1 00:00:08,130 --> 00:00:11,969 Robert: July 30th, 2026. Welcome to the Women and Money podcast, 2 00:00:12,010 --> 00:00:15,069 Robert: as well as everyone smart enough to listen. Hi everybody, 3 00:00:15,130 --> 00:00:19,120 Robert: it's Robert, the producer here. For today's Classic Suze School, 4 00:00:19,170 --> 00:00:21,920 Robert: we go back to the winter of 2024 for a 5 00:00:21,920 --> 00:00:25,829 Robert: lesson on the language of money in retirement accounts. 6 00:00:26,680 --> 00:00:28,920 Robert: Suze will be back with a brand new episode this 7 00:00:28,920 --> 00:00:32,020 Robert: coming Sunday, so until then, enjoy. 8 00:00:35,709 --> 00:00:38,189 Suze: Have any of you ever taken a trip to a 9 00:00:38,189 --> 00:00:43,909 Suze: foreign country where they speak a language other than your language? 10 00:00:43,990 --> 00:00:47,708 Suze: Let's say it's English, so you go over there and 11 00:00:47,709 --> 00:00:51,869 Suze: you learn a few words such as hello, thank you, 12 00:00:52,110 --> 00:00:54,869 Suze: I need the check, whatever it may be. Is it 13 00:00:54,869 --> 00:00:58,560 Suze: to the left? Is it to the right? Where's the bathroom? 14 00:00:59,119 --> 00:01:03,330 Suze: And it's those few words that get you by. You 15 00:01:03,330 --> 00:01:07,099 Suze: don't need to learn the entire language to have a 16 00:01:07,099 --> 00:01:10,289 Suze: good time. You don't need to be able to speak 17 00:01:10,290 --> 00:01:14,889 Suze: it fluently to have a great time. Just a few 18 00:01:14,889 --> 00:01:20,709 Suze: words to get you by. Well, when it comes to money, 19 00:01:20,930 --> 00:01:25,010 Suze: I have to tell you the same is exactly true. 20 00:01:25,790 --> 00:01:30,269 Suze: You don't need to know the entire terminology that is 21 00:01:30,269 --> 00:01:36,529 Suze: used within the financial world. It is extensive. It is confusing, 22 00:01:36,750 --> 00:01:41,050 Suze: and for most of you, it is irrelevant. 23 00:01:41,839 --> 00:01:45,680 Suze: You don't need to know that much, but you do 24 00:01:45,680 --> 00:01:49,440 Suze: need to know, especially when it comes to your retirement 25 00:01:49,440 --> 00:01:55,940 Suze: accounts that you have never paid taxes on traditional retirement accounts, 26 00:01:56,480 --> 00:01:59,059 Suze: just a few words. 27 00:01:59,519 --> 00:02:03,040 Suze: Because it is knowing that these few words that can 28 00:02:03,040 --> 00:02:06,760 Suze: keep you from making a mistake, that can keep you 29 00:02:06,760 --> 00:02:09,820 Suze: from paying taxes when you don't need to pay taxes, 30 00:02:10,360 --> 00:02:14,839 Suze: that can keep you from getting yourself into a penalty situation. 31 00:02:15,788 --> 00:02:20,339 Suze: And the reason that I'm still focusing on retirement accounts is, 32 00:02:20,550 --> 00:02:25,210 Suze: let's be honest, the majority of everybody out there has 33 00:02:25,210 --> 00:02:29,070 Suze: a retirement account. Whether it's an IRA doesn't matter whether 34 00:02:29,070 --> 00:02:34,339 Suze: it's traditional or Roth, whether it's a 401k, 403B, or TSP, 35 00:02:34,589 --> 00:02:38,449 Suze: doesn't matter if it's traditional or Roth, if you're even 36 00:02:38,550 --> 00:02:40,710 Suze: an individual or self-employed. 37 00:02:41,320 --> 00:02:46,239 Suze: You have a set IRA, an individual 401k, possibly a 38 00:02:46,240 --> 00:02:51,038 Suze: pension plan. All of us have on some level, at 39 00:02:51,038 --> 00:02:54,829 Suze: some time in our lives, retirement plans, and the truth 40 00:02:54,830 --> 00:02:58,000 Suze: of the matter is the bulk of the money that 41 00:02:58,000 --> 00:03:03,039 Suze: we have saved for later on in the future happens 42 00:03:03,038 --> 00:03:08,038 Suze: to be in most cases in a retirement plan that 43 00:03:08,038 --> 00:03:09,899 Suze: is taxable. 44 00:03:11,080 --> 00:03:13,759 Suze: So, there are just a few words that all of 45 00:03:13,758 --> 00:03:16,800 Suze: you need to know, and the reason that I'm doing 46 00:03:16,800 --> 00:03:20,839 Suze: this podcast is many of you write me emails and 47 00:03:20,839 --> 00:03:22,538 Suze: you tell me about your situation. 48 00:03:23,589 --> 00:03:26,070 Suze: And you tell me that you've done this, you've done that, 49 00:03:26,149 --> 00:03:29,750 Suze: you've done that, you've done this, and I'm so confused 50 00:03:29,750 --> 00:03:33,470 Suze: because I don't really understand what you've done because the 51 00:03:33,470 --> 00:03:36,789 Suze: words that you are using to describe the action that 52 00:03:36,789 --> 00:03:40,949 Suze: you've taken that you want advice on don't fit to 53 00:03:40,949 --> 00:03:47,240 Suze: the situation that you've described. Are you ready? And let's begin. 54 00:03:47,710 --> 00:03:51,529 Suze: First of all, write down the words. 55 00:03:52,500 --> 00:04:02,399 Suze: Roll over, Transfer and conversion, those are terms that I really 56 00:04:02,399 --> 00:04:07,240 Suze: want us to understand today and how they work. 57 00:04:08,360 --> 00:04:11,429 Suze: Before I begin with all of this, if you have 58 00:04:11,429 --> 00:04:16,469 Suze: a TSP, a thrift savings plan, one I'm about to 59 00:04:16,470 --> 00:04:21,589 Suze: say does not necessarily apply to you, right after I 60 00:04:21,589 --> 00:04:25,470 Suze: have done this, I will then tell you what these 61 00:04:25,470 --> 00:04:29,950 Suze: words mean to you. Also, I just have to say, 62 00:04:30,329 --> 00:04:33,570 Suze: that the majority of this is for people who have 63 00:04:33,570 --> 00:04:41,489 Suze: money in traditional retirement accounts, pre-taxed retirement accounts. Some of 64 00:04:41,488 --> 00:04:44,410 Suze: it will apply to those of you who have Roth 65 00:04:44,410 --> 00:04:50,589 Suze: retirement accounts, but obviously Roth retirement accounts, in most cases 66 00:04:50,738 --> 00:04:55,010 Suze: you don't owe taxes on them. So therefore just keep 67 00:04:55,010 --> 00:04:56,649 Suze: that in mind. 68 00:04:57,950 --> 00:05:00,290 Suze: So let's start with I'll rollover. 69 00:05:01,079 --> 00:05:05,940 Suze: A rollover is when you have a specific type of 70 00:05:05,940 --> 00:05:12,799 Suze: employer sponsored plan such as a 401k or 403B. 71 00:05:13,970 --> 00:05:19,769 Suze: And you either are leaving that place of employment, or 72 00:05:19,779 --> 00:05:22,279 Suze: you have retired whatever it may be. 73 00:05:23,160 --> 00:05:27,149 Suze: And you want to roll over, you want to change. 74 00:05:28,178 --> 00:05:32,820 Suze: A 401k that is with your employer, you are rolling 75 00:05:32,820 --> 00:05:37,239 Suze: it over to a new custodian or trustee. They're both 76 00:05:37,238 --> 00:05:37,950 Suze: the same... 77 00:05:38,809 --> 00:05:44,130 Suze: At a new firm, whether it's a brokerage firm, a 78 00:05:44,130 --> 00:05:48,929 Suze: discount brokerage firm, a bank, a credit union, an insurance company, 79 00:05:49,609 --> 00:05:53,209 Suze: anywhere that you want to roll it over to. 80 00:05:54,220 --> 00:05:59,100 Suze: You are changing the types of accounts that your money 81 00:05:59,100 --> 00:06:00,619 Suze: happens to be in. 82 00:06:01,428 --> 00:06:07,450 Suze: So, you are rolling it over from a 401k to 83 00:06:07,630 --> 00:06:12,250 Suze: an IRA and that's known at that point as an 84 00:06:12,250 --> 00:06:19,200 Suze: IRA rollover because it came from an employer sponsored plan 85 00:06:19,510 --> 00:06:22,950 Suze: known as a 401k or 403B. 86 00:06:24,350 --> 00:06:28,470 Suze: And what's important for you to understand about that is 87 00:06:28,470 --> 00:06:33,109 Suze: that there are two different ways for you to do 88 00:06:33,109 --> 00:06:34,190 Suze: a rollover. 89 00:06:35,029 --> 00:06:41,470 Suze: You can do a direct rollover or an indirect rollover. 90 00:06:42,339 --> 00:06:47,349 Suze: A direct rollover is when you are ready to change 91 00:06:47,350 --> 00:06:50,230 Suze: money from your employer sponsored plan. 92 00:06:50,980 --> 00:06:53,600 Suze: To an individual retirement account. 93 00:06:54,579 --> 00:06:57,640 Suze: Where you set up an IRA rollover. 94 00:06:58,760 --> 00:07:01,919 Suze: You set it up at either a brokerage firm, a 95 00:07:01,920 --> 00:07:04,640 Suze: discount brokerage firm, wherever you want to set it up. 96 00:07:04,678 --> 00:07:06,320 Suze: You can even do it at a bank or a 97 00:07:06,320 --> 00:07:11,799 Suze: credit union, and you open up an IRA account there. 98 00:07:12,510 --> 00:07:21,940 Suze: And you ask your financial advisor, to contact your ex-employer, to request 99 00:07:21,940 --> 00:07:27,260 Suze: what's known as a custodian to custodian transfer. It's also 100 00:07:27,260 --> 00:07:34,320 Suze: known as a trustee to trustee transfer, and that means 101 00:07:34,579 --> 00:07:42,070 Suze: that your ex-employer is going to send directly to your 102 00:07:42,070 --> 00:07:49,350 Suze: IRA the money that is in your 401k or 403B. 103 00:07:50,890 --> 00:07:54,929 Suze: You do not touch that money at all. It goes 104 00:07:54,929 --> 00:08:03,309 Suze: directly from your ex-employer, to your new custodian, where your IRA 105 00:08:03,309 --> 00:08:10,290 Suze: rollover is going to be located. Just that simple. When 106 00:08:10,290 --> 00:08:14,730 Suze: you do that, if you have $100,000 in your 401k, 107 00:08:15,510 --> 00:08:21,190 Suze: then automatically $100,000 is going to end up in your 108 00:08:21,190 --> 00:08:27,070 Suze: IRA rollover. Now, on your documents, it's not going to 109 00:08:27,070 --> 00:08:32,309 Suze: say IRA rollover, it's just going to say IRA, but 110 00:08:32,309 --> 00:08:36,109 Suze: in essence, you are rolling over the money from your 111 00:08:36,109 --> 00:08:37,559 Suze: employer sponsored plan, 112 00:08:38,419 --> 00:08:43,299 Suze: into a different type of plan known as an individual 113 00:08:43,299 --> 00:08:49,260 Suze: retirement account. Now, remember, everybody, this is also true whether 114 00:08:49,260 --> 00:08:53,179 Suze: you have a traditional account or a Roth account. 115 00:08:54,510 --> 00:08:59,989 Suze: An indirect rollover, this is something that 9 out of 116 00:08:59,989 --> 00:09:04,689 Suze: 10 of you will never ever want to do, especially 117 00:09:05,070 --> 00:09:12,890 Suze: if you have a pre-taxed retirement account. An indirect rollover, 118 00:09:13,609 --> 00:09:20,429 Suze: is where your ex-employer might ask you, do you want 119 00:09:20,809 --> 00:09:24,590 Suze: them to send you a check, or do you want 120 00:09:24,890 --> 00:09:28,809 Suze: them to send it directly to your new custodian? You 121 00:09:28,809 --> 00:09:35,409 Suze: always want to choose sending it directly to your new custodian. However, 122 00:09:35,650 --> 00:09:43,059 Suze: some of you may decide, yes, please send me the check. 123 00:09:43,919 --> 00:09:47,520 Suze: So now it will not go directly to the custodian, 124 00:09:47,760 --> 00:09:50,229 Suze: it goes to you. 125 00:09:51,320 --> 00:09:55,039 Suze: If they... and listen to me closely now, if they 126 00:09:55,039 --> 00:10:02,760 Suze: send you a check, and that check is made payable to you. 127 00:10:04,020 --> 00:10:10,380 Suze: And this is coming from a traditional retirement account. What 128 00:10:10,380 --> 00:10:17,500 Suze: will happen is they will absolutely withhold 20% for taxes. 129 00:10:18,280 --> 00:10:25,840 Suze: So, if you have $100,000 in your traditional 401k and 130 00:10:25,840 --> 00:10:33,080 Suze: they send you a check made payable to you, uou 131 00:10:33,080 --> 00:10:38,199 Suze: are only going to get a check for $80,000. 132 00:10:39,229 --> 00:10:42,969 Suze: You then will have 60 days from the date of 133 00:10:42,969 --> 00:10:49,539 Suze: that check, to put it in yourself into an IRA 134 00:10:49,760 --> 00:10:54,820 Suze: at whatever firm you opened up an IRA with. So, 135 00:10:54,830 --> 00:10:59,109 Suze: you are indirectly rolling over the money that was in 136 00:10:59,109 --> 00:11:04,630 Suze: your traditional 401k into an IRA because it's not going 137 00:11:04,630 --> 00:11:09,599 Suze: straight to the IRA, it's going to you first. Here 138 00:11:09,599 --> 00:11:11,960 Suze: is the danger if you do that. 139 00:11:12,969 --> 00:11:18,380 Suze: Number one, if you wait 61 days or more to 140 00:11:18,380 --> 00:11:23,598 Suze: do that indirect rollover with that $80,000 in this example, 141 00:11:24,299 --> 00:11:28,380 Suze: you are going to owe ordinary income taxes on that 142 00:11:28,380 --> 00:11:36,539 Suze: $80,000 and possibly a 10% penalty if you're not 59 and a half 143 00:11:36,539 --> 00:11:39,059 Suze: years of age or older. 144 00:11:40,400 --> 00:11:44,559 Suze: Something you need to think about. An exception to that 145 00:11:44,559 --> 00:11:47,880 Suze: would be that you're 55 years of age or older 146 00:11:47,880 --> 00:11:51,919 Suze: in the year you left service. OK, you won't have 147 00:11:51,919 --> 00:11:54,799 Suze: to pay the 10% federal tax penalty, but you most 148 00:11:54,799 --> 00:12:01,940 Suze: certainly will have to pay ordinary income tax on that money. 149 00:12:02,739 --> 00:12:07,210 Suze: But here's the other problem. Let's say you've been great 150 00:12:07,789 --> 00:12:09,210 Suze: and you get this money. 151 00:12:09,880 --> 00:12:14,859 Suze: And within that 60 day period of time, you have 152 00:12:14,859 --> 00:12:18,700 Suze: now put it in your IRA rollover account. 153 00:12:20,119 --> 00:12:23,239 Suze: So fine, you think you're doing OK, you are not. 154 00:12:23,890 --> 00:12:33,109 Suze: Because the $20,000 that your ex-employer withheld for taxes, is 155 00:12:33,109 --> 00:12:35,449 Suze: part of your taxable situation. 156 00:12:36,859 --> 00:12:40,280 Suze: So, you are going to have to come up with 157 00:12:40,460 --> 00:12:47,299 Suze: $20,000 out of your own pocket to put into your 158 00:12:47,299 --> 00:12:52,820 Suze: IRA rollover to make sure that there's $100,000 in that 159 00:12:52,820 --> 00:12:58,260 Suze: IRA rollover within that 60 day limit. 160 00:12:58,909 --> 00:13:04,549 Suze: Otherwise, you are going to owe taxes on that $20,000 161 00:13:04,549 --> 00:13:07,969 Suze: that they withheld to pay taxes. 162 00:13:08,840 --> 00:13:12,200 Suze: You don't want to get yourself in that situation. It 163 00:13:12,200 --> 00:13:20,460 Suze: makes absolutely no sense whatsoever. Almost 100% of the time, 164 00:13:21,080 --> 00:13:26,150 Suze: you only want to do a direct rollover. You do 165 00:13:26,150 --> 00:13:30,739 Suze: not want to do an indirect rollover. 166 00:13:31,520 --> 00:13:39,500 Suze: However, there are some times when an employer refuses to 167 00:13:39,500 --> 00:13:45,419 Suze: do a custodian to custodian or trustee to trustee rollover. 168 00:13:46,409 --> 00:13:50,390 Suze: Don't ask me why, but they just refuse to do it. 169 00:13:50,890 --> 00:13:55,169 Suze: And what they will do instead is that they will 170 00:13:55,169 --> 00:14:00,780 Suze: send to you a check from your 401k. 171 00:14:01,489 --> 00:14:04,929 Suze: And they'll send it to you, but this time the 172 00:14:04,929 --> 00:14:09,330 Suze: check will be made payable to your new account wherever 173 00:14:09,330 --> 00:14:11,880 Suze: you have opened up your IRA. 174 00:14:12,599 --> 00:14:17,239 Suze: And if they do that, then don't worry about it 175 00:14:17,619 --> 00:14:22,859 Suze: because chances are they have not withheld the 20% mandatory 176 00:14:22,859 --> 00:14:28,659 Suze: withholding tax, so it's OK if they do that. It's 177 00:14:28,659 --> 00:14:31,570 Suze: better if they did it directly so you didn't have 178 00:14:31,570 --> 00:14:33,570 Suze: to go and then take the check and get it 179 00:14:33,570 --> 00:14:38,349 Suze: into the account within 60 days, but there are some 180 00:14:39,090 --> 00:14:45,809 Suze: employers that just refuse to do custodian to custodian rollovers. 181 00:14:46,289 --> 00:14:49,169 Suze: So just to be clear, if you're one of those 182 00:14:49,169 --> 00:14:54,969 Suze: people and you get a check made payable to your 183 00:14:54,969 --> 00:15:00,250 Suze: new financial institution, your new account, don't worry about it. 184 00:15:00,880 --> 00:15:07,059 Suze: Because again, they should not have withheld the 20% mandatory withholding. So, 185 00:15:07,070 --> 00:15:13,530 Suze: if you have $100,000 in your 401k, and now you 186 00:15:13,530 --> 00:15:17,250 Suze: want to do an IRA rollover with it, but your 187 00:15:17,250 --> 00:15:22,929 Suze: ex-employer sends you a check made out to your new 188 00:15:22,929 --> 00:15:24,109 Suze: financial institution. 189 00:15:25,130 --> 00:15:31,070 Suze: Chances are that check is going to be for $100,000 190 00:15:31,330 --> 00:15:33,330 Suze: and you will just have to take that check and 191 00:15:33,330 --> 00:15:37,859 Suze: make sure you immediately deposit it within that 60 day period. 192 00:15:37,929 --> 00:15:40,609 Suze: It should be really right away, everybody, so you don't 193 00:15:40,609 --> 00:15:47,559 Suze: forget about it into your new account. Just that simple. So, 194 00:15:47,890 --> 00:15:52,530 Suze: very different than when your employer makes the check out 195 00:15:52,530 --> 00:15:54,250 Suze: payable to you. 196 00:15:55,010 --> 00:16:00,109 Suze: They then have to do the 20% mandatory withholding versus 197 00:16:00,409 --> 00:16:07,630 Suze: your ex-employer makes the check out to your new financial institution. 198 00:16:07,969 --> 00:16:12,929 Suze: So even though that is an indirect rollover, you're not 199 00:16:12,929 --> 00:16:19,229 Suze: going to have the 20% withholding withheld from your payment. 200 00:16:19,770 --> 00:16:23,890 Suze: I hope you're clear on everything I just said. 201 00:16:24,770 --> 00:16:26,609 Suze: Next, transfer. 202 00:16:27,359 --> 00:16:32,030 Suze: A transfer is not a rollover, everybody. 203 00:16:32,780 --> 00:16:37,989 Suze: A transfer is when you go from an IRA account, 204 00:16:38,429 --> 00:16:43,710 Suze: maybe at one brokerage firm, to another IRA account at 205 00:16:43,710 --> 00:16:50,309 Suze: another brokerage firm. You are not changing the types of accounts. 206 00:16:51,719 --> 00:16:55,559 Suze: Maybe it's going from one 401k at an employer that 207 00:16:55,559 --> 00:17:01,159 Suze: you left to your new employer. You're not changing the 208 00:17:01,159 --> 00:17:05,760 Suze: type of an account it is. Again, a 401k is 209 00:17:05,760 --> 00:17:07,419 Suze: different than an IRA. 210 00:17:08,380 --> 00:17:12,438 Suze: An IRA is not different than another IRA. 211 00:17:13,380 --> 00:17:18,253 Suze: So when you are going from one type of IRA 212 00:17:18,253 --> 00:17:23,650 Suze: to another, to the exact same type of IRA at 213 00:17:23,650 --> 00:17:29,069 Suze: a different institution that is known as a transfer. 214 00:17:30,069 --> 00:17:34,129 Suze: And in that situation, you also want it to go 215 00:17:34,510 --> 00:17:36,989 Suze: from custodian to custodian. 216 00:17:38,660 --> 00:17:44,145 Suze: If you have an IRA that is a traditional IRA, 217 00:17:44,145 --> 00:17:50,479 Suze: you legally are allowed to withdraw money from it if 218 00:17:50,479 --> 00:17:51,479 Suze: you want to. 219 00:17:52,770 --> 00:17:56,169 Suze: And you have to put it back within the 60 days. 220 00:17:56,619 --> 00:18:01,660 Suze: Some people do that because they really need money. They're 221 00:18:01,660 --> 00:18:05,139 Suze: short on something. They know money is coming in within 222 00:18:05,140 --> 00:18:08,739 Suze: 60 days for them, so they literally take money out 223 00:18:08,739 --> 00:18:12,280 Suze: of their IRA, use it for what they need to. 224 00:18:12,900 --> 00:18:17,140 Suze: When other money comes in, they replace it within those 225 00:18:17,140 --> 00:18:17,969 Suze: 60 days. 226 00:18:19,579 --> 00:18:25,489 Suze: That also is known as a rollover, where you're rolling 227 00:18:25,489 --> 00:18:28,650 Suze: over money to yourself and putting it back in. 228 00:18:29,469 --> 00:18:36,939 Suze: You cannot do more than one indirect rollover a year. 229 00:18:37,670 --> 00:18:42,869 Suze: So whether it's from a 401k and you indirectly have 230 00:18:42,869 --> 00:18:46,109 Suze: money sent to you, and then you put into an 231 00:18:46,109 --> 00:18:51,949 Suze: IRA or you have a traditional IRA where you have 232 00:18:51,949 --> 00:18:53,349 Suze: taken money out. 233 00:18:54,280 --> 00:18:57,739 Suze: And you are putting it back in within 60 days, 234 00:18:58,079 --> 00:19:03,679 Suze: you cannot do that more than once in a 12-month 235 00:19:03,680 --> 00:19:04,959 Suze: period of time. 236 00:19:05,989 --> 00:19:10,430 Suze: Notice I said a 12-month period of time. I did 237 00:19:10,430 --> 00:19:12,409 Suze: not say annually. 238 00:19:13,280 --> 00:19:17,680 Suze: So, if you do it once, you cannot do it 239 00:19:17,680 --> 00:19:24,760 Suze: again from any account for another 12 months. When it 240 00:19:24,760 --> 00:19:30,609 Suze: comes to transferring your accounts, you can do it as 241 00:19:30,609 --> 00:19:35,410 Suze: many times as you want in a year. When you 242 00:19:35,410 --> 00:19:38,770 Suze: transfer from one IRA to another IRA and now you 243 00:19:38,770 --> 00:19:41,650 Suze: want to transfer it to another IRA, you can do 244 00:19:41,650 --> 00:19:44,329 Suze: that as many times as you want. 245 00:19:45,300 --> 00:19:51,219 Suze: You can also do a direct 401k rollover to an 246 00:19:51,219 --> 00:19:55,130 Suze: IRA as many times as you want. 247 00:19:56,130 --> 00:20:02,310 Suze: So again, when you transfer something, there's no limits on 248 00:20:02,310 --> 00:20:05,948 Suze: how many times you can do that, provided they are 249 00:20:05,949 --> 00:20:13,180 Suze: trustee to trustee or custodian to custodian transfers. On rollovers, 250 00:20:13,609 --> 00:20:19,050 Suze: there's no limit, providing it is a direct rollover. 251 00:20:19,729 --> 00:20:27,948 Suze: But indirect rollovers, any 60 day distribution that you get 252 00:20:28,609 --> 00:20:34,449 Suze: is only allowed once in a 12 month period of 253 00:20:34,449 --> 00:20:37,849 Suze: time across all the accounts that you have. 254 00:20:39,209 --> 00:20:40,969 Suze: Next, a conversion. 255 00:20:42,430 --> 00:20:48,010 Suze: A conversion is when you are changing, you are converting 256 00:20:48,630 --> 00:20:59,040 Suze: a pre-taxed retirement account, iInto an after-tax retirement account. In most cases, 257 00:20:59,119 --> 00:21:05,520 Suze: you can convert a traditional 401k where you have never paid 258 00:21:05,520 --> 00:21:10,650 Suze: taxes on that money to a Roth 401k. 259 00:21:11,849 --> 00:21:13,890 Suze: That is a conversion. 260 00:21:14,939 --> 00:21:19,010 Suze: A conversion is when you go from a traditional IRA 261 00:21:19,270 --> 00:21:24,829 Suze: that you have never paid taxes on to a Roth IRA. 262 00:21:25,939 --> 00:21:30,089 Suze: When you convert, it doesn't matter if it's from a 263 00:21:30,209 --> 00:21:36,609 Suze: traditional 401k to a Roth 401k, a traditional 403b to 264 00:21:36,609 --> 00:21:42,229 Suze: a Roth 403b, a traditional IRA to a Roth IRA, 265 00:21:42,930 --> 00:21:48,448 Suze: you will owe taxes on any amount of money that 266 00:21:48,449 --> 00:21:52,250 Suze: you converted in the year that you converted. 267 00:21:53,189 --> 00:21:58,869 Suze: Do not get confused that once you retire from some 268 00:21:58,869 --> 00:22:03,910 Suze: place and you are taking a 401k and now you 269 00:22:03,910 --> 00:22:09,849 Suze: are thinking you are doing a rollover to an IRA 270 00:22:10,030 --> 00:22:13,030 Suze: at another brokerage firm or wherever you're doing it. 271 00:22:13,349 --> 00:22:16,989 Suze: And you put it into a Roth IRA, it is 272 00:22:16,989 --> 00:22:22,689 Suze: going to be 100% taxable to you on the amount 273 00:22:22,689 --> 00:22:27,250 Suze: that you did that. That is not a rollover, that 274 00:22:27,390 --> 00:22:28,829 Suze: is a conversion. 275 00:22:30,099 --> 00:22:33,979 Suze: Again, do not confuse it. 276 00:22:35,239 --> 00:22:41,179 Suze: A 401k to an IRA rollover pre-taxed is a rollover. 277 00:22:41,680 --> 00:22:48,060 Suze: A Roth 401k to a Roth IRA is a rollover. 278 00:22:48,680 --> 00:22:56,319 Suze: In traditional IRA, meaning pre-taxed, a traditional IRA to another 279 00:22:56,319 --> 00:23:01,679 Suze: traditional IRA at a different custodian is a transfer. 280 00:23:02,760 --> 00:23:10,280 Suze: A traditional IRA to a Roth IRA is a conversion. 281 00:23:10,920 --> 00:23:16,879 Suze: They are very, very, very different, and many of you 282 00:23:16,880 --> 00:23:22,040 Suze: are getting these confused and ending up owing taxes when 283 00:23:22,040 --> 00:23:24,780 Suze: you didn't think you needed to. 284 00:23:25,900 --> 00:23:30,369 Suze: One other thing about a backdoor Roth IRA since so 285 00:23:30,369 --> 00:23:32,300 Suze: many of you are interested in it. 286 00:23:33,219 --> 00:23:39,300 Suze: To do a backdoor Roth IRA you fund an IRA 287 00:23:39,300 --> 00:23:45,380 Suze: that is non-deductible, and you convert it to a Roth IRA. 288 00:23:45,780 --> 00:23:49,560 Suze: You don't transfer it, you don't do a rollover, that 289 00:23:49,780 --> 00:23:52,439 Suze: is a conversion as well. 290 00:23:53,349 --> 00:23:57,430 Suze: Let's just quickly switch to those of you who have 291 00:23:57,430 --> 00:24:01,869 Suze: a thrift savings plan. You're a federal employee or you 292 00:24:01,869 --> 00:24:06,709 Suze: work for the armed services. Your retirement plan is known 293 00:24:06,709 --> 00:24:11,310 Suze: as a thrift savings plan or a TSP. 294 00:24:12,489 --> 00:24:17,770 Suze: For you, a transfer means when you send money directly 295 00:24:17,770 --> 00:24:22,849 Suze: from a traditional TSP to your IRA account. 296 00:24:24,069 --> 00:24:27,260 Suze: So that is a transfer for you. 297 00:24:28,329 --> 00:24:32,810 Suze: If you're not TSP people, that was a rollover for you, 298 00:24:33,079 --> 00:24:38,699 Suze: a transfer for the TSP people, means you are simply 299 00:24:38,699 --> 00:24:45,500 Suze: sending money directly from where you have it to your 300 00:24:45,500 --> 00:24:49,430 Suze: IRA account. It does not go to you. 301 00:24:50,410 --> 00:24:57,969 Suze: A rollover, however, within a traditional TSP means they send 302 00:24:57,969 --> 00:25:01,890 Suze: you a check directly and you have 60 days to 303 00:25:01,890 --> 00:25:09,129 Suze: get it into an IRA. They will automatically also withhold 20% 304 00:25:09,329 --> 00:25:13,010 Suze: and send it to the IRS. If you are in 305 00:25:13,010 --> 00:25:19,290 Suze: the armed forces or work for the federal government, you never, ever, 306 00:25:19,400 --> 00:25:25,479 Suze: ever want to do a rollover of any kind. You 307 00:25:25,479 --> 00:25:28,239 Suze: only want to do a transfer. 308 00:25:29,359 --> 00:25:34,829 Suze: So again for you the terminology is different than for 309 00:25:34,829 --> 00:25:37,839 Suze: those who aren't part of the armed forces or work 310 00:25:37,839 --> 00:25:42,160 Suze: for the federal government. That is what you need to know. 311 00:25:42,329 --> 00:25:46,599 Suze: That is the language of money when it comes to 312 00:25:46,599 --> 00:25:50,718 Suze: retirement accounts. Now you may need to listen to this 313 00:25:50,719 --> 00:25:54,679 Suze: again over and over again. You may need to write 314 00:25:54,680 --> 00:25:59,760 Suze: the notes down over over again in your Suze notebook, 315 00:26:00,020 --> 00:26:03,459 Suze: if I were you, what I would be doing is 316 00:26:03,459 --> 00:26:07,640 Suze: I would be writing down the type of retirement account 317 00:26:07,640 --> 00:26:08,579 Suze: I have. 318 00:26:09,859 --> 00:26:14,469 Suze: And then I would be applying the terminology that I 319 00:26:14,469 --> 00:26:19,750 Suze: just gave you to the types of retirement accounts you 320 00:26:19,750 --> 00:26:24,140 Suze: have and what you intend to do with it. So, 321 00:26:24,160 --> 00:26:27,589 Suze: that is the Suze School for today. 322 00:26:28,439 --> 00:26:31,959 Suze: Remember there's only one thing that you need to know 323 00:26:31,959 --> 00:26:34,479 Suze: when it comes to your money, and it is this 324 00:26:34,760 --> 00:26:40,699 Suze: people first, then money, then things, so you just stay safe, 325 00:26:41,089 --> 00:26:44,280 Suze: and if you do all that, oh, I promise you 326 00:26:44,479 --> 00:26:47,419 Suze: you will be unstoppable.