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Classic Suze School: The Language of Money in Retirement Accounts · Suze Orman's Women & Money (And Everyone Smart Enough To Listen)

• 0:08
  Robert: July 30th, 2026. Welcome to the Women and Money podcast,
• 0:12
  Robert: as well as everyone smart enough to listen. Hi everybody,
• 0:15
  Robert: it's Robert, the producer here. For today's Classic Suze School,
• 0:19
  Robert: we go back to the winter of 2024 for a
• 0:21
  Robert: lesson on the language of money in retirement accounts.
• 0:26
  Robert: Suze will be back with a brand new episode this
• 0:28
  Robert: coming Sunday, so until then, enjoy.
• 0:35
  Suze: Have any of you ever taken a trip to a
• 0:38
  Suze: foreign country where they speak a language other than your language?
• 0:43
  Suze: Let's say it's English, so you go over there and
• 0:47
  Suze: you learn a few words such as hello, thank you,
• 0:52
  Suze: I need the check, whatever it may be. Is it
• 0:54
  Suze: to the left? Is it to the right? Where's the bathroom?
• 0:59
  Suze: And it's those few words that get you by. You
• 1:03
  Suze: don't need to learn the entire language to have a
• 1:07
  Suze: good time. You don't need to be able to speak
• 1:10
  Suze: it fluently to have a great time. Just a few
• 1:14
  Suze: words to get you by. Well, when it comes to money,
• 1:20
  Suze: I have to tell you the same is exactly true.
• 1:25
  Suze: You don't need to know the entire terminology that is
• 1:30
  Suze: used within the financial world. It is extensive. It is confusing,
• 1:36
  Suze: and for most of you, it is irrelevant.
• 1:41
  Suze: You don't need to know that much, but you do
• 1:45
  Suze: need to know, especially when it comes to your retirement
• 1:49
  Suze: accounts that you have never paid taxes on traditional retirement accounts,
• 1:56
  Suze: just a few words.
• 1:59
  Suze: Because it is knowing that these few words that can
• 2:03
  Suze: keep you from making a mistake, that can keep you
• 2:06
  Suze: from paying taxes when you don't need to pay taxes,
• 2:10
  Suze: that can keep you from getting yourself into a penalty situation.
• 2:15
  Suze: And the reason that I'm still focusing on retirement accounts is,
• 2:20
  Suze: let's be honest, the majority of everybody out there has
• 2:25
  Suze: a retirement account. Whether it's an IRA doesn't matter whether
• 2:29
  Suze: it's traditional or Roth, whether it's a 401k, 403B, or TSP,
• 2:34
  Suze: doesn't matter if it's traditional or Roth, if you're even
• 2:38
  Suze: an individual or self-employed.
• 2:41
  Suze: You have a set IRA, an individual 401k, possibly a
• 2:46
  Suze: pension plan. All of us have on some level, at
• 2:51
  Suze: some time in our lives, retirement plans, and the truth
• 2:54
  Suze: of the matter is the bulk of the money that
• 2:58
  Suze: we have saved for later on in the future happens
• 3:03
  Suze: to be in most cases in a retirement plan that
• 3:08
  Suze: is taxable.
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  Suze: So, there are just a few words that all of
• 3:13
  Suze: you need to know, and the reason that I'm doing
• 3:16
  Suze: this podcast is many of you write me emails and
• 3:20
  Suze: you tell me about your situation.
• 3:23
  Suze: And you tell me that you've done this, you've done that,
• 3:26
  Suze: you've done that, you've done this, and I'm so confused
• 3:29
  Suze: because I don't really understand what you've done because the
• 3:33
  Suze: words that you are using to describe the action that
• 3:36
  Suze: you've taken that you want advice on don't fit to
• 3:40
  Suze: the situation that you've described. Are you ready? And let's begin.
• 3:47
  Suze: First of all, write down the words.
• 3:52
  Suze: Roll over, Transfer and conversion, those are terms that I really
• 4:02
  Suze: want us to understand today and how they work.
• 4:08
  Suze: Before I begin with all of this, if you have
• 4:11
  Suze: a TSP, a thrift savings plan, one I'm about to
• 4:16
  Suze: say does not necessarily apply to you, right after I
• 4:21
  Suze: have done this, I will then tell you what these
• 4:25
  Suze: words mean to you. Also, I just have to say,
• 4:30
  Suze: that the majority of this is for people who have
• 4:33
  Suze: money in traditional retirement accounts, pre-taxed retirement accounts. Some of
• 4:41
  Suze: it will apply to those of you who have Roth
• 4:44
  Suze: retirement accounts, but obviously Roth retirement accounts, in most cases
• 4:50
  Suze: you don't owe taxes on them. So therefore just keep
• 4:55
  Suze: that in mind.
• 4:57
  Suze: So let's start with I'll rollover.
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  Suze: A rollover is when you have a specific type of
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  Suze: employer sponsored plan such as a 401k or 403B.
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  Suze: And you either are leaving that place of employment, or
• 5:19
  Suze: you have retired whatever it may be.
• 5:23
  Suze: And you want to roll over, you want to change.
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  Suze: A 401k that is with your employer, you are rolling
• 5:32
  Suze: it over to a new custodian or trustee. They're both
• 5:37
  Suze: the same...
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  Suze: At a new firm, whether it's a brokerage firm, a
• 5:44
  Suze: discount brokerage firm, a bank, a credit union, an insurance company,
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  Suze: anywhere that you want to roll it over to.
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  Suze: You are changing the types of accounts that your money
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  Suze: happens to be in.
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  Suze: So, you are rolling it over from a 401k to
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  Suze: an IRA and that's known at that point as an
• 6:12
  Suze: IRA rollover because it came from an employer sponsored plan
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  Suze: known as a 401k or 403B.
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  Suze: And what's important for you to understand about that is
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  Suze: that there are two different ways for you to do
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  Suze: a rollover.
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  Suze: You can do a direct rollover or an indirect rollover.
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  Suze: A direct rollover is when you are ready to change
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  Suze: money from your employer sponsored plan.
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  Suze: To an individual retirement account.
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  Suze: Where you set up an IRA rollover.
• 6:58
  Suze: You set it up at either a brokerage firm, a
• 7:01
  Suze: discount brokerage firm, wherever you want to set it up.
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  Suze: You can even do it at a bank or a
• 7:06
  Suze: credit union, and you open up an IRA account there.
• 7:12
  Suze: And you ask your financial advisor, to contact your ex-employer, to request
• 7:21
  Suze: what's known as a custodian to custodian transfer. It's also
• 7:27
  Suze: known as a trustee to trustee transfer, and that means
• 7:34
  Suze: that your ex-employer is going to send directly to your
• 7:42
  Suze: IRA the money that is in your 401k or 403B.
• 7:50
  Suze: You do not touch that money at all. It goes
• 7:54
  Suze: directly from your ex-employer, to your new custodian, where your IRA
• 8:03
  Suze: rollover is going to be located. Just that simple. When
• 8:10
  Suze: you do that, if you have $100,000 in your 401k,
• 8:15
  Suze: then automatically $100,000 is going to end up in your
• 8:21
  Suze: IRA rollover. Now, on your documents, it's not going to
• 8:27
  Suze: say IRA rollover, it's just going to say IRA, but
• 8:32
  Suze: in essence, you are rolling over the money from your
• 8:36
  Suze: employer sponsored plan,
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  Suze: into a different type of plan known as an individual
• 8:43
  Suze: retirement account. Now, remember, everybody, this is also true whether
• 8:49
  Suze: you have a traditional account or a Roth account.
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  Suze: An indirect rollover, this is something that 9 out of
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  Suze: 10 of you will never ever want to do, especially
• 9:05
  Suze: if you have a pre-taxed retirement account. An indirect rollover,
• 9:13
  Suze: is where your ex-employer might ask you, do you want
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  Suze: them to send you a check, or do you want
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  Suze: them to send it directly to your new custodian? You
• 9:28
  Suze: always want to choose sending it directly to your new custodian. However,
• 9:35
  Suze: some of you may decide, yes, please send me the check.
• 9:43
  Suze: So now it will not go directly to the custodian,
• 9:47
  Suze: it goes to you.
• 9:51
  Suze: If they... and listen to me closely now, if they
• 9:55
  Suze: send you a check, and that check is made payable to you.
• 10:04
  Suze: And this is coming from a traditional retirement account. What
• 10:10
  Suze: will happen is they will absolutely withhold 20% for taxes.
• 10:18
  Suze: So, if you have $100,000 in your traditional 401k and
• 10:25
  Suze: they send you a check made payable to you, uou
• 10:33
  Suze: are only going to get a check for $80,000.
• 10:39
  Suze: You then will have 60 days from the date of
• 10:42
  Suze: that check, to put it in yourself into an IRA
• 10:49
  Suze: at whatever firm you opened up an IRA with. So,
• 10:54
  Suze: you are indirectly rolling over the money that was in
• 10:59
  Suze: your traditional 401k into an IRA because it's not going
• 11:04
  Suze: straight to the IRA, it's going to you first. Here
• 11:09
  Suze: is the danger if you do that.
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  Suze: Number one, if you wait 61 days or more to
• 11:18
  Suze: do that indirect rollover with that $80,000 in this example,
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  Suze: you are going to owe ordinary income taxes on that
• 11:28
  Suze: $80,000 and possibly a 10% penalty if you're not 59 and a half
• 11:36
  Suze: years of age or older.
• 11:40
  Suze: Something you need to think about. An exception to that
• 11:44
  Suze: would be that you're 55 years of age or older
• 11:47
  Suze: in the year you left service. OK, you won't have
• 11:51
  Suze: to pay the 10% federal tax penalty, but you most
• 11:54
  Suze: certainly will have to pay ordinary income tax on that money.
• 12:02
  Suze: But here's the other problem. Let's say you've been great
• 12:07
  Suze: and you get this money.
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  Suze: And within that 60 day period of time, you have
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  Suze: now put it in your IRA rollover account.
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  Suze: So fine, you think you're doing OK, you are not.
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  Suze: Because the $20,000 that your ex-employer withheld for taxes, is
• 12:33
  Suze: part of your taxable situation.
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  Suze: So, you are going to have to come up with
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  Suze: $20,000 out of your own pocket to put into your
• 12:47
  Suze: IRA rollover to make sure that there's $100,000 in that
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  Suze: IRA rollover within that 60 day limit.
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  Suze: Otherwise, you are going to owe taxes on that $20,000
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  Suze: that they withheld to pay taxes.
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  Suze: You don't want to get yourself in that situation. It
• 13:12
  Suze: makes absolutely no sense whatsoever. Almost 100% of the time,
• 13:21
  Suze: you only want to do a direct rollover. You do
• 13:26
  Suze: not want to do an indirect rollover.
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  Suze: However, there are some times when an employer refuses to
• 13:39
  Suze: do a custodian to custodian or trustee to trustee rollover.
• 13:46
  Suze: Don't ask me why, but they just refuse to do it.
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  Suze: And what they will do instead is that they will
• 13:55
  Suze: send to you a check from your 401k.
• 14:01
  Suze: And they'll send it to you, but this time the
• 14:04
  Suze: check will be made payable to your new account wherever
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  Suze: you have opened up your IRA.
• 14:12
  Suze: And if they do that, then don't worry about it
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  Suze: because chances are they have not withheld the 20% mandatory
• 14:22
  Suze: withholding tax, so it's OK if they do that. It's
• 14:28
  Suze: better if they did it directly so you didn't have
• 14:31
  Suze: to go and then take the check and get it
• 14:33
  Suze: into the account within 60 days, but there are some
• 14:39
  Suze: employers that just refuse to do custodian to custodian rollovers.
• 14:46
  Suze: So just to be clear, if you're one of those
• 14:49
  Suze: people and you get a check made payable to your
• 14:54
  Suze: new financial institution, your new account, don't worry about it.
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  Suze: Because again, they should not have withheld the 20% mandatory withholding. So,
• 15:07
  Suze: if you have $100,000 in your 401k, and now you
• 15:13
  Suze: want to do an IRA rollover with it, but your
• 15:17
  Suze: ex-employer sends you a check made out to your new
• 15:22
  Suze: financial institution.
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  Suze: Chances are that check is going to be for $100,000
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  Suze: and you will just have to take that check and
• 15:33
  Suze: make sure you immediately deposit it within that 60 day period.
• 15:37
  Suze: It should be really right away, everybody, so you don't
• 15:40
  Suze: forget about it into your new account. Just that simple. So,
• 15:47
  Suze: very different than when your employer makes the check out
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  Suze: payable to you.
• 15:55
  Suze: They then have to do the 20% mandatory withholding versus
• 16:00
  Suze: your ex-employer makes the check out to your new financial institution.
• 16:07
  Suze: So even though that is an indirect rollover, you're not
• 16:12
  Suze: going to have the 20% withholding withheld from your payment.
• 16:19
  Suze: I hope you're clear on everything I just said.
• 16:24
  Suze: Next, transfer.
• 16:27
  Suze: A transfer is not a rollover, everybody.
• 16:32
  Suze: A transfer is when you go from an IRA account,
• 16:38
  Suze: maybe at one brokerage firm, to another IRA account at
• 16:43
  Suze: another brokerage firm. You are not changing the types of accounts.
• 16:51
  Suze: Maybe it's going from one 401k at an employer that
• 16:55
  Suze: you left to your new employer. You're not changing the
• 17:01
  Suze: type of an account it is. Again, a 401k is
• 17:05
  Suze: different than an IRA.
• 17:08
  Suze: An IRA is not different than another IRA.
• 17:13
  Suze: So when you are going from one type of IRA
• 17:18
  Suze: to another, to the exact same type of IRA at
• 17:23
  Suze: a different institution that is known as a transfer.
• 17:30
  Suze: And in that situation, you also want it to go
• 17:34
  Suze: from custodian to custodian.
• 17:38
  Suze: If you have an IRA that is a traditional IRA,
• 17:44
  Suze: you legally are allowed to withdraw money from it if
• 17:50
  Suze: you want to.
• 17:52
  Suze: And you have to put it back within the 60 days.
• 17:56
  Suze: Some people do that because they really need money. They're
• 18:01
  Suze: short on something. They know money is coming in within
• 18:05
  Suze: 60 days for them, so they literally take money out
• 18:08
  Suze: of their IRA, use it for what they need to.
• 18:12
  Suze: When other money comes in, they replace it within those
• 18:17
  Suze: 60 days.
• 18:19
  Suze: That also is known as a rollover, where you're rolling
• 18:25
  Suze: over money to yourself and putting it back in.
• 18:29
  Suze: You cannot do more than one indirect rollover a year.
• 18:37
  Suze: So whether it's from a 401k and you indirectly have
• 18:42
  Suze: money sent to you, and then you put into an
• 18:46
  Suze: IRA or you have a traditional IRA where you have
• 18:51
  Suze: taken money out.
• 18:54
  Suze: And you are putting it back in within 60 days,
• 18:58
  Suze: you cannot do that more than once in a 12-month
• 19:03
  Suze: period of time.
• 19:05
  Suze: Notice I said a 12-month period of time. I did
• 19:10
  Suze: not say annually.
• 19:13
  Suze: So, if you do it once, you cannot do it
• 19:17
  Suze: again from any account for another 12 months. When it
• 19:24
  Suze: comes to transferring your accounts, you can do it as
• 19:30
  Suze: many times as you want in a year. When you
• 19:35
  Suze: transfer from one IRA to another IRA and now you
• 19:38
  Suze: want to transfer it to another IRA, you can do
• 19:41
  Suze: that as many times as you want.
• 19:45
  Suze: You can also do a direct 401k rollover to an
• 19:51
  Suze: IRA as many times as you want.
• 19:56
  Suze: So again, when you transfer something, there's no limits on
• 20:02
  Suze: how many times you can do that, provided they are
• 20:05
  Suze: trustee to trustee or custodian to custodian transfers. On rollovers,
• 20:13
  Suze: there's no limit, providing it is a direct rollover.
• 20:19
  Suze: But indirect rollovers, any 60 day distribution that you get
• 20:28
  Suze: is only allowed once in a 12 month period of
• 20:34
  Suze: time across all the accounts that you have.
• 20:39
  Suze: Next, a conversion.
• 20:42
  Suze: A conversion is when you are changing, you are converting
• 20:48
  Suze: a pre-taxed retirement account, iInto an after-tax retirement account. In most cases,
• 20:59
  Suze: you can convert a traditional 401k where you have never paid
• 21:05
  Suze: taxes on that money to a Roth 401k.
• 21:11
  Suze: That is a conversion.
• 21:14
  Suze: A conversion is when you go from a traditional IRA
• 21:19
  Suze: that you have never paid taxes on to a Roth IRA.
• 21:25
  Suze: When you convert, it doesn't matter if it's from a
• 21:30
  Suze: traditional 401k to a Roth 401k, a traditional 403b to
• 21:36
  Suze: a Roth 403b, a traditional IRA to a Roth IRA,
• 21:42
  Suze: you will owe taxes on any amount of money that
• 21:48
  Suze: you converted in the year that you converted.
• 21:53
  Suze: Do not get confused that once you retire from some
• 21:58
  Suze: place and you are taking a 401k and now you
• 22:03
  Suze: are thinking you are doing a rollover to an IRA
• 22:10
  Suze: at another brokerage firm or wherever you're doing it.
• 22:13
  Suze: And you put it into a Roth IRA, it is
• 22:16
  Suze: going to be 100% taxable to you on the amount
• 22:22
  Suze: that you did that. That is not a rollover, that
• 22:27
  Suze: is a conversion.
• 22:30
  Suze: Again, do not confuse it.
• 22:35
  Suze: A 401k to an IRA rollover pre-taxed is a rollover.
• 22:41
  Suze: A Roth 401k to a Roth IRA is a rollover.
• 22:48
  Suze: In traditional IRA, meaning pre-taxed, a traditional IRA to another
• 22:56
  Suze: traditional IRA at a different custodian is a transfer.
• 23:02
  Suze: A traditional IRA to a Roth IRA is a conversion.
• 23:10
  Suze: They are very, very, very different, and many of you
• 23:16
  Suze: are getting these confused and ending up owing taxes when
• 23:22
  Suze: you didn't think you needed to.
• 23:25
  Suze: One other thing about a backdoor Roth IRA since so
• 23:30
  Suze: many of you are interested in it.
• 23:33
  Suze: To do a backdoor Roth IRA you fund an IRA
• 23:39
  Suze: that is non-deductible, and you convert it to a Roth IRA.
• 23:45
  Suze: You don't transfer it, you don't do a rollover, that
• 23:49
  Suze: is a conversion as well.
• 23:53
  Suze: Let's just quickly switch to those of you who have
• 23:57
  Suze: a thrift savings plan. You're a federal employee or you
• 24:01
  Suze: work for the armed services. Your retirement plan is known
• 24:06
  Suze: as a thrift savings plan or a TSP.
• 24:12
  Suze: For you, a transfer means when you send money directly
• 24:17
  Suze: from a traditional TSP to your IRA account.
• 24:24
  Suze: So that is a transfer for you.
• 24:28
  Suze: If you're not TSP people, that was a rollover for you,
• 24:33
  Suze: a transfer for the TSP people, means you are simply
• 24:38
  Suze: sending money directly from where you have it to your
• 24:45
  Suze: IRA account. It does not go to you.
• 24:50
  Suze: A rollover, however, within a traditional TSP means they send
• 24:57
  Suze: you a check directly and you have 60 days to
• 25:01
  Suze: get it into an IRA. They will automatically also withhold 20%
• 25:09
  Suze: and send it to the IRS. If you are in
• 25:13
  Suze: the armed forces or work for the federal government, you never, ever,
• 25:19
  Suze: ever want to do a rollover of any kind. You
• 25:25
  Suze: only want to do a transfer.
• 25:29
  Suze: So again for you the terminology is different than for
• 25:34
  Suze: those who aren't part of the armed forces or work
• 25:37
  Suze: for the federal government. That is what you need to know.
• 25:42
  Suze: That is the language of money when it comes to
• 25:46
  Suze: retirement accounts. Now you may need to listen to this
• 25:50
  Suze: again over and over again. You may need to write
• 25:54
  Suze: the notes down over over again in your Suze notebook,
• 26:00
  Suze: if I were you, what I would be doing is
• 26:03
  Suze: I would be writing down the type of retirement account
• 26:07
  Suze: I have.
• 26:09
  Suze: And then I would be applying the terminology that I
• 26:14
  Suze: just gave you to the types of retirement accounts you
• 26:19
  Suze: have and what you intend to do with it. So,
• 26:24
  Suze: that is the Suze School for today.
• 26:28
  Suze: Remember there's only one thing that you need to know
• 26:31
  Suze: when it comes to your money, and it is this
• 26:34
  Suze: people first, then money, then things, so you just stay safe,
• 26:41
  Suze: and if you do all that, oh, I promise you
• 26:44
  Suze: you will be unstoppable.