Podcast Summary: Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Episode: Ask KT & Suze Anything: Revisiting “Can I Give My Child Money and Get a Tax Deduction?”
Release Date: April 10, 2025
Host: Suze Orman Media
Introduction
In this engaging episode of Suze Orman's Women & Money, Suze Orman, alongside her co-host KT, delves into listener questions, providing comprehensive financial advice grounded in over four decades of expertise. The episode focuses on gifting money to children, retirement account management, estate planning, insurance choices, and tax implications, all tailored to empower listeners with actionable insights.
Gifting Money to Children and Tax Deductions
Listener Question by Marlene (01:40):
Marlene, a 75-year-old listener, inquires about gifting her 50-year-old son $17,000 to help with his substantial student loans while seeking a tax deduction. She wonders whether paying his bills directly would grant her the desired tax benefits or if transferring funds from her IRA to a Roth IRA is a better strategy.
Suze Orman's Response (02:06):
Suze clarifies that while gifting up to $18,000 annually to any individual is permissible without tax implications for either party, such gifts do not offer a tax deduction for the giver. She emphasizes that paying her son's loan won't provide a tax write-off and encourages Marlene to consider the emotional and practical impacts of her gift rather than the tax benefits. Suze advises Marlene to assess whether alleviating her son's debt will genuinely enhance his well-being and whether he is responsibly managing his finances.
Notable Quote:
Suze Orman states, “The goal of money is for you to be secure. And there is no better way for you to be secure than having an emergency savings account.” (00:00)
Managing Retirement Accounts: 401(k)/403(b) to IRA Transfers
Listener Question by Peggy (12:06):
Peggy seeks advice on the purpose of transferring her 401(k) and 403(b) accounts into an IRA as she approaches retirement.
Suze Orman's Explanation (07:07):
Suze explains that rolling over employer-sponsored retirement accounts into an IRA offers greater diversification and investment options. While 401(k) and 403(b) plans often limit investment choices to specific mutual funds or company stock, an IRA allows for a broader range of investments, including individual stocks, ETFs, and bonds. This flexibility is crucial for tailoring one's investment strategy to align with retirement goals and risk tolerance.
Notable Exchange:
Marlene prompts KT with a quiz, leading Suze to detail the reasons for transferring retirement funds, emphasizing diversification and control over investments. (08:01)
Estate Planning: Handling Large Sums of Money Found Posthumously
Listener Question by Pat (13:02):
Pat asks about the appropriate steps to take upon discovering a large sum of cash ($200,000) in a deceased loved one’s home. She wonders if depositing such a significant amount in a bank would raise suspicions.
Suze Orman's Guidance (13:23):
Suze advises that while $200,000 is substantial and could generate significant interest if invested, Pat should consult with an estate lawyer to ensure proper handling. She recommends depositing the money into an estate account, accompanied by necessary legal documents such as a death certificate and the will or trust, to legitimize the funds. Transparency with the bank about the source of the money is crucial to avoid legal complications. Suze underscores the importance of professional guidance in managing inherited funds to comply with legal and tax obligations.
Notable Quote:
Suze emphasizes, “$200,000 is a lot of money. And if you just let it sit there in cash, you're missing out on about $10,000 a year currently in interest.” (13:37)
Including Rental Property in Living Trusts
Listener Question by Lou (16:48):
Lou questions whether to include a rental property that generates $2,550 monthly income in his living trust, noting that his primary home is not included.
Suze Orman's Insight (17:04):
Suze explains that including rental properties in a living trust is beneficial for estate planning, as it ensures smooth transfer of assets without probate, which can be costly and time-consuming. She highlights that while trusts don't affect income taxes, they play a crucial role in managing assets in the event of incapacity or death. Suze advocates for comprehensive asset inclusion in trusts to enhance financial security and simplify future estate administration.
Notable Statement:
Suze asserts, “Both should absolutely be put as many assets as you have, right? It's not about the probate, it's about incapacity.” (19:08)
Dental Insurance vs. Dental Plans
Listener Question by Sarah Berg (20:07):
Sarah seeks advice on whether to opt for dental insurance or a dental savings plan after leaving her job, considering her good dental health at age 55.
Suze Orman's Recommendation (20:28):
Suze advises against traditional dental insurance unless it’s provided by an employer. Instead, she recommends dental savings plans, which typically cost around $150 annually and offer significant discounts on dental procedures without waiting periods or usage limits. These plans provide flexibility and cost-effectiveness, especially for individuals with generally good dental health who may only need occasional services.
Notable Quote:
Suze recommends, “With a dental savings plan, maybe if it's just you, it will cost you $150 a year and you can save anywhere from 10 to 60% on procedures.” (20:33)
Tax Implications of Short-Term Capital Gains on Roth Contributions
Listener Question by Wayne (20:40):
Wayne inquires whether income from interest or capital gains from selling stocks held for less than a year counts towards the income threshold affecting Roth IRA contributions, specifically the $146,000 limit.
Suze Orman's Clarification (21:57):
Suze confirms that short-term capital gains are taxed as ordinary income and thus do count towards the modified adjusted gross income (MAGI) when determining eligibility for Roth IRA contributions. This means that gains from stocks held for less than a year will impact Wayne's ability to contribute to a Roth IRA if his MAGI exceeds the $146,000 limit.
Notable Exchange:
Suze elaborates, “When you sell a stock that you have held for less than one year, Wayne, that's taxed to you then as ordinary income, right? So, yes, it counts towards your income.” (22:24)
Closing Remarks and Empowerment
As the episode concludes, Suze and KT reinforce the core principle of prioritizing people over money and things. They encourage listeners to make informed financial decisions that foster security and personal well-being.
Notable Closing Quote:
Suze Orman emphasizes, “People first, then money, then things. And if you follow that guideline … you will be unstoppable.” (24:18)
Conclusion
This episode of Women & Money provides listeners with nuanced financial advice on a variety of topics, from gifting money responsibly to strategic retirement planning and savvy estate management. Suze Orman's practical guidance, coupled with her empathetic approach, empowers individuals to navigate complex financial decisions with confidence and clarity.
Notable Quotes:
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“The goal of money is for you to be secure. And there is no better way for you to be secure than having an emergency savings account.” — Suze Orman (00:00)
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“$200,000 is a lot of money. And if you just let it sit there in cash, you're missing out on about $10,000 a year currently in interest.” — Suze Orman (13:37)
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“People first, then money, then things. And if you follow that guideline … you will be unstoppable.” — Suze Orman (24:18)
Resources Mentioned:
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Ultimate Opportunity Savings Account: Visit myalliant.com to learn more about opening a savings account with competitive interest rates.
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Dental Savings Plans: Explore options at dentalplans.com for affordable dental care discounts.
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Must Have Documents: Access essential legal documents at musthavedocs.com.
Disclaimer: The information provided in this summary is for informational purposes only and does not constitute financial, accounting, or legal advice. Consult with a professional advisor regarding your specific situation.