May 1, 2025 • 27 mins
On this episode of Ask KT and Suze Anything, Suze answers questions about beneficiaries of IRAs, student loans, filing taxes as a married couple and so much more.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:28):
May 1st, 2025. Welcome everybody to the Women and Money podcast,
as well as everybody smart enough to listen. Today is
what KT?
KT (00:39):
Ask KT and Suze Anything Thursday.
Suze (00:41):
And she is so happy to be back in the studio.
KT (00:46):
No, I missed it. I missed I missed my microphone,
Suze (00:50):
Right? And all of you are just gonna have to
be patient because my voice, as you can hear, it's
been giving me trouble recently. So KT actually likes how
low it is. Do you like it?
KT (01:01):
I do. It's sexy.
Suze (01:02):
It's sexy. But anyway, so get used to it until
it changes again. All right, go on, KT.
KT (01:09):
OK, so we've got some great questions here.
And the first one is from Betsy. She said, You
rock KT and Suze. Love you and listen all the time.
I'm 76 years old and my hubby's 79. We both
have everything in place, including the must-have documents.
Suze (01:28):
Yeah, baby.
KT (01:29):
You want to tell them if they don't have a
must-have document what to do?
Suze (01:33):
No.
KT (01:33):
OK.
So I understand, I understand my spouse should be my
beneficiary of my retirement accounts. She has a Roth and
rollover IRA and vice versa. But if I want some
of that to go to other members in my family,
wouldn't my niece and nephew get taxed on it when
(01:53):
my husband gives it to them?
She goes on to say, I love you, your efforts
are working for all of us, and this is the
best part of the email, everyone.
She said, I took over my hubby's 401k when he retired,
and I have doubled it. So that's incredible, she said,
Thank you for giving me an education along with
(02:16):
confidence.
Suze (02:16):
Yeah, that's actually the goal of the Women and Money podcast,
and everybody smart enough to listen is so that you
can be your own best financial advisor. But Betsy, so
I don't understand your question.
I just don't, but I'm going to assume what you're
asking me, which is obviously the reason that I want
(02:40):
your husband
to be the primary beneficiary of your retirement accounts more
than the trust, because many of you, when you have
the must-have docs, which happens to be a living revocable trust,
a will, an advanced directive and durable power of attorney
for health care, as well as a financial power, many
(03:02):
of you have tended to make the primary beneficiary your trust.
It's so much easier on your beneficiaries, especially if you
are married, to make your spouse the primary beneficiary. Why?
Because your spouse has all kinds of benefits that nobody
(03:22):
else has, the main one being that he can take
over your retirement account as if it was his own
and on and on, however...
You can have contingent beneficiaries cause what if something happens
to you and your husband together and that's where you
leave maybe your other family members there and that's how
(03:45):
they get it but...
If everything is left to your husband, you die, and
now he's taking out some of that money. He's the
one who's going to have to pay income taxes on it.
And he can turn around and just give it if
he wants to your other family members. Remember, with the
(04:08):
new increase in the amount you can give, you now
this year, 2025, can give $19,000 a year to as
many people as you want. They do not have to
be relatives anything, and they don't pay taxes on it.
So therefore, that's probably what should happen.
KT (04:30):
19,000 total?
Suze (04:32):
No, 19,000 per person total per person, but I could
give Sophia 19,000, Travis 19,000. I could go down the street.
In fact, I had the weirdest thing this morning, KT.
KT (04:49):
A dream?
Suze (04:49):
Not a dream, but I was looking at something, these
things that I have, right, and I had this hit
of I'm just going to walk down the street and
hand people these things that are worth a lot of money.
KT (05:00):
Oh,
you mean objects.
Suze (05:02):
Objects
like a watch...
KT (05:04):
A watch. Oh, I see things...
Suze (05:05):
Do I know my joke growing up?
KT (05:08):
No.
Suze (05:09):
Yes, you do.
KT (05:09):
What is it?
Suze (05:10):
The millionaire.
KT (05:11):
Oh.
Suze (05:12):
I had this dream.
Uh, not dream fantasy dream, but this desire when I
got older.
To be able to go down the street and just
give somebody a check for a million dollars and walk away.
I wanted to do those things.
I kind of still do and I do. But there
is one story, KT that I just, it reminds me
(05:35):
of is that I did give a $10,000 check to
a little boy who was supporting his mom.
And he went and he wanted to put it into
his bank account and the bank literally thought that he
had stolen my checks. There's no way Suze Orman would
have given him $10,000 and it was just so very,
(05:56):
very sad. So sometimes it's interesting when you give somebody
money what can happen from it. All right, next question, girlfriend.
KT (06:04):
OK.
Hi Suze. My 60 year old sister recently passed away.
Her 401k is worth $281,000. My other sister and I
are the beneficiaries. I am 62. My sister's 64. We
also have two other siblings we wish to share it with,
(06:26):
and they are 59 and 64. We are all still working.
Hm.
The funds will be transferred to an inheritance 401k. What
is the best way to share with our other two
siblings?
Suze (06:41):
So Irene, oh boy, this is why I wish everybody
you would have had a Roth 401k or a Roth IRA.
It would have made your life so much easier. However,
Irene, you have
what's known as a traditional 401k that you just inherited,
which means taxes have never been paid on it. Therefore,
(07:03):
it's going to have to go over to an inherited
401k or an inherited IRA divided equally between you and
your sister.
Now those two IRAs are going to have to be
wiped clean within 10 years. You could take it all
(07:24):
out right now and pay taxes on it, which you
wouldn't want to do. You also, however, would not want
to let it sit there for 10 years or whatever
it may be, and then have to take it all
out at once. So if I were you, I would
divide the amounts once they're divided by 10.
(07:44):
So let's just say you each get $140,000. You need,
in my opinion, to take out between 14 and $20,000
a year for the next 10 years. So at the
end of the 10th year, it's wiped clean. When you
take out the money, you are going to owe ordinary
(08:08):
income tax on it.
So if you want to give some to your other siblings,
they should also have to pay income tax on it.
So you would subtract whatever amount of income tax you paid,
figure out how much that would have been on the
amount you want to give them, and then just give
them the money. It's just that easy next, KT.
KT (08:31):
OK, this is from Will. I really like this one.
Will said, um, he misses us. He said, I'm 35.
I work full time as the director of nursing at
a nursing home. I'm about to start back to college
to get my master's in nursing, which I think will
increase my future earning potential. Will said, I currently have
(08:53):
about 100,000 in retirement, another 130,000 in Fidelity IRAs, home equity, cash, etc.
He, he's only anticipating one purchase in the next 1
to 3 years, which is a new car, but he
said the program he's looking into, Suze, will cost about
$30,000 over the next 3 years. I could afford to
(09:17):
pay the tuition out of pocket, but I'm wondering if
I might end up with more money in the long
run by taking out student loans. Now here's the catch, Suze.
He's 35. He already has $30,000 in student loans, and
Will says, I hate to add to that, as it
(09:40):
is my only debt outside of my home loan. So
he just gave you a key word. I hate to
add to that.
Suze (09:48):
All right, so you give him the advice. What would
you do?
Quzzy pop quizzy.
KT (09:53):
I wouldn't go back for my master's Will.
Suze (09:56):
Oh God,
I wasn't expecting that.
KT (10:00):
No, seriously, you're 35. You're doing a great job. I'm
telling you something, boyfriend, I think.
The nursing industry so needs people like you that are
good at what you do, you love what you do,
and who cares about earning potential? You're great. Don't go
back for the masters.
Suze (10:21):
All right, but Will, before you go back for the masters,
if you decide to go back and get a master's,
you really need to check and see what would that
do for you financially speaking if you had a masters.
You need to find that out, especially if you have
to take out a student loan or take money out
(10:43):
of something else to finance it. What would that money
have grown to versus how much really of an increase
in your salary will you get? Just something to think
about if, however, you decide that it's worth it and
you have the money now
(11:04):
to be able to pay 10,000 a year towards it,
I would do that rather than going into debt to
get it, cause why you hate that you have debt. Yes,
you hate it. So therefore don't hate things in life. Will.
When you hate something, it makes you negative and all
these other things, and you'll never get a job or
things in a raise that you want if you have
(11:25):
anger in you because you're doing something you hate. so.
I kind of would probably stick by KT suggested my dear,
you know, KT, I have to say.
Over the years now, if you go back and you
listen everybody to podcasts, I've even been questioning, does it
make sense to go to a university at all that
(11:49):
costs you $40,000 or $60,000 a year? Why not at
community college? Why not getting, you know, all kinds of things?
Be careful, everybody. That's all I can say. All right, go on.
KT (12:00):
OK, so next question. This isn't actually a question. This
is a great.
Email.
Suze (12:07):
I'm so surprised you didn't start with a great email.
KT (12:10):
No...Hi KT and Suze. I recently visited a friend and
her husband. Somehow we got on the thrilling topic of taxes.
She mentioned that they decided to file separately this year
because it would supposedly save them money right away. My
gut said something was off,
Suze (12:28):
especially
So, married filling and separately.
KT (12:30):
Yeah,
Suze (12:30):
wait,
KT (12:31):
especially since she told me before that she contributes to
a Roth IRA.
I told her my husband and I filed jointly because
I was pretty sure we couldn't contribute to our Roths
if we filed separately.
Suze (12:45):
And you live together.
KT (12:47):
She said, no, you can. Even our tax preparer had
suggested married filing separately to reduce...
Suze (12:55):
Do they live together?
KT (12:56):
... to reduce the tax bill. Yeah, now listen, listen
to this.
I felt silly for not remembering why my husband and
I filed jointly and kind of embarrassed that I may
have been wrong, so I followed up on this topic.
I found a podcast from August 15, 2021 where you
(13:17):
went over the rules for married couples. The
income limit is up to 10,000 for married filing separately
and living together. My friend and I definitely earn way
above that and share the same residence with our spouses.
So I was right. And thankfully, I have not changed
(13:40):
my filing status.
I emailed our tax person and sent the IRS rules
to my friend as an FYI. Suze, you rock. Thank
you for taking the time to repeat the information over
and over so that it's drilled into my brain.
Suze (13:59):
What's interesting about this...
KT (14:01):
She said she loves you so much.
Suze (14:02):
Thank you. Thank you. Anyway, what's interesting about this is
that I want all of you to start to take note.
Just because a so-called professional, a CPA, a financial adviser says, no,
you can do that. You better check it, recheck it
(14:23):
and check it again. And when a friend says to you,
I've been listening to the Suze Orman show, and I
think she said that.
They really should check it again. So it's not that
I'm never wrong, of course I can be wrong, but
that's just plain stupid. How we doing, KT?
KT (14:41):
I think, I think we're doing pretty good. How's your voice? How,
how do you, how do you feel?
Suze (14:46):
Are you back in the saddle.
KT (14:47):
I'm in the, I'm in the saddle, but how about
your little throat and voice? Is it in the saddle?
Suze (14:52):
Back in the saddle again. Go on.
KT (14:58):
All right. Hi KT and Suze. You both inspire me
and give me hope. I have just two short questions,
but I'm only gonna ask one.
With my new job, they offer a traditional 401k. They
will match 4%. Will I contribute only to the match
or maximize the 15%? I'm 49 turning 50 this May
(15:23):
with only 70,000 in a rollover IRA, 40,000 Roth IRA
and an emergency fund of 36,000, which is good for
about 5 months for me. So there you go.
Suze (15:39):
She said, so there you go. Are you saying it?
KT (15:41):
No, no, no, I, I'm saying so there you go.
Suze (15:43):
So there you go.
KT (15:43):
So, what's your advice?
Suze (15:45):
Are you telling me that the company that you work
for doesn't offer a 401k Roth, that they only offer
a traditional 401k?
Is that true?
Cause if that's true, where they only offer a traditional 401k,
which is a pre-tax 401k, then yeah, you're only going
(16:09):
to contribute up to the point of the match that 4%.
I don't care that you know you can put in
an extra 11%. doesn't matter to me. What matters to
me is that you have the most efficient use of
your retirement money.
And the most efficient use would be after the 4%
(16:30):
open up a Roth IRA and given...
You're turning 50 this month. You can put $8000 in
your Roth IRA after taxes, which also can be used
as your emergency fund, period. The other money I don't
(16:51):
care about now. If they do, why are you laughing?
KT (16:56):
People don't say I don't care about the other.
Suze (16:59):
Well, you know what I mean. You, you get it.
You get it, but here's the scoop. It may be,
that your company may offer a Roth 401k, but the
match goes into a traditional 401k, and a lot of
people think, oh, that means I have to only have
a traditional 401k for them to match it. If they
(17:22):
have a Roth 401k, then here's what you are to do.
You are
to put up to 15% if you want in your
Roth 401k, they will put the 4% in your traditional 401k,
and you can still have an $8000 Roth IRA if
(17:43):
you want. Now you have hit the serious retirement jackpot.
Next question, KT.
KT (17:50):
Ok, Suze, this last email.
Suze (17:53):
Why is it the last one?
KT (17:54):
Because it's really long and I want to have a
conversation about it. I think it's important. I'm gonna read
the whole thing.
Suze (17:59):
I know why it's the last one. Why, Mama KT,
she's trying to protect my voice.
KT (18:05):
I am protecting it, otherwise none of you are gonna
get a Sunday. And if you want a Sunday real
deal authentic Suze Orman, this is my last email.
Suze (18:14):
Tell everybody I had a Sundae last night.
KT (18:20):
Oh, she did. I gave her a non-dairy, um, ice cream,
a non it was really good
Suze (18:27):
Because I can't have dairy.
KT (18:28):
And that little bit of a cold on her throat
was so nice.
Suze (18:33):
OK, wait, I just have to laugh, so I asked KT,
Can you get me a little non-dairy ice cream? So
she's out.
KT (18:40):
The one flavor she wanted, they didn't have, so I
brought back 4,
Suze (18:43):
And I'm like, I asked for just a little.
KT (18:45):
But then she wanted to taste all.
All of that so that was, that was her plan.
So this this is an interesting one, and I picked
it because I think many of you listening will go
through this or have already either for your family or yourselves.
Dear Suze and KT, first of all, thank you. My
wife and I have learned so much from you. Our
(19:08):
children learned more watching your shows back in the day.
And trying to predict your answer on the Can I
Afford it segment than they ever learned in school about
personal finance.
Suze (19:20):
So now have them go to my YouTube channel where
they can actually play the Can I Afford it game.
KT (19:26):
Go to Suze's official YouTube channel, and there's a lot
of great stuff on that.
So here's my question. My father-in-law is currently in hospice
care and will be passing soon. He has asked us
to take care of his wife, and we fully intend
to do so. In fact, we already own the condo
(19:47):
where they live. As part of that, he has asked
me to take care of the bills which his wife
has never been involved with.
He then handed me a stack of bills that revealed
he has 13 credit cards with about $50,000 in debt.
He is currently paying $200 a month to each of
(20:10):
the cards, a bit over the minimum payments on each.
Now because we have followed your recommendations for 25+ years now,
we could easily write a check to each of the
credit cards, cut them up, and be done with it.
Suze (20:26):
Over my dead body.
KT (20:28):
However, I don't want to do that because I am angry.
Not at my in-laws but at the predatory credit card
companies they could have run a credit report. They would
have seen that he lived on a fixed income and
that he already had 6, 7, 8 credit cards he
(20:49):
was not paying off. I am furious that two new
significantly large companies wrote him and said, we see that
you have
11 credit cards already. We would like to be your
12th at a 29.99% interest.
Suze (21:06):
I would love to know the name of those companies.
KT (21:09):
Yeah, we don't have that.
Suze (21:11):
You write me and tell me. Go on.
KT (21:12):
That seems almost criminal to me. I do not judge
my father-in-law at all. They did not live extravagantly, but
I am angry at these credit card companies.
My question is this
and be done with it...
Suze (21:31):
No.
KT (21:31):
... which would not be a burden on us.
Suze (21:33):
No.
KT (21:34):
Or should I set up an autopay for the monthly
minimums and ride it out so that these predatory
credit card companies don't get an extra penny.
Suze (21:45):
No.
KT (21:46):
If we do pay it off, should we use our
funds or the $100,000 life insurance funds?
Suze (21:53):
No.
KT (21:54):
Suze, thank you so much for all that you do. Um...
Suze (21:58):
That's good because I'll tell you why it's good, KT.
I wrote this person and here's the advice that I
gave them. Now...
Did you hear what I just said? I wrote this
person back personally. Every once in a while when I'm
reading these, something touches my heart, especially if something has
(22:18):
gone wrong when it didn't have to be wrong.
And I told him what to do. How can you
possibly be somebody like that? Do you have a question?
You should send it into the Ask Suze S U
Z E podcast at gmail.com. And KT does look through them,
but so do I. And depending on the situation, do
(22:42):
not be surprised if you hear back from me. In fact, recently, KT,
just yesterday morning.
There's this woman and her mother had died and her
father also had died and the adviser was telling all
these things and blah blah blah and finally I said,
you know, this deserves a one on one phone call.
KT (23:04):
Oh, you called her.
Suze (23:05):
I will, right, so anyway, I just want to say that,
asked Suze Podcast at gmail.com. But here is the advice
that I gave this person.
All right, so now Daddy has died. Now, your job
is to take care of mom. What's interesting is mom
(23:27):
doesn't really have any assets in her name.
Her house that she's living in is in your name.
The $100,000 life insurance policy. She could absolutely just say,
you know what, I don't want it or whatever, and
let it go to you. So that $100,000 could absolutely
go into your name as well. Now here's Mom. She
(23:50):
doesn't have any assets at all, and all of a sudden,
you let the credit card companies know that Dad died
and let's see what they do. If they come after mom,
here's the way that you're going to get back at them.
You are going to claim bankruptcy for your mother because
your mother doesn't really have any income. She doesn't really
(24:11):
have any assets. You are not going to give them
the pleasure of letting this money earn 29%.
Interest you are going to become a warrior and you
are not going to turn your back on this battlefield.
You are going to protect your mother. You are going
to protect her assets, and you are going to take
these banks and let them lose the money. They never
(24:32):
should have lent it. They don't deserve it back, and
there you go. All right, KT.
KT (24:37):
So I thought that that would be your decision because
she's
84 and really healthy and she has a long way
to go. So why have any debt? Just claim bankrupcy...
Suze (24:47):
She doesn't have debt, she never even knew it. And
with that $100,000 from the life insurance policy that the
kids now have...
KT (24:55):
They'll take care of her.
Suze (24:56):
They'll take care of her, you know, they own the house, everything,
so believe it or not, the mere fact,
that you own the house that she lives in is
your father's saving grace. So therefore, and that's what I
would do.
KT (25:13):
That was great advice. I love that because I was
thinking the same thing.
Suze (25:17):
You were thinking that...
KT (25:18):
Claim bankruptcy.
Suze (25:20):
All right. There we go, two great minds think alike.
They think alike. All right, everybody, that brings us to
the end
of another Ask KT and Suze Anything podcast.
KT (25:31):
What are you gonna do Sunday?
Suze (25:33):
So Sunday will be Suze School and I'll be a
little bit different is I am gonna talk about diversification
because many of you are confused. I had diversification in
my portfolio, you write me, but yet my money is down.
You say you had diversification, but your money was up. Why?
So I want to tell you about what my definition
(25:56):
of true diversification is. I also want to address Pfizer's stock,
you know, I've told many of you how much I
love it, and it's currently at an 8% dividend.
You're writing me and you're afraid they're going to cut
the dividend, I will address that then. Also, I want
to talk to you about why it's so important for
you to listen every single week to the Women and
(26:19):
Money podcast, especially if you follow a stock recommendation.
Do you remember a while back? Well, in fact, I'm
not going to tell you you're going to have to
wait till Sunday, and if there's time, I want us
to talk about student loans and the changes that have
just come back in effect. So until Sunday.
(26:42):
There's only one thing, isn't there, KT, that we want
you to remember. What is that smile all about?
KT (26:48):
People
first, baby, then money, then things, and you stay healthy
and
safe.
Suze (26:54):
And so if you do that, KT, what will you be?
KT (26:57):
Unstoppable!
Suze (26:58):
All right, see you Sunday. bye bye.
May 1st, 2025. Welcome everybody to the Women and Money podcast,
as well as everybody smart enough to listen. Today is
what KT?
KT (00:39):
Ask KT and Suze Anything Thursday.
Suze (00:41):
And she is so happy to be back in the studio.
KT (00:46):
No, I missed it. I missed I missed my microphone,
Suze (00:50):
Right? And all of you are just gonna have to
be patient because my voice, as you can hear, it's
been giving me trouble recently. So KT actually likes how
low it is. Do you like it?
KT (01:01):
I do. It's sexy.
Suze (01:02):
It's sexy. But anyway, so get used to it until
it changes again. All right, go on, KT.
KT (01:09):
OK, so we've got some great questions here.
And the first one is from Betsy. She said, You
rock KT and Suze. Love you and listen all the time.
I'm 76 years old and my hubby's 79. We both
have everything in place, including the must-have documents.
Suze (01:28):
Yeah, baby.
KT (01:29):
You want to tell them if they don't have a
must-have document what to do?
Suze (01:33):
No.
KT (01:33):
OK.
So I understand, I understand my spouse should be my
beneficiary of my retirement accounts. She has a Roth and
rollover IRA and vice versa. But if I want some
of that to go to other members in my family,
wouldn't my niece and nephew get taxed on it when
(01:53):
my husband gives it to them?
She goes on to say, I love you, your efforts
are working for all of us, and this is the
best part of the email, everyone.
She said, I took over my hubby's 401k when he retired,
and I have doubled it. So that's incredible, she said,
Thank you for giving me an education along with
(02:16):
confidence.
Suze (02:16):
Yeah, that's actually the goal of the Women and Money podcast,
and everybody smart enough to listen is so that you
can be your own best financial advisor. But Betsy, so
I don't understand your question.
I just don't, but I'm going to assume what you're
asking me, which is obviously the reason that I want
(02:40):
your husband
to be the primary beneficiary of your retirement accounts more
than the trust, because many of you, when you have
the must-have docs, which happens to be a living revocable trust,
a will, an advanced directive and durable power of attorney
for health care, as well as a financial power, many
(03:02):
of you have tended to make the primary beneficiary your trust.
It's so much easier on your beneficiaries, especially if you
are married, to make your spouse the primary beneficiary. Why?
Because your spouse has all kinds of benefits that nobody
(03:22):
else has, the main one being that he can take
over your retirement account as if it was his own
and on and on, however...
You can have contingent beneficiaries cause what if something happens
to you and your husband together and that's where you
leave maybe your other family members there and that's how
(03:45):
they get it but...
If everything is left to your husband, you die, and
now he's taking out some of that money. He's the
one who's going to have to pay income taxes on it.
And he can turn around and just give it if
he wants to your other family members. Remember, with the
(04:08):
new increase in the amount you can give, you now
this year, 2025, can give $19,000 a year to as
many people as you want. They do not have to
be relatives anything, and they don't pay taxes on it.
So therefore, that's probably what should happen.
KT (04:30):
19,000 total?
Suze (04:32):
No, 19,000 per person total per person, but I could
give Sophia 19,000, Travis 19,000. I could go down the street.
In fact, I had the weirdest thing this morning, KT.
KT (04:49):
A dream?
Suze (04:49):
Not a dream, but I was looking at something, these
things that I have, right, and I had this hit
of I'm just going to walk down the street and
hand people these things that are worth a lot of money.
KT (05:00):
Oh,
you mean objects.
Suze (05:02):
Objects
like a watch...
KT (05:04):
A watch. Oh, I see things...
Suze (05:05):
Do I know my joke growing up?
KT (05:08):
No.
Suze (05:09):
Yes, you do.
KT (05:09):
What is it?
Suze (05:10):
The millionaire.
KT (05:11):
Oh.
Suze (05:12):
I had this dream.
Uh, not dream fantasy dream, but this desire when I
got older.
To be able to go down the street and just
give somebody a check for a million dollars and walk away.
I wanted to do those things.
I kind of still do and I do. But there
is one story, KT that I just, it reminds me
(05:35):
of is that I did give a $10,000 check to
a little boy who was supporting his mom.
And he went and he wanted to put it into
his bank account and the bank literally thought that he
had stolen my checks. There's no way Suze Orman would
have given him $10,000 and it was just so very,
(05:56):
very sad. So sometimes it's interesting when you give somebody
money what can happen from it. All right, next question, girlfriend.
KT (06:04):
OK.
Hi Suze. My 60 year old sister recently passed away.
Her 401k is worth $281,000. My other sister and I
are the beneficiaries. I am 62. My sister's 64. We
also have two other siblings we wish to share it with,
(06:26):
and they are 59 and 64. We are all still working.
Hm.
The funds will be transferred to an inheritance 401k. What
is the best way to share with our other two
siblings?
Suze (06:41):
So Irene, oh boy, this is why I wish everybody
you would have had a Roth 401k or a Roth IRA.
It would have made your life so much easier. However,
Irene, you have
what's known as a traditional 401k that you just inherited,
which means taxes have never been paid on it. Therefore,
(07:03):
it's going to have to go over to an inherited
401k or an inherited IRA divided equally between you and
your sister.
Now those two IRAs are going to have to be
wiped clean within 10 years. You could take it all
(07:24):
out right now and pay taxes on it, which you
wouldn't want to do. You also, however, would not want
to let it sit there for 10 years or whatever
it may be, and then have to take it all
out at once. So if I were you, I would
divide the amounts once they're divided by 10.
(07:44):
So let's just say you each get $140,000. You need,
in my opinion, to take out between 14 and $20,000
a year for the next 10 years. So at the
end of the 10th year, it's wiped clean. When you
take out the money, you are going to owe ordinary
(08:08):
income tax on it.
So if you want to give some to your other siblings,
they should also have to pay income tax on it.
So you would subtract whatever amount of income tax you paid,
figure out how much that would have been on the
amount you want to give them, and then just give
them the money. It's just that easy next, KT.
KT (08:31):
OK, this is from Will. I really like this one.
Will said, um, he misses us. He said, I'm 35.
I work full time as the director of nursing at
a nursing home. I'm about to start back to college
to get my master's in nursing, which I think will
increase my future earning potential. Will said, I currently have
(08:53):
about 100,000 in retirement, another 130,000 in Fidelity IRAs, home equity, cash, etc.
He, he's only anticipating one purchase in the next 1
to 3 years, which is a new car, but he
said the program he's looking into, Suze, will cost about
$30,000 over the next 3 years. I could afford to
(09:17):
pay the tuition out of pocket, but I'm wondering if
I might end up with more money in the long
run by taking out student loans. Now here's the catch, Suze.
He's 35. He already has $30,000 in student loans, and
Will says, I hate to add to that, as it
(09:40):
is my only debt outside of my home loan. So
he just gave you a key word. I hate to
add to that.
Suze (09:48):
All right, so you give him the advice. What would
you do?
Quzzy pop quizzy.
KT (09:53):
I wouldn't go back for my master's Will.
Suze (09:56):
Oh God,
I wasn't expecting that.
KT (10:00):
No, seriously, you're 35. You're doing a great job. I'm
telling you something, boyfriend, I think.
The nursing industry so needs people like you that are
good at what you do, you love what you do,
and who cares about earning potential? You're great. Don't go
back for the masters.
Suze (10:21):
All right, but Will, before you go back for the masters,
if you decide to go back and get a master's,
you really need to check and see what would that
do for you financially speaking if you had a masters.
You need to find that out, especially if you have
to take out a student loan or take money out
(10:43):
of something else to finance it. What would that money
have grown to versus how much really of an increase
in your salary will you get? Just something to think
about if, however, you decide that it's worth it and
you have the money now
(11:04):
to be able to pay 10,000 a year towards it,
I would do that rather than going into debt to
get it, cause why you hate that you have debt. Yes,
you hate it. So therefore don't hate things in life. Will.
When you hate something, it makes you negative and all
these other things, and you'll never get a job or
things in a raise that you want if you have
(11:25):
anger in you because you're doing something you hate. so.
I kind of would probably stick by KT suggested my dear,
you know, KT, I have to say.
Over the years now, if you go back and you
listen everybody to podcasts, I've even been questioning, does it
make sense to go to a university at all that
(11:49):
costs you $40,000 or $60,000 a year? Why not at
community college? Why not getting, you know, all kinds of things?
Be careful, everybody. That's all I can say. All right, go on.
KT (12:00):
OK, so next question. This isn't actually a question. This
is a great.
Email.
Suze (12:07):
I'm so surprised you didn't start with a great email.
KT (12:10):
No...Hi KT and Suze. I recently visited a friend and
her husband. Somehow we got on the thrilling topic of taxes.
She mentioned that they decided to file separately this year
because it would supposedly save them money right away. My
gut said something was off,
Suze (12:28):
especially
So, married filling and separately.
KT (12:30):
Yeah,
Suze (12:30):
wait,
KT (12:31):
especially since she told me before that she contributes to
a Roth IRA.
I told her my husband and I filed jointly because
I was pretty sure we couldn't contribute to our Roths
if we filed separately.
Suze (12:45):
And you live together.
KT (12:47):
She said, no, you can. Even our tax preparer had
suggested married filing separately to reduce...
Suze (12:55):
Do they live together?
KT (12:56):
... to reduce the tax bill. Yeah, now listen, listen
to this.
I felt silly for not remembering why my husband and
I filed jointly and kind of embarrassed that I may
have been wrong, so I followed up on this topic.
I found a podcast from August 15, 2021 where you
(13:17):
went over the rules for married couples. The
income limit is up to 10,000 for married filing separately
and living together. My friend and I definitely earn way
above that and share the same residence with our spouses.
So I was right. And thankfully, I have not changed
(13:40):
my filing status.
I emailed our tax person and sent the IRS rules
to my friend as an FYI. Suze, you rock. Thank
you for taking the time to repeat the information over
and over so that it's drilled into my brain.
Suze (13:59):
What's interesting about this...
KT (14:01):
She said she loves you so much.
Suze (14:02):
Thank you. Thank you. Anyway, what's interesting about this is
that I want all of you to start to take note.
Just because a so-called professional, a CPA, a financial adviser says, no,
you can do that. You better check it, recheck it
(14:23):
and check it again. And when a friend says to you,
I've been listening to the Suze Orman show, and I
think she said that.
They really should check it again. So it's not that
I'm never wrong, of course I can be wrong, but
that's just plain stupid. How we doing, KT?
KT (14:41):
I think, I think we're doing pretty good. How's your voice? How,
how do you, how do you feel?
Suze (14:46):
Are you back in the saddle.
KT (14:47):
I'm in the, I'm in the saddle, but how about
your little throat and voice? Is it in the saddle?
Suze (14:52):
Back in the saddle again. Go on.
KT (14:58):
All right. Hi KT and Suze. You both inspire me
and give me hope. I have just two short questions,
but I'm only gonna ask one.
With my new job, they offer a traditional 401k. They
will match 4%. Will I contribute only to the match
or maximize the 15%? I'm 49 turning 50 this May
(15:23):
with only 70,000 in a rollover IRA, 40,000 Roth IRA
and an emergency fund of 36,000, which is good for
about 5 months for me. So there you go.
Suze (15:39):
She said, so there you go. Are you saying it?
KT (15:41):
No, no, no, I, I'm saying so there you go.
Suze (15:43):
So there you go.
KT (15:43):
So, what's your advice?
Suze (15:45):
Are you telling me that the company that you work
for doesn't offer a 401k Roth, that they only offer
a traditional 401k?
Is that true?
Cause if that's true, where they only offer a traditional 401k,
which is a pre-tax 401k, then yeah, you're only going
(16:09):
to contribute up to the point of the match that 4%.
I don't care that you know you can put in
an extra 11%. doesn't matter to me. What matters to
me is that you have the most efficient use of
your retirement money.
And the most efficient use would be after the 4%
(16:30):
open up a Roth IRA and given...
You're turning 50 this month. You can put $8000 in
your Roth IRA after taxes, which also can be used
as your emergency fund, period. The other money I don't
(16:51):
care about now. If they do, why are you laughing?
KT (16:56):
People don't say I don't care about the other.
Suze (16:59):
Well, you know what I mean. You, you get it.
You get it, but here's the scoop. It may be,
that your company may offer a Roth 401k, but the
match goes into a traditional 401k, and a lot of
people think, oh, that means I have to only have
a traditional 401k for them to match it. If they
(17:22):
have a Roth 401k, then here's what you are to do.
You are
to put up to 15% if you want in your
Roth 401k, they will put the 4% in your traditional 401k,
and you can still have an $8000 Roth IRA if
(17:43):
you want. Now you have hit the serious retirement jackpot.
Next question, KT.
KT (17:50):
Ok, Suze, this last email.
Suze (17:53):
Why is it the last one?
KT (17:54):
Because it's really long and I want to have a
conversation about it. I think it's important. I'm gonna read
the whole thing.
Suze (17:59):
I know why it's the last one. Why, Mama KT,
she's trying to protect my voice.
KT (18:05):
I am protecting it, otherwise none of you are gonna
get a Sunday. And if you want a Sunday real
deal authentic Suze Orman, this is my last email.
Suze (18:14):
Tell everybody I had a Sundae last night.
KT (18:20):
Oh, she did. I gave her a non-dairy, um, ice cream,
a non it was really good
Suze (18:27):
Because I can't have dairy.
KT (18:28):
And that little bit of a cold on her throat
was so nice.
Suze (18:33):
OK, wait, I just have to laugh, so I asked KT,
Can you get me a little non-dairy ice cream? So
she's out.
KT (18:40):
The one flavor she wanted, they didn't have, so I
brought back 4,
Suze (18:43):
And I'm like, I asked for just a little.
KT (18:45):
But then she wanted to taste all.
All of that so that was, that was her plan.
So this this is an interesting one, and I picked
it because I think many of you listening will go
through this or have already either for your family or yourselves.
Dear Suze and KT, first of all, thank you. My
wife and I have learned so much from you. Our
(19:08):
children learned more watching your shows back in the day.
And trying to predict your answer on the Can I
Afford it segment than they ever learned in school about
personal finance.
Suze (19:20):
So now have them go to my YouTube channel where
they can actually play the Can I Afford it game.
KT (19:26):
Go to Suze's official YouTube channel, and there's a lot
of great stuff on that.
So here's my question. My father-in-law is currently in hospice
care and will be passing soon. He has asked us
to take care of his wife, and we fully intend
to do so. In fact, we already own the condo
(19:47):
where they live. As part of that, he has asked
me to take care of the bills which his wife
has never been involved with.
He then handed me a stack of bills that revealed
he has 13 credit cards with about $50,000 in debt.
He is currently paying $200 a month to each of
(20:10):
the cards, a bit over the minimum payments on each.
Now because we have followed your recommendations for 25+ years now,
we could easily write a check to each of the
credit cards, cut them up, and be done with it.
Suze (20:26):
Over my dead body.
KT (20:28):
However, I don't want to do that because I am angry.
Not at my in-laws but at the predatory credit card
companies they could have run a credit report. They would
have seen that he lived on a fixed income and
that he already had 6, 7, 8 credit cards he
(20:49):
was not paying off. I am furious that two new
significantly large companies wrote him and said, we see that
you have
11 credit cards already. We would like to be your
12th at a 29.99% interest.
Suze (21:06):
I would love to know the name of those companies.
KT (21:09):
Yeah, we don't have that.
Suze (21:11):
You write me and tell me. Go on.
KT (21:12):
That seems almost criminal to me. I do not judge
my father-in-law at all. They did not live extravagantly, but
I am angry at these credit card companies.
My question is this
and be done with it...
Suze (21:31):
No.
KT (21:31):
... which would not be a burden on us.
Suze (21:33):
No.
KT (21:34):
Or should I set up an autopay for the monthly
minimums and ride it out so that these predatory
credit card companies don't get an extra penny.
Suze (21:45):
No.
KT (21:46):
If we do pay it off, should we use our
funds or the $100,000 life insurance funds?
Suze (21:53):
No.
KT (21:54):
Suze, thank you so much for all that you do. Um...
Suze (21:58):
That's good because I'll tell you why it's good, KT.
I wrote this person and here's the advice that I
gave them. Now...
Did you hear what I just said? I wrote this
person back personally. Every once in a while when I'm
reading these, something touches my heart, especially if something has
(22:18):
gone wrong when it didn't have to be wrong.
And I told him what to do. How can you
possibly be somebody like that? Do you have a question?
You should send it into the Ask Suze S U
Z E podcast at gmail.com. And KT does look through them,
but so do I. And depending on the situation, do
(22:42):
not be surprised if you hear back from me. In fact, recently, KT,
just yesterday morning.
There's this woman and her mother had died and her
father also had died and the adviser was telling all
these things and blah blah blah and finally I said,
you know, this deserves a one on one phone call.
KT (23:04):
Oh, you called her.
Suze (23:05):
I will, right, so anyway, I just want to say that,
asked Suze Podcast at gmail.com. But here is the advice
that I gave this person.
All right, so now Daddy has died. Now, your job
is to take care of mom. What's interesting is mom
(23:27):
doesn't really have any assets in her name.
Her house that she's living in is in your name.
The $100,000 life insurance policy. She could absolutely just say,
you know what, I don't want it or whatever, and
let it go to you. So that $100,000 could absolutely
go into your name as well. Now here's Mom. She
(23:50):
doesn't have any assets at all, and all of a sudden,
you let the credit card companies know that Dad died
and let's see what they do. If they come after mom,
here's the way that you're going to get back at them.
You are going to claim bankruptcy for your mother because
your mother doesn't really have any income. She doesn't really
(24:11):
have any assets. You are not going to give them
the pleasure of letting this money earn 29%.
Interest you are going to become a warrior and you
are not going to turn your back on this battlefield.
You are going to protect your mother. You are going
to protect her assets, and you are going to take
these banks and let them lose the money. They never
(24:32):
should have lent it. They don't deserve it back, and
there you go. All right, KT.
KT (24:37):
So I thought that that would be your decision because
she's
84 and really healthy and she has a long way
to go. So why have any debt? Just claim bankrupcy...
Suze (24:47):
She doesn't have debt, she never even knew it. And
with that $100,000 from the life insurance policy that the
kids now have...
KT (24:55):
They'll take care of her.
Suze (24:56):
They'll take care of her, you know, they own the house, everything,
so believe it or not, the mere fact,
that you own the house that she lives in is
your father's saving grace. So therefore, and that's what I
would do.
KT (25:13):
That was great advice. I love that because I was
thinking the same thing.
Suze (25:17):
You were thinking that...
KT (25:18):
Claim bankruptcy.
Suze (25:20):
All right. There we go, two great minds think alike.
They think alike. All right, everybody, that brings us to
the end
of another Ask KT and Suze Anything podcast.
KT (25:31):
What are you gonna do Sunday?
Suze (25:33):
So Sunday will be Suze School and I'll be a
little bit different is I am gonna talk about diversification
because many of you are confused. I had diversification in
my portfolio, you write me, but yet my money is down.
You say you had diversification, but your money was up. Why?
So I want to tell you about what my definition
(25:56):
of true diversification is. I also want to address Pfizer's stock,
you know, I've told many of you how much I
love it, and it's currently at an 8% dividend.
You're writing me and you're afraid they're going to cut
the dividend, I will address that then. Also, I want
to talk to you about why it's so important for
you to listen every single week to the Women and
(26:19):
Money podcast, especially if you follow a stock recommendation.
Do you remember a while back? Well, in fact, I'm
not going to tell you you're going to have to
wait till Sunday, and if there's time, I want us
to talk about student loans and the changes that have
just come back in effect. So until Sunday.
(26:42):
There's only one thing, isn't there, KT, that we want
you to remember. What is that smile all about?
KT (26:48):
People
first, baby, then money, then things, and you stay healthy
and
safe.
Suze (26:54):
And so if you do that, KT, what will you be?
KT (26:57):
Unstoppable!
Suze (26:58):
All right, see you Sunday. bye bye.
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