Episode Summary: Roth Conversions: What You Need to Know
Podcast Title: Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Host: Suze Orman Media
Episode: Roth Conversions: What You Need to Know
Release Date: August 14, 2025
In this episode, Suze Orman delves into the intricacies of Roth IRA conversions, providing listeners with valuable insights and answering real-life financial questions. The discussion ranges from equitable financial contributions within marriages to strategies for protecting investments against currency fluctuations. Below is a detailed summary of the key points, discussions, and conclusions drawn during the episode.
1. Understanding Equitable Financial Contributions in Partnerships
Listener Question: Lisa inquires about equitable contributions towards monthly expenses when partners have differing incomes.
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Key Discussion:
- Suze emphasizes the importance of equal percentages rather than equal dollar amounts to ensure fairness in financial contributions.
- Example Provided:
- If one partner earns $7,000 and the other $3,000 monthly, with total expenses at $3,000, each should contribute 30% of their income. This translates to $2,100 from the $7,000 earner and $900 from the $3,000 earner, totaling the required $3,000.
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Notable Quote:
"Not equal amounts of money, but equal percentages, which is going to change your entire email question."
— Suze Orman [04:17] -
Suze's Advice:
- Beyond financial contributions, Suze advises addressing household chores to maintain overall equity.
- Encourages open dialogue to ensure both financial and domestic efforts are balanced.
2. Roth IRA Conversion Rules and Implications
Listener Question: Albert, a 57-year-old, seeks clarity on Roth IRA conversion rules, specifically concerning the five-year rule and taxation.
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Key Discussion:
- Each Roth IRA conversion initiates its own five-year rule, regardless of the Roth IRA's existing duration.
- Tax Implications:
- Converted amounts are subject to ordinary income taxes but are exempt from the 10% penalty once the account holder reaches 59½.
- Earnings require the five-year period to avoid ordinary income tax upon withdrawal.
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Notable Quotes:
"Whenever you convert, it does not matter how long your original Roth IRA has been open. Every conversion has its own five-year rule period."
— Suze Orman [09:16]"Once you reach 59 and a half, it doesn't matter if it hasn't been in there five years, because you're already too old for the 10% penalty to apply."
— Suze Orman [09:16] -
Suze's Conclusion:
- Albert has correctly followed the rules and will have access to his converted funds by January 1, 2030, without penalties.
- Encourages listeners to stay informed and cautious about Roth conversions to optimize tax benefits.
3. Investing in Bitcoin ETFs
Listener Question: Gina faces restrictions purchasing Bitcoin ETFs (iBit) through her Merrill Edge account and seeks alternatives.
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Key Discussion:
- Suze acknowledges Merrill Lynch's current stance on Bitcoin ETFs as too risky.
- Recommendations:
- Consider opening accounts with brokerages like Charles Schwab or Fidelity, which permit Bitcoin ETF purchases.
- Investment Perspective:
- Suze, traditionally cautious about Bitcoin, expresses increased confidence due to institutional adoption and suggests allocating a small portion (e.g., 5%) to Bitcoin ETFs.
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Notable Quotes:
"I used to say, only invest with money that you can afford to lose. I have to tell you, I am changing that stance."
— Suze Orman [14:17]"If you invest a small amount of money, maybe 5% or whatever, in IBIT... I don't think there's anything wrong with you owning IBIT at all."
— Suze Orman [14:17] -
Suze's Takeaway:
- Bitcoin ETFs can be a viable addition to a diversified portfolio, especially when accessed through supportive brokerage platforms.
- Emphasizes cautious but open-minded investment strategies in emerging asset classes.
4. Handling Property Titles and Trusts After a Spouse's Death
Listener Question: Ellen seeks advice on maintaining her property's title and creating a revocable trust after her husband's passing.
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Key Discussion:
- While Ellen's lawyer advised that removing her deceased husband's name from the title isn't mandatory, Suze recommends doing so for future ease.
- Rationale:
- Simplifies the transfer process to her children and the establishment of a trust.
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Notable Quote:
"Just because you don't have to do something doesn't mean you shouldn't do it."
— Suze Orman [15:53] -
Suze's Recommendation:
- Remove the deceased spouse's name from the property title to streamline inheritance and trust formation.
- Encourages proactive steps to prevent potential legal complications for heirs.
5. Maximizing Retirement Contributions at Older Ages
Listener Question: Brownie, aged 67, asks whether to continue contributing to a non-Roth 403(b) with a 6% employer match and add a new Roth account with an additional 4%.
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Key Discussion:
- Suze affirms the importance of capitalizing on employer matches, regardless of age.
- Highlights the flexibility and benefits of maintaining both pre-tax and Roth accounts.
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Notable Quote:
"It's absolutely worth it. But you're not limited to just 4% into your Roth, IRA. I don't know what that 4% would be — you should be funding it to the max of $8,000 a year."
— Suze Orman [17:18] -
Suze's Advice:
- Continue contributing to the employer-matched 403(b) to harness free money.
- Additionally, maximize Roth IRA contributions to diversify tax-advantaged retirement savings.
6. Optimizing IRA to Roth IRA Conversions with Investments
Listener Question: Marisol contemplates whether to convert cash or stocks from her IRA to a Roth IRA to manage tax implications effectively.
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Key Discussion:
- Suze advises prioritizing the conversion of stock holdings before cash to capitalize on potential growth within the Roth IRA.
- Strategy:
- Convert appreciated assets first to minimize future tax liabilities on earnings.
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Notable Quote:
"I would be converting that to the Roth first. Even if you have to liquidate it."
— Suze Orman [18:39] -
Suze's Strategy:
- By converting stocks already in the IRA, Marisol can take advantage of growth within the Roth, potentially reducing taxable earnings during the conversion process.
7. Protecting Investments Against a Falling Dollar
Listener Question: Bob, aged 61 and retired early, seeks strategies to safeguard his funds in CDs and money market accounts amid a depreciating dollar.
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Key Discussion:
- Suze explains that while a falling dollar primarily affects the cost of imports and international travel, it doesn't directly devalue investments like CDs or Treasuries.
- Potential Indirect Effects:
- Could contribute to inflation, impacting purchasing power and possibly influencing stock markets.
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Notable Quote:
"The increased cost of goods and everyday items can be affected by a falling dollar because it's more expensive to buy what they need if they have to import it in."
— Suze Orman [24:29]"I do think that the dollar isn't going to fall a whole lot more than it has already fallen."
— Suze Orman [25:29] -
Suze's Conclusion:
- While direct investment holdings in CDs and money markets may remain stable, Bob should be mindful of the broader economic impacts of a falling dollar.
- Encourages a balanced and informed approach to investment, considering both current holdings and potential economic shifts.
Final Thoughts
Throughout the episode, Suze Orman emphasizes the importance of tailored financial strategies that consider individual circumstances. Whether it's equitable financial contributions in a partnership, navigating the complexities of Roth IRA conversions, or safeguarding investments against economic changes, the key takeaway is proactive and informed decision-making. Suze consistently advocates for open communication, strategic planning, and leveraging available resources to optimize financial well-being.
Listeners are encouraged to participate actively by submitting questions and engaging with the Women's & Money community through the dedicated app, fostering a supportive environment for financial growth and education.
Disclaimer: The information provided in this summary is for informational purposes only and does not constitute financial advice. Consult with a qualified financial advisor for personalized guidance.