1 00:00:41,389 --> 00:00:46,650 Suze: July 14th, 2024. Welcome everybody to the Women and Money 2 00:00:46,659 --> 00:00:50,279 Suze: podcast as well as everybody smart enough to listen. And 3 00:00:50,290 --> 00:00:54,520 Suze: today is Suze School. But before we do Suze School today, 4 00:00:55,689 --> 00:00:57,540 Suze: for those of you who wrote in and you want 5 00:00:57,549 --> 00:01:01,229 Suze: to know how is KT doing? She's fine. She's waiting 6 00:01:01,240 --> 00:01:04,260 Suze: in the other room for us to go out fishing 7 00:01:04,269 --> 00:01:07,399 Suze: with Colo. So that means she's doing 8 00:01:08,069 --> 00:01:13,250 Suze: great. That's number one. Number two. Today is July 14th 9 00:01:13,529 --> 00:01:18,010 Suze: and it happens to be the birthday of my uncle 10 00:01:18,260 --> 00:01:21,569 Suze: Nady and my aunt Thelma, last name of a Notkin 11 00:01:21,580 --> 00:01:25,220 Suze: for both of them. And that was both of their 12 00:01:25,230 --> 00:01:29,809 Suze: birthdays and they had a love beyond the beyond. 13 00:01:30,110 --> 00:01:34,089 Suze: It was such a fabulous love. I can't even tell 14 00:01:34,099 --> 00:01:38,449 Suze: you it's one really that KT and I always wanted 15 00:01:38,459 --> 00:01:45,410 Suze: to have because just so incredible and obviously they died 16 00:01:45,419 --> 00:01:48,040 Suze: quite a while ago now. But I just want to 17 00:01:48,050 --> 00:01:51,010 Suze: wish them a very happy birthday up in heaven. 18 00:01:51,360 --> 00:01:54,790 Suze: And for all of you to know that maybe one 19 00:01:54,800 --> 00:01:58,019 Suze: of the greatest people and role model in my life 20 00:01:58,029 --> 00:02:02,160 Suze: really even more than my mom. And my dad was 21 00:02:02,169 --> 00:02:08,869 Suze: my Aunt Thelma. Oh my God. I loved her, loved her, 22 00:02:08,880 --> 00:02:13,330 Suze: loved her. Oh, I loved her. And so Auntie Thelma, 23 00:02:13,339 --> 00:02:16,210 Suze: I will miss you also. Forever and a day. 24 00:02:16,830 --> 00:02:20,380 Suze: All right. And last, but not least, I just want 25 00:02:20,389 --> 00:02:24,240 Suze: to talk a little bit about inflation. As you all know, 26 00:02:24,250 --> 00:02:27,978 Suze: a few days ago inflation was announced that it came 27 00:02:27,990 --> 00:02:31,369 Suze: down a little bit and it's now at 3%. And 28 00:02:31,380 --> 00:02:34,410 Suze: therefore it's also being projected, who knows if it will 29 00:02:34,419 --> 00:02:38,990 Suze: happen or not? That maybe the fed funds rate will 30 00:02:39,000 --> 00:02:42,039 Suze: come down starting in September. I don't know, 31 00:02:42,720 --> 00:02:44,660 Suze: I don't know if it will or not, but that's 32 00:02:44,669 --> 00:02:48,100 Suze: besides the point. But what is happening and you can 33 00:02:48,110 --> 00:02:51,660 Suze: see it happening is that interest rates are starting to 34 00:02:51,669 --> 00:02:56,059 Suze: come down and you can see that in particular in 35 00:02:56,070 --> 00:03:00,460 Suze: mortgage rates, mortgage rates now for a 30 year fixed rate, 36 00:03:00,470 --> 00:03:02,699 Suze: mortgage are below 7%. 37 00:03:03,070 --> 00:03:06,130 Suze: And the reason that they are coming down is that 38 00:03:06,139 --> 00:03:10,970 Suze: interest rates on mortgages are attached really, they're dictated by 39 00:03:10,979 --> 00:03:15,429 Suze: the 10 year Treasury, not by the fed funds rate, 40 00:03:15,479 --> 00:03:18,690 Suze: but by the 10 year treasury. 41 00:03:19,419 --> 00:03:22,490 Suze: And because the 10 year treasury rate is starting to 42 00:03:22,500 --> 00:03:27,880 Suze: come down, so is the interest rates on mortgages? Just 43 00:03:27,889 --> 00:03:30,919 Suze: something for you to take note of 44 00:03:31,750 --> 00:03:36,520 Suze: but also you need to take note of the interest 45 00:03:36,529 --> 00:03:43,050 Suze: rate decline on treasuries, on certificates of deposits on things 46 00:03:43,059 --> 00:03:45,089 Suze: like that. Ok. 47 00:03:45,740 --> 00:03:49,800 Suze: So for those of you who still want to lock 48 00:03:49,809 --> 00:03:54,160 Suze: in a good interest rate, maybe you have money that 49 00:03:54,169 --> 00:03:57,839 Suze: you don't want for maybe the next 12 months or 50 00:03:57,850 --> 00:04:02,880 Suze: maybe the next almost 18 months. Let's just say that's true. 51 00:04:02,990 --> 00:04:05,729 Suze: And you just want to lock in what will be 52 00:04:05,740 --> 00:04:08,399 Suze: probably the highest interest rate that you're going to get 53 00:04:08,410 --> 00:04:10,759 Suze: anywhere during that time. 54 00:04:11,500 --> 00:04:15,639 Suze: I am telling you the interest rate for the 12 55 00:04:15,649 --> 00:04:18,929 Suze: to 17 month and 30 day, which makes it almost 56 00:04:18,940 --> 00:04:23,720 Suze: 18 month certificate of deposit at Alliance Credit Union is 57 00:04:23,730 --> 00:04:26,130 Suze: something that you should be doing. Now, 58 00:04:26,690 --> 00:04:35,040 Suze: the rate is 5.05% apr for amounts under $75,000 and 59 00:04:35,049 --> 00:04:42,750 Suze: for $75,000 or above. It's 5.10 apr now, you know, 60 00:04:42,760 --> 00:04:47,190 Suze: and I know that interest rates from Alliance Credit Union 61 00:04:47,200 --> 00:04:52,029 Suze: just like every other financial institution and treasury out there. 62 00:04:52,540 --> 00:04:55,988 Suze: They have been coming down little by little 63 00:04:56,850 --> 00:04:59,519 Suze: and the last time or the last few times I 64 00:04:59,529 --> 00:05:01,750 Suze: told you take a hold of it because you never 65 00:05:01,760 --> 00:05:06,720 Suze: know when interest rates could come down again. Especially with 66 00:05:06,738 --> 00:05:08,149 Suze: Alliance Credit Union. 67 00:05:09,209 --> 00:05:12,649 Suze: It's true. They did come down. I don't know if 68 00:05:12,660 --> 00:05:15,519 Suze: they're going to be lowering their rates or not, but 69 00:05:15,529 --> 00:05:19,040 Suze: I sure wouldn't wait and see. So if you want 70 00:05:19,049 --> 00:05:22,329 Suze: to take advantage of that interest rate right now. Go 71 00:05:22,339 --> 00:05:29,849 Suze: to my, my Alliant. Alliant.com. Click on where it says 72 00:05:29,859 --> 00:05:34,459 Suze: certificates and there you go. All right. 73 00:05:35,178 --> 00:05:39,899 Suze: Now, let me tell you why the topic of Suzie 74 00:05:39,910 --> 00:05:43,839 Suze: School today is all about 75 00:05:44,600 --> 00:05:52,299 Suze: transfers versus IRA rollovers and why you have got to 76 00:05:52,309 --> 00:05:56,779 Suze: know the difference between those two. 77 00:05:57,480 --> 00:06:01,630 Suze: So this week I was talking to somebody, there were 78 00:06:01,640 --> 00:06:04,178 Suze: a lot of people on the island 79 00:06:05,100 --> 00:06:07,679 Suze: and they would see me and they would talk to 80 00:06:07,690 --> 00:06:11,959 Suze: me and things like that and one of the members because, 81 00:06:11,970 --> 00:06:13,950 Suze: you know, I live on a private island and you 82 00:06:13,959 --> 00:06:16,529 Suze: have to be a member of it. But one of 83 00:06:16,540 --> 00:06:20,769 Suze: their workers saw me and they were so excited to 84 00:06:20,779 --> 00:06:25,299 Suze: tell me something that they were so proud of. So 85 00:06:25,309 --> 00:06:26,828 Suze: I stopped to listen 86 00:06:27,559 --> 00:06:30,420 Suze: and here is what this person told me. 87 00:06:31,170 --> 00:06:33,059 Suze: He said to me, Suze 88 00:06:34,359 --> 00:06:35,910 Suze: last year, 89 00:06:36,859 --> 00:06:38,540 Suze: I needed money. 90 00:06:39,200 --> 00:06:48,440 Suze: So I took out $25,000 from my traditional IRA 91 00:06:49,299 --> 00:06:53,399 Suze: and I needed to pay it back within 60 days 92 00:06:53,410 --> 00:06:54,399 Suze: as you know. 93 00:06:55,649 --> 00:06:58,558 Suze: So I took it out and I did whatever I 94 00:06:58,570 --> 00:07:00,678 Suze: needed to do with it. He did not tell me 95 00:07:00,690 --> 00:07:03,890 Suze: what he needed to do with it. 60 days were 96 00:07:03,899 --> 00:07:09,079 Suze: coming close and now before the 60 days were up, 97 00:07:10,070 --> 00:07:14,570 Suze: what happened was we're now in 2024. So he took 98 00:07:14,579 --> 00:07:20,190 Suze: out $25,000 from a traditional IRA. You might want to 99 00:07:20,200 --> 00:07:26,570 Suze: write this down at the end of 2023. Ok. 100 00:07:27,380 --> 00:07:31,260 Suze: And he needed to have that paid back within 60 101 00:07:31,269 --> 00:07:35,480 Suze: days of whenever he took possession of that money. 102 00:07:36,429 --> 00:07:38,730 Suze: Now, we're in 2024 103 00:07:39,690 --> 00:07:41,480 Suze: and he tells me 104 00:07:42,529 --> 00:07:46,429 Suze: that here we are, Suze and the 60 days are 105 00:07:46,440 --> 00:07:49,579 Suze: almost up. So you want to know what I did? 106 00:07:50,220 --> 00:07:55,730 Suze: I didn't have that $25,000 but I had another traditional 107 00:07:55,739 --> 00:07:56,518 Suze: IRA 108 00:07:57,459 --> 00:08:02,269 Suze: at a different brokerage firm. So he had two traditional 109 00:08:02,279 --> 00:08:05,540 Suze: IRAs at two different brokerage firms. 110 00:08:06,450 --> 00:08:12,809 Suze: And he said, so I took out that $25,000 from 111 00:08:12,820 --> 00:08:15,070 Suze: the other brokerage firm 112 00:08:16,429 --> 00:08:19,829 Suze: because now we're in a new year, Suze. So now 113 00:08:19,839 --> 00:08:25,070 Suze: I can do another IRA rollover and I put that 114 00:08:25,079 --> 00:08:30,290 Suze: money back into the IRA rollover 115 00:08:30,959 --> 00:08:33,819 Suze: that the 60 days were almost up at. Now, did 116 00:08:33,830 --> 00:08:36,579 Suze: that just make sense to all of you? What he did? 117 00:08:37,559 --> 00:08:38,978 Suze: Just to be clear 118 00:08:39,940 --> 00:08:44,380 Suze: the end of last year, he took out $25,000 to 119 00:08:44,390 --> 00:08:49,439 Suze: do something with at the beginning before 60 days was up, 120 00:08:49,520 --> 00:08:55,419 Suze: he had another IRA, he took out $25,000 from that 121 00:08:55,429 --> 00:08:56,199 Suze: IRA 122 00:08:57,250 --> 00:09:00,419 Suze: to do what with it? Put it in the first 123 00:09:00,429 --> 00:09:03,369 Suze: one to get it in there before the 60 days 124 00:09:03,380 --> 00:09:04,390 Suze: were up. 125 00:09:05,309 --> 00:09:10,799 Suze: And now the 60 day clock is running for his 126 00:09:10,809 --> 00:09:14,479 Suze: second one that he did in 2024. 127 00:09:15,530 --> 00:09:18,030 Suze: And so I said, now, what did you do? 128 00:09:18,710 --> 00:09:24,989 Suze: He said, well by then I had the $25,000 to 129 00:09:25,000 --> 00:09:29,598 Suze: pay back the second IRA rollover that I did. So 130 00:09:29,609 --> 00:09:31,250 Suze: now everything's great. 131 00:09:32,619 --> 00:09:35,030 Suze: He said, wasn't I smart? 132 00:09:36,169 --> 00:09:40,349 Suze: And I said, I don't quite think so. And he 133 00:09:40,359 --> 00:09:42,549 Suze: looked at me and he said, what are you talking about? 134 00:09:43,289 --> 00:09:50,229 Suze: I said, you are only allowed one IRA rollover where 135 00:09:50,239 --> 00:09:53,830 Suze: you literally take out money and then you put it 136 00:09:53,840 --> 00:09:59,400 Suze: back within the 60 days. You are only allowed one 137 00:09:59,409 --> 00:10:01,869 Suze: IRA rollover a year. 138 00:10:03,090 --> 00:10:07,359 Suze: And he says to me, I know I did an 139 00:10:07,369 --> 00:10:13,059 Suze: IRA rollover in 2023 and then I did another one 140 00:10:13,070 --> 00:10:17,150 Suze: in 2024. So there's one a year 141 00:10:17,929 --> 00:10:21,469 Suze: and I said it doesn't work like that. It's not 142 00:10:21,479 --> 00:10:23,530 Suze: a calendar year. 143 00:10:24,250 --> 00:10:30,630 Suze: It is 365 days from the time that you did 144 00:10:30,640 --> 00:10:35,869 Suze: your first IRA rollover. So you would not be able 145 00:10:35,880 --> 00:10:40,710 Suze: to do another IRA rollover until the end 146 00:10:41,650 --> 00:10:46,869 Suze: of 2024 when 365 days passed. 147 00:10:47,989 --> 00:10:51,559 Suze: And he just looked at me like 148 00:10:52,479 --> 00:10:53,229 Suze: what 149 00:10:54,719 --> 00:10:58,239 Suze: he said, what does that mean? I said, I'll tell 150 00:10:58,250 --> 00:11:01,460 Suze: you what that means to you is that you went 151 00:11:01,469 --> 00:11:02,419 Suze: past 152 00:11:03,099 --> 00:11:09,728 Suze: the 60 day rule. So that $25,000 is going to 153 00:11:09,739 --> 00:11:13,650 Suze: be taxed to you most likely as ordinary income plus 154 00:11:13,659 --> 00:11:15,390 Suze: a 10% penalty. 155 00:11:16,590 --> 00:11:20,520 Suze: Plus now you've just really screwed everything up. So you 156 00:11:20,530 --> 00:11:23,849 Suze: better go see a CPA and figure out what you 157 00:11:23,859 --> 00:11:27,559 Suze: can do about this and the penalties now that are 158 00:11:27,570 --> 00:11:29,530 Suze: going to be. 159 00:11:30,229 --> 00:11:35,929 Suze: So I said to him, however, didn't your CPA, didn't 160 00:11:35,940 --> 00:11:38,909 Suze: they catch this? And he said no, I do my 161 00:11:38,919 --> 00:11:44,530 Suze: own taxes and nobody said anything because I just did them. 162 00:11:45,700 --> 00:11:48,880 Suze: All right. So why am I telling you this story? 163 00:11:49,349 --> 00:11:53,000 Suze: I'm telling you this story because number one, the biggest 164 00:11:53,010 --> 00:11:55,760 Suze: mistakes you will ever make with your money 165 00:11:56,390 --> 00:12:00,650 Suze: are the mistakes you don't even know that you are making. 166 00:12:01,309 --> 00:12:05,590 Suze: You need to know the difference between a rollover and 167 00:12:05,599 --> 00:12:11,650 Suze: a transfer because many of you are still totally confused 168 00:12:11,659 --> 00:12:14,770 Suze: between the two. All right, 169 00:12:15,559 --> 00:12:18,469 Suze: what is a roll over 170 00:12:19,320 --> 00:12:21,539 Suze: a rollover is when 171 00:12:22,539 --> 00:12:28,030 Suze: you literally let's say have an IRA or a Roth IRA 172 00:12:28,039 --> 00:12:29,349 Suze: doesn't matter. 173 00:12:30,380 --> 00:12:36,030 Suze: And when you take money out of an IRA, you 174 00:12:36,039 --> 00:12:36,829 Suze: take it 175 00:12:37,549 --> 00:12:41,929 Suze: and you want to put it back within 60 days 176 00:12:42,039 --> 00:12:46,010 Suze: that is known as a rollover. 177 00:12:46,890 --> 00:12:48,539 Suze: When you do that, 178 00:12:49,390 --> 00:12:51,979 Suze: you can only do that once 179 00:12:52,659 --> 00:12:59,299 Suze: every 365 days period. So it is not in a 180 00:12:59,309 --> 00:13:05,130 Suze: calendar year. It is, the date starts from the date 181 00:13:05,140 --> 00:13:09,099 Suze: that you took that money out. And even if you 182 00:13:09,109 --> 00:13:11,700 Suze: put it back within the 60 days, 183 00:13:12,460 --> 00:13:15,488 Suze: it's 365 days for you to be able to do 184 00:13:15,500 --> 00:13:19,119 Suze: that again. If you want from the date that you 185 00:13:19,130 --> 00:13:22,400 Suze: originally took that money out period. 186 00:13:24,330 --> 00:13:30,070 Suze: It's for all your IRA accounts. If you do an 187 00:13:30,080 --> 00:13:34,440 Suze: IRA rollover in one account and you happen to have 188 00:13:34,450 --> 00:13:39,469 Suze: another account or a Roth IRA, it doesn't matter. All 189 00:13:39,479 --> 00:13:46,750 Suze: the IRA accounts are counted as one account. That's what 190 00:13:46,760 --> 00:13:51,289 Suze: a rollover is. What is a transfer? 191 00:13:52,080 --> 00:13:57,000 Suze: A transfer is when you have money in an IRA 192 00:13:57,010 --> 00:14:02,059 Suze: for instance, and you want to change the brokerage firm 193 00:14:02,070 --> 00:14:05,848 Suze: or the credit union or whatever that it's at and 194 00:14:05,859 --> 00:14:10,319 Suze: you transfer it to a new brokerage firm or a 195 00:14:10,330 --> 00:14:11,460 Suze: credit union 196 00:14:11,869 --> 00:14:17,929 Suze: and it goes directly from custodian to custodian. You do 197 00:14:17,940 --> 00:14:23,159 Suze: not touch it whatsoever. A rollover when we're talking about 198 00:14:23,169 --> 00:14:29,869 Suze: IRAs when you actually take money out, it's in your 199 00:14:29,880 --> 00:14:33,359 Suze: hands and you have 60 days to roll it over 200 00:14:33,369 --> 00:14:34,630 Suze: back into it. 201 00:14:35,429 --> 00:14:41,909 Suze: A transfer. You can do as many transfers as you want. 202 00:14:42,679 --> 00:14:45,669 Suze: So I'm just doing IRAs right now, whether it's a 203 00:14:45,679 --> 00:14:47,530 Suze: Roth or traditional. 204 00:14:48,260 --> 00:14:52,559 Suze: So you could, if you want, you have five different 205 00:14:52,570 --> 00:14:56,940 Suze: brokerage firms that you have opened up a traditional or 206 00:14:56,950 --> 00:14:59,580 Suze: a Roth. Hopefully it's a Roth and you want to 207 00:14:59,590 --> 00:15:05,419 Suze: transfer all five of those into your new Roth IRA. 208 00:15:05,429 --> 00:15:09,039 Suze: And let's say they were all Roth. You could transfer 209 00:15:09,049 --> 00:15:13,010 Suze: every single one of those. You're not limited to just 210 00:15:13,020 --> 00:15:16,760 Suze: one a year. You could do all five, 211 00:15:17,340 --> 00:15:22,159 Suze: you would just do a custodian to custodian transfer. What 212 00:15:22,169 --> 00:15:26,919 Suze: does that mean? That means that you go to the 213 00:15:26,929 --> 00:15:30,450 Suze: brokerage firm or credit union or wherever it is that 214 00:15:30,460 --> 00:15:34,640 Suze: you want the account to transfer into or the accounts 215 00:15:34,650 --> 00:15:38,400 Suze: to transfer into you, open up an account or maybe 216 00:15:38,409 --> 00:15:41,239 Suze: you already have one and you have them 217 00:15:41,739 --> 00:15:47,380 Suze: simply contact the custodian of your other Roth IRAs or 218 00:15:47,390 --> 00:15:53,669 Suze: traditional IRAs and they do a custodian to custodian transfer. 219 00:15:54,250 --> 00:15:57,849 Suze: You can do 100 of those a year if you want. 220 00:15:58,299 --> 00:16:04,280 Suze: It's only with an IRA rollover that you can do 221 00:16:04,289 --> 00:16:06,789 Suze: only one a year 222 00:16:07,229 --> 00:16:14,010 Suze: and that year isn't a calendar year. It's 365 days 223 00:16:14,020 --> 00:16:18,309 Suze: from the day you got that money. Are we clear 224 00:16:18,320 --> 00:16:22,969 Suze: on that? Let's go to a 401k. 225 00:16:23,659 --> 00:16:27,989 Suze: A lot of you have most of your money truthfully 226 00:16:28,320 --> 00:16:33,520 Suze: in your 401k, whether it's a Roth or a traditional, 227 00:16:33,530 --> 00:16:38,719 Suze: your 403 B or your TSP or an account like 228 00:16:38,729 --> 00:16:39,159 Suze: that 229 00:16:40,080 --> 00:16:44,919 Suze: when you have money in a 401k, now, let's just 230 00:16:44,929 --> 00:16:48,900 Suze: say you're retiring and you want that money to go 231 00:16:48,909 --> 00:16:54,869 Suze: over to an IRA because it gives you more choice. 232 00:16:54,880 --> 00:16:57,070 Suze: That's what you want to do with it. You don't 233 00:16:57,080 --> 00:17:00,859 Suze: like the investment choices possibly in your 401k, whatever it 234 00:17:00,869 --> 00:17:01,659 Suze: may be 235 00:17:02,619 --> 00:17:07,160 Suze: when you take money and it goes from a 401k 236 00:17:07,790 --> 00:17:09,810 Suze: to an IRA 237 00:17:11,198 --> 00:17:15,649 Suze: that is known as a roll over 238 00:17:16,569 --> 00:17:21,380 Suze: and it will be either a direct rollover or an 239 00:17:21,390 --> 00:17:23,699 Suze: indirect rollover. 240 00:17:24,479 --> 00:17:29,319 Suze: And when you do a rollover, whether it's direct, which 241 00:17:29,329 --> 00:17:33,500 Suze: I'll explain in a second or indirect from a 401k, 242 00:17:33,510 --> 00:17:35,579 Suze: 403 B or TSP, 243 00:17:36,420 --> 00:17:38,719 Suze: whether it's a Roth or not, 244 00:17:39,510 --> 00:17:44,359 Suze: that is considered a roll over. 245 00:17:45,589 --> 00:17:51,250 Suze: So those are not limited to once a year. 246 00:17:52,310 --> 00:17:55,819 Suze: And why is that? It's because they are going from 247 00:17:55,829 --> 00:18:02,149 Suze: an employer plan to an IRA or a Roth. Just 248 00:18:02,209 --> 00:18:07,290 Suze: that simple. What is a direct or indirect one? 249 00:18:08,030 --> 00:18:12,829 Suze: A direct one is where you go to your brokerage 250 00:18:12,839 --> 00:18:17,300 Suze: firm or credit union. You open up your IRA rollover 251 00:18:17,310 --> 00:18:20,609 Suze: account or your Roth IRA rollover account 252 00:18:21,630 --> 00:18:23,909 Suze: And it will just be a regular account, but it 253 00:18:23,920 --> 00:18:28,040 Suze: will be for a rollover from where from your employer 254 00:18:28,050 --> 00:18:29,209 Suze: sponsored plan 255 00:18:30,119 --> 00:18:33,660 Suze: and they will contact your employer 256 00:18:34,400 --> 00:18:40,060 Suze: and the money goes direct from your employer to your 257 00:18:40,069 --> 00:18:42,719 Suze: IRA rollover account. 258 00:18:43,430 --> 00:18:45,389 Suze: Just that simple. 259 00:18:46,290 --> 00:18:52,430 Suze: Sometimes it can be an indirect rollover. What is that 260 00:18:53,089 --> 00:18:56,630 Suze: an indirect rollover? And this is when you have to 261 00:18:56,640 --> 00:18:57,619 Suze: be careful, 262 00:18:58,459 --> 00:19:00,569 Suze: an indirect rollover 263 00:19:01,310 --> 00:19:07,250 Suze: is when you instruct your company for whatever reason, they 264 00:19:07,260 --> 00:19:10,609 Suze: don't want to send it directly to your brokerage firm 265 00:19:10,619 --> 00:19:11,689 Suze: or credit union, 266 00:19:12,640 --> 00:19:16,170 Suze: they want to send it to you and they want 267 00:19:16,180 --> 00:19:21,469 Suze: you to put it yourself into the Ira rollover that 268 00:19:21,479 --> 00:19:22,270 Suze: you opened. 269 00:19:23,160 --> 00:19:28,459 Suze: That is called an indirect rollover where they don't directly 270 00:19:28,469 --> 00:19:32,180 Suze: send it to your IRA rollover account, they send it 271 00:19:32,189 --> 00:19:35,739 Suze: to you and you have 60 days to get it 272 00:19:35,750 --> 00:19:39,979 Suze: into your account. If they want to do that, it 273 00:19:39,989 --> 00:19:47,630 Suze: is necessary mandatory that you tell your employer that they 274 00:19:47,640 --> 00:19:51,280 Suze: have got to make your rollover check. However, 275 00:19:51,640 --> 00:19:57,609 Suze: your distribution check made out to the name of 276 00:19:58,319 --> 00:20:04,699 Suze: whatever brokerage firm you're doing the rollover with or credit union. 277 00:20:05,540 --> 00:20:09,280 Suze: That's how it has to be. So when they send 278 00:20:09,290 --> 00:20:13,079 Suze: it to you, you're not gonna cash it. What you're 279 00:20:13,089 --> 00:20:15,849 Suze: going to do is you're going to take it within 280 00:20:15,859 --> 00:20:18,879 Suze: that 60 days, give it to your brokerage firm or 281 00:20:18,890 --> 00:20:19,770 Suze: credit union. 282 00:20:20,760 --> 00:20:25,930 Suze: And therefore now you have done an indirect rollover and 283 00:20:25,939 --> 00:20:30,500 Suze: you are not limited to just once a year, no penalties, 284 00:20:30,510 --> 00:20:36,859 Suze: no taxes, nothing. That is how it has to be done. 285 00:20:38,199 --> 00:20:46,079 Suze: Now, what's important about this is that if, however, for 286 00:20:46,089 --> 00:20:51,448 Suze: whatever reason, you decide that you know what you could 287 00:20:51,459 --> 00:20:57,639 Suze: use some of the money that's in your employer account. 288 00:20:58,349 --> 00:21:01,599 Suze: So they're now going to send it to you. They're 289 00:21:01,609 --> 00:21:05,550 Suze: gonna make the check payable to you and you think 290 00:21:05,560 --> 00:21:10,689 Suze: I have 60 days to get that money into my 291 00:21:10,709 --> 00:21:12,410 Suze: rollover account. 292 00:21:13,229 --> 00:21:18,689 Suze: Better be careful because if they send you a check 293 00:21:18,699 --> 00:21:24,550 Suze: made out to you, then there is mandatory tax withholding 294 00:21:24,560 --> 00:21:27,609 Suze: on that check of 20%. 295 00:21:28,500 --> 00:21:32,119 Suze: So let me give you an example of this. Let's 296 00:21:32,130 --> 00:21:35,159 Suze: just say you have $200,000 297 00:21:35,979 --> 00:21:40,869 Suze: in your 401k. Let's just say it's a traditional 401k 298 00:21:41,780 --> 00:21:46,060 Suze: and you figure out, well, why not have that money 299 00:21:46,069 --> 00:21:48,159 Suze: come directly to me? 300 00:21:49,439 --> 00:21:53,750 Suze: And I'll take that $200,000 I'll deposit it in an 301 00:21:53,760 --> 00:21:58,629 Suze: interest bearing account for 50 days. I'll earn interest on 302 00:21:58,640 --> 00:21:58,900 Suze: it 303 00:21:59,680 --> 00:22:04,300 Suze: and then I'll take that $200,000 out and within the 304 00:22:04,310 --> 00:22:08,739 Suze: 60 days, put it in my ira rollover. 305 00:22:09,920 --> 00:22:13,280 Suze: The problem with that is that if you do an 306 00:22:13,290 --> 00:22:15,380 Suze: indirect rollover 307 00:22:16,160 --> 00:22:21,129 Suze: and you have the company make the check payable to 308 00:22:21,140 --> 00:22:22,530 Suze: you directly, 309 00:22:23,329 --> 00:22:30,069 Suze: there is a mandatory 20% IRS withholding for tax. 310 00:22:30,819 --> 00:22:37,228 Suze: So your company is going to withhold $40,000 from that 311 00:22:37,239 --> 00:22:43,969 Suze: $200,000 for tax. So you are only going to get 312 00:22:43,979 --> 00:22:50,239 Suze: a check for 100 and $60,000. So you put that 313 00:22:50,250 --> 00:22:54,160 Suze: $160,000 in an interest bearing account. All right, you make money, 314 00:22:54,939 --> 00:22:58,300 Suze: but you then within the 60 days are putting that 315 00:22:58,310 --> 00:23:01,560 Suze: into your IRA rollover account. 316 00:23:02,369 --> 00:23:08,510 Suze: But the problem is the $40,000 that they withheld, 317 00:23:10,130 --> 00:23:13,589 Suze: you are going to owe taxes on that money 318 00:23:14,329 --> 00:23:19,909 Suze: and a possible 10% penalty if you are not 55 319 00:23:19,920 --> 00:23:22,229 Suze: years of age or older in the year that you 320 00:23:22,239 --> 00:23:23,310 Suze: did that. 321 00:23:24,119 --> 00:23:25,659 Suze: And why is that? 322 00:23:26,439 --> 00:23:31,159 Suze: That is because you had $200,000 that was supposed to 323 00:23:31,170 --> 00:23:38,260 Suze: be rolled over, you only rolled over $160,000. So, unless 324 00:23:38,270 --> 00:23:43,939 Suze: you come up with that $40,000 before the 60 days 325 00:23:43,949 --> 00:23:44,979 Suze: is up, 326 00:23:45,949 --> 00:23:49,959 Suze: you are going to owe absolutely ordinary income taxes on 327 00:23:49,969 --> 00:23:58,129 Suze: $40,000 if it was a traditional 401k plus a possible 10% penalty. 328 00:23:59,020 --> 00:24:04,409 Suze: So you are never, ever, ever to make that mistake 329 00:24:04,640 --> 00:24:10,719 Suze: of an indirect rollover from your 401k 403 B or 330 00:24:10,729 --> 00:24:11,680 Suze: TSP 331 00:24:12,349 --> 00:24:16,209 Suze: where they make the check directly to you. If they 332 00:24:16,219 --> 00:24:20,729 Suze: won't send it directly to your new brokerage firm or 333 00:24:20,739 --> 00:24:23,449 Suze: credit union or wherever you're doing it 334 00:24:25,020 --> 00:24:27,010 Suze: and they're going to send it to you. You have 335 00:24:27,020 --> 00:24:29,619 Suze: got to make sure that they make it out to 336 00:24:29,630 --> 00:24:32,399 Suze: your new custodian. 337 00:24:33,530 --> 00:24:39,160 Suze: That is something that you need to know. How many 338 00:24:39,630 --> 00:24:45,400 Suze: rollovers can you do from a 401k, 403 B or 339 00:24:45,410 --> 00:24:51,729 Suze: TSP in one year as many as you want. It 340 00:24:51,739 --> 00:24:53,479 Suze: is not the same 341 00:24:54,099 --> 00:24:59,219 Suze: as a IRA rollover where you're going from Ira to 342 00:24:59,229 --> 00:25:03,619 Suze: yourself back to an IRA or from a Roth to 343 00:25:03,630 --> 00:25:09,079 Suze: yourself back to a Roth. It is very, very different. 344 00:25:09,089 --> 00:25:11,399 Suze: Do you understand that? 345 00:25:12,180 --> 00:25:16,800 Suze: Now, the next thing is, let's talk about conversions where 346 00:25:16,810 --> 00:25:22,099 Suze: you go from a traditional Ira to a Roth IRA, 347 00:25:22,109 --> 00:25:23,959 Suze: you are converting, 348 00:25:25,510 --> 00:25:30,530 Suze: you can convert as many times as you want in 349 00:25:30,540 --> 00:25:35,760 Suze: one year. Just that simple because the money is doing 350 00:25:35,770 --> 00:25:41,930 Suze: a transfer. It is going from your traditional IRA directly 351 00:25:41,939 --> 00:25:46,930 Suze: to a Roth IRA. That's a transfer, but you're converting 352 00:25:47,369 --> 00:25:51,550 Suze: what you are converting pre tax money to after tax 353 00:25:51,560 --> 00:25:56,550 Suze: money and there is no limitation on that whatsoever. 354 00:25:57,319 --> 00:26:01,669 Suze: Here's the bottom line that you need to understand. You 355 00:26:01,680 --> 00:26:07,020 Suze: can do as many conversions a year as you want 356 00:26:07,089 --> 00:26:09,379 Suze: from an IRA to a Roth. 357 00:26:10,410 --> 00:26:14,800 Suze: You can do as many transfers a year as you 358 00:26:14,810 --> 00:26:18,810 Suze: want from an IRA at one firm directly to an 359 00:26:18,819 --> 00:26:22,839 Suze: IRA at another firm where you transfer it, you can 360 00:26:22,849 --> 00:26:30,599 Suze: do as many 401k IRA rollovers a year as you want. 361 00:26:30,839 --> 00:26:34,260 Suze: And remember when it goes from an employer plan to 362 00:26:34,270 --> 00:26:39,639 Suze: an IRA that is known as an IRA rollover, 363 00:26:41,410 --> 00:26:45,469 Suze: that's what you need to know. And last, but not 364 00:26:45,479 --> 00:26:51,170 Suze: least in an IRA where you withdraw the money and 365 00:26:51,180 --> 00:26:54,589 Suze: you have 60 days to replace what you withdrew. You 366 00:26:54,599 --> 00:26:58,689 Suze: can only do that once in a 365 day period 367 00:26:58,699 --> 00:26:59,310 Suze: of time 368 00:26:59,979 --> 00:27:03,599 Suze: and you can only do it in one account. 369 00:27:05,000 --> 00:27:09,589 Suze: So that's what the Suze school was all about. Now, 370 00:27:09,599 --> 00:27:12,390 Suze: I hope that made it clear. 371 00:27:13,150 --> 00:27:16,060 Suze: I just want to say something. Everybody tonight is one 372 00:27:16,069 --> 00:27:20,369 Suze: of the biggest nights in our household and let me 373 00:27:20,380 --> 00:27:21,560 Suze: tell you why, 374 00:27:22,380 --> 00:27:26,520 Suze: as you know, Colo, our kind of adopted son, aren't 375 00:27:26,530 --> 00:27:29,479 Suze: you Colo? Aren't we both so lucky. Anyway, 376 00:27:30,569 --> 00:27:32,560 Suze: he's from Colombia 377 00:27:33,469 --> 00:27:43,468 Suze: and tonight Colombia is in the soccer championship against Argentina. 378 00:27:44,069 --> 00:27:48,050 Suze: This is a big deal. Everybody I am telling you 379 00:27:48,060 --> 00:27:52,630 Suze: it is a big, big deal in this household. So 380 00:27:52,780 --> 00:27:57,689 Suze: we are rooting for Colombia. We hope they win tonight 381 00:27:58,050 --> 00:28:02,300 Suze: and um I can't wait to see what happens. But 382 00:28:02,310 --> 00:28:08,130 Suze: until Thursday, when Miss Travis joins us again, there's really 383 00:28:08,140 --> 00:28:10,380 Suze: only one thing that I want you to remember when 384 00:28:10,390 --> 00:28:14,099 Suze: it comes to your money and it is people first, 385 00:28:14,109 --> 00:28:18,260 Suze: then money, then things now you stay safe. And if 386 00:28:18,270 --> 00:28:22,780 Suze: you do that you will stay unstoppable.