Suze: May 15, 2025. Welcome everybody to the Women and Money
Suze: podcast as well as everybody smart enough to listen. Drum
Suze: roll introducing the one and only
KT: KT. Today is Ask Suze Anything starring KT.
Suze: What else is today, KT
KT: May 15th and we're going back to the island finally.
Suze: We have been in Florida for one full month.
KT: Yes, yes.
Suze: One day we'll tell you why, but that's besides the point.
Suze: But today we get to go back to our home
Suze: in the island, so KT could not be more excited
Suze: if she tried, right?
KT: I'm very
KT: happy because this is now coming into the season. I
KT: love the most, which is summer.
Suze: What do you love about it?
KT: Hot, calm, beautiful, long days, early mornings, late, late nights...
Suze: And hurricanes.
KT: Well, that's at the end of the summer. That's called
KT: hurricane season. This is just lazy summer floating around with
KT: Suze in the ocean, very calm summer.
Suze: All right, so today is Ask KT and Suze anything
Suze: if you have a question that you would possibly like
Suze: for us to answer it on the podcast, please write
Suze: into ask Suze podcast@gmail.com. By the way, you're better off
Suze: just writing into ask Suze podcast at gmail.com.
Suze: Versus sending in a question on the Women and Money
Suze: community app for some reason, don't ask me. Those don't
Suze: necessarily always go through. So if you have a question,
Suze: ask Suze podcast at gmail.com. KT, let's begin.
KT: My first question, Suze...
Suze: My voice is hoarse today, huh, is down.
Suze: What is my voice today?
KT: It's OK. It's getting a little better. Suze had lots
KT: of procedures on her throat, so we're trying to get
KT: rid of this cough you all know about. But today
KT: is pretty good.
Suze: Pretty good. But that's why we've been here for a month.
KT: Yeah, not bad. All right,go on.
KT: So I'll do most of the talking, right? This is from Whitney.
Suze: I got news, everybody,
Suze: even if my throat is 1,000%, Katy always does most
Suze: of the talking anyway. Go on.
KT: Yes, she does, and this is from Whitney. She said, Suze,
KT: here's why I'm writing. I've just gone through a divorce,
KT: and one of the major reasons I divorced him was
KT: our different approaches to money. So true, right, Suze.
KT: So she said, my ex-husband is an extremely prominent world
KT: class scientist who is known throughout his field as just
KT: about the best in the world. He can do the
KT: most complicated mathematical computations that one can think of. However,
KT: this is funny, when it comes to the simple arithmetic
KT: of income minus expenses, he struggles.
KT: Just goes to show that even if you are a
KT: highly educated professor at a university sometimes common sense isn't
KT: so
KT: common.
Suze: Now I actually gave that to KT to open up
Suze: today's podcast. Do you wonder why KT?
KT: I think it was funny.
Suze: You think it was funny, but I know it's true.
Suze: When I was actually seeing clients, had my own firm.
Suze: And everything what absolutely puzzled me is that doctors, lawyers, neurosurgeons,
Suze: you name it. They were so horrible with money I
Suze: can't even tell you, and I almost got to the point,
Suze: everybody seriously KT, that because I always had a waiting
Suze: list of people wanting to see me, that one of
Suze: the questions was, are you a doctor?
KT: And then you wouldn't see them.
Suze: And then really we would put them down to the
Suze: bottom of the list because it was just so frustrating
Suze: to me because number one they always thought what they
Suze: thought was correct, even if it wasn't.
Suze: And they didn't understand the simplest of things just like
Suze: Whitney was saying. So the reason that I wanted that
Suze: is because maybe you're in a relationship with somebody who
Suze: is a brainiac, very high powered job, knows everything, very intellectual,
Suze: who knows what that doesn't mean they're good with money.
Suze: Because money is all about emotions and that's what we
Suze: learned on last Sunday's podcast.
KT: And a lot of common sense.
Suze: I just want you to be aware if you're in
Suze: a relationship with somebody who makes a lot of money,
Suze: very high powered, regarded by everybody as this most brilliant
Suze: person around,
Suze: it does not mean that you should lose your power
Suze: thinking that they're better at it than you cause chances
Suze: are they are not. All right, KT.
KT: OK, so Suze asked me to redo a question that
KT: we actually had on last Thursday, but the information that
KT: she gave to this question was inaccurate.
KT: So we were redoing it and we've got a much
KT: better and more succinct answer and guidance for all of
KT: you and it's kind of sad this question. Hi, Suze,
KT: my 60 year old sister recently passed away.
KT: Her 401k is worth $281,000. My other sister and I
KT: are the beneficiaries. I'm 62. My sister is 64. So
KT: all these girls were in their 60s, and the young
KT: one died. She said. We also have two other siblings
KT: we wish to share it with. They are 59 and 64.
KT: We're all still working.
KT: The funds will be transferred to an inheritance 401k. What
KT: is the best way to share with our other two siblings?
Suze: Yeah, now here's the thing. Notice that in this question,
Suze: it says that the funds will be transferred to an
Suze: inheritance 401k.
Suze: All of you have to understand that the way a
Suze: 401k is done in most corporations versus an inherited IRA
Suze: is very, very different, so I answered as if the
Suze: money was going to stay in a 401k that's inherited
Suze: now many corporations listen to me closely,
Suze: do not really honor the Secure 2.0 act where if
Suze: you are an eligible beneficiary that you can then do
Suze: what take it out over your life span. They would
Suze: simply say in most corporations that you have 10 years
Suze: to wipe an inherited 401k clean, and that's how I
Suze: answered the question.
Suze: What's important for all of you to know is if
Suze: you're ever in a situation where you have money that
Suze: you're inheriting from a 401k, you're far better off transferring
Suze: it to an inherited IRA in your
Suze: individual names and so the sisters that is what you
Suze: should do now because it will be in an inherited
Suze: IRA now you are what's called an eligible designated beneficiary.
Suze: Which means that you can take this account over and
Suze: stretch the withdrawals over your entire life expectancy, and why
Suze: can you do that? Because you happen to be an
Suze: individual that's not more than 10 years younger than the
Suze: deceased IRA owner, which you're not. You're actually older than her.
Suze: But it doesn't matter if you're older, you also qualify
Suze: as an eligible designated beneficiary. So the correct answer to
Suze: this question is if you do an inherited IRA in
Suze: your individual names.
Suze: You are an eligible designated beneficiary, and you can absolutely
Suze: take it out over your life expectancies. You do not
Suze: have to wipe it clean in 10 years at what KT?
KT: How do
KT: they share it?
Suze: They share it now this becomes a little difficult because
Suze: it depends how much do they want to share and
Suze: because it's in a traditional inherited IRA.
Suze: Any money they take out, they're gonna have to pay
Suze: ordinary income taxes on it, so they're gonna have to
Suze: decide do they want to take a lump sum out.
Suze: And just give it to the sisters minus the tax
Suze: that's going to be owed on it. Are they going
Suze: to take it out in small little lump sum?
KT: So
KT: in essence they have to have a family meeting to
KT: determine how they all wish to
KT: share this.
Suze: Yes, but if they share it, they need to make
Suze: sure that it's equal and that the sisters
Suze: also have to pay income tax on whatever is being shared.
KT: Everyone shares the expenses as well.
Suze: Yeah. OK, OK. All right.
KT: Well, that's clear. So next question's from Gillian. She said,
KT: hi Suze, I'm a federal worker stationed overseas.
KT: I have two dependents, spouse and child. I am the
KT: sole breadwinner. I used to feel like my job was stable,
KT: but as you know, we are living in fear of
KT: losing our jobs at any moment.
KT: What a shame, right? No comment here, Suze.
Suze: Stupid.
KT: I know. Anyway, so Gillian said, I have significant debt
KT: but still pay into my TSP.
KT: And have a decent emergency fund.
Suze: Now everybody
Suze: at TSP is a thrift savings plan, which is essentially
Suze: a 401k or 403B, but it's for federal employees alright, go on.
KT: So her question is, should I stop paying into my
KT: TSP and use both that money and the emergency fund
KT: money to pay down debt?
KT: Note, now this is important, she said. Doing this won't
KT: even cover half of my debt.
Suze: Now, KT, if you are going to answer that question,
Suze: what would you say?
KT: If I did a pop quizzy...
KT: I would say um no I don't think she should
KT: stop paying into the TSP and I definitely would not
KT: use that emergency fund money.
Suze: And why shouldn't she stop paying into the TSP?
KT: Because
KT: that's growing, and I think that what she has to
KT: do is, is use other monies to pay down the debt.
Suze: So, all right, so pretty good KT kind of ding
Suze: ding ding. Listen to me.
KT: Was that a little pop-up quiz because we weren't gonna
KT: do
KT: them anymore.
Suze: I know a little pop up quizzy.
KT: Do you all miss the quizzies, everybody?
Suze: Don't ask us if they say yes, I'm gonna do
Suze: it again. KT was always so nervous about these quizzies.
KT: When the
Suze: quizzy
KT: time came up, I was like, let's hurry up and
KT: finish this recording. I hated the quizzies because I didn't
KT: get them right.
Suze: And then I realized if KT hates anything, why the
Suze: heck are we doing it? That just was stupid, so
Suze: I stopped the quizzies. But here's the thing I want
Suze: all of you to know the key answer to this question.
Suze: Is... note doing this won't even cover half of my debts,
Suze: so she can stop putting all this money towards her retirement,
Suze: and it still will not help her with her debts.
Suze: There is a rule of thumb, when you owe more
Suze: money than you are worth, you are essentially bankrupt number one. Number two,
Suze: and none of you ought to forget what I'm about
Suze: to say. Your TSP.
Suze: Your IRA, your 401k, your 403B are all protected against bankruptcy.
Suze: So if you put a lot of money into your
Suze: Roth IRA into your TSP, you built it and built
Suze: it and built it.
Suze: Guess what, if ever you needed to claim bankruptcy, that
Suze: money would be safe and sound. Therefore, no, do not
Suze: stop putting money in a place that's safe and sound.
Suze: Now if you had said to me, if I did this,
Suze: I'd be out of debt in like 6 months or
Suze: 8 months, different answer. But given the fact that you
Suze: have so much debt.
Suze: I have a feeling that especially if you lose your job,
Suze: you're the sole breadwinner, and on and on, uh, we
Suze: may be heading for a situation that you just want
Suze: to protect everything you possibly can. All right, go on.
KT: This next question is my favorite because of the name Lupi.
KT: This is from Lupi. I, I love that name.
Suze: Her name's Lupi,
KT: L U P I Lupi. Love that name.
Suze: You know why she really loves that name? KT and
Suze: I used to have a little favorite word, right, that,
Suze: that when I was on TV that I would let
Suze: her know I was thinking about her and it would
Suze: be like do
Suze: whatever it could be, but like some loopy loopy doopy
Suze: and it was kind of like pulling my ear.
KT: She'd say
KT: like the markets are really doopy loopy today, KT and
KT: I knew or she'd say today, and I knew it
KT: was for me. All right, so, so this is from Lupi.
KT: She said, Hi, Suze, thanks for sharing all of your knowledge.
KT: I'll be 70 this summer and will begin taking SSI
KT: the last 4 months of the year.
KT: Filing jointly with my husband, I project our combined income
KT: for 2025 will be less than that $60,000.
KT: I'm contemplating converting a portion of my traditional IRA to
KT: a Roth this year. My goal is to convert just
KT: enough to keep us in the current tax bracket, which
KT: should be 12%.
KT: Is this a good idea to do the conversion in
KT: this down market?
Suze: As you're reading this, this market is not a down
Suze: market anymore.
KT: Not anymore. This email was sent a little while ago,
KT: but it sure isn't the same
KT: today.
Suze: Now, first of all, it's true. So if her income
Suze: is $60,000 her base income per year, that's approximately $30,000
Suze: under
Suze: what it would be for her to go to the
Suze: next income tax bracket, which would be 22% by the way.
Suze: So she has approximately $29,450 that she could convert.
Suze: And still stay in the 12% tax bracket, so that's
Suze: just something that she should look at if she wants
Suze: to do it. What you should be doing right now
Suze: because these markets have really gone up so and aren't
Suze: you all thrilled that you stayed in, that you didn't
Suze: get out, that you just kept dollar cost averaging, and
Suze: now you have stocks like Palantair almost at $130.
Suze: Are you kidding me? Really, you all should be so
Suze: happy right now. But then another month from now when
Suze: it turns around, you're gonna be so depressed again. The
Suze: lesson you have got to learn from all this is
Suze: just stick with it.
Suze: Just keep dollar cost averaging. Just stick with what's good
Suze: and everything like that for you, my dear Lupi. What
Suze: you should be doing seriously is take a look at
Suze: your portfolio and anything that really hasn't skyrocketed that much.
Suze: Why don't you just convert, even if it did skyrocket?
Suze: It's
Suze: possible that it's gonna continue to skyrocket. You know, it's
Suze: projected now, Mr. Fitzgerald says that he thinks Palantair's gonna
Suze: go to 200. Wow. So if you happen to own Palantair,
Suze: for instance, you can't just wait till something goes down.
Suze: You have to decide, I want to keep it. I'm
Suze: just gonna convert it. So just start
Suze: doing it now little by little so you stay in
Suze: the 12% tax bracket and just get the money over there.
Suze: It's no longer a down market and you just can't
Suze: necessarily say I'm going to wait because it may not
Suze: be a down market again,
Suze: That it might be down for a
KT: while, but who knows?
Suze: That's right. So KT, tell everybody
Suze: what you said to me yesterday after I said to you, Look, KT,
Suze: we're back way up again in our portfolio.
KT: I said, make sure we don't go back down again.
Suze: So she and she was serious.
KT: I was serious. I said, Great, how do you, how
KT: do you stay up there, Suze?
Suze: And I said, you probably don't.
Suze: So
Suze: everybody wants to always stay up there, but they don't
Suze: like when it goes down.
KT: For years she would come in and say, KT, your
KT: Apple shares, for instance, your Apples are up like
KT: 500 points or whatever and I'd say sell them that
KT: my answer to every time she announced that I had
KT: a gain I'd say sell it just like that and
KT: she would laugh at me and walk out of the
KT: room and I'm really glad she did because if I
KT: kept doing that, I actually wouldn't get anywhere, quite honestly.
Suze: And just so all of you know.
Suze: I don't plan, I hope KT doesn't either, to sell
Suze: anything that we have. I think they're all incredible investments.
Suze: I think if the market goes down dramatically again, I
Suze: will just buy more of what I already have, and
Suze: so I'm thrilled when the market goes down.
Suze: And I love seeing it go back up again, but
Suze: overall the trend is really up right now, KT we're
Suze: no longer in my opinion in this like bear market
Suze: that's gonna go down, down, down, down, down. I think
Suze: overall these markets are up at this point in time,
Suze: so maybe Sunday I'll go over some areas of the market.
Suze: That I think are probably really good for all of
Suze: you to be involved in in case you're not.
KT: I think that would be a great idea. It's, it's
KT: a good time to do that.
Suze: Yeah, give me
Suze: one more question.
KT: OK, so I have one here from CP and she said,
KT: this is Carol. She said, Hi, Suze. I had a
KT: 401k from a previous employer that I rolled into a
KT: traditional IRA.
KT: I was then advised to contribute into the IRA, which
KT: I have been doing for years. I just realized after
KT: hearing some of your podcast that I was contributing after-tax
KT: amounts to pre-tax IRA for which I'm not getting any deductions.
KT: I mean that's crazy, right?
Suze: Well, she could have been doing a Roth the whole
Suze: time and getting tax-free growth.
KT: So wait, let me finish telling you what she's doing.
KT: I just stopped contributing to the IRA. I'm 52. I
KT: can't withdraw from the IRA yet.
KT: Question is, can I withdraw the after-tax contribution I made
KT: in the IRA without paying tax on the total amount
KT: and open a Roth IRA as you advise to open
KT: a Roth for tax-free withdrawal? I need guidance on this, Suze.
KT: I appreciate it. Thank you so much. So Carol
KT: is a little bit confused.
Suze: Yeah, so Carol, I'm so sorry that your financial adviser
Suze: didn't take the time to just give you a little
Suze: bit more guidance that said rather than contributing after tax
Suze: dollars to your IRA that you already have, which simply
Suze: means that you're putting more money in there, but the
Suze: growth of that money is still gonna be taxed to
Suze: you as ordinary income when you withdraw it.
Suze: All he or she had to say to you is,
Suze: why don't you just open up a Roth IRA, put
Suze: the money in there obviously with after tax dollars, let
Suze: it grow, and it will all be tax free. But no,
Suze: they didn't take the time to say that. But here's
Suze: what you need to understand now with a straight Roth IRA.
Suze: You can take out any time you want,
Suze: regardless of how long the account has been open or
Suze: your age, your original contributions that you put in, so
Suze: if you put in $7000 a year ago, $7000 this year,
Suze: whatever it may be, you could take out the $14,000
Suze: no
Suze: taxes, penalties doesn't matter. It's the growth on that money
Suze: that you cannot touch until you're 59.5 and the account's
Suze: been open for at least 5 years. At that point
Suze: then everything in there is tax free.
Suze: You would think that that's how an IRA works that
Suze: you put in after tax dollars, but it is not.
Suze: It is very, very different. So whenever you make a
Suze: non-deductible an after-tax contribution to a traditional IRA,
Suze: you establish what the IRS calls a basis in that IRA,
Suze: the amount in which you already paid taxes on. So
Suze: first of all, do you know the amount that you
Suze: have put in to that IRA and that is your basis.
Suze: All future distributions listen to me closely now from that
Suze: IRA are then treated under the pro rata rule, so
Suze: you cannot simply pull out only your after-tax contributions, girlfriend.
Suze: So here's what you have to have done hopefully.
Suze: Did you file a form 8606 every single year? You
Suze: needed to do so because it's right there that it
Suze: keeps track of how much in a nondeductible contribution you made,
Suze: so that's important because now you have choices ready. Why
Suze: don't you just do a total conversion to a Roth
Suze: IRA with everything that's in there.
Suze: If there isn't that much money, you then get the
Suze: after tax contribution that goes into a Roth.
Suze: You then only owe taxes on the earnings and the
Suze: part that was taxable in the IRA, but then everything
Suze: is in a Roth IRA done just that simple. Now
Suze: you may have too much money in there to do so,
Suze: and it might affect your tax bracket, but if I
Suze: were you, I would look at converting it to a
Suze: Roth because it's such a mistake to leave after tax.
Suze: Money growing taxable within your IRA. It is such a waste.
Suze: So can you just see a CPA and get that
Suze: to happen for yourself? All right, KT...
KT: That was a wrap, Suze.
Suze: That's a little bit of an early wrap because we
Suze: are packing up to get on the plane to go
Suze: back home. Do you think Colo remembers what we
Suze: look like?
KT: No, not at all, but he's very excited.
KT: He's excited. He misses us, even if his wife was
KT: with him. He so misses us.
Suze: Are you sure?
KT: Yes,
Suze: We'll find out shortly. So until Sunday when we are
Suze: back with Suze School, there's only one thing that we
Suze: want you to remember when it comes to your money.
Suze: What is it, KT?
KT: Use lots of sunscreen. Stay safe.
Suze: No, actually KT, have you been reading the reports on sunscreen?
KT: No
Suze: Horrible.
KT: Oh, don't use lots of sunscreen. You just wear a
KT: hat and stay out of the sun.
Suze: Yeah, like we do. But anyway, just remember people first...
KT: Thne money...
Suze: Then things. Now you stay safe. Bye bye.