Ask KT & Suze Anything: Why I Quit My CPA

Summary

Podcast Summary: Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Episode: Ask KT & Suze Anything: Why I Quit My CPA
Release Date: March 13, 2025

In this insightful episode of "Women & Money (And Everyone Smart Enough To Listen)," hosts KT and financial guru Suze Orman delve into a series of listener-submitted questions, providing expert advice on navigating complex financial decisions. Despite Suze battling sinus issues, the dynamic duo delivers a robust discussion covering topics from mortgage refinancing to Roth IRAs, ensuring listeners gain valuable knowledge to manage their finances effectively.

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Introduction

The episode kicks off with an empowering message about strength and resilience, setting the tone for a candid and supportive conversation. KT introduces Suze, who is recovering from sinus issues but remains committed to addressing the audience's financial concerns. Suze emphasizes the importance of understanding not just market movements but the underlying personal financial decisions that impact wealth.

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Mortgage Refinancing: Navigating Interest Rate Changes

Listener: Michelle
Timestamp: [02:56]

Michelle faces a significant increase in her mortgage payment after moving to a new house with a higher interest rate. Having planned for this eventuality, she inquires about the optimal time to refinance her mortgage.

Suze's Advice:
Suze cautions against the common mistake of refinancing into a longer-term mortgage, which can negate potential savings. She outlines two critical considerations:

1. Mortgage Term Alignment: Ensure the new mortgage term does not exceed the remaining years on the current mortgage.
2. Cost-Benefit Analysis: Calculate the refinancing costs against the monthly savings to determine the break-even point.

Notable Quote:
"Fear is the greatest internal obstacle to wealth. So it's best to do nothing than something you don't understand in many cases." — Suze Orman [01:05]

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The Importance of Financial Literacy: Challenging Professional Misconceptions

Listener: Pamela
Timestamp: [06:13]

Pamela shares her experience of having a misleading conversation with a CPA regarding Roth IRA withdrawals, highlighting the necessity of financial literacy.

Suze's Insight:
Suze underscores that professional titles do not always equate to accurate financial advice. She recounts her own experience with PBS rejecting her correct information about Roth IRAs, reinforcing the importance of double-checking financial information.

Notable Quotes:

• "Just because somebody is in a suit, sitting behind a desk with some plaque that says they're this or that doesn't mean they know what they are talking about." — Suze Orman [08:20]
• "You have to check, double check. Be clear. Be crystal clear, and know and know." — Suze Orman [09:21]

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Evaluating Annuities for Predictable Income

Listener: Deb Johnny
Timestamp: [09:50 - 12:18]

Deb seeks advice on using her traditional 401(k) funds to purchase a single premium immediate lifetime annuity to secure predictable income before retiring.

Suze's Recommendation:
Suze advises against this strategy, explaining that fixed annuity payments do not account for inflation and may not meet future expenses. Instead, she suggests focusing on growth-oriented investments like dividend-paying stocks to preserve and increase assets.

Notable Quote:
"The 2.8 is not going to change for the rest of your life... you need to keep up with inflation and you need growth at this age." — Suze Orman [11:04]

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Maximizing Roth IRA Contributions Through Backdoor Conversions

Listener: Maria
Timestamp: [12:18 - 13:43]

Maria, restricted by income limits from contributing directly to a Roth IRA, asks if she can use after-tax savings to execute a backdoor Roth conversion.

Suze's Guidance:
Suze confirms that Maria can perform a backdoor Roth IRA conversion by first contributing to a non-deductible traditional IRA and then converting it to a Roth IRA, provided she has no other traditional, SEP, or SIMPLE IRAs to avoid the pro-rata rule complications.

Notable Quote:
"Forget what you have at work... then you decide which investments that you have make the most sense." — Suze Orman [13:43]

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Supporting a Family Member's First Roth IRA Investment

Listener: Jody
Timestamp: [13:57 - 15:59]

Jody seeks advice on guiding her 29-year-old daughter in setting up her first Roth IRA, specifically regarding brokerage firms and investment options.

Suze's Advice:
Suze recommends reputable brokerage firms like Vanguard, Fidelity, or Schwab. She advises funding the Roth IRA with a combination of Treasury money market funds initially and gradually investing in diversified ETFs to leverage market growth while managing risk through dollar-cost averaging.

Notable Quote:
"It's just that simple. So if she puts in $7,000 at once, then you would have her put in approximately $583 a month into either the Standard and Poor's 500 index fund, the Vanguard Total Stock Market Index Fund..." — Suze Orman [15:23]

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Strategizing Roth Conversions to Limit Required Minimum Distributions (RMDs)

Listener: Scott
Timestamp: [15:59 - 17:53]

Scott, approaching 50, contemplates converting multiple traditional IRAs to Roth IRAs amid recent market fluctuations to minimize future RMDs.

Suze's Recommendation:
Suze endorses converting traditional IRAs to Roth IRAs, especially when markets are down, to take advantage of lower tax liabilities. She advises converting incrementally to avoid pushing into higher tax brackets.

Notable Quote:
"But it's definitely worth it to convert while the markets are down." — Suze Orman [16:49]

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Understanding Social Security Spousal Benefits

Listener: Linda
Timestamp: [18:09 - 23:54]

Linda, a retired teacher, seeks clarity on spousal Social Security benefits and whether her husband should start collecting benefits at 67 or wait until 70.

Suze's Guidance:
Suze clarifies that spousal benefits are based on the spouse's full retirement age (67 in this case), not the age at which they eventually collect. She advises that the husband should commence benefits earlier if it allows both spouses to maximize their collective benefits without unnecessarily delaying Social Security payments.

Notable Quotes:

• "You only get 50% of what your spouse would have gotten at their full retirement age of 67." — Suze Orman [20:34]
• "Therefore, in those two years, that would be close to $61,000 of money that you're entitled to that you wouldn't have claimed." — Suze Orman [23:42]

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Clarifying Backdoor Roth IRA Eligibility with Employer-Sponsored Plans

Listener: Sheila
Timestamp: [23:54 - 25:23]

Sheila is confused about whether having employer-sponsored retirement accounts like 401(k)s and 403(b)s affects her ability to perform a backdoor Roth IRA conversion.

Suze's Clarification:
Suze confirms that the backdoor Roth strategy specifically pertains to individual retirement accounts (IRAs) and is not affected by employer-sponsored plans like 401(k)s or 403(b)s.

Notable Quote:
"Any money you have in employer sponsored plan, I don't care what kind of money it is in there, then that doesn't count for the Pro rata backdoor IRA. It's only traditional IRAs." — Suze Orman [24:56]

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Conclusion

The episode wraps up with a heartfelt reminder from KT and Suze about prioritizing faith, financial stability, and personal well-being. Suze reiterates the importance of making informed financial decisions and not succumbing to fear-driven inaction.

Final Takeaways:

• Financial Literacy is Crucial: Always verify financial advice, even from professionals.
• Strategic Financial Planning: Align financial decisions with long-term goals and market conditions.
• Incremental Actions: Avoid making large financial moves all at once to mitigate risks.

Notable Closing Quote:
"People. First God, Then money. Then things." — KT [25:28]

Suze adds a final note of encouragement:
"Stay safe, stay strong, stay healthy. Then together we really will rise." — Suze Orman [25:29]

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This episode serves as a comprehensive guide for listeners seeking clarity on various financial matters, emphasizing the significance of informed decision-making and proactive financial management.

Transcript

[Unknown Speaker]

We are strong, we are wise we will not apologize. We are here. We will thrive Together we will rise. We're the open of faith and everything it takes. We are strong, we are wise Together we will rise. Arise.

[KT]

Hi, everybody. Welcome to the Women and Money podcast. And everyone's smart enough to Listen. This is KT here, and I'm opening this on March 13th for Susie, who is in the studio with me, but she's still suffering from sinuses and who knows what else. Listen to this nose. Listen to her.

[Susie]

Hello. Hello. So we thought we would get through this podcast if I saved my voice some, because it just now came back after a while of me not even having one. Don't ask me why.

[KT]

I answer the questions for everyone.

[Susie]

Oh, they'll love that.

[KT]

All right.

[Susie]

So anyway, before we start though, KT with question and answers, which is very important, everybody, because your money is far more than what's happening in the market. It's these little things that you also need to know about, like converting a Roth, not converting it, all kinds of things. So we have to deal with those things as well. They're equally as important. But I told you that last Sunday. I was going to tell you my interpretation of what's going on with the market. Wasn't able to. God willing, I will do so this Sunday. But here's the bottom line. Yeah, we're in for a rocky road, and I don't know which way that road is going to lead. And the reason is this. The incredible uncertainty of making a decision, then it's unmade. This is going to happen, and then it's not going to happen. On and off causes confusion. And when not only investors like you are confused, but businesses are confused, governments are confused, everybody's confused. Everybody just stops and does nothing. And when you do nothing, it's because you're afraid. And what have I always told you? Fear is the greatest internal obstacle to wealth. So it's best to do nothing than something you don't understand in many cases. So I have no problem with just briefly saying, if you're in good quality, everything as I've told you, just stay put. But Sunday, we'll go into greater detail after we figure out what happened this week in the market all the way through Friday. All right, kt.

[KT]

Okay, so I've got some great questions here. And this one says, hi, Susie and kt, I've been listening to you for a year and a half, and you have made me feel much more control of my situation. And this is from Michelle. She said, susie, we bought our Forever House in May 2023 to be in a better school district. We went from a 2.5% interest rate. Now having a 6% interest rate, our new house costs significantly more than the old one. So our mortgage payment has more than doubled. We did plan for this. All right, that's the key to this email, Susie. We did plan for this. We saved to comfortably staying afloat and figured we would be able to refinance in one to two years. My question for you is at what point would we refinance when rates get to 5% or lower? What would make a difference?

[Susie]

It all depends. Seriously. And what it depends on is this. So listen closely. Many people make the mistake of they do a mortgage at a specific interest rate for, let's say, 30 years, like you probably did at 6%. And then you think, all right, when interest rates go down, you'll refinance. And let's say that happens four or five years from now, then you refinance for another 30 years. So these four or five years that you have been paying on it, you've just lost all of that. So you think that you're ahead, but the truth of the matter is you're not. So rule number one, if you ever do refinance, you have to make sure you don't have the mortgage term longer than the current amount of years left on your mortgage. So if you have only 26 years left on your mortgage that you're refinancing, then refinance your new house for 25 years, all right? Not another 30, something like that. That's number one. Number two, it's hard for me to answer the question because I don't know if you're going to have points involved, not points involved, what the closing costs are going to be. So the way that you would figure this out is what is it going to cost you to totally refinance this house and what will your current mortgage payments be and what will the savings be? If you were to do that between your new mortgage rate and your old, then you divide that number, the difference, into the cost of refinancing and then you'll know how long it's going to take you to make up for that figure. If it's going to be five, six, seven years and you don't think you're going to be in the house that long, then it makes absolutely no sense to do it. If it's going to be like two years and you know you're going to be in the house that long or longer Then you refinance. So that is how I would answer that question. In fact, that's how I did answer it.

[KT]

All right, next, kt next is from Pamela. And it's not a question, but it's something I want. It's a lesson. And Susie, you taught her this lesson. Ready? Hi, kt.

[Susie]

I taught you any lessons?

[KT]

Me? Oh my God. We don't have enough time and podcast for the rest of our life for me to answer that.

[Susie]

Because people sure like my Roth IRA podcast.

[KT]

I don't want to talk about March 6th.

[Susie]

All right, fine. No problem.

[KT]

So I left your Susie School on March 6th.

[Susie]

Oh, that's fascinating because I'm sitting here thinking about how did KT even know that the Roth IRA quiz was on March 6th? I went, did she listen to it?

[KT]

I go listen to that over and over.

[Susie]

Honest to God, everybody. I had no idea she was just going to say what she was. Because I don't know these questions she's reading. Go on.

[KT]

I loved your Susie School on March 6th. I only got one question wrong. So I was like showing off. Pamel. Pamela. Pamela got one question wrong. KT got like 50% wrong. Now she said, I also.

[Susie]

Katie, be honest. You got, you got.

[KT]

I got like 70% wrong.

[Susie]

Yeah, you got three right out of 18.

[KT]

That's not true.

[Susie]

It is true.

[KT]

It is not. Don't listen to everybody for everybody. I also wanted you to know that when I was getting my taxes done a month ago, the CPA told me I couldn't withdraw from my contributions in my Roth IRA without a penalty. I've had my Roth IRA for 10 years. I will be 58 in June. I told him that is not true. I didn't want him doing my taxes, Susie. So I walked out the door. She left. I'm so proud of her. She said, I can't even take credit. I learned this all from you. I want to help my 28 year old son and 31 year old daughter with everything I've learned from you. And thank you so very much. Pamela is that great. She had the courage, everyone to get up and walk out. He was so wrong.

[Susie]

And the lesson from that is just because somebody is in a suit, sitting behind a desk with some plaque that says they're this or that doesn't mean they know what they are talking about. Just a quick story, kt, go ahead. I did a PBS special, the very first one ever. And that is when I said and introduced Roth IRAs for the very first time and told everybody that they could take out their Original contributions anytime they want, without taxes or penalties, regardless of age or how long it's been in there. All these people, after it aired, wrote into PBS and said, that's absolutely wrong. You have to take that off the air. Blah, blah, blah, blah. I was right. They were wrong. Just because they have a few initials after their name doesn't mean squat.

[KT]

The point of that whole experience is that you've got to really know. And you can't just trust one.

[Susie]

You have to check, double check. Be clear. Be crystal clear, and know and know. And hey, if you didn't believe him or her, go to another one and see if they agree. But it's written everywhere, so he's just. Whatever. Go on.

[KT]

Okay. This is from.

[Susie]

Wait. Aren't you proud of me? I didn't call him what I was going to say. Yes, yes, thank you.

[KT]

Especially with that nasally nose of yours.

[Susie]

The next is more with it.

[KT]

No.

[Susie]

Oh, that's good to know. Okay, go on.

[KT]

All right, the next question is from Deb Johnny. Don't you love that name? Deb Johnny.

[Susie]

Do you think her mom's name is Deb and her daddy's name is Johnny and they named her Deb Johnny?

[KT]

Maybe. I just think it's a pretty name. She said, hi, Susie. I hope this is a quick one. I'm in my mid-50s. I've recently retired. I have about $3 million in assets. I'm single with no dependents. I have 650,000 in my 401k, of which 500,000 is traditional. The rest is Roth. What do you think about using my traditional 401 balance to. To purchase a single premium immediate lifetime annuity to get some predictable income before I become eligible for Social Security. She's planning on taking that at 70. I'll get about 2.8 thousand per month, which will cover more than 50% of my monthly expenses. She's doing this, Susie, because she said that way she can let her brokerage account grow without starting to draw down too much. So what do you think about that?

[Susie]

I think it's a really, really bad idea.

[KT]

Why?

[Susie]

And the reason is this, Deb. Joni, right now you're in your mid-50s, and KT just said you want to do this because $2.8K a month is going to pay for 50% of your expenses. That's your expenses today, girlfriend.

[KT]

Uhhuh.

[Susie]

That 2.8 is not going to change for the rest of your life. So what do you think it's going to be worth 20 or 30 years from now, what do you think your expenses are going to be 20 or 30 years from now? You need to keep up with inflation and you need growth at this age. You do not need more income because you already have $3 million in assets. So the goal here is number one, to protect your assets but keep up with the income for when you really need it that you haven't invested in something that grows dividend paying stocks. If I were you, but no, I would not be taking it now for my 401k. I think it would be the biggest mistake you could ever make if you told me you were 69 and you wanted to do it. I think about it, but not in the 50s. No. Go on KT.

[KT]

Okay, next question is from Maria. She said, hi Susie and kt. I've listened to your Sunday podcast on questions about Roth. This is another March 6th. It was so informative. Thank you so much. I want to ask if I could use my money in my savings account after tax to transfer to an IRA and then convert it to a Roth through the back door. I already max out my Roth 401 at work and I'm not qualified to fund my individual Roth because of my income. Is this possible?

[Susie]

What you should do if you do not already have an ira, a SEP ira, any individual retirement account, Forget what you have at work. Work, Roth 401ks, traditional 401ks, whatever, they don't count. But if you do not have any additional IRA outside of work, then therefore you can just open up a non deductible IRA and then convert it to a Roth. Just that simple. That's known as a backdoor Roth. So that you can do as long as you don't have another individual retirement account of any kind. Okay.

[KT]

Okay, next is from Jody. I never miss an episode of your podcast and I used to watch Can I afford it as a family. Well, we have a little treat coming up for YouTube.

[Susie]

YouTube?

[KT]

Just be patient. Well, my little girl has grown up and she's now 29 years old. Does that make us feel old? She wants to set up her first Roth IRA. She has $40,000 in a high interest savings to use to fund an ira. Susie, I don't know how to guide her. Is there a brokerage firm you recommend that doesn't charge many fees? What should she do? ETFs mutual funds. Question, question, question. Oh, wait, and then there's one more line here. It said, but like kt, Roth investing and I are like oil and water. Thanks Jody. You and I are from the same same Batch oil and water.

[Susie]

Slippery, huh? Anyway, so Jody, all you have to do is like, go to Schwab, go to Vanguard. Vanguard is a fabulous brokerage firm. Vanguard, Fidelity or Schwab, either one, doesn't matter. Okay, but let's say you ditch Schwab, Go and open up a Roth IRA for her. Fully funded to $7,000. Put it in their Treasury Money market fund or whatever it may be. And then have her dollar cost average into these stock markets. Because obviously this stock market is not having a really great time this year so far. But it will again. Now, if I were you, I would have her do Exchange traded funds, ETFs. So she has some diversification. So it's really just that simple. So if she puts in $7,000 at once, then you would have her put in approximately $583 a month into either the Standard and Poor's 500 index fund, the Vanguard Total Stock Market Index Fund, or just keep it simple for now to get her used to investing and the upside and downs of the market. That's what I would be doing if I were you. Next, kt.

[KT]

Hey, I have a question from Scott. He said, Susie and KT, thanks for all the advice. I'll be 50 in June. He's a Gemini. Like you. Gemini.

[Susie]

Scott, like me, I'm going to be 74.

[KT]

All right. But Scott, you have a long way to go.

[Susie]

Between your show, your 24 years till that age be as great as mine.

[KT]

Yes, between your show and conversations with my mom, converting all of my pre tax retirement accounts without 401k seems to be the best course to limit RMDs. So he said, I have about half a dozen traditional IRAs with recent and potential market corrections. Would you recommend converting as many as possible to Roth's this year?

[Susie]

I would. Depending. However, what the tax ramification will be to you. Because even though the markets are down, that doesn't mean that you don't have a lot of money still in those positions. So therefore, after you have checked with a cpa, then you decide which investments that you have make the most sense. Like which ones do you want to keep that have gone down dramatically. And then you would convert those. But it's definitely worth it to convert while the markets are down.

[KT]

All right, next question.

[Susie]

Why'd you look at me like that?

[KT]

I didn't know if you were done.

[Susie]

I wasn't sure I was done.

[KT]

I know. Are you finished?

[Susie]

Let me think about it.

[KT]

Yes, you are. Okay. Because I have so many good questions.

[Susie]

But what's key about that is never do it all at once unless all you have in there is like 3,000, 5,000. If you have a lot of money in there, never convert to a Roth all at once. You'll be so sorry that you did, especially if it puts you in a really high tax bracket.

[KT]

All right, next question is from Gay. She said, I'm a retired New York City teacher with a 457B and a tax deferred annuity. They have RMD rules that seem similar to those of traditional IRAs.

[Susie]

Yeah, and.

[KT]

And now she's asking, I also have a relatively small traditional IRA opened at the beginning of time. Can these three types of accounts be aggregated for the RMD so I can draw from the least lucrative one? I don't. I thought that was a good question because I don't know. Can. Can you.

[Susie]

Are you sure you don't know? It's just your quizzy.

[KT]

If it's a quizzy, then I'm going to guess. You absolutely cannot aggregate accounts like that.

[Susie]

And why would you say that?

[KT]

Because they're all different. They're all different.

[Susie]

Dinga, dinga, dinga, dinga. See, she got that one.

[KT]

But it's a good question. People wonder.

[Susie]

You cannot. If you have 15 different IRAs, then you aggregate all of them. The total that's in there for your RMD and you can take it from anyone you want, it doesn't matter. But you have to do it on the total amount. But you cannot add into that amount what's in your tax deferred annuity or your 450. Those are separate and have to do their own. What you could do is if you're retired and you want, you can roll them over. Like you could roll over possibly your tax deferred annuity into your IRA that you've had forever and aggregate it there so that you'd only have to figure out one rmd. So look into that to see if you can do that with your accounts.

[KT]

So, Susie, next question is from Linda. She said, I am a teacher and will receive a pension. We love teachers, don't we? So much.

[Susie]

So much.

[KT]

Our favorite people. I'm a teacher, will receive a pension, but do not have enough Social Security credits to receive Social Security. Myself. Yeah, my husband will receive Social Security and I understand that I will be able to receive his Social Security benefit if he passes before me. But, Susie, what about spousal benefit while we're both alive? He's 60. I am 59. We planned to wait until he was 70 to begin collecting his social. However, will I be eligible for spousal benefits while he is alive? If so, is there any benefit to having him start to collect at 67 so we can both receive benefits earlier, or is it best to still wait to 70? You got to set her straight, Susie.

[Susie]

Linda, listen, the biggest mistake that most people make is they always think that they are going to get 50% of their spouse's Social Security no matter what. So if their spouse waits till they are 70, let's say to get Social Security, you think you're going to get 50% of the amount that your spouse will get at 70, and that's not true. You only get 50% of what your spouse would have gotten at his or her full retirement age, which is currently 67. Now, since you aren't going to have any Social Security, then what I would advise you to do is this. Let's just say that your husband is going to get $2,000 at the age of 70. Therefore, you're not going to get 50% of that 2,000. You get 50% of what he would get at his full retirement age of 67. That means at 67, he would probably only be getting about $1,600 a month, which means you would get 50% of that, which is about $800 a month. Remember, you have to be 67, your full retirement age to get the full 50% of the spousal benefit. So given that you and your husband are just one year apart, it's just so great, I can't tell you. So this is what I would do if I were you, assuming that those numbers were your numbers, and you have to do this with your own numbers. I would have your husband claim at the age of 68, and that would be about $1,750 a month. I would have you claim 50% of the spousal benefit of his full retirement age. I would have you do that at 67, which would give you about 80 $800 a month. So you would get approximately $2,550 a month starting when he is 68 and you are 67. Given that he wasn't going to claim, let's just say till 70, that's two years of payments that you wouldn't have been getting. Neither of you, because you have to claim spouse has to claim Linda, in order for you to get a spousal benefit. Therefore, in those two years, that would be close to $61,000 of money that you're entitled to that you wouldn't have claimed I don't know. I think that's a big difference. And if I were you, that's what I would go for. Did that all make sense to you, KT?

[KT]

Yeah, I think that it's smart that they 68 and 67 go for it.

[Susie]

Right. All right.

[KT]

61,000 is a lot of money in two years.

[Susie]

Yeah. And really, if you look at the difference between what they would have gotten and no, it's not worth it. In my opinion.

[KT]

They do better off doing what you just said.

[Susie]

I think so, but you should always double check. All right, next question.

[KT]

Kt, Susie, my final question from Sheila. Hi, Susie. Thank you for the Roth info. I'm a little confused because I heard you say that if you have pre tax money in any retirement account, then don't do a backdoor Roth. But we have 401s and 403bs, so does that mean we shouldn't do a backdoor Roth, or were you just referring to IRAs with tax money?

[Susie]

Now, I already answered that on this podcast. Kt. What's the answer? Don't look at me like that. No, so the answer is what? The answer is, were you just referring to Iras?

[KT]

So? So she has 401ks and 403bs.

[Susie]

Yeah.

[KT]

Were you just referring to Iras? Yes. You were. You were referring only to Iras.

[Susie]

That's right. Good. So it wasn't no, it was yes. Ding, ding.

[KT]

Yeah, I meant no, she can't do the other two.

[Susie]

Yeah. No, don't worry. Any money you have in employer sponsored plan, I don't care what kind of money it is in there, then that doesn't count for the Pro rata backdoor IRA. It's only traditional IRAs. IRAs, SEP IRAs, simple IRAs, anything that's an individual retirement account. All right, KT, I did it.

[KT]

You did it, Susie, that's a wrap. And everyone, I want you to just remember three things.

[Susie]

What are they?

[KT]

People. First God, Then money. Then things.

[Susie]

And if you do that, stay safe, stay strong, stay healthy. Oh, then together we really will rise. Bye. Bye.

[Unknown Speaker]

We are strong, we are wise we will not apologize we are here, we will thrive Together we will rise we're the little bit of faith and everything it takes we are strong, we are wise Together we will rise.