15:59,770 --> 00:16:03,609 Suze: that you keep a record of how much you converted 214 00:16:03,919 --> 00:16:06,820 Suze: and the year that you converted 215 00:16:07,880 --> 00:16:13,080 Suze: makes sense. I hope so. Now, what's really important also 216 00:16:13,090 --> 00:16:17,580 Suze: for you to understand is that when it comes to 217 00:16:17,590 --> 00:16:19,460 Suze: a Roth 401k, 218 00:16:20,340 --> 00:16:26,440 Suze: how you withdraw money from a Roth 401k is very, 219 00:16:26,450 --> 00:16:32,919 Suze: very different than how you withdraw money from a contributory Roth. 220 00:16:33,159 --> 00:16:37,039 Suze: Remember in a contributory w Roth, you can take out 221 00:16:37,049 --> 00:16:41,750 Suze: any money you originally contributed without any taxes or penalties 222 00:16:41,770 --> 00:16:46,059 Suze: regardless of how long the account has been opened or 223 00:16:46,070 --> 00:16:47,359 Suze: your age. 224 00:16:48,289 --> 00:16:52,979 Suze: A Roth 401k does not work that way 225 00:16:53,710 --> 00:16:56,969 Suze: if you have a Roth 401k 226 00:16:57,820 --> 00:17:01,280 Suze: and you wanna take an early withdrawal from it, 227 00:17:02,099 --> 00:17:08,438 Suze: withdrawals from a Roth 401k are prorated 228 00:17:09,239 --> 00:17:15,140 Suze: and they are prorated between the nontaxable contributions that you 229 00:17:15,150 --> 00:17:20,839 Suze: made and the earnings that are in there. Now, let's 230 00:17:20,849 --> 00:17:21,938 Suze: just say 231 00:17:22,829 --> 00:17:28,219 Suze: that you put in $9000 in contributions and you've made 232 00:17:28,250 --> 00:17:31,579 Suze: $1000 in earnings. 233 00:17:32,439 --> 00:17:38,619 Suze: So you have $10,000 in the account and you wanna 234 00:17:38,630 --> 00:17:44,339 Suze: just take out $4000 you have $10,000 in there. 235 00:17:45,439 --> 00:17:51,880 Suze: $9000 of your original contributions, $1000 of earnings 236 00:17:53,510 --> 00:17:57,290 Suze: and all you want to do is withdraw $4000. The 237 00:17:57,300 --> 00:18:01,449 Suze: way that it would be figured out is this, the 238 00:18:01,459 --> 00:18:08,099 Suze: $1000 divided by the $10,000 is 10%. So the $1000 239 00:18:08,109 --> 00:18:13,208 Suze: of your earnings into the $10,000 that's totally in the 240 00:18:13,219 --> 00:18:15,890 Suze: account is 10%. 241 00:18:16,760 --> 00:18:23,040 Suze: So if you withdraw $4000. 10 percent of that $4000 you 242 00:18:23,050 --> 00:18:27,708 Suze: want to withdraw, which is $400 you are going to 243 00:18:27,719 --> 00:18:33,900 Suze: owe taxes and a 10% penalty on that $400. 244 00:18:34,939 --> 00:18:38,869 Suze: If you're not 59 and a half years of age or older, no 245 00:18:38,880 --> 00:18:42,780 Suze: matter what, you're gonna owe taxes on that $400. But 246 00:18:42,790 --> 00:18:46,459 Suze: if you are 59 and a half years of age or older, then 247 00:18:46,469 --> 00:18:49,800 Suze: you won't have to pay the 10% penalty. If you 248 00:18:49,810 --> 00:18:55,280 Suze: do this, then there will be no taxes or penalties. Um, 249 00:18:55,290 --> 00:18:57,760 Suze: the $3600 250 00:18:58,430 --> 00:19:01,050 Suze: the difference between the 4000 251 00:19:01,920 --> 00:19:04,968 Suze: and the 400 which is taxable and penalized if you're 252 00:19:04,979 --> 00:19:09,949 Suze: not of age. So the $3600 there are no taxes 253 00:19:09,959 --> 00:19:16,489 Suze: or penalties on that $3600 regardless again of age or 254 00:19:16,500 --> 00:19:19,689 Suze: how long it has been in there. Do you understand 255 00:19:19,699 --> 00:19:24,290 Suze: the difference if that had been a Roth IRA and 256 00:19:24,300 --> 00:19:27,780 Suze: you wanted to take out $4000 you could have done 257 00:19:27,790 --> 00:19:31,660 Suze: so without any taxes or penalties regardless of your age. 258 00:19:32,410 --> 00:19:36,010 Suze: So you just have to remember in a Roth 401 259 00:19:37,400 --> 00:19:41,629 Suze: it also has to have been opened for five years 260 00:19:41,729 --> 00:19:46,219 Suze: and for you to be 59 and a half so that you can 261 00:19:46,229 --> 00:19:53,939 Suze: access anything, your original contributions or your earnings totally tax free. 262 00:19:53,949 --> 00:20:00,420 Suze: Prior to that time, they will consider those earnings taxable. 263 00:20:00,859 --> 00:20:06,099 Suze: If you have a Roth 401k, listen closely to this 264 00:20:06,109 --> 00:20:06,540 Suze: now 265 00:20:07,199 --> 00:20:11,079 Suze: that you have had open for, let's say 10 years. 266 00:20:11,839 --> 00:20:15,209 Suze: And now you want to roll it over to a 267 00:20:15,219 --> 00:20:19,930 Suze: Roth IRA and you are opening a Roth IRA for 268 00:20:19,939 --> 00:20:21,300 Suze: the first time 269 00:20:22,469 --> 00:20:27,579 Suze: when you roll the Roth 401k over to a Roth 270 00:20:27,589 --> 00:20:31,640 Suze: IRA that you've just opened or it has not been 271 00:20:31,650 --> 00:20:34,170 Suze: opened for at least five years. 272 00:20:35,000 --> 00:20:41,219 Suze: The 401k time clock totally disappears and it takes on 273 00:20:41,229 --> 00:20:47,359 Suze: the time that the Roth IRA has been open. So 274 00:20:47,369 --> 00:20:50,869 Suze: it is the opening time clock of the Roth Ira 275 00:20:50,880 --> 00:20:56,968 Suze: that counts. Not how long you have had a Roth 401k. 276 00:20:57,489 --> 00:21:02,250 Suze: All right, everybody that is your Suze School for today. 277 00:21:03,140 --> 00:21:06,609 Suze: Please don't freak out when you hear all of these 278 00:21:06,619 --> 00:21:11,020 Suze: numbers and all of these rules. You absolutely have what 279 00:21:11,030 --> 00:21:15,439 Suze: it takes to understand every single thing that I just said. 280 00:21:15,739 --> 00:21:18,050 Suze: And that is why you have a notebook. That is 281 00:21:18,060 --> 00:21:20,609 Suze: why you go over it again and again 282 00:21:21,319 --> 00:21:26,579 Suze: and once you get it, you'll never get yourself in trouble. 283 00:21:26,599 --> 00:21:29,859 Suze: It's when you don't understand this rule and you think 284 00:21:29,869 --> 00:21:34,060 Suze: everything's gonna be tax free and you make a mistake here. 285 00:21:34,069 --> 00:21:38,420 Suze: You can be in for a big financial shock, right? So, 286 00:21:38,430 --> 00:21:43,589 Suze: until next Thursday, when KT who by the way is 287 00:21:43,599 --> 00:21:45,500 Suze: already out in her garden, 288 00:21:45,969 --> 00:21:49,680 Suze: she is so happy, so happy to be back on 289 00:21:49,689 --> 00:21:53,670 Suze: the island. I cannot even tell you and Colo, I 290 00:21:53,680 --> 00:21:56,569 Suze: know you listen to the podcast all the time. I 291 00:21:56,579 --> 00:22:01,530 Suze: know you're in Colombia with your wife and your kids. Hi, 292 00:22:01,540 --> 00:22:04,920 Suze: Annie and your dog that you love so much Toby. 293 00:22:05,160 --> 00:22:09,150 Suze: We're doing fine. We miss you. We love you and 294 00:22:09,160 --> 00:22:11,599 Suze: we can't wait for you to come home to us. 295 00:22:11,829 --> 00:22:14,389 Suze: But until Thursday 296 00:22:15,099 --> 00:22:18,560 Suze: there's only one thing that I really want you to 297 00:22:18,569 --> 00:22:21,909 Suze: remember when it comes to your money and it's this 298 00:22:22,040 --> 00:22:27,560 Suze: people first, then money, then things and if you can 299 00:22:27,569 --> 00:22:33,419 Suze: remember that, I promise you you will be unstoppable.