1 00:00:47,509 --> 00:00:54,380 Suze: April 25th, 2024. Welcome everybody to the Women and Money podcast. 2 00:00:54,389 --> 00:00:57,169 Suze: As well as everybody smart enough to listen. 3 00:00:57,770 --> 00:00:58,830 Suze: Go on KT. 4 00:00:58,840 --> 00:01:03,349 KT: So I wanna dedicate today's podcast to someone very, very 5 00:01:03,360 --> 00:01:07,790 KT: special in our lives and was in our life. And 6 00:01:07,800 --> 00:01:12,750 KT: that's Suze's mother. Today is Anne Orman's birthday. 7 00:01:12,760 --> 00:01:15,550 Suze: Her 109th birth day. 8 00:01:15,559 --> 00:01:17,669 KT: She would have been 100 and nine years old. Can 9 00:01:17,680 --> 00:01:20,809 KT: you imagine? But we had her, we, we loved her 10 00:01:20,819 --> 00:01:22,509 KT: up till she was 97 11 00:01:22,769 --> 00:01:26,389 KT: and I wanted to share with all of you that 12 00:01:26,400 --> 00:01:30,870 KT: it's very befitting that today's podcast, which Suze promised that 13 00:01:30,879 --> 00:01:34,589 KT: we would focus on the Roth. Is that Anne Orman 14 00:01:34,599 --> 00:01:37,750 KT: had a saying called an Orman never gives up 15 00:01:38,019 --> 00:01:41,489 KT: and Suze never gives up on me or all of 16 00:01:41,500 --> 00:01:45,879 KT: you listening when it comes to understanding why a Roth 17 00:01:45,889 --> 00:01:49,660 KT: is the way to go. So this is for Mama O. 18 00:01:50,849 --> 00:01:53,910 Suze: Oh, miss you so much. I, you know, every year 19 00:01:53,919 --> 00:01:55,919 Suze: that goes by. I actually miss her more. 20 00:01:55,930 --> 00:01:56,959 KT: Of course. 21 00:01:57,089 --> 00:01:59,040 Suze: I had a dream about her. 22 00:01:59,150 --> 00:01:59,879 KT: Was it good? 23 00:01:59,970 --> 00:02:02,290 Suze: It was interesting. But we'll go on, we'll do a 24 00:02:02,300 --> 00:02:06,559 Suze: finance podcast. So, anyway, here we go. So here's the thing. 25 00:02:06,569 --> 00:02:07,720 Suze: I want to say everybody 26 00:02:08,179 --> 00:02:15,570 Suze: last Sunday's podcast. April 21st obviously hit a big chord 27 00:02:15,919 --> 00:02:22,220 Suze: because I have never ever gotten so many emails and responses, 28 00:02:22,229 --> 00:02:25,470 Suze: especially on the women's community app. 29 00:02:25,479 --> 00:02:28,330 KT: And just so everyone knows that's where I actually took 30 00:02:28,339 --> 00:02:30,820 KT: most of these questions because they're so current. 31 00:02:31,149 --> 00:02:33,740 Suze: And what's interesting, KT, I don't know if you know this, 32 00:02:33,750 --> 00:02:37,100 Suze: but usually we get X amount of questions but then 33 00:02:37,110 --> 00:02:40,100 Suze: maybe two or three X that amount say whether they 34 00:02:40,110 --> 00:02:42,559 Suze: like it or not, we're just putting a like, but they 35 00:02:42,570 --> 00:02:43,660 Suze: don't ask a question 36 00:02:44,110 --> 00:02:49,029 Suze: this time, more people asked questions than left whether they 37 00:02:49,038 --> 00:02:50,539 Suze: liked it or not. 38 00:02:51,029 --> 00:02:54,550 KT: So you got thumbs up on all of these. But they're, 39 00:02:54,589 --> 00:02:57,948 KT: it's very, let's do a rapid fire, Suze, try to 40 00:02:57,960 --> 00:03:00,850 KT: get through. These are so great. Shall we start? 41 00:03:01,660 --> 00:03:02,210 Suze: No. 42 00:03:02,270 --> 00:03:03,119 KT: OK. 43 00:03:03,130 --> 00:03:05,130 Suze: No. Go on. I'm just joking with you. 44 00:03:05,179 --> 00:03:08,639 KT: Well, let's tell everyone how they can send a question. 45 00:03:08,679 --> 00:03:11,299 Suze: So there's two ways that you can send a question. 46 00:03:11,309 --> 00:03:14,500 Suze: One is through the women and money community app that 47 00:03:14,508 --> 00:03:18,478 Suze: you can download absolutely for free on Google Play or 48 00:03:18,490 --> 00:03:21,199 Suze: Apple apps. And by the way, if you go 49 00:03:21,429 --> 00:03:25,229 Suze: on there, you will see that I answered many, many 50 00:03:25,240 --> 00:03:30,190 Suze: many of the questions that were asked about the Roth. 51 00:03:30,399 --> 00:03:33,279 Suze: So take advantage of that so you can send a 52 00:03:33,288 --> 00:03:38,339 Suze: question there or go to ask Suze Podcast at gmail.com. 53 00:03:38,350 --> 00:03:40,789 Suze: If you don't know how to spell my name by now, 54 00:03:41,279 --> 00:03:47,220 Suze: I'm not going to tell you, but that's where you go. Alright, Suze. Alright. 55 00:03:47,429 --> 00:03:50,139 Suze: And send it in there and if KT chooses it, 56 00:03:50,440 --> 00:03:52,699 Suze: it will be on the podcast. 57 00:03:53,210 --> 00:03:55,100 KT: So here we go, everybody. 58 00:03:55,740 --> 00:03:59,119 KT: So, Suze, before we fire away with these questions for 59 00:03:59,130 --> 00:04:02,160 KT: those that are new to the women and Money podcast. 60 00:04:02,259 --> 00:04:06,839 KT: Give them a tiny itty bitty tutorial of why and 61 00:04:06,850 --> 00:04:08,419 KT: what a Roth is. 62 00:04:08,449 --> 00:04:12,520 Suze: I'm not gonna tell them why you're gonna have to listen to a past 63 00:04:12,529 --> 00:04:15,250 Suze: podcast on that. When I am going to tell you 64 00:04:15,259 --> 00:04:17,630 Suze: simply is a Roth retirement account 65 00:04:17,988 --> 00:04:22,149 Suze: is a retirement account that you fund with after tax dollars. 66 00:04:22,178 --> 00:04:25,709 Suze: Then it grows over all the years and it's absolutely 67 00:04:25,720 --> 00:04:27,890 Suze: tax free when you go to take it out and 68 00:04:27,899 --> 00:04:32,700 Suze: no required minimum distributions are needed and your beneficiaries get 69 00:04:32,709 --> 00:04:37,250 Suze: it tax free. A regular retirement account is funded with 70 00:04:37,260 --> 00:04:42,159 Suze: pre tax contributions. Contributions you have never paid taxes on 71 00:04:42,670 --> 00:04:44,928 Suze: and you're just also thrilled not to have to pay 72 00:04:44,940 --> 00:04:49,179 Suze: taxes that you invest that way. You let it grow 73 00:04:49,190 --> 00:04:51,910 Suze: and grow and grow, but it grows tax deferred. And 74 00:04:51,920 --> 00:04:54,070 Suze: when you go to take it out, you will pay 75 00:04:54,079 --> 00:04:58,609 Suze: ordinary income taxes on it when you are of proper age, 76 00:04:58,619 --> 00:05:03,570 Suze: 73 or 75 depending when you were born, you will 77 00:05:03,579 --> 00:05:08,600 Suze: be required to take out RMDs and your beneficiaries. When 78 00:05:08,609 --> 00:05:09,350 Suze: they get it, 79 00:05:09,678 --> 00:05:12,890 Suze: they will have to pay ordinary income taxes on whatever 80 00:05:12,899 --> 00:05:16,000 Suze: they withdraw. And if they're other than your spouse, uh, 81 00:05:16,010 --> 00:05:19,619 Suze: they're gonna have to wipe it clean within 10 years. 82 00:05:19,630 --> 00:05:20,220 Suze: All right. 83 00:05:20,230 --> 00:05:21,820 KT: All right. So, here we go, everyone 84 00:05:22,209 --> 00:05:24,399 KT: and I'm not gonna give you the name since these 85 00:05:24,410 --> 00:05:26,570 KT: are all from the wall. I'm just gonna go very 86 00:05:26,579 --> 00:05:30,510 KT: quickly through the questions. First question says, Suze, can you 87 00:05:30,519 --> 00:05:35,019 KT: continue to convert funds from a traditional Ira to a 88 00:05:35,029 --> 00:05:39,709 KT: Roth after you have started the RMDs? I never heard 89 00:05:39,720 --> 00:05:41,549 KT: anyone say to continue. 90 00:05:41,859 --> 00:05:46,980 Suze: Yeah, you absolutely can. But you cannot take your RMDs 91 00:05:47,459 --> 00:05:50,459 Suze: and put them in a Roth and think you have 92 00:05:50,470 --> 00:05:53,919 Suze: met the RMD MD quirement. You have got to take 93 00:05:53,928 --> 00:05:55,790 Suze: your RMDs first 94 00:05:56,079 --> 00:05:59,380 Suze: After you have taken them. Then after that, if you 95 00:05:59,390 --> 00:06:03,059 Suze: want to invest that year and convert some money to 96 00:06:03,070 --> 00:06:05,959 Suze: a Roth, you absolutely can. Next KT. 97 00:06:05,970 --> 00:06:10,660 KT: Next question, I'm having a tough time finding an institution 98 00:06:10,869 --> 00:06:16,380 KT: that offers a Roth SEP IRA, do you know any? Also 99 00:06:16,390 --> 00:06:19,899 KT: in prior years, I funded both my Roth IRA and 100 00:06:19,910 --> 00:06:23,100 KT: a SEP IRA. Will I be able to fund both 101 00:06:23,109 --> 00:06:25,488 KT: a Roth IRA and a Roth SEP? 102 00:06:25,799 --> 00:06:28,070 KT: I can't find my answer anywhere. 103 00:06:28,079 --> 00:06:31,269 Suze: So yes, you can just like you are now you 104 00:06:31,279 --> 00:06:35,049 Suze: can fund a Roth IRA and a Roth SEP IRA. 105 00:06:35,350 --> 00:06:40,308 Suze: Even though the Secure Act 2.0 mandated that there should 106 00:06:40,320 --> 00:06:43,738 Suze: be SEP IRAs for some reason. And I don't know 107 00:06:43,750 --> 00:06:48,730 Suze: why institutions just aren't creating them. So the best advice 108 00:06:48,738 --> 00:06:52,420 Suze: for you would be to simply do a SEP IRA 109 00:06:52,428 --> 00:06:53,570 Suze: just like you do 110 00:06:54,010 --> 00:06:58,570 Suze: and then convert it to a Roth IRA and then 111 00:06:58,579 --> 00:07:00,950 Suze: you have it all in one place. All right. 112 00:07:00,959 --> 00:07:05,269 KT: Ok. This one, I really like this one. Made me smile, Suze. 113 00:07:05,279 --> 00:07:08,909 KT: The struggle is real with this IRA issue. 114 00:07:09,299 --> 00:07:14,809 KT: I'm married to a tax accountant. Wait and debating this. 115 00:07:14,820 --> 00:07:17,230 KT: And he, and I guess it's a, he wrote, ah, 116 00:07:18,040 --> 00:07:23,209 KT: my company does not match Roth contributions only pre-tax. This 117 00:07:23,220 --> 00:07:26,329 KT: just adds to our arguments. Help. 118 00:07:26,339 --> 00:07:27,609 Suze: So, obviously, 119 00:07:27,720 --> 00:07:30,339 Suze: let me just see this one for a second. So, 120 00:07:30,350 --> 00:07:36,700 Suze: obviously this person's spouse is saying you should absolutely only 121 00:07:36,709 --> 00:07:40,480 Suze: do a pre-tax. Get the tax right off right now 122 00:07:40,489 --> 00:07:43,570 Suze: and probably doesn't quite take my word for it because 123 00:07:43,579 --> 00:07:46,920 Suze: I'm not a CPA, I'm not an accountant. I'm just 124 00:07:46,929 --> 00:07:49,420 Suze: the personal finance expert of the world. But that's besides 125 00:07:49,429 --> 00:07:52,859 Suze: the point. So, here's what I would suggest that you 126 00:07:52,869 --> 00:07:56,980 Suze: tell your spouse to do. There is one person 127 00:07:57,399 --> 00:08:02,100 Suze: who is the expert bar none when it comes to 128 00:08:02,109 --> 00:08:07,899 Suze: retirement accounts. CPA. He has every possible qualification you would 129 00:08:07,910 --> 00:08:11,570 Suze: want to have in somebody. And he actually does a 130 00:08:11,579 --> 00:08:16,140 Suze: newsletter and his name is Ed Slott. 131 00:08:16,540 --> 00:08:21,959 Suze: There is nobody, nobody, not me, nobody better versed on 132 00:08:21,970 --> 00:08:28,839 Suze: these topics than him. He has a website called Ira help.com. 133 00:08:29,220 --> 00:08:32,449 Suze: You can subscribe to his newsletter if you want. I 134 00:08:32,460 --> 00:08:33,750 Suze: absolutely do. 135 00:08:34,260 --> 00:08:37,780 Suze: And I'm sure if you were to Google him or 136 00:08:37,789 --> 00:08:40,580 Suze: look him up on youtube or whatever, I haven't, but 137 00:08:40,590 --> 00:08:43,380 Suze: I'm sure he has to be there. I am sure 138 00:08:43,390 --> 00:08:48,199 Suze: you will hear him speaking incredibly all the time about 139 00:08:48,210 --> 00:08:51,979 Suze: why if you do not do a Roth retirement account, 140 00:08:52,109 --> 00:08:53,960 Suze: no matter what your situation, 141 00:08:54,440 --> 00:08:57,239 Suze: you are making the biggest mistake out there. So if 142 00:08:57,250 --> 00:08:59,820 Suze: your spouse doesn't want to take my word for it, 143 00:09:00,049 --> 00:09:03,049 Suze: go to one of the greatest tax people in the 144 00:09:03,059 --> 00:09:08,829 Suze: United States on this topic, Mr Ed Slott. I should 145 00:09:08,840 --> 00:09:11,799 Suze: ask Ed to come on this podcast even though I 146 00:09:11,809 --> 00:09:15,510 Suze: don't have guests and let him talk to everybody about this. 147 00:09:16,159 --> 00:09:17,380 KT: I'll contact him. 148 00:09:17,390 --> 00:09:18,750 Suze: He's so brilliant. 149 00:09:19,119 --> 00:09:19,949 KT: He's also funny. 150 00:09:20,330 --> 00:09:22,700 KT: He has a great sense of humor. I mean, he 151 00:09:22,710 --> 00:09:26,090 KT: takes this topic seriously, but he puts a good little 152 00:09:26,099 --> 00:09:29,939 KT: twist on it. Ok. Hi, Suze. If I open a 153 00:09:29,950 --> 00:09:33,640 KT: contributing Roth, can I make the same dollar amount of 154 00:09:33,650 --> 00:09:39,359 KT: contribution as a traditional IRA and receive the tax credit 155 00:09:39,369 --> 00:09:41,270 KT: on my income taxes? 156 00:09:41,429 --> 00:09:43,049 Suze: So I think they're asking me, can they do a 157 00:09:43,059 --> 00:09:45,539 Suze: Roth and a traditional IRA. 158 00:09:46,049 --> 00:09:51,159 Suze: You can, but you cannot contribute more with the combination 159 00:09:51,169 --> 00:09:55,309 Suze: of both of them than the $7000 limit if you 160 00:09:55,320 --> 00:09:58,799 Suze: are under 50 the $8000 limit per year right now, 161 00:09:58,809 --> 00:10:01,659 Suze: if you are 50 or older. So if you wanted to, 162 00:10:01,669 --> 00:10:06,520 Suze: you could put $4000 in a Roth, $3000, if you're under 163 00:10:06,530 --> 00:10:10,359 Suze: 50 into a traditional IRA. Please, can you 164 00:10:10,469 --> 00:10:12,690 Suze: just all get rid of these traditionals? 165 00:10:12,700 --> 00:10:17,750 Suze: I cannot find one circumstance where a traditional retirement account 166 00:10:17,760 --> 00:10:19,689 Suze: makes sense. All right. 167 00:10:19,710 --> 00:10:22,729 KT: Ok. Next. And this is referring by the way to 168 00:10:22,739 --> 00:10:26,119 KT: your last Sunday's podcast, the April 21st. Those of you 169 00:10:26,130 --> 00:10:29,449 KT: that missed it. Listen to that because Suze really set 170 00:10:29,460 --> 00:10:33,569 KT: the stage for today's podcast. Says Suze, in your example, 171 00:10:33,580 --> 00:10:34,919 KT: on last Sunday's pod, 172 00:10:35,229 --> 00:10:42,059 KT: doesn't that salary exceed the 2024 Roth single eligibility limit 173 00:10:42,150 --> 00:10:47,869 KT: of 100 and $53,000. How can he or she contribute 174 00:10:47,880 --> 00:10:51,000 KT: at all? That's why many of us never opened a 175 00:10:51,010 --> 00:10:53,630 KT: Roth while working. What am I missing? 176 00:10:53,640 --> 00:10:56,450 Suze: So, what you're missing is you didn't listen closely. I 177 00:10:56,460 --> 00:10:59,419 Suze: wasn't talking about an IRA. 178 00:11:00,109 --> 00:11:05,750 Suze: I was talking about a Roth 401k in this example 179 00:11:05,760 --> 00:11:10,010 Suze: where this person was making $300,000 a year. 180 00:11:10,739 --> 00:11:15,400 Suze: And therefore, there is no income limitation when it comes 181 00:11:15,409 --> 00:11:22,099 Suze: to a Roth 401k, a Roth 403b a Roth TSP. 182 00:11:22,200 --> 00:11:28,440 Suze: One more correction. If you are single in 2024 183 00:11:28,900 --> 00:11:34,140 Suze: the max MAGI - modified adjusted gross income - that you can 184 00:11:34,150 --> 00:11:42,159 Suze: make is and $146,000 for a full $7000 contribution to 185 00:11:42,169 --> 00:11:46,090 Suze: a Roth if you are under 50 $8,000 if you are 186 00:11:46,099 --> 00:11:51,679 Suze: 50 and older, not 153,000 for the max. Ok. 187 00:11:51,859 --> 00:11:53,320 KT: Ok. Next question. 188 00:11:53,599 --> 00:11:58,590 KT: Thanks Suze for a great podcast. Again. Everybody. April 21st 189 00:11:58,599 --> 00:12:02,000 KT: is what they're all referencing. Is it better to convert 190 00:12:02,010 --> 00:12:06,530 KT: my traditional IRA to a Roth when the markets are down? 191 00:12:06,539 --> 00:12:09,260 KT: Or is it a wash because you don't get to 192 00:12:09,270 --> 00:12:10,650 KT: buy as much. 193 00:12:11,039 --> 00:12:14,059 Suze: So, absolutely a benefit 194 00:12:14,294 --> 00:12:19,085 Suze: to convert while the markets are down. Because let's say 195 00:12:19,094 --> 00:12:23,325 Suze: you're going to convert from a traditional IRA to a 196 00:12:23,335 --> 00:12:27,205 Suze: Roth IRA. And let's say the markets are high. And 197 00:12:27,215 --> 00:12:29,594 Suze: by the way, you need to know everybody in the 198 00:12:29,604 --> 00:12:34,534 Suze: majority of cases, you can convert what's called in kind. 199 00:12:34,940 --> 00:12:39,450 Suze: If you have 100 shares of XYZ stock, 100 shares 200 00:12:39,460 --> 00:12:42,640 Suze: of ABC stock, you don't have to sell them and 201 00:12:42,650 --> 00:12:47,199 Suze: convert cash to the Roth IRA. You actually can convert 202 00:12:47,210 --> 00:12:51,900 Suze: the XYZ and the ABC stock. But let's say in 203 00:12:51,909 --> 00:12:57,419 Suze: this example, those two stocks when you convert them are 204 00:12:57,609 --> 00:13:02,359 Suze: $100 a share each. And now you convert them 205 00:13:02,830 --> 00:13:07,569 Suze: and you now owe income taxes on whatever those stocks 206 00:13:07,580 --> 00:13:10,750 Suze: were worth at the time you converted them. But now 207 00:13:10,760 --> 00:13:13,440 Suze: they're in your Roth IRA and now they have gone 208 00:13:13,450 --> 00:13:17,890 Suze: down and down and now they're only worth $75 a share. 209 00:13:18,780 --> 00:13:23,080 Suze: You're stuck paying income tax on the $100 a share 210 00:13:23,090 --> 00:13:28,039 Suze: conversion price. So when stocks go down, you are far 211 00:13:28,049 --> 00:13:31,919 Suze: better off to convert when they go down than convert 212 00:13:31,929 --> 00:13:36,330 Suze: when they are high. If you have that opportunity. Next question, KT. 213 00:13:36,380 --> 00:13:39,849 KT: Ok, Suze, this is from Daisy. She says if we 214 00:13:39,859 --> 00:13:43,000 KT: only have a regular Roth as an option 215 00:13:43,320 --> 00:13:48,358 KT: and a 401k unmatched at the employer after maxing out 216 00:13:48,369 --> 00:13:52,549 KT: 7000 to the Roth, should we not do the 401k 217 00:13:52,729 --> 00:13:56,659 KT: and invest in regular after tax account instead? 218 00:13:56,869 --> 00:13:58,090 Suze: Now, I did an entire... 219 00:13:58,169 --> 00:14:00,000 KT: I don't quite get that question. 220 00:14:00,020 --> 00:14:03,619 Suze: I did an entire podcast on this everybody. And I 221 00:14:03,630 --> 00:14:06,619 Suze: have to tell you, I realized it because of a 222 00:14:06,630 --> 00:14:09,260 Suze: serious mistake that I made. 223 00:14:09,929 --> 00:14:12,869 Suze: As I was younger, I was making a lot of money. 224 00:14:12,880 --> 00:14:16,750 Suze: So I had what was called a defined benefit program, 225 00:14:17,159 --> 00:14:20,820 Suze: which means I could put in a whole bunch of money, 226 00:14:21,570 --> 00:14:24,719 Suze: get a tax write off for that. And it was 227 00:14:24,729 --> 00:14:28,460 Suze: done according to a particular formula. So that when I 228 00:14:28,469 --> 00:14:33,969 Suze: was older, I had a defined benefit, a defined amount 229 00:14:33,979 --> 00:14:35,909 Suze: of money that I would get 230 00:14:36,679 --> 00:14:40,270 Suze: every single year. But that would be taxable to me. 231 00:14:40,700 --> 00:14:42,760 Suze: And I had been doing this for a number of 232 00:14:42,770 --> 00:14:46,419 Suze: years and all of a sudden I realized, am I crazy? 233 00:14:47,549 --> 00:14:50,270 Suze: I'm always going to be in a high income tax bracket, 234 00:14:50,280 --> 00:14:54,030 Suze: even if I'm not, I'm compounding and this money is 235 00:14:54,039 --> 00:14:57,549 Suze: invested and I'm doing exactly what I was telling all 236 00:14:57,559 --> 00:15:01,070 Suze: of you not to do in last Sunday's podcast. And 237 00:15:01,080 --> 00:15:05,469 Suze: so I stopped it and I actually converted what was 238 00:15:05,479 --> 00:15:08,710 Suze: there to a traditional IRA, 239 00:15:09,830 --> 00:15:12,090 Suze: which also I made a mistake in. But I can 240 00:15:12,099 --> 00:15:14,010 Suze: tell you that in a little bit because I didn't 241 00:15:14,020 --> 00:15:19,429 Suze: convert it all to a Roth KT in 2010 when 242 00:15:19,440 --> 00:15:22,469 Suze: I could have done so and had two years of 243 00:15:22,479 --> 00:15:27,409 Suze: taxes to pay for it. So back in 2010, there 244 00:15:27,419 --> 00:15:30,330 Suze: was a new tax law just for that year because 245 00:15:30,340 --> 00:15:33,530 Suze: the markets have been going down. We were in recession 246 00:15:34,140 --> 00:15:36,929 Suze: that you could take money out of a retirement account 247 00:15:37,349 --> 00:15:40,919 Suze: and have two years to pay the taxes on it. 248 00:15:41,409 --> 00:15:45,770 Suze: So I could have converted them, not pay taxes in 249 00:15:45,780 --> 00:15:49,340 Suze: the year I converted and oh my God, the markets 250 00:15:49,349 --> 00:15:52,869 Suze: were still down then and had two years to pay 251 00:15:52,880 --> 00:15:56,010 Suze: the taxes. And from 2010 till now 252 00:15:56,440 --> 00:16:00,780 Suze: that averaged almost 14% a year on that money, KT, 253 00:16:00,789 --> 00:16:04,539 Suze: I would have it all in a Roth IRA now. Instead, 254 00:16:04,549 --> 00:16:07,679 Suze: it's still all in a traditional IRA. And I have 255 00:16:07,690 --> 00:16:11,799 Suze: to take RMDs this year, I made a serious mistake. 256 00:16:11,869 --> 00:16:14,900 KT: You weren't happy about that RMD right. So 257 00:16:14,989 --> 00:16:19,630 Suze: I also however realized at that time, I would be 258 00:16:19,640 --> 00:16:24,859 Suze: far better off just simply investing in an investment account 259 00:16:25,429 --> 00:16:29,070 Suze: that I didn't pay taxes on at all while I 260 00:16:29,080 --> 00:16:33,570 Suze: still own the stocks until I sold them. Knowing my 261 00:16:33,580 --> 00:16:37,450 Suze: investment habits, which would be to hold on for a 262 00:16:37,460 --> 00:16:41,609 Suze: long period of time and I still own the majority 263 00:16:41,619 --> 00:16:45,250 Suze: of those stocks. I've never paid taxes on it. 264 00:16:45,549 --> 00:16:49,919 Suze: And when, in fact I do sell, I do it 265 00:16:49,929 --> 00:16:53,729 Suze: at the capital gains rate, not at ordinary income rates. 266 00:16:53,830 --> 00:16:58,989 Suze: If I never sell, it goes to a beneficiary and 267 00:16:59,000 --> 00:17:01,489 Suze: they get a step up in cost basis and they 268 00:17:01,500 --> 00:17:05,349 Suze: don't pay taxes. So, yeah, you're far better off doing 269 00:17:05,469 --> 00:17:09,890 Suze: an investment account than a pre-tax retirement account as long 270 00:17:09,900 --> 00:17:12,810 Suze: as you are disciplined and invest every year. 271 00:17:13,500 --> 00:17:16,349 Suze: Oh, that was a longer explanation than I thought you 272 00:17:16,359 --> 00:17:19,479 Suze: may all need your little Suze notebooks and take out 273 00:17:19,489 --> 00:17:22,438 Suze: just to understand what I just said there. But anyway, 274 00:17:22,449 --> 00:17:23,780 Suze: next question, KT. 275 00:17:24,109 --> 00:17:28,699 KT: Next question, Suze. I'm considering doing small conversions from my 276 00:17:28,709 --> 00:17:32,550 KT: IRA rollover to my Roth. Now that the markets are lower, 277 00:17:32,560 --> 00:17:34,359 KT: I'm almost 62. 278 00:17:34,640 --> 00:17:37,439 KT: I don't need any of this money for eight years. 279 00:17:37,560 --> 00:17:41,729 KT: I've held the Roth for 15 or more years. Wow. 280 00:17:41,869 --> 00:17:46,180 KT: So here's the question. All my IRA money is invested 281 00:17:46,189 --> 00:17:50,650 KT: no cash to easily convert. Do I choose the two 282 00:17:50,660 --> 00:17:55,198 KT: stocks that show small losses, sell them, then convert that 283 00:17:55,209 --> 00:17:58,689 KT: cash to a Roth? I have not held either stock 284 00:17:58,699 --> 00:17:59,900 KT: for at least a year. 285 00:18:00,260 --> 00:18:03,910 KT: So they are short term losses. I can't figure out 286 00:18:03,920 --> 00:18:08,319 KT: how short term losses affect this decision to convert or 287 00:18:08,329 --> 00:18:10,359 KT: if at all. Wow. 288 00:18:11,030 --> 00:18:13,300 Suze: KT, what do I tell you to do when you 289 00:18:13,310 --> 00:18:16,719 Suze: ask or say something that makes absolutely no sense. 290 00:18:17,420 --> 00:18:21,550 KT: Shake my head. Wait, she says, KT, shake your head, 291 00:18:21,560 --> 00:18:24,438 KT: get the cobwebs, shake your head, shake your head. Right. 292 00:18:24,589 --> 00:18:27,959 Suze: And that's exactly what I would be telling this person 293 00:18:27,969 --> 00:18:31,719 Suze: to do. First of all, whether it's an IRA 294 00:18:32,560 --> 00:18:37,379 Suze: a Roth IRA a 401k plan, whatever it may be, 295 00:18:37,920 --> 00:18:42,540 Suze: there are no long term or short term gains. It 296 00:18:42,550 --> 00:18:46,760 Suze: does not work that way that only applies to money 297 00:18:46,770 --> 00:18:51,500 Suze: that is invested outside of a retirement account, regardless of 298 00:18:51,510 --> 00:18:54,448 Suze: the retirement account that you have. 299 00:18:55,109 --> 00:18:59,089 Suze: Number two. Just a little bit ago, I made the 300 00:18:59,099 --> 00:19:05,239 Suze: comment that you can choose to convert stock that you 301 00:19:05,250 --> 00:19:09,369 Suze: own in kind. So you don't have to sell it, 302 00:19:09,380 --> 00:19:12,849 Suze: whether it's at a loss or a gain to convert it, 303 00:19:13,069 --> 00:19:15,849 Suze: you just have to make a decision first. 304 00:19:16,469 --> 00:19:20,270 Suze: What stocks are in your portfolio. Forget if they're in 305 00:19:20,280 --> 00:19:24,569 Suze: an IRA or a Roth IRA. What stocks do you 306 00:19:24,579 --> 00:19:27,750 Suze: own that you no longer want to own if any, 307 00:19:28,699 --> 00:19:32,199 Suze: because it doesn't matter about conversion first, it matters what 308 00:19:32,209 --> 00:19:36,589 Suze: your money is invested in. So let's assume that your 309 00:19:36,599 --> 00:19:39,839 Suze: money is invested in the stocks that you still want 310 00:19:39,849 --> 00:19:43,069 Suze: to own. Even maybe they're down a little bit now, 311 00:19:43,079 --> 00:19:46,989 Suze: but you still want to own them then depending on 312 00:19:47,000 --> 00:19:50,319 Suze: how much you want to convert because you don't want 313 00:19:50,329 --> 00:19:53,599 Suze: to go into a higher income tax bracket because any 314 00:19:53,609 --> 00:19:57,719 Suze: money that you convert, you will owe ordinary income taxes 315 00:19:57,729 --> 00:19:58,199 Suze: on it. 316 00:19:58,540 --> 00:20:02,959 Suze: And remember when you convert, that amount of money starts 317 00:20:02,969 --> 00:20:05,319 Suze: the five year rule. 318 00:20:06,270 --> 00:20:10,719 Suze: Therefore, look at the stocks that you wanna convert and 319 00:20:10,729 --> 00:20:14,010 Suze: maybe you wanna convert those that are higher priced right 320 00:20:14,020 --> 00:20:14,589 Suze: now 321 00:20:15,349 --> 00:20:18,449 Suze: because the more you can convert right now, 322 00:20:19,239 --> 00:20:22,449 Suze: the better it might be later on if tax brackets 323 00:20:22,459 --> 00:20:27,400 Suze: do happen to go up. Because remember in 2026 the 324 00:20:27,410 --> 00:20:32,300 Suze: current tax structure goes away. So you all need to 325 00:20:32,310 --> 00:20:35,349 Suze: think about that. So it does not matter how long 326 00:20:35,359 --> 00:20:38,979 Suze: you have held these stocks, whether it's less than a year, 327 00:20:38,989 --> 00:20:42,579 Suze: more than a year, none of that matters. You just 328 00:20:42,589 --> 00:20:44,938 Suze: need to sit down with the CPA 329 00:20:45,410 --> 00:20:49,659 Suze: and decide how much should you convert this year 330 00:20:50,459 --> 00:20:54,639 Suze: and maybe take a look at what stocks you should convert. 331 00:20:54,770 --> 00:20:58,910 Suze: Remember the more you can possibly convert, listen to me 332 00:20:58,920 --> 00:21:03,540 Suze: closely now that keeps you in the same income tax bracket, 333 00:21:04,439 --> 00:21:07,869 Suze: the more money you have converted at once. The five 334 00:21:07,939 --> 00:21:12,359 Suze: year rule has started on that amount of money. If 335 00:21:12,369 --> 00:21:16,640 Suze: you keep converting little amounts of money, the five year 336 00:21:16,650 --> 00:21:21,099 Suze: rule will start for each one of those conversions. So 337 00:21:21,109 --> 00:21:25,069 Suze: the more you can convert at once without affecting your 338 00:21:25,079 --> 00:21:28,188 Suze: tax bracket, the better off you are. 339 00:21:28,709 --> 00:21:30,969 Suze: All right, KT, you got more for me? 340 00:21:30,979 --> 00:21:32,709 KT: Four more questions. 341 00:21:32,739 --> 00:21:34,209 Suze: Make them good, KT. 342 00:21:34,219 --> 00:21:38,339 KT: I like this one. Suze, I have $2 million in 343 00:21:38,349 --> 00:21:42,250 KT: the IRA Rollover. Why didn't I listen to you in 344 00:21:42,260 --> 00:21:44,849 KT: 1998 on that PBS special. 345 00:21:44,859 --> 00:21:47,609 Suze: Wait, can we stop for a second here? Right. I 346 00:21:47,619 --> 00:21:48,729 Suze: will never forget. 347 00:21:49,339 --> 00:21:56,479 Suze: In 1997 everybody, Senator Roth proposed the Roth IRAs and 348 00:21:56,489 --> 00:22:01,520 Suze: it passed. So here we are, it's 1998. Nobody has 349 00:22:01,530 --> 00:22:05,790 Suze: heard about a Roth IRA. Nobody knows how they work. 350 00:22:05,800 --> 00:22:09,300 Suze: I'm sure Ed Slott knew exactly how they work. And 351 00:22:09,310 --> 00:22:12,609 Suze: I do a PBS special called The Nine Steps To 352 00:22:12,619 --> 00:22:14,130 Suze: Financial Freedom. 353 00:22:14,459 --> 00:22:18,939 Suze: And in that PBS special, I am telling everybody they 354 00:22:18,949 --> 00:22:24,989 Suze: should run, not walk to do a Roth IRA number one. 355 00:22:25,170 --> 00:22:28,310 Suze: And I go on to tell everybody how they work 356 00:22:28,530 --> 00:22:31,520 Suze: that you can take out any money that you originally 357 00:22:31,530 --> 00:22:36,800 Suze: put in without any taxes or penalties whatsoever, regardless of 358 00:22:36,810 --> 00:22:40,290 Suze: your age or how long the money has been in there? Great. 359 00:22:40,300 --> 00:22:41,760 Suze: I think I've done a great job. 360 00:22:42,530 --> 00:22:47,629 Suze: The PBS special starts to show thousands of emails come 361 00:22:47,640 --> 00:22:52,910 Suze: in from CPAs from all these accountant types, Suze Orman 362 00:22:52,920 --> 00:22:56,198 Suze: has it wrong. You cannot take out your, uh, they 363 00:22:56,209 --> 00:23:00,630 Suze: started to criticize right and left. PBS now is freaking 364 00:23:00,640 --> 00:23:03,859 Suze: out that the number one pledge show that year 365 00:23:04,680 --> 00:23:08,000 Suze: and every year since then actually, and every show I've 366 00:23:08,010 --> 00:23:12,198 Suze: done right is telling everybody about Roth IRAs and they 367 00:23:12,209 --> 00:23:16,579 Suze: don't work that way. Well, guess what? Once again they 368 00:23:16,589 --> 00:23:18,540 Suze: were wrong and I was right. 369 00:23:18,969 --> 00:23:22,060 KT: Listen to the rest of this. So this person saying, why 370 00:23:22,069 --> 00:23:25,379 KT: didn't I listen to you in 1998 on the PBS. Special. 371 00:23:25,390 --> 00:23:26,900 KT: God only knows. And then 372 00:23:27,140 --> 00:23:30,629 KT: my CPA told me I would be better in a 373 00:23:30,640 --> 00:23:35,160 KT: pre-tax Suze. I don't need any money. I don't have 374 00:23:35,170 --> 00:23:38,800 KT: kids or anyone to leave it to. Can I use 375 00:23:38,810 --> 00:23:42,800 KT: my RMDs to give to charity and not have to 376 00:23:42,810 --> 00:23:44,130 KT: pay tax on it. 377 00:23:44,520 --> 00:23:45,879 Suze: How much does he or she have in there? 378 00:23:45,890 --> 00:23:48,109 KT: $2 million. 379 00:23:50,130 --> 00:23:53,560 Suze: So here's what you should do. 380 00:23:54,109 --> 00:23:58,050 Suze: There is something that was passed in the latest Secure 381 00:23:58,060 --> 00:24:01,969 Suze: Act 2.0 that was passed just a little bit ago 382 00:24:02,349 --> 00:24:04,089 Suze: called a QCD. 383 00:24:06,180 --> 00:24:11,719 Suze: And a QCD is a qualified charity distribution. 384 00:24:12,260 --> 00:24:16,040 Suze: And the way that it works is you have to 385 00:24:16,050 --> 00:24:20,969 Suze: be 70 a half years of age or older. Now, 386 00:24:20,979 --> 00:24:26,540 Suze: I'm going to assume that you are 73 because you 387 00:24:26,550 --> 00:24:29,958 Suze: say you don't need your RMD. So I'm assuming you 388 00:24:29,969 --> 00:24:32,099 Suze: want to do it this year. But even if you 389 00:24:32,109 --> 00:24:33,879 Suze: don't want to do it this year and it's in 390 00:24:33,890 --> 00:24:36,859 Suze: future years, this is what you need to know if 391 00:24:36,869 --> 00:24:40,959 Suze: you want to leave your RMDs to a charity. 392 00:24:41,560 --> 00:24:45,300 Suze: So number one, you have to be 70 and a half years of 393 00:24:45,310 --> 00:24:50,420 Suze: age or older. Your QCD has to be made directly 394 00:24:50,430 --> 00:24:54,839 Suze: from your IRA to the charity. It cannot come to 395 00:24:54,849 --> 00:24:59,579 Suze: you and then go to the charity. You will not 396 00:24:59,589 --> 00:25:03,099 Suze: receive a tax deduction for the QCD 397 00:25:04,084 --> 00:25:07,675 Suze: because the distribution really is already tax free because it's 398 00:25:07,685 --> 00:25:12,905 Suze: going to the charity, it's not going to you. And again, 399 00:25:12,915 --> 00:25:19,083 Suze: remember the QCD can count towards your required minimum distribution 400 00:25:19,094 --> 00:25:20,555 Suze: for the year. 401 00:25:21,280 --> 00:25:24,319 Suze: All right. So you can do that also. You have 402 00:25:24,329 --> 00:25:28,709 Suze: to make sure everybody that the charity is a qualified organization. 403 00:25:28,869 --> 00:25:33,819 Suze: It's got to be a nonprofit, educational institution, a religious organization. 404 00:25:34,030 --> 00:25:38,979 Suze: So you have to know that. But QCDs are fabulous 405 00:25:38,989 --> 00:25:40,589 Suze: for individuals who are 406 00:25:40,665 --> 00:25:45,515 Suze: looking to make charitable contributions. They don't want their RMD 407 00:25:46,064 --> 00:25:50,854 Suze: to add to their taxes at all. They don't have beneficiaries, 408 00:25:50,864 --> 00:25:54,843 Suze: they don't care about it. Everybody's taken care of and 409 00:25:55,015 --> 00:25:58,564 Suze: they want it to go directly to the charity. However, 410 00:25:58,694 --> 00:25:59,964 Suze: here's the big one. 411 00:26:00,369 --> 00:26:06,409 Suze: The max is $105,000 a year. However, since you have 412 00:26:06,420 --> 00:26:11,540 Suze: $2 million in your IRA rollover, chances are your RMD 413 00:26:11,890 --> 00:26:16,310 Suze: will be something like $80,000. So currently you will be 414 00:26:16,319 --> 00:26:19,849 Suze: able to make a QCD. There might be a time 415 00:26:19,859 --> 00:26:23,900 Suze: that your future contributions may be more than the current 416 00:26:23,910 --> 00:26:27,109 Suze: QCD at that time. And then you'll have to think 417 00:26:27,119 --> 00:26:28,310 Suze: about how you do it. 418 00:26:28,819 --> 00:26:33,000 KT: Ready, Suze? I have a couple more questions. So, Suze, 419 00:26:33,010 --> 00:26:37,129 KT: great podcast. Again, everyone, these, these are still coming in 420 00:26:37,140 --> 00:26:40,589 KT: from last Sunday's example that Suze gave on the 21st 421 00:26:40,599 --> 00:26:45,089 KT: of April and this one said great podcast, Suze. However, 422 00:26:45,180 --> 00:26:48,560 KT: I was told the government was going to reverse the Roth. 423 00:26:48,680 --> 00:26:52,280 KT: So that's why I'm not doing it. Do you disagree? 424 00:26:53,459 --> 00:26:57,000 Suze: Who is telling you these things? Do you know that 425 00:26:57,010 --> 00:26:59,800 Suze: many of you write in and go? Is the government 426 00:26:59,810 --> 00:27:02,680 Suze: gonna reverse? Is the government gonna reverse? Listen, 427 00:27:03,109 --> 00:27:06,930 Suze: I don't think so. Why Suze Orman, don't you think 428 00:27:06,939 --> 00:27:09,930 Suze: that the reason? I don't think that is Secure Act 429 00:27:09,939 --> 00:27:14,650 Suze: 2.0 if you know anything and you read what law 430 00:27:14,660 --> 00:27:19,300 Suze: actually is they for the first time, made it so 431 00:27:19,310 --> 00:27:22,000 Suze: that you could do what you could have a SEP 432 00:27:22,010 --> 00:27:27,208 Suze: Roth IRA. You could have a simple Roth IRA. Both 433 00:27:27,219 --> 00:27:32,849 Suze: things that you couldn't have before this in your Roth 401k, 434 00:27:33,489 --> 00:27:35,969 Suze: they made it so you don't have to take out 435 00:27:35,979 --> 00:27:41,369 Suze: required minimum distributions. That wasn't true before this. They have 436 00:27:41,380 --> 00:27:48,469 Suze: added so many advantages to the Roth retirement accounts, including 437 00:27:48,729 --> 00:27:52,030 Suze: that your employer, if they want to, can put the 438 00:27:52,040 --> 00:27:57,349 Suze: contribution into your Roth 401k. So you tell me why 439 00:27:57,359 --> 00:28:02,270 Suze: if the government doesn't want Roth IRAs and they're gonna 440 00:28:02,280 --> 00:28:03,030 Suze: reverse it? 441 00:28:03,339 --> 00:28:08,629 Suze: Have they now created more possibilities for all of you 442 00:28:08,810 --> 00:28:12,229 Suze: to do Roth IRAs why 443 00:28:12,619 --> 00:28:18,400 Suze: Roth Simples, Roth SEP IRAs all those kinds. Why did 444 00:28:18,410 --> 00:28:22,619 Suze: they not get rid of the back door Roth IRA, 445 00:28:22,670 --> 00:28:25,949 Suze: which is the biggest loophole out there and was the 446 00:28:25,959 --> 00:28:29,619 Suze: one that everybody thought they were going to get rid of? 447 00:28:29,660 --> 00:28:33,719 Suze: So why didn't they get rid of all of those 448 00:28:33,729 --> 00:28:37,040 Suze: would seem to me if they're adding roths that you 449 00:28:37,050 --> 00:28:37,760 Suze: can do, 450 00:28:38,319 --> 00:28:40,670 Suze: they're not gonna get rid of the Roths that are 451 00:28:40,680 --> 00:28:45,680 Suze: already there. Now, it's possible. Maybe they'll change MAGI limits, 452 00:28:45,689 --> 00:28:48,439 Suze: who knows what they'll do that way. But I don't 453 00:28:48,449 --> 00:28:50,680 Suze: think you have to worry about them getting rid of 454 00:28:50,689 --> 00:28:53,880 Suze: it given they've just added so many more. 455 00:28:53,890 --> 00:28:55,839 KT: Ok. This is my last question. 456 00:28:56,359 --> 00:29:02,250 KT: I have, Suze. I just turned 73 like you. And 457 00:29:02,260 --> 00:29:06,800 KT: now I have to take RMDs first. What balance do 458 00:29:06,810 --> 00:29:11,819 KT: I use to figure the RMD? That's a great question, right? 459 00:29:11,829 --> 00:29:15,439 Suze: And the great answer to that is you base it 460 00:29:15,449 --> 00:29:23,680 Suze: on December 31st balance of 2023. That's in your IRA. 461 00:29:24,170 --> 00:29:27,829 Suze: So for me and I'm happy about this, I get 462 00:29:27,839 --> 00:29:31,469 Suze: to figure it when on the last day of last 463 00:29:31,479 --> 00:29:36,589 Suze: year's balance in my IRA account for these three months 464 00:29:36,599 --> 00:29:40,089 Suze: and possibly this six months until whenever I decide to 465 00:29:40,099 --> 00:29:44,270 Suze: take it out. Guess what everybody my ira has gone 466 00:29:44,280 --> 00:29:45,589 Suze: up dramatically. 467 00:29:45,800 --> 00:29:50,510 Suze: So I'm actually happy that it's based on December 31st 468 00:29:50,520 --> 00:29:54,160 Suze: of the year prior to when you're taking out your RMD. 469 00:29:55,760 --> 00:29:59,900 Suze: Are you ready everybody? Now, of course, KT has to 470 00:29:59,910 --> 00:30:00,670 Suze: have a quizzy, 471 00:30:01,479 --> 00:30:05,069 Suze: right. Because the quizzy isn't just for KT anymore. The 472 00:30:05,079 --> 00:30:09,020 Suze: quizzy is for all of you. So this is where 473 00:30:09,030 --> 00:30:13,219 Suze: I'm going to ask a question that was asked of me, KT. 474 00:30:13,229 --> 00:30:15,739 Suze: You'll wait a few seconds to answer it 475 00:30:16,280 --> 00:30:18,979 Suze: so that everybody else has a chance to answer it 476 00:30:18,989 --> 00:30:22,560 Suze: as well because all of you need to know how 477 00:30:22,569 --> 00:30:27,060 Suze: to answer every one of these questions. Believe it or not. 478 00:30:27,150 --> 00:30:30,199 KT: You know what? We should start giving me a prize 479 00:30:30,209 --> 00:30:31,300 KT: if I get it right. 480 00:30:31,479 --> 00:30:32,189 Suze: Like what? 481 00:30:32,199 --> 00:30:32,780 KT: I don't know. 482 00:30:32,790 --> 00:30:34,459 Suze: I thought my ding, ding, ding was enough of... 483 00:30:34,510 --> 00:30:36,300 KT: No we need like a real prize. 484 00:30:36,310 --> 00:30:38,250 Suze: Like, what do you want me to do? Dishes you want? 485 00:30:38,260 --> 00:30:39,250 Suze: What do you want? 486 00:30:40,469 --> 00:30:41,569 Suze: No really, What would you want? 487 00:30:41,579 --> 00:30:42,989 KT: I have to think about the prize. 488 00:30:43,000 --> 00:30:45,869 KT: Everyone should write him. What should be KT's prize if 489 00:30:45,880 --> 00:30:46,939 KT: she gets it right. 490 00:30:47,170 --> 00:30:49,959 Suze: What is it possible that you could want? You don't 491 00:30:49,969 --> 00:30:51,900 Suze: want from anything, do you? 492 00:30:51,920 --> 00:30:54,699 KT: I need a prize. I need more of an incentive 493 00:30:54,709 --> 00:30:56,060 KT: to study, to get it right? 494 00:30:56,069 --> 00:30:57,369 Suze: Like a new fishing shirt? 495 00:30:57,560 --> 00:30:58,280 KT: Maybe 496 00:30:58,589 --> 00:30:59,619 Suze: You have 50. 497 00:30:59,979 --> 00:31:03,079 KT: Ok. Ask me the question. What's the quizzy for all 498 00:31:03,089 --> 00:31:03,650 KT: of us? 499 00:31:03,660 --> 00:31:08,569 Suze: Thank you for the podcast. All of our 401k money 500 00:31:08,949 --> 00:31:14,050 Suze: will be donated to charity. Ours too. Everybody. I have 501 00:31:14,060 --> 00:31:18,939 Suze: enough in taxable brokerage accounts to retire comfortably and take 502 00:31:18,949 --> 00:31:23,890 Suze: care of family also. I am currently in the highest 503 00:31:23,900 --> 00:31:26,209 Suze: tax bracket. Oh, so are we. 504 00:31:26,819 --> 00:31:32,560 Suze: In light of that, I contribute to a traditional 401k 505 00:31:33,550 --> 00:31:40,489 Suze: and max a backdoor Roth. I hope you would approve. However, 506 00:31:40,500 --> 00:31:46,250 Suze: I agree that 99% of employees should choose a Roth 401k. 507 00:31:46,260 --> 00:31:48,250 Suze: So I want you to get this right. 508 00:31:49,130 --> 00:31:55,660 Suze: This gentleman is saying he is in the highest tax bracket. Therefore, 509 00:31:55,670 --> 00:32:01,930 Suze: he is contributing to a pre-tax 401k rather than a 510 00:32:01,939 --> 00:32:03,790 Suze: Roth 401k. 511 00:32:04,599 --> 00:32:07,709 Suze: And the reason being he is going to be giving 512 00:32:07,719 --> 00:32:10,170 Suze: it all to charity. 513 00:32:11,849 --> 00:32:15,109 Suze: Do you agree with what he's doing? Think about it, KT. 514 00:32:15,709 --> 00:32:16,380 Suze: I 515 00:32:17,180 --> 00:32:18,520 Suze: would have said what to him, 516 00:32:19,969 --> 00:32:22,310 Suze: would I be telling him? Cause he's in the highest 517 00:32:22,319 --> 00:32:24,310 Suze: income tax bracket like we are, 518 00:32:24,959 --> 00:32:29,729 Suze: to be contributing to a pre-tax 401k? 519 00:32:29,800 --> 00:32:32,619 KT: No, I don't think you would do that for sure, 520 00:32:32,770 --> 00:32:33,420 KT: for sure. 521 00:32:33,430 --> 00:32:35,250 Suze: So do I agree with him? 522 00:32:35,310 --> 00:32:37,900 KT: No, she doesn't agree with you. 523 00:32:38,800 --> 00:32:41,859 Suze: So yeah, I don't know how long you have been 524 00:32:41,869 --> 00:32:46,170 Suze: doing this, but I'm going to assume that you have 525 00:32:46,180 --> 00:32:49,739 Suze: been doing it for a long time because if you 526 00:32:49,750 --> 00:32:53,829 Suze: have enough money to retire comfortably and take care of 527 00:32:53,839 --> 00:32:57,800 Suze: your family in investment accounts, that means 528 00:32:58,180 --> 00:33:00,839 Suze: that for a long time, I am sure you have 529 00:33:00,849 --> 00:33:06,579 Suze: been contributing the max to a pre-tax 401k plan just 530 00:33:06,589 --> 00:33:10,359 Suze: to pay taxes. But wait, he feels it's ok or 531 00:33:10,369 --> 00:33:13,479 Suze: she feels I actually don't know which one this is right. 532 00:33:14,189 --> 00:33:18,650 Suze: Ok. About it because the 401k is going to charity 533 00:33:18,660 --> 00:33:23,050 Suze: just like our IRA KT. Would you approve him or 534 00:33:23,060 --> 00:33:24,130 Suze: deny him? 535 00:33:24,140 --> 00:33:27,489 KT: I think I have to deny because I don't think 536 00:33:27,500 --> 00:33:28,760 KT: you do it like that. 537 00:33:29,219 --> 00:33:30,719 Suze: You are so denied. 538 00:33:31,300 --> 00:33:32,199 KT: Did I get it right? 539 00:33:32,209 --> 00:33:35,530 Suze: Oh ding ding, ding, ding, ding, ding, ding baby, baby. 540 00:33:35,540 --> 00:33:38,380 Suze: Did all of you get that right. Let me tell 541 00:33:38,390 --> 00:33:40,969 Suze: you why you're not thinking correctly. 542 00:33:41,550 --> 00:33:46,130 Suze: You're about to make the exact same mistake or actually 543 00:33:46,140 --> 00:33:51,339 Suze: you are making the same mistake that I made all 544 00:33:51,349 --> 00:33:54,500 Suze: of these years. I do not know how much you 545 00:33:54,510 --> 00:33:57,250 Suze: have in your 401k, 546 00:33:57,989 --> 00:34:04,030 Suze: but it doesn't matter what you're leaving to charity because 547 00:34:04,040 --> 00:34:08,129 Suze: you're still going to have to take out required minimum 548 00:34:08,139 --> 00:34:14,010 Suze: distributions once you turn 73 and if you have a 549 00:34:14,020 --> 00:34:16,359 Suze: lot of money in there, 550 00:34:16,949 --> 00:34:19,729 Suze: it's not like you're gonna be able to take out 551 00:34:19,739 --> 00:34:22,120 Suze: a whole lot of money and leave it to a 552 00:34:22,129 --> 00:34:30,129 Suze: charity while you're still alive because the maximum is $105,000 553 00:34:30,139 --> 00:34:35,600 Suze: for 2024. What's gonna happen to you is first you're 554 00:34:35,610 --> 00:34:38,750 Suze: going to have to take out your required minimum distributions. 555 00:34:38,760 --> 00:34:40,989 Suze: And if you have a lot of money in your 556 00:34:41,000 --> 00:34:43,129 Suze: pretax 401k plan, 557 00:34:43,648 --> 00:34:46,288 Suze: it all depends how much money you have in there 558 00:34:46,428 --> 00:34:50,819 Suze: and that money has been growing and growing tax deferred 559 00:34:51,610 --> 00:34:57,590 Suze: all these years. So it's true on your death, you're 560 00:34:57,600 --> 00:35:01,090 Suze: going to be leaving all of this to charity. Fine. 561 00:35:01,100 --> 00:35:03,750 Suze: I don't have a problem with that. Just like us. 562 00:35:04,429 --> 00:35:05,659 Suze: In the meantime, 563 00:35:06,280 --> 00:35:10,739 Suze: what's gonna happen is you're going to get a substantial 564 00:35:10,750 --> 00:35:13,860 Suze: ordinary income tax that you are going to have to 565 00:35:13,870 --> 00:35:18,060 Suze: pay because the amount of money that you are going 566 00:35:18,070 --> 00:35:22,580 Suze: to be withdrawing. And if you already have enough money 567 00:35:22,649 --> 00:35:24,389 Suze: in taxable brokerage accounts 568 00:35:24,925 --> 00:35:28,245 Suze: that you'll be taking and everything else. You may find 569 00:35:28,254 --> 00:35:32,254 Suze: yourself in a seriously high income tax bracket over the years, 570 00:35:32,264 --> 00:35:37,524 Suze: especially if they raise tax brackets. Also. I just want 571 00:35:37,534 --> 00:35:42,485 Suze: to say this, you never know what can happen in life. 572 00:35:43,040 --> 00:35:47,250 Suze: You never know if you want to change your mind 573 00:35:47,620 --> 00:35:51,719 Suze: because something has happened to a child. They need 24 574 00:35:51,729 --> 00:35:55,169 Suze: hour day care or your spouse does or something. The 575 00:35:55,179 --> 00:35:59,179 Suze: markets tank and maybe you don't have enough money to 576 00:35:59,189 --> 00:36:02,979 Suze: live comfortably in taxable accounts. And you can use this 577 00:36:02,989 --> 00:36:08,009 Suze: money really in your 401k or so. Could one of 578 00:36:08,020 --> 00:36:09,689 Suze: your beneficiaries? 579 00:36:10,699 --> 00:36:14,530 Suze: Ok. But if you change your mind and you leave 580 00:36:14,540 --> 00:36:18,260 Suze: it to a beneficiary, guess what? They're gonna have to 581 00:36:18,270 --> 00:36:21,649 Suze: pay ordinary income taxes on it now. So you have 582 00:36:21,659 --> 00:36:26,189 Suze: not given yourself any room for the what ifs of 583 00:36:26,199 --> 00:36:30,570 Suze: life and while you enjoyed that tax, write off over 584 00:36:30,580 --> 00:36:35,229 Suze: all these years again, that was just a loan to 585 00:36:35,239 --> 00:36:39,330 Suze: Uncle Sam. And if you live a long life, like 586 00:36:39,340 --> 00:36:40,520 Suze: my mama did 587 00:36:40,879 --> 00:36:45,379 Suze: to 97 we'll see how that works out for you. No, 588 00:36:45,389 --> 00:36:48,939 Suze: I do not on any level, agree with you because 589 00:36:48,949 --> 00:36:54,300 Suze: I made that mistake as well and I should have 590 00:36:54,310 --> 00:36:57,620 Suze: known better. All right, KT. How is that? 591 00:36:58,270 --> 00:36:59,060 KT: Well, there you go. 592 00:36:59,239 --> 00:36:59,760 KT: There you go. 593 00:36:59,770 --> 00:37:01,699 KT: Ain't gonna make that mistake again. 594 00:37:02,110 --> 00:37:04,449 Suze: Well, he's still making it. What can I tell you? 595 00:37:04,729 --> 00:37:09,060 Suze: But anyway, just want to say something. I want all 596 00:37:09,070 --> 00:37:16,110 Suze: of you to go to my alliant.com. All right, everybody, 597 00:37:16,149 --> 00:37:21,510 Suze: my alliant.com and right there you will see a quiz. 598 00:37:21,729 --> 00:37:27,560 Suze: It's a stay smart quiz for 2024 and I want 599 00:37:27,570 --> 00:37:30,310 Suze: you to take it and then at the end after 600 00:37:30,320 --> 00:37:32,089 Suze: you've done, it's only five questions. 601 00:37:32,790 --> 00:37:38,409 Suze: Simply put in your email. On May 6th, coming up, 602 00:37:39,139 --> 00:37:43,010 Suze: I will be announcing to you exactly why you should 603 00:37:43,020 --> 00:37:47,409 Suze: be doing that and what you have to gain from 604 00:37:47,419 --> 00:37:51,569 Suze: doing that because it will only be what I'm about 605 00:37:51,580 --> 00:37:56,129 Suze: to tell you on May 6th, available till my birthday 606 00:37:56,139 --> 00:37:57,610 Suze: on June 5th. 607 00:37:57,989 --> 00:38:00,689 Suze: So you don't have to open up an account with Alliant. 608 00:38:01,179 --> 00:38:04,259 Suze: You don't have to do anything with Allliant. The quiz, just 609 00:38:04,320 --> 00:38:08,620 Suze: take the quiz. You should tell every friend, you know, 610 00:38:08,709 --> 00:38:12,090 Suze: put it on the internet blog about it, put it 611 00:38:12,100 --> 00:38:15,179 Suze: on TikTok. I don't care where you put it, but 612 00:38:15,189 --> 00:38:17,760 Suze: every single person there 613 00:38:18,229 --> 00:38:23,419 Suze: should do it obviously valid emails only. That's what I 614 00:38:23,429 --> 00:38:27,389 Suze: would be doing if I were and it doesn't matter 615 00:38:27,399 --> 00:38:30,020 Suze: if they get it right or wrong. Actually, it doesn't, 616 00:38:30,189 --> 00:38:32,698 Suze: the quiz isn't about that. Just do it, get your 617 00:38:32,709 --> 00:38:36,729 Suze: email in there, right. Just know you should ask that 618 00:38:38,580 --> 00:38:40,050 Suze: doing it. Everybody 619 00:38:40,320 --> 00:38:44,100 Suze: and you'll be so happy you did. All right. They 620 00:38:44,110 --> 00:38:46,799 Suze: can only take it once, by the way. Just so, 621 00:38:46,810 --> 00:38:51,459 Suze: you know, tell everyone, you know everyone, you know. All right, KT, 622 00:38:51,639 --> 00:38:52,459 Suze: what are we gonna do? 623 00:38:52,469 --> 00:38:53,229 KT: That's a wrap. 624 00:38:53,239 --> 00:38:54,138 Suze: What are we gonna do? 625 00:38:54,270 --> 00:38:55,300 KT: I'm gonna swim. 626 00:38:55,310 --> 00:38:58,310 Suze: All right. You go swim. I don't know what I'm 627 00:38:58,320 --> 00:39:01,699 Suze: gonna do but I do know this. There's only one 628 00:39:01,709 --> 00:39:03,939 Suze: thing that matters when it comes to your money. 629 00:39:04,379 --> 00:39:05,759 Suze: And what is that, KT? 630 00:39:05,770 --> 00:39:09,560 KT: It's people first, then money, then things. 631 00:39:09,659 --> 00:39:12,339 Suze: And if you do that and if you wish my 632 00:39:12,350 --> 00:39:18,350 Suze: mother happy birthday today, I promise you just like she was, 633 00:39:18,409 --> 00:39:22,080 Suze: you will be unstoppable.