February 29, 2024 • 33 mins
For this episode of Ask KT and Suze Anything, Suze answers questions about IRA contributions, what happens when only one spouse works, selling a home and so much more.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
KT (00:45):
Good morning, everybody. And welcome to the Ask Suze Anything
Women and Money podcast.
Today is February 29th and I have something special to
say before. I introduce you to Suze. Never again. Never again.
For four years. Will this day ever be present on
(01:06):
your calendars. So listen up and listen up. Good.
Suze (01:10):
Oh, she is so proud of herself for opening up
the podcast pretty good, KT. But you do need to
tell everybody it is the Women and Money podcast.
KT (01:18):
I said that.
Suze (01:21):
You didn't say women and money. You said it's not the...
KT (01:25):
It's the women and this is the... today is February 29.
Suze (01:29):
Here she goes again,
KT (01:30):
The Women and Money podcast asks Suze...
Suze (01:34):
No, you need to say, and everybody smart enough to listen.
KT (01:36):
Ok and today is February 29th, the Women and Money
Podcast
and everybody and everybody smart enough to listen.
You're not, you better listen up because you ain't gonna
hear this for another four years.
Suze (01:52):
Forget it. Let's go. Everybody. So, this is where you've
written in. Why do I ever ask her to open
up the podcast? Is it that difficult? Is it that difficult?
KT (02:03):
It's not what I do. I'm not good at it. It's not what I do.
Suze (02:06):
How can somebody who is married to me even utter
the words? I'm not good at something. I'm not good
at opening the podcast. I'm great at asking questions and
answering quizzes. I'm not good at. I wouldn't exactly say
you're great at it.
KT (02:23):
Come on, let's not waste. Everyone's time this day ain't
gonna happen again for four years.
Suze (02:28):
All right, everybody. This is the Ask KT and Suze
Anything edition. If you have a question
that you would like to possibly be chosen to be
answered on this podcast write into Ask Suze Podcast at gmail.com.
And that is Suze. All right, KT.
KT (02:48):
This first question, put a smile on my face. It's
from Jen. Hi Suze and KT. How do you recommend
assets and life insurance documentation be stored for your beneficiaries?
Do life insurance and 529 savings plans go into your
living revocable trust. I'm just wondering if something happened to
(03:12):
myself and my spouse. How would my children's guardian know
about the retirement accounts? Life insurance and assets that they're
entitled to receive?
Suze (03:23):
Well girlfriend
if you've left them in a trust, how would they
know about it unless you told them? So tell them.
So a 529 is not in a trust. Life insurance
can be in a trust if it's a life insurance
trust because you want it out of your estate because
you have so much money. But really, Jen,
(03:45):
just tell them where all the documents are, share it
with them. Don't wait until you're not here anymore in
the hopes that somebody's going to tell them about everything.
Tell them while they are a live girlfriend, share it
with them, show them your trust, show them your wills,
show them everything you have so that they know who
(04:05):
actually is also going to be the successor trustee or
the executor. So they all know. All right, KT.
KT (04:14):
OK. Next question from Suzanne. Suze. I am a high
earning employee and received $7000 back from my contributions last year.
I have so many questions about this. It is not
even funny. Why do I have to be penalized if
others don't want to contribute? How do I prepare for
(04:35):
this coming year so that I don't contribute too much?
explain what this is because I didn't get it at first.
And then I had to look it up. I asked Suze,
what the heck is she talking about?
Suze (04:48):
Listen, everybody, especially if it is a small company can
fall into this, but everybody that contributes to a 401k,
the plan has to make sure that all the employees
in the plan are contributing on some level
and in case they choose not to, the plan can
(05:11):
become what's called top heavy and a top heavy plan
is when more than 60% of the total value of
the plan
has been funded by the key employees of that company.
And when that happens, then either they have to make
(05:33):
it right by doing the safe harbor things and on
and on and on. But in your case, they actually
chose to just give the money back to you to
equalize it out. You know, KT, that's why
we used to make those big bucks from those major
corporations who paid me to go and talk to their
(05:53):
thousands of employees in the hopes that they would sign
up for the retirement account. Because if they didn't sign
up for the 401k plan,
then the key employees may have contributed too much in
comparison and then it would have been a top heavy plan,
which isn't good for anybody.
(06:14):
So here's what you need to know Suzanne. Normally, if
your plan was top heavy last year, December 31st of
last year, it's going to be top heavy again this year.
So that's just how they figure it out. So don't
contribute as much this year because if you do and
(06:36):
they haven't rectified everything, you are going to get money
back again. All right.
KT (06:42):
So this is from Melissa.
Suze, I have approximately $91,000 in a 403b. I am
no longer with my employer. I had to retire early
for health reasons. I will be 55 this month. So
my question is, what do I do with the money?
(07:03):
Do I let it sit in the account even though
I'm no longer making
contributions or do I roll it over to an IRA?
The Annuity account representative also gave me the following options,
cash it out, do systematic withdrawals or annuitize the amount
I desperately need advice. Do you like any of those options?
Suze (07:25):
Not really? Melissa, here's the thing normally I would say
to you
if you don't have any possibility of wanting to do
a backdoor Roth IRA. Later on that, I would tell
you to take the $91,000 and do an IRA rollover
with it at a discount brokerage firm like Charles Schwab
(07:46):
or Fidelity or wherever. Then you have a variety of
things that you can invest in. Whether it's mutual funds,
exchange traded funds, individual stocks, treasuries, whatever it may be.
But the only reason that I'm hesitating right now is
because a lot of people feel comfortable with the money
(08:11):
in the 403b that you may have because you're used
to the investment choices. You're used to how your statement looks,
you feel safe there and it's someplace that you know.
And when you do a rollover, especially with $91,000 then
who is going to make the decisions for you to
(08:34):
invest that money, how it should be invested and sometimes
you can get really afraid having $91,000 all in one
lump sum to decide what you should do with. Remember
you got this $91,000 simply by having money deducted from
your paychecks and over time it grew, it wasn't like Melissa,
(08:56):
what are you gonna do with $91,000 in one lump sum? So,
if you want, you can leave it exactly where it
is and just keep going. I would not be cashing
it out. I wouldn't look at systematic withdrawals, especially since
you're really only 55. I wouldn't annuitize it on any level.
(09:16):
If you feel comfortable with it, you like the mutual
fund choices, leave it there. However, you also don't have
to take all of it out. You could take out
$20,000 and do an IRA rollover with it
and therefore see what it feels like to invest that
money and have control over it. And then if you
(09:38):
feel secure, you can do a custodian to custodian transfer
again and roll over the rest.
But if you feel comfortable with it, if you have
control over the money and you're not afraid, then I
would be doing an IRA rollover with it. All right, KT.
KT (09:55):
This next question, Suze I chose because it's a conversation
about family issues and real estate.
And again, I think this may come up with many
families that are listening.
Suze (10:07):
So I'm looking at her and she's got two pages
to read to us so this is a Suze story time.
KT (10:13):
I'm gonna just tell the story. It's Hi, KT and Suze.
I'm a longtime fan of your books and podcasts. I
would like to get your thoughts about my situation.
My father is currently 76 years old. He owns a
two family home in Brooklyn. My mother, father, sister and
I are on the deed of the house. The house
(10:34):
was purchased actually from their uncle in 2006, Suze for
about 495,000. But now the property is valued at 1.5
million or more.
And he thinks that he, that there's about a 325,000
mortgage left.
Suze (10:52):
So think about that for one second, KT, they bought
it for how much?
KT (10:56):
495
Suze (10:58):
And how many years ago?
KT (10:59):
2006.
Suze (11:01):
So in all of these years, really, almost 20 years
if you think about it and they still have a
mortgage of $325,000 that means they probably didn't put
any money down if any. And they've only been paying
a mortgage. All right.
KT (11:20):
So my father and sister are on the mortgage and
they've been making the payments over the years. My parents
live on the second floor. My sister and her family
live on the first floor. I do not live in
the house and I own a separate house.
Now, here's the story. His dad retired five years after
purchasing the house, the sister. Ok, so five years, so...
Suze (11:43):
2011,
KT (11:45):
Yeah. The sister started paying for the entire mortgage payment. She's
been paying 13 years, she's been paying for it. So
my father recently
informed me to remove my name from the deed and
avoid any future dispute over the property with my sister.
In return, he will have me as the contingent beneficiary
(12:06):
for his bank account investments. Anything he has including his retirement,
his mother would be the primary beneficiary of those investments.
So long story short, he's concerned that by the time
his parents both pass, there may not be anything left
in those accounts for him.
(12:28):
I do not need. Then he says I do not
need the money. I try to tell myself it's not
a big deal, but my gut just does not feel
right removing my name from the deed. Also, as my
parents get older, I feel like it's better for them
to keep my name on the property... Ready? In case
my sister persuades them to remove their name from the
(12:51):
property and sell it. He doesn't trust his sister. So
he then goes on to say he consulted with an attorney,
a CPA blah, blah, blah, blah, blah. He said he
feels that he should be entitled to a small equity
when and if the home is sold.
And basically, he's asking, you know, your guidance or advice
(13:14):
from a trusted professional, which is you, on what he
should do. But this is emotional. It's not really a
financial decision,
Suze (13:22):
But it did say in there you, I did just
hear you say correct that his father and sister
don't want his name on it.
KT (13:30):
The father wants to remove his name from the deed.
So there will not be any future disputes with the
property after he passes. Which just sounds like the sister
and brother don't get along.
Suze (13:45):
So I just took the email from KT
and there's one line here, KT you didn't read which was,
but my father and sister feel like I did not
contribute payment to the house and should not be entitled
to any equity.
KT (14:00):
Suze. I feel the same way. I think that the
father and sister are right. He doesn't need the money,
but he thinks,
because he's the son, he, he's entitled.
Suze (14:09):
He also said since my sister lives in the house
and occupied the first floor, we could have generated rental
income from the first floor of the house to pay
for the majority of the mortgage over the years at
the end of the day, I just want to be
fair for all parties.
KT (14:25):
Well, how do you feel about it?
Suze (14:27):
Well, here's the thing.
I hope that you've all sat down as a family
and talked about it because the greatest loss here isn't
the loss of money or equity on the home or
money that you could have gotten afterwards. It's the loss
of the relationship with your sister.
(14:47):
It's the feeling angry at your father.
No amount of money really is worth that. The truth
of the matter is you say that you're doing fine financially.
So then what is it, what's really bugging you here?
Is it that you're not being valued in your mind?
(15:09):
Is it that your father is favoring your sister over you?
But there's something else that is going on here that
you need to have a discussion with yourself. If it
were me, I'd be really happy that my father was
going to put me on the account as a contingent
(15:30):
beneficiary to a savings account that has about $250,000 in it.
Maybe your mother will spend it. Maybe she won't.
But at least he's considering that and of course, all
the money should first go to your mother. If your
mother wanted to, she should spend everything because it's their money.
(15:50):
That's number one. But number two, you might suggest to
your father
that when he and mom die, then obviously your sister
is going to get the entire house. Maybe at that time,
(16:10):
he could make it so that you own some of
it at that time. Like he leaves you a portion
of it at that time
so that you get a little bit of that half
of that inheritance as well. That could be done by
how they hold title to the house, they could hold
(16:31):
title to the house as tenants in common or many
other ways. But you might want to talk to him
about that if he does not want to do that
and he wants to leave everything to your sister.
You have to honor his wishes. It's his money. He
is the father. He gets to decide and he's made
(16:54):
a decision and you need to honor that decision no
matter how you feel again. You've been blessed with the
fact that you don't need the money. But I'll tell
you what you do need. You need a relationship with
your mother, your father and your sister. And if you
don't have that, you really have struck
(17:14):
an emotional poverty level that you will experience when you
have lost them. All right, KT.
KT (17:22):
That was a good answer, Suze and I like having
these conversations because I think these issues come up more
than anyone thinks.
Suze (17:32):
Well, KT, you know, we've had to discuss these issues
that do we leave more to this one? Do we
leave less to that one? Do we not leave anything
to any of them?
We've had to make those decisions and many of them
may not be very happy because I'm sure some of
them KT really are calculating. Oh, I wonder how much
Suze's gonna leave me. So it happens. So do what
(17:57):
I do. Everybody just tell them you're not getting anything
KT (18:00):
Charity.
All right. Next question is from Diane. Good morning, KT
and Suze. I enjoyed the in depth Suze School about
the five year rule. I have a question. I'm having
trouble verifying the answer to. I'm 59.5. My husband is 61.
(18:21):
I'm still working, but my husband is not. Can we
put money in both my Roth IRA and his Roth IRA.
I've read something about spousal donations. If they don't have
earned income.
Suze (18:35):
Diane, you
absolutely can both put money in a Roth IRA for
yourself and for your husband, it falls under the nonworking
spousal account. Now, they're not gonna say that on the account,
it's gonna be a Roth IRA in his name. But
that is what will allow you to put money in there.
(18:55):
Just know that you are limited
to how much money you earn. If you've earned over
$16,000 a year, then you can put $8000 in your account,
which is the max this year and $8000 in his account. So,
it's based on how much money you're also making. But
if you're making good money,
(19:16):
yeah, you could fully fund it no matter what. As
long as you are under the modified adjusted growth income limits.
All right.
KT (19:26):
Ok. So everybody, again, I picked another one of these
stories today. I feel like storytelling time today. So this
is from Peggy. Dear, Suze. I'm 56 years old. I'm
hoping to retire at the age of 65
14 years ago, my husband was laid off during the recession.
(19:47):
At the time, we had three children under nine and
decided that him staying home was the best option. Here
we are 14 years later, the youngest is now 18.
My husband has still not gotten a job or contributed
financially to the household during all that time.
(20:08):
I love him very much and he does all the
household upkeep. I come home to a cooked dinner, completed laundry,
dishes away, food shopping, done, and a clean house. He
is definitely not lazy in that sense.
I love having a house husband, however. Ready Suze? I've
(20:30):
lost my sense of self. The only way I can
retire is if the mortgage is paid off. We currently
have 13 years left on that mortgage. We have three children,
one out of college, one in college and one heading
to college in the fall.
I feel awful and guilty that we're not able to
help the children with any of their college finances. They
(20:54):
are riddled with debt due to taking out student loans.
I've spoken to my husband multiple times and shared my
feelings over the last several years. He always promises to
get a job or do something, but the promises never
come through.
I'm at my wit's end, kicking him out, wouldn't solve
(21:15):
anything financially. I don't believe in divorce and we vowed
for richer or poorer. I can't imagine my life without him. However,
I resent him
every day. I know. Wait, listen to this. I go
to work. I bring home the money. I pay the
bills and make sure everything is in financial order. But
(21:38):
I struggle with guilt when I buy something for myself
or for the house. So my husband's 57 he's not
worked in his field for 14 years, which has changed drastically.
I don't expect him to get a job in this field.
A simple job at Home Depot or ShopRite or anything
to bring in extra money enough to throw more money
(22:00):
at the mortgage. But I think he's embarrassed to do that.
I often think myself about getting a second job. However,
I work a very demanding 40 plus hour nurse manager
position and I can only do something on the weekend.
I think it would be more embarrassing for him if
people knew that I had to get a second job
(22:21):
to support the family when he hasn't worked in years.
She makes a good salary. They live a simple life.
They don't have much extra. She's contributing 10% to retirement. However,
she can't even afford to bump it up to 15%.
She said any advice on how to approach the subject.
(22:42):
This is a tough one. This is a, you know,
you often wonder how many, how many couples are in
that position.
Suze (22:50):
Yeah I know there's not a lot of extra money here,
but I would tell you to go to couples counseling.
I really would because obviously he's not hearing you because
you've had this conversation with him many, many times
and you may not be hearing him
(23:11):
And what his fears are and what he's afraid of. Obviously,
he's embarrassed. He feels like the only thing he can
do are the things he's doing at the house and
he doesn't even know how to begin. So you both
need help in that communication with one another. I love
(23:34):
that you don't believe in divorce. I love that you
say you love him
that it was for richer or poorer. However, what I
don't love is that you resent him every single day.
So you know, you can't have it both ways because
(23:55):
somehow there's no way you can resent somebody
and like them. And KT, what's my favorite saying? Like
is more important than love. We throw around that word.
I love you. I love you. I love you so
easy and then something happens and it's like I hate you,
(24:16):
I hate you. I hate you,
Right? I like KT.
KT (24:21):
I like Suze.
But no, really, we really, really like each other.
Suze (24:26):
And that is more important than loving her because there
are times that I'm like, I'm not feeling that loving
right? Really? But I always...
KT (24:37):
She never stops liking me and I, I like everything
about her.
Suze (24:41):
So I need you to ask yourself the question. What
do you like about him?
What is it
that keeps you there really?
Because when you resent somebody every day that you look
at you emit a certain energy and that energy may
(25:02):
also be contributing to what keeps him down because don't
think he can't feel it. When I'm mad at KT,
she can feel it even though she says, are you OK?
And I go, I'm all right. She knows. I know.
When you live with somebody and you've lived with them
for a long time, you've shared children with them.
(25:23):
They know. So is your resentment, what's keeping him from
feeling strength and power and the ability to go on
and make a change? So I would tell you at
this point in time,
you really, really need again to go to couple counseling.
I just want to make one other comment about the children.
(25:46):
Do not feel bad for them that you can't pay
for their college education. Nobody paid for my college education
and look at me today.
So it's really important that they understand when you have
the ability financially to pay for a college education. And
when you don't, and when they get older and they
(26:07):
have children, they may be in the position to say
to their kids. Listen, I had to pay for it
on my own. I had student loan debt and I
did it.
I can't afford to pay for your college education. So
you're educating them on the realities of life, don't protect
them against the realities of life and don't protect yourself
(26:29):
about the reality of the relationship that you are really,
really in.
Well, those were quite the questions you picked this time,
my dear KT. And it is quizzy time. And if
I had known you had chosen the stories you chose,
I probably wouldn't have chosen this quizzy. But since I
(26:50):
don't have another quizzy, I'm gonna do this quizzy. All right,
everybody and we all know what quizzy time means means.
How would you answer this question:
Dear KT and Suze.
I'm so lucky to be one of the everyone else
smart enough to listen to your podcast. I only wished
(27:14):
I had discovered your show sooner. As I think I
made a big mistake.
Last year out of the blue, a relative very generously
gifted me a large sum of money they wanted me
to use for a down payment for a home. I
ended up buying a small condo I'd like in DC
(27:35):
with a 30 year mortgage at a 5.75% interest rate. However,
I really messed up the math on how home ownership
would affect my ability to cover all my other expenses.
I'm 27 and only have around $1000 left each month
(27:57):
for other expenses after paying my mortgage and condo fee
as well as contributing 5% to my Roth TSP. I'm
struggling to pay off credit cards in full each month.
What should I do? Here's the question.
Should I sell the condo after only owning it for
(28:20):
a year and give the money back to my relative.
Had I discovered your podcast sooner. I would have made
a different choice and carefully calculated my budget. Waited for
interest rates to go down and focused on saving for
an emergency fund and retirement instead.
Thank you for your help and sending peace and hugs
(28:42):
your way. So,
should he sell the condo after only owning it for
a year and give the money back to his relative?
KT (28:56):
Did he inherit the money?
Suze (28:58):
No, it was a gift?
KT (28:59):
A gift? Absolutely. Absolutely. Here's what I would do.
Suze (29:05):
What would you do?
KT (29:06):
So, he's 27 years old. Sounds like such a good boy.
I would absolutely find out if you can earn or
make a tiny profit selling it because he has a
30 year mortgage. My goodness, that's a big mortgage. So, absolutely.
Try to sell it. But let the relatives know your plan,
(29:27):
let them know that you bit off more than you
can chew. That you understand, you made a mistake and
that you're going to sell it and give them back
the money. They may want you to sell it and
use that money to get something a little more reasonable
and try to help you with a leg up on,
on your life. That's what it seems like they want
(29:47):
to do. So I would sell it. Yeah. Get something
more reasonable that you can afford.
Suze (29:53):
I'm gonna give you a ding ding ding on that one.
That wasn't an exciting ding ding ding. Was it?
KT (30:00):
Give it to me? Give it to me
Suze (30:01):
Ding, ding, ding, ding, ding, ding, ding, ding, ding kind of.
So here's what's really important is that we always stand
in our truth and we don't take an action with
something that was a gift from somebody else
without including them in that decision, which is what you said.
(30:23):
So I just wouldn't sell it outright. I would definitely
go to this relative. Tell them the truth and tell
them that you made a mistake. You love them so much,
but that in fact, you are going to sell it
if that's what they think you should do. And then
let's see what they say. The next question becomes,
(30:43):
if you sell it, chances are you may make money
on it. You never know because it's been a while now.
Are you going to return to them? The money that
they gave you, plus the money that you made because
it was their money
or are you not? Because really if you think about it,
(31:05):
you did make money based on the tax savings because
your mortgage that you had provided you with some ability
to save money on taxes. So you saved a little there.
But can you figure out a way that you'll also
feel good about it because you did pay that mortgage
for all that time.
As to do you split the money that you made
(31:28):
on it, if you do make any money on it
or do you not? It's not just as simple as
I'm gonna sell it and give you the money back
because remember that money could have been sitting in a
money market account for them making four or 5% a year.
So maybe that's what you do. You calculate what four
(31:48):
or 5% would have been on that money sitting there
if you do make more than that. And that's how
much you give them back and you keep the rest,
assuming you've made money.
KT (32:01):
I'd offer all of it back. And if I were
those relatives, I'd say, oh, sweetheart, we're so proud of
you that you realized you bit off more than you
can chew. Let's sit down together with a calculator and
we'll figure it out. Let's start over. That's what I
would say if I were the relative.,
Suze (32:18):
But we don't know what the relatives are gonna say.
What we have to do here, KT, is to be
fair is to give him choices of how to think
of
because trust me, if all of a sudden he goes
to sell this and he makes a whole lot of
money on it, he's gonna have to face this question
that I just posed. So it's not what the relatives
(32:40):
are gonna say. It's what is he going to think
when the time comes. But absolutely talk to them first.
All right, Miss Travis.
KT (32:50):
That's a wrap.
Suze (32:51):
That's a wrap. So, until next time
there's only one thing that we want you to remember
when it comes to your money and it is this:
KT (33:00):
People first, then money, then things.
Suze (33:03):
And if you do that and stay safe, we promise
you you will be unstoppable.
Good morning, everybody. And welcome to the Ask Suze Anything
Women and Money podcast.
Today is February 29th and I have something special to
say before. I introduce you to Suze. Never again. Never again.
For four years. Will this day ever be present on
(01:06):
your calendars. So listen up and listen up. Good.
Suze (01:10):
Oh, she is so proud of herself for opening up
the podcast pretty good, KT. But you do need to
tell everybody it is the Women and Money podcast.
KT (01:18):
I said that.
Suze (01:21):
You didn't say women and money. You said it's not the...
KT (01:25):
It's the women and this is the... today is February 29.
Suze (01:29):
Here she goes again,
KT (01:30):
The Women and Money podcast asks Suze...
Suze (01:34):
No, you need to say, and everybody smart enough to listen.
KT (01:36):
Ok and today is February 29th, the Women and Money
Podcast
and everybody and everybody smart enough to listen.
You're not, you better listen up because you ain't gonna
hear this for another four years.
Suze (01:52):
Forget it. Let's go. Everybody. So, this is where you've
written in. Why do I ever ask her to open
up the podcast? Is it that difficult? Is it that difficult?
KT (02:03):
It's not what I do. I'm not good at it. It's not what I do.
Suze (02:06):
How can somebody who is married to me even utter
the words? I'm not good at something. I'm not good
at opening the podcast. I'm great at asking questions and
answering quizzes. I'm not good at. I wouldn't exactly say
you're great at it.
KT (02:23):
Come on, let's not waste. Everyone's time this day ain't
gonna happen again for four years.
Suze (02:28):
All right, everybody. This is the Ask KT and Suze
Anything edition. If you have a question
that you would like to possibly be chosen to be
answered on this podcast write into Ask Suze Podcast at gmail.com.
And that is Suze. All right, KT.
KT (02:48):
This first question, put a smile on my face. It's
from Jen. Hi Suze and KT. How do you recommend
assets and life insurance documentation be stored for your beneficiaries?
Do life insurance and 529 savings plans go into your
living revocable trust. I'm just wondering if something happened to
(03:12):
myself and my spouse. How would my children's guardian know
about the retirement accounts? Life insurance and assets that they're
entitled to receive?
Suze (03:23):
Well girlfriend
if you've left them in a trust, how would they
know about it unless you told them? So tell them.
So a 529 is not in a trust. Life insurance
can be in a trust if it's a life insurance
trust because you want it out of your estate because
you have so much money. But really, Jen,
(03:45):
just tell them where all the documents are, share it
with them. Don't wait until you're not here anymore in
the hopes that somebody's going to tell them about everything.
Tell them while they are a live girlfriend, share it
with them, show them your trust, show them your wills,
show them everything you have so that they know who
(04:05):
actually is also going to be the successor trustee or
the executor. So they all know. All right, KT.
KT (04:14):
OK. Next question from Suzanne. Suze. I am a high
earning employee and received $7000 back from my contributions last year.
I have so many questions about this. It is not
even funny. Why do I have to be penalized if
others don't want to contribute? How do I prepare for
(04:35):
this coming year so that I don't contribute too much?
explain what this is because I didn't get it at first.
And then I had to look it up. I asked Suze,
what the heck is she talking about?
Suze (04:48):
Listen, everybody, especially if it is a small company can
fall into this, but everybody that contributes to a 401k,
the plan has to make sure that all the employees
in the plan are contributing on some level
and in case they choose not to, the plan can
(05:11):
become what's called top heavy and a top heavy plan
is when more than 60% of the total value of
the plan
has been funded by the key employees of that company.
And when that happens, then either they have to make
(05:33):
it right by doing the safe harbor things and on
and on and on. But in your case, they actually
chose to just give the money back to you to
equalize it out. You know, KT, that's why
we used to make those big bucks from those major
corporations who paid me to go and talk to their
(05:53):
thousands of employees in the hopes that they would sign
up for the retirement account. Because if they didn't sign
up for the 401k plan,
then the key employees may have contributed too much in
comparison and then it would have been a top heavy plan,
which isn't good for anybody.
(06:14):
So here's what you need to know Suzanne. Normally, if
your plan was top heavy last year, December 31st of
last year, it's going to be top heavy again this year.
So that's just how they figure it out. So don't
contribute as much this year because if you do and
(06:36):
they haven't rectified everything, you are going to get money
back again. All right.
KT (06:42):
So this is from Melissa.
Suze, I have approximately $91,000 in a 403b. I am
no longer with my employer. I had to retire early
for health reasons. I will be 55 this month. So
my question is, what do I do with the money?
(07:03):
Do I let it sit in the account even though
I'm no longer making
contributions or do I roll it over to an IRA?
The Annuity account representative also gave me the following options,
cash it out, do systematic withdrawals or annuitize the amount
I desperately need advice. Do you like any of those options?
Suze (07:25):
Not really? Melissa, here's the thing normally I would say
to you
if you don't have any possibility of wanting to do
a backdoor Roth IRA. Later on that, I would tell
you to take the $91,000 and do an IRA rollover
with it at a discount brokerage firm like Charles Schwab
(07:46):
or Fidelity or wherever. Then you have a variety of
things that you can invest in. Whether it's mutual funds,
exchange traded funds, individual stocks, treasuries, whatever it may be.
But the only reason that I'm hesitating right now is
because a lot of people feel comfortable with the money
(08:11):
in the 403b that you may have because you're used
to the investment choices. You're used to how your statement looks,
you feel safe there and it's someplace that you know.
And when you do a rollover, especially with $91,000 then
who is going to make the decisions for you to
(08:34):
invest that money, how it should be invested and sometimes
you can get really afraid having $91,000 all in one
lump sum to decide what you should do with. Remember
you got this $91,000 simply by having money deducted from
your paychecks and over time it grew, it wasn't like Melissa,
(08:56):
what are you gonna do with $91,000 in one lump sum? So,
if you want, you can leave it exactly where it
is and just keep going. I would not be cashing
it out. I wouldn't look at systematic withdrawals, especially since
you're really only 55. I wouldn't annuitize it on any level.
(09:16):
If you feel comfortable with it, you like the mutual
fund choices, leave it there. However, you also don't have
to take all of it out. You could take out
$20,000 and do an IRA rollover with it
and therefore see what it feels like to invest that
money and have control over it. And then if you
(09:38):
feel secure, you can do a custodian to custodian transfer
again and roll over the rest.
But if you feel comfortable with it, if you have
control over the money and you're not afraid, then I
would be doing an IRA rollover with it. All right, KT.
KT (09:55):
This next question, Suze I chose because it's a conversation
about family issues and real estate.
And again, I think this may come up with many
families that are listening.
Suze (10:07):
So I'm looking at her and she's got two pages
to read to us so this is a Suze story time.
KT (10:13):
I'm gonna just tell the story. It's Hi, KT and Suze.
I'm a longtime fan of your books and podcasts. I
would like to get your thoughts about my situation.
My father is currently 76 years old. He owns a
two family home in Brooklyn. My mother, father, sister and
I are on the deed of the house. The house
(10:34):
was purchased actually from their uncle in 2006, Suze for
about 495,000. But now the property is valued at 1.5
million or more.
And he thinks that he, that there's about a 325,000
mortgage left.
Suze (10:52):
So think about that for one second, KT, they bought
it for how much?
KT (10:56):
495
Suze (10:58):
And how many years ago?
KT (10:59):
2006.
Suze (11:01):
So in all of these years, really, almost 20 years
if you think about it and they still have a
mortgage of $325,000 that means they probably didn't put
any money down if any. And they've only been paying
a mortgage. All right.
KT (11:20):
So my father and sister are on the mortgage and
they've been making the payments over the years. My parents
live on the second floor. My sister and her family
live on the first floor. I do not live in
the house and I own a separate house.
Now, here's the story. His dad retired five years after
purchasing the house, the sister. Ok, so five years, so...
Suze (11:43):
2011,
KT (11:45):
Yeah. The sister started paying for the entire mortgage payment. She's
been paying 13 years, she's been paying for it. So
my father recently
informed me to remove my name from the deed and
avoid any future dispute over the property with my sister.
In return, he will have me as the contingent beneficiary
(12:06):
for his bank account investments. Anything he has including his retirement,
his mother would be the primary beneficiary of those investments.
So long story short, he's concerned that by the time
his parents both pass, there may not be anything left
in those accounts for him.
(12:28):
I do not need. Then he says I do not
need the money. I try to tell myself it's not
a big deal, but my gut just does not feel
right removing my name from the deed. Also, as my
parents get older, I feel like it's better for them
to keep my name on the property... Ready? In case
my sister persuades them to remove their name from the
(12:51):
property and sell it. He doesn't trust his sister. So
he then goes on to say he consulted with an attorney,
a CPA blah, blah, blah, blah, blah. He said he
feels that he should be entitled to a small equity
when and if the home is sold.
And basically, he's asking, you know, your guidance or advice
(13:14):
from a trusted professional, which is you, on what he
should do. But this is emotional. It's not really a
financial decision,
Suze (13:22):
But it did say in there you, I did just
hear you say correct that his father and sister
don't want his name on it.
KT (13:30):
The father wants to remove his name from the deed.
So there will not be any future disputes with the
property after he passes. Which just sounds like the sister
and brother don't get along.
Suze (13:45):
So I just took the email from KT
and there's one line here, KT you didn't read which was,
but my father and sister feel like I did not
contribute payment to the house and should not be entitled
to any equity.
KT (14:00):
Suze. I feel the same way. I think that the
father and sister are right. He doesn't need the money,
but he thinks,
because he's the son, he, he's entitled.
Suze (14:09):
He also said since my sister lives in the house
and occupied the first floor, we could have generated rental
income from the first floor of the house to pay
for the majority of the mortgage over the years at
the end of the day, I just want to be
fair for all parties.
KT (14:25):
Well, how do you feel about it?
Suze (14:27):
Well, here's the thing.
I hope that you've all sat down as a family
and talked about it because the greatest loss here isn't
the loss of money or equity on the home or
money that you could have gotten afterwards. It's the loss
of the relationship with your sister.
(14:47):
It's the feeling angry at your father.
No amount of money really is worth that. The truth
of the matter is you say that you're doing fine financially.
So then what is it, what's really bugging you here?
Is it that you're not being valued in your mind?
(15:09):
Is it that your father is favoring your sister over you?
But there's something else that is going on here that
you need to have a discussion with yourself. If it
were me, I'd be really happy that my father was
going to put me on the account as a contingent
(15:30):
beneficiary to a savings account that has about $250,000 in it.
Maybe your mother will spend it. Maybe she won't.
But at least he's considering that and of course, all
the money should first go to your mother. If your
mother wanted to, she should spend everything because it's their money.
(15:50):
That's number one. But number two, you might suggest to
your father
that when he and mom die, then obviously your sister
is going to get the entire house. Maybe at that time,
(16:10):
he could make it so that you own some of
it at that time. Like he leaves you a portion
of it at that time
so that you get a little bit of that half
of that inheritance as well. That could be done by
how they hold title to the house, they could hold
(16:31):
title to the house as tenants in common or many
other ways. But you might want to talk to him
about that if he does not want to do that
and he wants to leave everything to your sister.
You have to honor his wishes. It's his money. He
is the father. He gets to decide and he's made
(16:54):
a decision and you need to honor that decision no
matter how you feel again. You've been blessed with the
fact that you don't need the money. But I'll tell
you what you do need. You need a relationship with
your mother, your father and your sister. And if you
don't have that, you really have struck
(17:14):
an emotional poverty level that you will experience when you
have lost them. All right, KT.
KT (17:22):
That was a good answer, Suze and I like having
these conversations because I think these issues come up more
than anyone thinks.
Suze (17:32):
Well, KT, you know, we've had to discuss these issues
that do we leave more to this one? Do we
leave less to that one? Do we not leave anything
to any of them?
We've had to make those decisions and many of them
may not be very happy because I'm sure some of
them KT really are calculating. Oh, I wonder how much
Suze's gonna leave me. So it happens. So do what
(17:57):
I do. Everybody just tell them you're not getting anything
KT (18:00):
Charity.
All right. Next question is from Diane. Good morning, KT
and Suze. I enjoyed the in depth Suze School about
the five year rule. I have a question. I'm having
trouble verifying the answer to. I'm 59.5. My husband is 61.
(18:21):
I'm still working, but my husband is not. Can we
put money in both my Roth IRA and his Roth IRA.
I've read something about spousal donations. If they don't have
earned income.
Suze (18:35):
Diane, you
absolutely can both put money in a Roth IRA for
yourself and for your husband, it falls under the nonworking
spousal account. Now, they're not gonna say that on the account,
it's gonna be a Roth IRA in his name. But
that is what will allow you to put money in there.
(18:55):
Just know that you are limited
to how much money you earn. If you've earned over
$16,000 a year, then you can put $8000 in your account,
which is the max this year and $8000 in his account. So,
it's based on how much money you're also making. But
if you're making good money,
(19:16):
yeah, you could fully fund it no matter what. As
long as you are under the modified adjusted growth income limits.
All right.
KT (19:26):
Ok. So everybody, again, I picked another one of these
stories today. I feel like storytelling time today. So this
is from Peggy. Dear, Suze. I'm 56 years old. I'm
hoping to retire at the age of 65
14 years ago, my husband was laid off during the recession.
(19:47):
At the time, we had three children under nine and
decided that him staying home was the best option. Here
we are 14 years later, the youngest is now 18.
My husband has still not gotten a job or contributed
financially to the household during all that time.
(20:08):
I love him very much and he does all the
household upkeep. I come home to a cooked dinner, completed laundry,
dishes away, food shopping, done, and a clean house. He
is definitely not lazy in that sense.
I love having a house husband, however. Ready Suze? I've
(20:30):
lost my sense of self. The only way I can
retire is if the mortgage is paid off. We currently
have 13 years left on that mortgage. We have three children,
one out of college, one in college and one heading
to college in the fall.
I feel awful and guilty that we're not able to
help the children with any of their college finances. They
(20:54):
are riddled with debt due to taking out student loans.
I've spoken to my husband multiple times and shared my
feelings over the last several years. He always promises to
get a job or do something, but the promises never
come through.
I'm at my wit's end, kicking him out, wouldn't solve
(21:15):
anything financially. I don't believe in divorce and we vowed
for richer or poorer. I can't imagine my life without him. However,
I resent him
every day. I know. Wait, listen to this. I go
to work. I bring home the money. I pay the
bills and make sure everything is in financial order. But
(21:38):
I struggle with guilt when I buy something for myself
or for the house. So my husband's 57 he's not
worked in his field for 14 years, which has changed drastically.
I don't expect him to get a job in this field.
A simple job at Home Depot or ShopRite or anything
to bring in extra money enough to throw more money
(22:00):
at the mortgage. But I think he's embarrassed to do that.
I often think myself about getting a second job. However,
I work a very demanding 40 plus hour nurse manager
position and I can only do something on the weekend.
I think it would be more embarrassing for him if
people knew that I had to get a second job
(22:21):
to support the family when he hasn't worked in years.
She makes a good salary. They live a simple life.
They don't have much extra. She's contributing 10% to retirement. However,
she can't even afford to bump it up to 15%.
She said any advice on how to approach the subject.
(22:42):
This is a tough one. This is a, you know,
you often wonder how many, how many couples are in
that position.
Suze (22:50):
Yeah I know there's not a lot of extra money here,
but I would tell you to go to couples counseling.
I really would because obviously he's not hearing you because
you've had this conversation with him many, many times
and you may not be hearing him
(23:11):
And what his fears are and what he's afraid of. Obviously,
he's embarrassed. He feels like the only thing he can
do are the things he's doing at the house and
he doesn't even know how to begin. So you both
need help in that communication with one another. I love
(23:34):
that you don't believe in divorce. I love that you
say you love him
that it was for richer or poorer. However, what I
don't love is that you resent him every single day.
So you know, you can't have it both ways because
(23:55):
somehow there's no way you can resent somebody
and like them. And KT, what's my favorite saying? Like
is more important than love. We throw around that word.
I love you. I love you. I love you so
easy and then something happens and it's like I hate you,
(24:16):
I hate you. I hate you,
Right? I like KT.
KT (24:21):
I like Suze.
But no, really, we really, really like each other.
Suze (24:26):
And that is more important than loving her because there
are times that I'm like, I'm not feeling that loving
right? Really? But I always...
KT (24:37):
She never stops liking me and I, I like everything
about her.
Suze (24:41):
So I need you to ask yourself the question. What
do you like about him?
What is it
that keeps you there really?
Because when you resent somebody every day that you look
at you emit a certain energy and that energy may
(25:02):
also be contributing to what keeps him down because don't
think he can't feel it. When I'm mad at KT,
she can feel it even though she says, are you OK?
And I go, I'm all right. She knows. I know.
When you live with somebody and you've lived with them
for a long time, you've shared children with them.
(25:23):
They know. So is your resentment, what's keeping him from
feeling strength and power and the ability to go on
and make a change? So I would tell you at
this point in time,
you really, really need again to go to couple counseling.
I just want to make one other comment about the children.
(25:46):
Do not feel bad for them that you can't pay
for their college education. Nobody paid for my college education
and look at me today.
So it's really important that they understand when you have
the ability financially to pay for a college education. And
when you don't, and when they get older and they
(26:07):
have children, they may be in the position to say
to their kids. Listen, I had to pay for it
on my own. I had student loan debt and I
did it.
I can't afford to pay for your college education. So
you're educating them on the realities of life, don't protect
them against the realities of life and don't protect yourself
(26:29):
about the reality of the relationship that you are really,
really in.
Well, those were quite the questions you picked this time,
my dear KT. And it is quizzy time. And if
I had known you had chosen the stories you chose,
I probably wouldn't have chosen this quizzy. But since I
(26:50):
don't have another quizzy, I'm gonna do this quizzy. All right,
everybody and we all know what quizzy time means means.
How would you answer this question:
Dear KT and Suze.
I'm so lucky to be one of the everyone else
smart enough to listen to your podcast. I only wished
(27:14):
I had discovered your show sooner. As I think I
made a big mistake.
Last year out of the blue, a relative very generously
gifted me a large sum of money they wanted me
to use for a down payment for a home. I
ended up buying a small condo I'd like in DC
(27:35):
with a 30 year mortgage at a 5.75% interest rate. However,
I really messed up the math on how home ownership
would affect my ability to cover all my other expenses.
I'm 27 and only have around $1000 left each month
(27:57):
for other expenses after paying my mortgage and condo fee
as well as contributing 5% to my Roth TSP. I'm
struggling to pay off credit cards in full each month.
What should I do? Here's the question.
Should I sell the condo after only owning it for
(28:20):
a year and give the money back to my relative.
Had I discovered your podcast sooner. I would have made
a different choice and carefully calculated my budget. Waited for
interest rates to go down and focused on saving for
an emergency fund and retirement instead.
Thank you for your help and sending peace and hugs
(28:42):
your way. So,
should he sell the condo after only owning it for
a year and give the money back to his relative?
KT (28:56):
Did he inherit the money?
Suze (28:58):
No, it was a gift?
KT (28:59):
A gift? Absolutely. Absolutely. Here's what I would do.
Suze (29:05):
What would you do?
KT (29:06):
So, he's 27 years old. Sounds like such a good boy.
I would absolutely find out if you can earn or
make a tiny profit selling it because he has a
30 year mortgage. My goodness, that's a big mortgage. So, absolutely.
Try to sell it. But let the relatives know your plan,
(29:27):
let them know that you bit off more than you
can chew. That you understand, you made a mistake and
that you're going to sell it and give them back
the money. They may want you to sell it and
use that money to get something a little more reasonable
and try to help you with a leg up on,
on your life. That's what it seems like they want
(29:47):
to do. So I would sell it. Yeah. Get something
more reasonable that you can afford.
Suze (29:53):
I'm gonna give you a ding ding ding on that one.
That wasn't an exciting ding ding ding. Was it?
KT (30:00):
Give it to me? Give it to me
Suze (30:01):
Ding, ding, ding, ding, ding, ding, ding, ding, ding kind of.
So here's what's really important is that we always stand
in our truth and we don't take an action with
something that was a gift from somebody else
without including them in that decision, which is what you said.
(30:23):
So I just wouldn't sell it outright. I would definitely
go to this relative. Tell them the truth and tell
them that you made a mistake. You love them so much,
but that in fact, you are going to sell it
if that's what they think you should do. And then
let's see what they say. The next question becomes,
(30:43):
if you sell it, chances are you may make money
on it. You never know because it's been a while now.
Are you going to return to them? The money that
they gave you, plus the money that you made because
it was their money
or are you not? Because really if you think about it,
(31:05):
you did make money based on the tax savings because
your mortgage that you had provided you with some ability
to save money on taxes. So you saved a little there.
But can you figure out a way that you'll also
feel good about it because you did pay that mortgage
for all that time.
As to do you split the money that you made
(31:28):
on it, if you do make any money on it
or do you not? It's not just as simple as
I'm gonna sell it and give you the money back
because remember that money could have been sitting in a
money market account for them making four or 5% a year.
So maybe that's what you do. You calculate what four
(31:48):
or 5% would have been on that money sitting there
if you do make more than that. And that's how
much you give them back and you keep the rest,
assuming you've made money.
KT (32:01):
I'd offer all of it back. And if I were
those relatives, I'd say, oh, sweetheart, we're so proud of
you that you realized you bit off more than you
can chew. Let's sit down together with a calculator and
we'll figure it out. Let's start over. That's what I
would say if I were the relative.,
Suze (32:18):
But we don't know what the relatives are gonna say.
What we have to do here, KT, is to be
fair is to give him choices of how to think
of
because trust me, if all of a sudden he goes
to sell this and he makes a whole lot of
money on it, he's gonna have to face this question
that I just posed. So it's not what the relatives
(32:40):
are gonna say. It's what is he going to think
when the time comes. But absolutely talk to them first.
All right, Miss Travis.
KT (32:50):
That's a wrap.
Suze (32:51):
That's a wrap. So, until next time
there's only one thing that we want you to remember
when it comes to your money and it is this:
KT (33:00):
People first, then money, then things.
Suze (33:03):
And if you do that and stay safe, we promise
you you will be unstoppable.
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1. Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
2. The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
3. Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.