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Suze Orman was as candid as ever when Gina, a 56 year-old retiree, called into her Women & Money podcast earlier this year.
Orman was quick to shoot down Gina’s plan, which involved converting a $1.6 million pretax 401(k) into a Roth 401(k), and eventually into a Roth IRA.
Orman was shocked after learning her caller had received this financial advice from her company’s former benefits department. She retorted, “With the utmost of respect to your benefits person – are you crazy? Really?”
Orman went on to explain that converting from a pretax 401(k) to any Roth account would trigger taxes upfront, as it involves moving funds from a tax-deferred to a tax-free account.
She quickly shot down the plans Gina had for her Roth IRA.
Shuffling accounts, as it turns out, isn’t the tax loophole Gina thought it to be.
The American system is notoriously convoluted and clunky, and the Tax Policy Center claims it’s getting even more complicated every year.
In an interview with MSNBC earlier this year, Orman was asked what she thought the biggest money problem is for women that are around Gina’s age.
She said women over 50 tend to avoid dealing with money and don’t make plans to take care of themselves later in life, but tend to focus on their family instead.
“Women still give more to others than we give to ourselves and that is a really big mistake.”
For those of us without a direct line to Orman, services like Advisor.com can help. Advisor.com connects you with vetted fiduciary financial advisors near you. All you have to do is answer a few simple questions about your finances, and Adivsor.com matches you with a short list of certified experts to choose from.
You can then set up an introductory meeting with no obligation to hire.
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Suze Orman has long been a passionate advocate for long-term wealth generation.
