Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Ask KT & Suze Anything: Can I Start a Roth for My 3 Year Old?
Thu, 03 Apr 2025
On this episode of Ask KT and Suze Anything, Suze answers questions about 529 plans, Social Security and IRA rollovers. Plus, a quick word about the markets and tariffs and more. Jumpstart financial wellness for your employees: https://bit.ly/SecureSave Try your hand at Can I Afford It on Suze’s YouTube Channel Protect your financial future with the Must Have Docs: https://bit.ly/3Vq1V3GGet your savings going with Alliant Credit Union: https://bit.ly/3rg0YioGet Suze’s special offers for podcast listeners at suzeorman.com/offerJoin Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on the podcast. Download the app by following one of these links: CLICK HERE FOR APPLE: https://apple.co/2KcAHbH CLICK HERE FOR GOOGLE PLAY: https://bit.ly/3curfMISee omnystudio.com/listener for privacy information.
Chapter 1: What are the current interest rates and CD options?
All right, listen up to me, everybody. Interest rates are not going to last. They're going down, down, down, down, down. So I want you to take advantage of the 12 to 17 month CD at myalliant.com. You have to look at it. So much higher than treasuries. I cannot even tell you. So currently, they are paying for amounts of $1,000 to $74,999, 4.25 APR for $75,000 and up. It is 4.30.
4.25.
4.25.
4.25. We are strong.
We are strong. We are wise.
April 2nd, 2025. Welcome everybody to the Women in Money podcast, as well as everybody smart enough to listen. Yes, I know. I said April 2nd. And most of you are listening to this because the podcast normally drops on April 3rd. But because we will be traveling tomorrow, we recorded it a day earlier. And it's actually 937 a.m.,
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Chapter 2: What is the impact of tariffs on the stock market?
And the reason that I'm telling you that, everybody, is that before we begin the Ask KT and Suzy Anything portion of the Women in Money podcast, say hi to everybody, KT. Hi, everybody. Right? Is that obviously today is the day that tariffs are going to be announced. And so many of you have been writing in to go, Suzy, Suzy, what's going to happen when he announces? Are there tariffs?
Are there not? Take a pause. Take a breath. All right. President Trump has told you he's going to be announcing tariffs. At the time that we are recording this, he hasn't announced yet. But let me just talk to you a little bit about the stock market, regardless of what happens. Right now, it is down because people think he is going to be announcing tariffs. And
And do you know how I talk to all of you about support and resistance levels? You need to know that this market is going to probably go on a roller coaster ride. It's already been on a roller coaster. Do you like roller coasters? I actually do. Susie loves them. I love them. I love them so much. But anyway, so just be prepared for it.
Chapter 3: Can you explain stock market support and resistance levels?
As I'm recording this with KT, the Standard & Poor's 500 Index is about 5,601. That is the level it is at. It's down 30 points so far on the day. A lot of you have been writing in and go, what is the next support level? The level that if it goes down to, it should bounce up. That level is 5,480 for those of you who just want to know. If it breaks that level,
it could absolutely go down another 5% to 5,367. Okay, so it could go down. But I expect that it will hold at 5,480. And it could then go up and its resistance will be 5,703. So for those of you who don't know what I'm talking about, 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 more. Resistance is it starts to go up and it hits a resistance level and it's very hard to go through that. So the next week or two, you're going to see bouncing all over the place. And for those of you who wrote in and wanted to know that, now you know. All right, KT, how are you, my dear?
Kind of bouncing around. That's what I am.
Should that have been your quizzy? Yes.
What is the resistance level? All right. All right. So are we ready?
What do you think my resistance level is with you? Zero. You don't think I have a resistance level with you? Never. What does that mean? Does that mean that I just go off the wall no matter what? All the time. No, KT, that's not true. No. We don't have resistance levels. We just keep going higher and higher?
Yeah, we just go up. We don't drop and we don't worry about resistance level.
Oh, that's my girl. All right.
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Chapter 4: How can a 529 plan be converted to a Roth IRA?
S-U-Z-E.
Yes, now offers a really fun Can I Afford It game, which is part of the original Suzy Ormond show, which many of you watched for decades. In any event, I want you to go there and play this. Natalie writes, super fun, great jackets. She's mentioning Suzy's wardrobe. If you can, definitely make more of these, please. But obviously, you need to come up with a KT avatar.
So I'm not going to tell you why she said that until you go and actually play Susie's Can I Afford It game.
Yeah. And there's other things there as well. And it seems to be quite popular. We just launched it a week or two ago. Can you believe that for all these years, I couldn't get my own YouTube channel back? Somebody had it and we didn't even know who had it. Anyway, that's besides the point. All right, Katie, ask away, my love.
Okay, first question here. It says, my mother has a 529 account for my son. My son is going to graduate in May. This is from Teresa. So let me explain. This is a little bit long, everybody. There's approximately $7,000 left in that 529 account. On one of your podcasts, you mentioned that 529 accounts can be moved into a Roth account.
The 529 company confirmed this, but said the funds wouldn't be accessible without a penalty for 15 years. Ready? The IRS rules... This isn't a quizzy. Hold on. The IRS rules say that the Roth account has to be open for 15 years to do this, which isn't the same as what the 529 company said. Susie, my son has a Roth that's been open for a year. So what should we do with the leftover 529 money?
Then she said her mom is 81 years old.
Teresa, listen to me. For your son to be able to transfer it to a Roth IRA, the 529 account has to have been open for at least 15 years. For those of you who are wondering what Teresa is talking about, is that if you happen to have had a 529 account that has been open for at least 15 years, and let's just say Teresa had had this account for 15 years. And the beneficiary of it was her son.
And he had earned income in the year that he wanted to roll it over into the Roth. The Roth IRA has to be in the name of her son. And it has to be subject to the annual Roth IRA contribution limit for this year, which is $7,000 since he is under 50. And just so you know, there's a lifetime limit of $35,000 that can be rolled over for this. So it's very tricky, everybody.
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Chapter 5: Are municipal bond ETFs a good way to reduce federal taxes?
Well, the reason that I get excited and animated, it's like... You're frustrated. If you're going to give everybody a benefit, like being able to transfer money from a 529 plan into a Roth... Make it so that it really applies to the majority of people. Don't make it so hard that even the 529 plan company doesn't know how it works. All right. All right.
This is from Andrea. She said, I love your podcast so much.
Me too.
My financial advisor is advising me to buy municipal bond ETFs and money market municipal bonds. Is this a safe way to reduce federal income taxes? Is it?
You know... All of you have to weigh reducing income taxes against possible loss of principal. Any municipal investment, a bond or an ETF or mutual fund that is made up of municipal bonds, the interest on those bonds are absolutely federally tax-free, but they also have to be bonds that are in the state that you live in if you live in a state that is taxable.
So if you live in California, you would need an ETF or mutual fund that was made up of all municipal bonds of the state of California. I I don't think that's a great way for you to save taxes because normally the interest rate on municipal bonds are lower than what the actual taxable yields on treasuries and certificates of deposits happen to be.
Like if you look at the yield on the 12-month CD at Alliant Credit Union, which is an incredible yield right now, I think you would find, and you would do that, by the way, by going to myalliant.com, I think you would find that that yield after taxes may be even higher than your ETF or mutual fund made up of municipal bonds. And remember, an ETF or a mutual fund doesn't have a maturity date.
So you have no guarantee of getting back the amount of money that you originally put in. So the fact that you're even asking this question tells me about your sophistication level. And truthfully, I wouldn't be doing it if I were you. All right, what does that look for?
It took a long time to get to a no.
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Chapter 6: Should I choose a lump sum or annuity for retirement?
It's not verbose at all. Verbose is your actions, but the amount of information, I would have taken the no right up front and be happy with it.
But KT, don't you want these people to be educated as to how it works?
Not necessarily.
Yeah, of course you don't.
Just give her the straight up no. No, don't do it. This is from Nisha. All right. This is a yes or no as well. Hi, Susie. I'm still working, but wondering if I should take a lump sum or monthly annuity when I retire next year. I was sure to take an annuity, but now my company's pension benefit has been sold and transferred to an insurance company as a group annuity.
Is it still safe to take an annuity over a lump sum in this case?
Yeah, but I need to know the amounts. What are the amounts?
Okay, so the choice is the lump sum is half a million, 500,000, or the annuity is 3,300 per month with 50% survival benefit when I retire next year. That's from Nisha.
So, Nisha, the big mistake that all of you make is that you really think... that upon your death, that your spouse will need 50% less than what they were getting when you were alive. And I can tell you, over all the years that I've been doing this, that is not true. Because if both of you also qualify for Social Security, upon your death, Nisha, if you happen to die first...
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