Podcast Summary: Suze Orman's Women & Money (And Everyone Smart Enough To Listen) Episode: Ask KT & Suze Anything: Can I Start a Roth for My 3 Year Old?
Release Date: April 3, 2025

In this engaging episode of Women & Money, Suze Orman and her co-host KT delve into a series of listener questions, providing expert financial advice tailored to diverse personal circumstances. The conversation spans various topics, including investment strategies, retirement planning, and optimizing Social Security benefits. Below is a detailed summary capturing the key discussions, insights, and conclusions from the episode.

Market Insights and Economic Context

[01:01 - 05:27]

Suze opens the episode by addressing the current economic climate, particularly the anticipation surrounding President Trump's impending tariff announcements. She explains the impact of such political developments on the stock market, highlighting the volatility it introduces. Suze provides a technical breakdown of market support and resistance levels, educating listeners on how to interpret these indicators:

“A support level is when the market goes down to a certain point and the market supports it there and you want it to hold there. And if it breaks at that level, it then falls.”
– Suze Orman [02:39]

Despite the uncertainty, Suze reassures listeners by comparing the market's unpredictability to a roller coaster, suggesting a strategy of preparedness and resilience.

Listener Questions and Expert Advice

1. Teresa’s Inquiry: 529 to Roth IRA Conversion

[06:41 - 09:15]

Question: Teresa inquires about transferring funds from a 529 account, which has approximately $7,000 remaining, to a Roth IRA for her son. She faces a constraint where her son’s existing Roth account has been open for only a year, conflicting with IRS rules requiring a 15-year account duration for such a transfer.

Suze’s Response: Suze explains the stringent IRS regulations governing this transfer:

“The 529 account has to have been open for at least 15 years... contributions and earnings from the last five years... are not eligible to be rolled over.”
– Suze Orman [07:07]

She concludes that the process is overly complicated and likely unfeasible for most, advising caution and reconsideration.

2. Andrea’s Query: Municipal Bond ETFs for Tax Reduction

[10:13 - 12:25]

Question: Andrea seeks advice on whether investing in municipal bond ETFs and money market municipal bonds is a safe and effective method to reduce federal income taxes.

Suze’s Response: Suze critically evaluates the efficacy of municipal bonds for tax reduction, pointing out potential drawbacks:

“The interest rate on municipal bonds are lower than what the actual taxable yields on treasuries and certificates of deposits happen to be like.”
– Suze Orman [10:29]

She suggests alternative investment vehicles, such as high-yield CDs from Alliant Credit Union, which may offer better after-tax returns and greater security.

3. Neisha’s Retirement Decision: Lump Sum vs. Annuity

[12:25 - 17:09]

Question: Neisha faces a decision between taking a $500,000 lump sum or a $3,300 monthly annuity, especially considering the recent transfer of her company's pension to an insurance firm.

Suze’s Response: Suze underscores the importance of evaluating longevity and survivor benefits:

“When one spouse dies, their spouse's return goes down to 1,650... you could be hit with a tremendous tax bracket.”
– Suze Orman [13:35]

She emphasizes the necessity of personalized financial planning, considering factors such as the presence of children and the potential need for accessible principal.

4. Maria’s Roth IRA Conversion Timing

[17:50 - 19:00]

Question: Maria, unable to contribute directly to a Roth IRA due to income restrictions, asks whether she should convert her traditional IRA immediately or wait to avoid accruing taxable interest.

Suze’s Response: Suze clarifies the mechanics of a backdoor Roth IRA:

“Put it in an account that doesn’t make any interest for a few days. And then when it feels right to you convert it to a backdoor Roth.”
– Suze Orman [17:50]

She reassures Maria that the process is straightforward, advising prompt conversion to minimize tax liabilities.

5. Jerry’s Social Security and Investment Choices Amid Government Cuts

[19:00 - 21:34]

Question: Jerry is concerned about potential government cuts to Social Security and seeks advice on whether to liquidate his Social Security benefits into CDs, high-yield savings, or Treasuries.

Suze’s Response: Suze addresses the uncertainties surrounding Social Security:

“I cannot imagine... they make it that you do not get your Social Security check at 70 under the current laws.”
– Suze Orman [19:15]

She advises focusing on personal security rather than speculative financial maneuvers, highlighting the importance of Social Security's reliability while acknowledging the unpredictability of government policies.

6. Clay’s Question: Opening a Roth IRA for a 3-Year-Old

[21:36 - 23:18]

Question: Clay wants to open a Roth IRA for his three-year-old daughter, who participates in a medical study, questioning whether this counts as earned income.

Suze’s Response: Suze dispels the misconception about what qualifies as earned income:

“Earned income means you work for it. You can't go to, like, Vegas and win money.”
– Suze Orman [22:53]

She confirms that income from a medical study for a child does not qualify as earned income, thus making it ineligible for a Roth IRA contribution.

7. Kelly’s SEP IRA Contribution vs. Investment Account

[23:24 - 25:13]

Question: Kelly is advised by her accountant to contribute $45,000 to her husband's SEP IRA, who already has $400,000 in a SEP IRA. She wonders if investing in a regular investment account might be more beneficial.

Suze’s Response: Suze advocates for maximizing SEP IRA contributions and leveraging backdoor Roth strategies:

“You should absolutely do the SEP ira... convert it to a Roth.”
– Suze Orman [23:46]

She recommends consulting with an accountant to explore converting SEP IRA funds to a Roth IRA, thereby increasing after-tax retirement savings.

8. Jennifer’s Inherited IRA Management

[25:13 - 26:19]

Question: Jennifer inherited a $500,000 IRA composed of individual stocks and mutual funds and is concerned about the tax implications of taking minimal distributions over time.

Suze’s Response: Suze advises a strategic withdrawal plan to minimize tax burdens:

“Divide it by 10, and take out that amount of money every single year so the account really is wiped clean by the end of the 10th year.”
– Suze Orman [26:13]

She emphasizes working with a CPA to tailor the withdrawal strategy based on current and projected tax brackets.

9. Marcy’s Social Security Contributions at a New Job

[27:17 - 28:27]

Question: Marcy, aged 62, works at a new job that does not contribute to Social Security and is concerned about the impact on her future benefits.

Suze’s Response: Suze explains the implications of insufficient Social Security contributions:

“If you don't already have 35 years in Social Security... these years that you're working that don't pay into Social Security will absolutely hurt you.”
– Suze Orman [27:41]

She advises assessing her total years of Social Security contributions to determine the extent of the impact, recommending adjustments if necessary.

Conclusion and Key Takeaways

[28:26 - 30:06]

As the episode concludes, Suze and KT reiterate the fundamental principle that places people’s well-being above financial considerations:

“People first, then money, then things.”
– KT [28:44]

They encourage listeners to stay informed, secure, and focused on their unique financial paths, emphasizing the importance of personalized financial planning and resilience in the face of economic uncertainties.

Final Thoughts:

This episode of Women & Money showcases Suze Orman's commitment to demystifying complex financial topics and offering actionable advice. From optimizing retirement strategies to navigating inheritance and understanding Social Security nuances, Suze provides listeners with the knowledge to make informed financial decisions. Her engaging and straightforward approach ensures that listeners, regardless of their financial literacy level, can grasp and apply the insights shared.

Note: While Suze Orman offers valuable guidance, it's essential for listeners to consult with certified financial advisors to tailor strategies to their specific circumstances.