The Ramsey Show - App - What Should I Do With a 401(k) From a Previous Job? (Hour 3)

Episode Date: August 5, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Show. Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us, America. It's a free call anywhere in North America.

If you want to talk about your life or your money, we're here for you. The phone number, 888-825-5225. That's 888-825-5225. Pat is in Modesto, California. Hi, Pat. Welcome to the Ramsey Show. Actually, it's Riverbank, California, but it's next door to Modesto. Does that count? It does. I'll go with that.

How can we help? Okay. I got notice from my long-term insurance that their premiums are going up from $1,056 annually to about $4,000 over the next few years. Also, the notice gave me, like, a number of options. And I bought a plan years ago when I was managing my dad's affairs,

and he had a plan, and it was, you know, it seemed like a good idea to me at the time. And I also went on your website and did the insurance survey and, and found out that you do indeed recommend long-term insurance, but I don't have kids. If I burn through my whole estate, when I go to a rest home, who cares? And then you go on nutty,

nutty. What? So I need some ideas why I should keep an insurance plan. Now, the other thing with this is Genworth, my plan that I have, and they also included in the information that they have a C++ financial strength and they have manageable marginal ability to meet its ongoing insurance obligations. And so it's like, okay,

how old are you? I'm 67. How much money do you have? Um, I had 600,000 in my, uh, retirement. I have,

uh, a $42,000 investment that I have earmarked for a vehicle if my husband's currently in the rest home. He's been there for about a year. If by miracle he gets better and comes home, I will need a vehicle for him. And so that's earmarked for that. And then I got about $38,000 in savings. The house is worth about $250,000. How's your husband's health?

Not good. I'm sorry. He's improved a little bit over the last month. So it's kind of like I'm in limbo. I don't know if he's going to come home or not. Okay. Well, here's the thing. The average time spent nationally in a nursing home is 2.4 years.

The average cost is a little under $100,000 a year. Okay. So that means you're... I know that well. Yeah. And so I was not able to buy a policy for him right because even 20 years ago he had rheumatoid arthritis and that excluded him from coverage so you're paying for this no he's on medical oh okay medical my income is low and low enough my monthly income is low enough

to where i uh my sheriff cost is only 14145. Okay. Quality care is fine then. Pardon? The quality of care is fine in that program then, I'm assuming? Yes. Yes. He is in a good place. Yes. Good.

All right. Good. Well, I just want to make sure he's taken care of and you're taken care of because that's what the whole discussion is really about, right? So if you didn't go on medical uh but it sounds like you could as well possibly go on that if that something happened that you needed nursing home but let's just pretend worst case scenario you had to fund yours and it took two and a half and the average stay was two and a half years well if you went twice the average oh almost three times the

average six years at a hundred thousand you would burn through your money, right? Right. The likelihood statistically of you doing that is close to zero, statistically. You see what I'm saying? Because, I mean, the chance of you doing three times the average stay would be highly unusual. I mean, it would have to be highly unusual um i mean it had to be an unusual uh issue and of course the other options you've got with with six hundred thousand dollars in your hand you could do in-home care you could do a lot of other things so you can afford to drop this and to self-insure given those numbers, okay?

70% of claims right now on long-term care insurance are for in-home care. Only 15% of the claims are nursing home care. Now, that's not Medi-Cal. I'm talking about private, like your Genco prop or your Genworth deal, okay? And so this is what the typical, typical thing is. And so the average, you know, there's just lots and lots of averages you can look at on this, but the, you know, you guys are living out a fairly normal situation.

You typically, 75% of the ladies outlive their husbands. And so dad goes in the nursing home, cracks and scrambles a nest egg if he doesn't have long-term care insurance or in this case medica right so i take it that's a california program that you're under i'm not i'm not familiar with it but that's right it's it's uh california's version of medicaid Right. Okay. And in some places, the quality of care on a Medicaid nursing home is substantially lower. And so other states, you might not want to do that. But in your case, you found a way that your situation is that he's getting quality care there, and likely you would, too. And so you might not even burn through the money even

then but so do you take the chance uh if i'm in your shoes i probably do given the numbers i just gave you if you told me you had a hundred thousand dollars to your name i'd take get a policy to make sure that you had coverage and to make sure you had care which is important but i mean i don't think the chances of you burning through 600 grand are very high to start with we're probably not going to touch it at all with medical and even if we did you got to go three times the national average in your nursing home stay to be very unusual i mean you'd have a cognitive thing where your body didn't deteriorate. That's the type of a thing where you would stay 10 years, you know?

Mm-hmm. And, but that's the only, I mean, anything where your body deteriorates, not your mind, you know, you're not going to make it 10 years. That's just, I'm just, that's kind of cold, but that's how we all face. We're all not going to make it. So that's how we have to have these discussions, because this is about probabilities and statistics and trying to gauge that into common sense with our personal lives and where we stand, you know? And so if I woke up in your shoes knowing what I just laid out here between Medi-Cal

and 600 grand, I'm not re-upping if I'm in your shoes. I'm going to self-insure through this issue. Does that make sense to you? Okay. It does. It does. And it was a consideration because, like I said, so what if something happened and I burned through all the money and I had to go on Medi-Cal?

Who cares? Yeah. Well, I mean, you don't even have to burn. I don't have kids. I don't have anybody standing at the a waiting for my house or my money. Yeah, that's exactly right. And that's why you did this, is to take care of you. That's why you have 600 grand.

That's why you saved money, so that you would have options and care and so on. It's very important. Good discussion. Thanks for joining us. In an uncertain world, being a good steward of your money is more important than ever. While some circumstances can't be controlled, there are items within your budget you can take charge of, such as your health care costs. For nearly 40 years, Christian Health Care Ministries, or CHM, has provided a budget-friendly means of sharing for medical bills when our members need it.

Learn more by visiting chministries.org slash budget. That's chministries.org. All the research that we have seen in the last 30 years on DIY investing, do-it-yourself investing, tells us what we already knew, that when 2020 hit, people made a lot of mistakes. See, here's the thing. You need some investment professionals in your corner. They don't need to tell you what to do, but they're there to teach you and sometimes to talk you off the ledge when you go into panic mode.

You absolutely, absolutely need someone in your life. Hey, I'm a do-it-yourselfer. I fix some stuff myself, but I don't pull my own teeth and I don't even work on my own cars anymore. I don't even know what's under that hood. It looks like a big battery to me, but it's not because I don't have one of those cars. So here, the problem is you get investing in the wrong things when you don't have help you get caught up in trends you make rookie mistakes you make emotional decisions that are stupid and that happens to everybody unless

they've got someone in their corner and and that person can say, listen, calm down, breathe, ride the roller coaster to the end of the ride. Let 2020 be your wake-up call. Never again let your retirement be at the mercy of a global crisis. Go to RamseySolutions.com slash SmartVestor and create a rock-solid investing plan today. RamseySolutions.com slash SmartVestor. Lucian is with us in Akron, Ohio. Hi, Lucian. How are you? I'm great. How are you, Dave? Better than I deserve. What's up? Hey, so I'll give you a little bit of context and then I'll shoot the question out there. I've been, I'm a small business owner and been grinding it pretty hard for about a decade

and going into it. Uh, the business was a vehicle for me to get, uh, the financial independence. I wanted to have assets that kicked off passive income greater than my, my active expenses. And, uh, so I'm about 10 years in and I own 150,000 on my home mortgage, and that's my last debt that I have. And it's hanging over my head, and I'm getting kind of weary in the business. And I've got the cash in my business to basically write a check and pay off the home mortgage. And I'm tempted to do that, and I want to do that. But I have not yet this year invested 15% and I have not yet this year put away, I've got three kids, so I haven't put away,

I've been putting away $2,000 a year per kid. I haven't done that yet. I guess my question is, is it wrong to just get this home mortgage debt off my books and off my conscience and just be done with it? Or is that the bad thing to do? Or should I just stay the course and keep going ahead and not pay that off all at once and get that paid off down the line. What will your profits be for 2021?

What will my business profits be for 2021? Probably gross income somewhere around $200,000, $210,000, $20,000, something like that. So why could you not put 15% in your kids' college funding out of that? So I probably could. I have the ability to do it right now and then still be able to. No, I'm just saying it's not an either-or. Now, the second question is you've got $150,000 in your business. Is that what you told me?

Yes, sir. And the mortgage balance is what? $150,000. I got about $160,000 in the business. Is that what you told me? Yes, sir. And the mortgage balance is what? $150,000. I got about $160,000 in the business. The mortgage balance is $150,000. It sounds like you're going to have zero retained earnings or close when we do this.

No money left in the business. Yeah, I've got income coming in about maybe $30,000 in the next 30 days. Yeah, that's part of your $200,000 income, though, right? It is. Yeah. Okay. I don't want you to leave the business so skinny that it collapses because we left it cash poor.

I don't know what your cash needs are around this business or cash fluctuation. Either you have a very, very high risk tolerance and you don't mind rolling the dice on stuff and you don't even flinch when you do it, or your business does not have much cash need. Both. I'm a real estate salesperson okay okay yeah you don't have much cash need so 10 000 with 30 000 coming in wouldn't kill you all right well we've got reserves tucked away for personal you know five months i know but i'm just saying i didn't know whether you were running employees or what you had, you know, I didn't know what kind of payroll you were running,

and I don't want a hiccup to come in and take you guys out because we used all your cash because you didn't keep a liquidity position, and you need to do that from a business perspective, but yours is a little different model. So, yeah, I'm probably paying off the house. The house, all right. Now, as a part of that, I'm probably paying off the house. The house, all right. Now, as a part of that, I'm also going to commit to using my income this year to going ahead and funding my 15% and funding my kid's college.

But we may do that a little bit later in the year. Mm-hmm. But I think, I mean, it's only 30, what, 60 grand, or 30 grand. That's all you need to do that. And, you know, then let's also rebuild and keep some cash in your business. It doesn't sound like it's necessary to keep $150,000 in your business. And so just, you know, keep pushing through. But congratulations, you're doing a great, great job.

But make sure you just go ahead and play through with it. Because baby steps four and five generally should be cash flowed out of your budget, not out of lump sum cash. And, you know, then Baby Step 6 is any cash we come into past those things in our budget or, in your case, we're taking some of your retained earnings in your business and you're going to pay off the house. That's more lump sum stuff at Baby Step 6. Matt is with us in spokane washington hi matt welcome to the ramsey show hey dave how are you great what's up uh well i'm hoping that you can help me out with a

retirement ceremony my wife and i are working on we're both 51 years old we have four kids three of which are going to be in college this year, and I have one that's a senior in high school. I have a previous retirement from the military, and I'm working a part-time job now. My wife is fully employed. We're doing all the right steps. I've listened to you for years and years.

I've never actually read your books, so I don't exactly know all the steps and whatnot, but I think we've got a pretty good handle on it. We'd like to retire within the next year or two for good and just travel and live off of what we've invested and what we've saved. My question is, the only debt we have right now is our mortgage. We owe $212,000 on that. I have the money in one of my mutual funds, an investment account that I could cash out and pay that off. That account that I would use to do that with, though, was the one that I was primarily going to live off if we retired early

until I turned 59 1⁄2 and I can tap into my lot probabilities and my traditional. So I also have money in the bank and whatnot. So I think I already know the answers, but I just wondered if that would be a smart move to go ahead and cash out that account. What's your total mistake, counting retirement and everything? Well, let's see. In the IRAs, we have about $600,000.

I've got $70,000 in the bank. There's $230,000 in that account I'm talking about cashing out. And then I've got some other accounts that we could tap into, $35,000. So, look, the total investments is like $1.2 million. Some of it's locked up until I'm 59 1⁄2. Right. So if we pay off the mortgage with this, how do you travel?

How do you eat? Well. Until 59. I say we're talking about retiring. So I still have a military income, and we're both still employed. Yeah, but I'm saying if you retire, if you pay off the mortgage with this and you retire, what's your military income? It's about $3,000 a month. Okay.

So I don't think you're living on that. So how are you going to live? Nope. How are you going to live and travel? Well, we're looking at using that um the other 200,000 that we have and living off of that oh i thought you had only 200 in one place so you've got 400 that's non-retirement yeah we have so between roth iras and traditional they have six hundred thousand dollars in those yeah but you can't touch the roths or retirement until you're 59 1⁄2.

You already brought that up. So, yeah, I'm paying off the mortgage. Definitely paying off the mortgage in this case. Thanks for joining us, America. This is the Ramsey Show. Jason and Stephanie are with us in Austin, Texas. It says on my screen, you guys are debt-free. Congratulations. Thank you.

Thanks, Dave. Way to go. How much have you paid off? $150,000. Awesome. How long did this take? It took 13 years. We had a few setbacks, but we kept at it and did it.

Okay. And your range of income during that time? $70,000 and now $140,000. Cool. What do you all do for a living? I am a construction engineering inspector. And I'm a licensed professional counselor. Excellent.

What kind of debt was the $150,000? It was vehicle debt, credit cards, and student loans. Wow. All right. Well, tell me the story. What happened 13 years ago, and what does this journey look like? Well, I was feeling sick to my stomach every time I was writing those checks every month for all those credit cards and all that debt.

And a class was offered at our church, and I'm so grateful that we went and we hopped in right away. I was a little quicker than Jason. He hopped on a little bit after me. I'm the nerd. He's the free spirit. And we started from there. Very cool.

And so you've been on a 13-year journey since then. We have. We had a few setbacks. Jason had an injury at work. And then our youngest son was diagnosed with brain cancer at age two, and so that created a whole other situation that we had to work through and set us back a little bit, and we just kept powering ahead. Yeah, a lot of things that were more important than getting out of debt. You've got to take care of that baby. That's right. ahead. Yeah. A lot of things that were more important than getting out of debt. You've got to take care of that baby.

That's right. Good. Yes. And that, you know, cancer is all-consuming. Cancer in a child is all-consuming. Yeah. Wow. You guys, that's amazing.

So how's he doing? He's doing great. He is seven years cancer-free this November, so it's amazing. All right. Very good. So you guys just kept, in spite of these overwhelming medical situations, just kept peck, peck, peck, peck, pecking away and finally chipped your way all the way through. We did.

Yes. That is an amazing amount of perseverance. Thank you. 13 years. Wow. Yes. Thank you. Easy, yeah. Yes. Yes, exactly. Oh, my gosh. Well, you did. You powered your way through, which makes it all the more sweeter, doesn't it? Yes, it does.

Indeed. Yeah. How does it feel to be free? It feels amazing. I think sometimes we sort of pinch ourselves because it doesn't seem real yet because it's been such a long time coming. Wow. seem real yet because it's been such a long time coming and i'll listen a lot to your show and it is it's it doesn't seem real yet because like when people do the debt-free scream it's like i'm going to be there one day i'm going to be there and now i'm here and it's like i mean i'm just

i'm just overwhelmed with with uh joy a huge, huge weight has been lifted. A little surreal then, huh? Yes. Yeah, wow, wow, crazy, amazing. Wow. Well, well done. Well done, you guys. Very, very well done.

What do you tell people the key to getting out of debt is? Tithing. 100% tithing. That's the key. We started giving. Our church did a challenge, a tithing challenge, and our pastor told us if we didn't reap the reward and the blessing of tithing, which doesn't mean money, it comes in many different ways, that he would give us our money back, and we've never had to ask for it back for 13 years. And that's the ticket right there.

We have faithfully tied this entire time, and we do not regret it one bit. That's a money-back guarantee you never have to write the check for there. That's a good one. I love that. Well done, you guys. Very, very well done. Very well done. You guys are heroes for continuing to push through on this

absolutely amazing very well done so proud of you excellent thank you we've got a copy of the legacy journey for you that's the next chapter in your story for sure and um uh you know definitely go on and change your whole family tree and an extra copy of the total money makeover for you to give away get someone else's journey started. Because I'm sure folks have been looking over your shoulder and watching you as long as you've been doing this. And so just very, very powerful on your part. Very well done. So proud of you.

Oh, thank you so much. Jason and Stephanie Austin, Texas. $150,000 paid off in 13 years. A couple of medical events during that time, to say the least, making $70,000 up to $140,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free!

Yeah! Yeah! Ha, ha, ha, ha, ha! That is how it's done. Oh, my goodness. How fabulous is that? Very, very cool. John is with us.

John is in Indianapolis. Hi, John. How are you? Hi, Dave. Doing great. I can't believe I'm talking to you. Well, I'm glad to talk to you, sir. How can I help?

Well, my wife and I are in baby step two, and we anticipate turning our retirement contributions back on January 1, 2024. However, her employer is giving her a one-time choice that we have to decide on right now. Option one is she can maintain her 401k match, which they throw in 3.5%, and maintain her portable pension account 100% provided by the company. Option two is she fulfills the pension, less the vested balance. I'm sorry, option two is what? You cut out when you said option two.

Option two is what? Option two is she no longer has the pension option, but her 401k match goes up to 8%. So we're wondering what your wisdom is as far as do we keep the 3.5% match and the company pension, which, by the way, they throw in 5% of her gross per year. So the face value of option one is about 8.5% of her gross per year. So the face value of option one is about eight and a half percent of her gross or option two with the higher 401k match, which has a face value of 8% and more options with, um, investments,

but, uh, but no pension. What, what is, uh, yeah, uh, the, um, the pension, the pension account compounds at about 4% a year, so, I mean, maybe keeps up with inflation, but no significant growth. It's more risk-free. Yeah. I mean, the only way to do this properly is to get all the way down in the numbers, which we can't do on a radio call. If you sit down with a SmartVestor Pro, they can help you do that.

But there's a couple. I think where you're going to land, I'm very sure where you're going to land, is option two at the end of the story. And the reason is that when you die, 100% of that money is yours. When you die with option one, the pension dies with you. If there's a survivor benefit, it dies with the second person to die, but it eventually dies. And so all of the other money is going into a, you know,

the extra 5% in option two is going into a good investment, an investment that works better than the pension works and doesn't disappear upon death. And so those two things generally will have you pick, all things being equal, the 401k. My guess is that they have also done the numbers because most companies have moved away from pensions. And it sounds like this company is trying to move away from pensions. And so they're being generous with option two to get you to do it.

Because most companies hate these things. They're a pain in the butt to deal with. And they don't perform that well. So no one's really winning at the end of the day on this. So I'm going to tell you, I think there's a 90% probability you're going to land on option two. But without actually combing through every piece of the arithmetic, I can't be 100% sure on that. But I think that's where you're going to end up for those reasons. This is the Ramsey Show. Our scripture of the day, Revelations 3.20,

Behold, I stand at the door and knock. If anyone hears my voice and opens the door, I will come in to him and dine with him and he with me. Elizabeth Elliot said, When you don't know what to do next, just do the thing in front of you. Wow. Bill is with us. Bill's in Lansing. Hi, Bill. Welcome to the Ramsey Show.

Hey, what's up, Dave? Thanks for your time. My pleasure. How can I help? I have a question for you. So I am a massage therapist, and I left my job at the end of April. There wasn't a lot of healthy leadership going on there and some other things that made me leave and go on my own. And I'm a lot happier that I did now. But my question is, I had a simple IRA that my employer provided.

And I only have about, the balance of it right now is $1,700. So I'm calling to see, I know typically we don't talk about like, you know, cashing out retirements and stuff like that. But I'm wondering if I should convert that over into a traditional or if I should cash it out and then put it into my existing Roth as that lump sum minus the taxes that I would owe on it. Well, you can roll it to a traditional and not pay any taxes on it. You can roll it to a traditional and then convert it to a Roth

and pay the taxes on it, or you can cash it out. Those are really your three options. You can't really put it into another Roth, but it just creates its own is what it is. Each account is just its own. That's all it is. So if you cash it out, I mean, really, the truth is that on $1,700, it's not going to change your life no matter what you do with it. Right, absolutely.

I just wanted to make sure that it wasn't anything that I was missing out. And so that's just the, you know, you could go any direction you want to go. You're going to give the government a third of it if you cash it out. You're going to give the government a third of it if you convert it to a Roth. Or you're going to have to pay the equivalent of a third of it if you convert it to a Roth, or you're going to have to pay the equivalent of a third of it if you convert it to a Roth. So get ready to write an extra $500 check to the government if you convert this to a Roth. Wouldn't be a bad idea. It's always a great idea to get as much as you can in tax-free growth, and so that's probably what I would do with it, is I would just go ahead and roll it to a Roth IRA and pay the taxes that come due as a result of that,

assuming you have the money to pay $500 when your tax bill comes due. But it sounds like you're making money as a massage therapist now. Maybe you should be able to do that. Randy's with us. Randy is in Tucson. Hi, Randy. Welcome to the Ramsey Show. Hi.

Thank you for taking my call. Sure. What's up? So my question is, my husband and I owned a commercial cattle ranch for 10 years, and we sold it last year. With the profits of the ranch, we were able to pay off all of our debts except for

our house. But now our question is, we still own all of our cattle, and the cattle, the money the cattle have brought in has overtaken what my husband makes at his day job. So his question is, should he continue on with his day job, or should we just do ranching full time? Why did you quit ranching? Well, we continued to ranch. We just sold the piece of property why so we just moved our animals to a closer location why why'd you quit why'd you sell it because we had a huge

payment that was getting really hard to make every year with the cattle market well i mean if you want to be in the cattle business uh you're in the cattle business and you can make money doing that i don't have any problem with that if that's if that's his career and direction he wants to go have at it that's not a problem at all for me um the thing is i don't want you to make a decision to walk away from the quote day job uh based on i don't know what cattle prices are doing are they unusually high right now uh they are right now but like last year for example um we've always steadily been around 40 between 40 and 60 thousand dollars a year with

our cows and his day job right now he only makes about,000 a year. So I don't want you to say we're going to make this decision based on prices that are unusually high that aren't going to stay high, because that would be a false set of information. Agreed? Right, yes, sir. Yeah, but if you think that the normal variation in beef prices, and I don't know what that is. I'm not an expert on that. But if you look at this and say, as a business, this is not one of these things

where the supply chain's gotten screwed up and beef has gone through the roof, and I thought it had. I thought I heard it was really, really expensive right now. Yeah. It is, yeah. But don't make your decision based on those numbers because they're not going to stay that way. Right. Yeah, we that way. Right.

Yeah, we understand that. Okay. If you can make the decision going the other way, I'm not sure why you didn't do this in the first place. Did he have a day job when you sold the cattle ranch? Yes, he's always had a day job, and he's always done this on the side. I think he's just nervous about leaving the stability of having a steady paycheck. Yeah. Well, I mean, it sounds like it's fairly steady at $40,000 or $50,000, but not at $100,000.

Right? Okay. It's what you're telling me. So, I mean, a steady paycheck has to do with the quality of the business. Is the business steady? Is the business going to continue? And, you know, an unsteady paycheck that averages $60,000 a year versus a steady paycheck that makes $32,000 is a really, really good move. A really good move. So, yeah, don't be confused about where stability comes from.

Stability comes from his ability to earn in the marketplace, and he can do that working in cattle, or he can do that working in something else. Kimberly's with us in Philadelphia. Hi, Kimberly. Welcome to the Ramsey Show. Hi, Dave. Thanks for taking my call. Sure.

What's up? So my question, Dave, is I have a PFP account that I contribute to, and I've been contributing to the traditional for like 24 years and also in the G fund the whole time, not knowing any better. I know now. So I wanted to know, now that I'm over 50, is it too late to switch over to Roth because I'm missing out on the compounding? No. It does not affect the compounding at all, to be in Roth or

not to be in Roth. The only question is whether the pre-tax is better than the tax-free and tax-free is still better. Because here's the thing. Don't switch your other, just switch your future contributions, not the whole account. If you flop the whole account over to Roth, you're going to have to pay taxes on it. I just did it. Well, I didn't, well, I just, I didn't, I did the allocation change. Okay.

I'm talking about all the money that's in the account. What's the TSP worth today? $250,000. $250,000. You didn't flop that to Roth, did you? No, it's TSP. I'm sorry. The TSP has a Roth option.

Yes. I just allocated everything. I just switched. What I did was I kept 5%. I was doing 32% for traditional. I kept 5% for traditional. Kimberly, stop. Kimberly, stop.

Okay. You're talking about your contributions now. Yes. I'm not talking about your contributions going forward. We can even switch the $250 into how it's allocated into the C plan, the S, and the I. That's a different discussion than Roth. There's two different discussions. Discussion number one is Roth versus traditional.

Discussion number two is the allocation of C, S, and I. We're going to allocate the whole thing, your future contributions and your current account, to 80% C, 10% S, 10% I. Okay? Right. Now, that's the contributions and the existing account. The future contributions need to be Roth. The $250,000 does not.

Okay, I'll change it back. I already changed it two days ago, but it's not going to come out of my pay until the 20th. Honey, the 250 doesn't come out of your pay. The 250 is already there. You're still not understanding me. No, sorry. That's okay. Your future contributions that come out of your pay when you put money into the TSP from today forward should be Roth.

Gotcha. The existing, the old contributions that are in there, the $250,000, should remain traditional. Otherwise, you're going to pay taxes on $250,000 freaking dollars. Don't do that. Okay? Leave that alone. That's the difference. That's what you've got to work through there. Hey, good call. Okay? Leave that alone. That's the difference. That's what you've got to work through there.

Hey, good call. Thank you for calling in. That puts this hour of the Ramsey Show in the books. Our thanks to James Childs, our producer, Kelly Daniel, our associate producer and phone screener. I'm Dave Ramsey, your host. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. I'm Kelly, associate producer and phone screener for The Ramsey Show.

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