Jill on Money with Jill Schlesinger: Episode Summary

Episode Title: High Earners, Still Do Roth?
Release Date: July 29, 2025
Host: Jill Schlesinger, CFP®
Guest: William (from New Jersey)
Guest Co-host: Mark

1. Introduction to the Episode

In this episode of "Jill on Money," host Jill Schlesinger delves into the complexities faced by high earners when deciding between Roth and traditional retirement accounts. The primary focus is on how substantial income affects tax strategies and long-term financial planning.

2. Guest Introduction and Financial Background

Jill welcomes William from New Jersey, a long-time listener who previously reached out in 2021. William and his wife, both in their early thirties with two young children, share an impressive combined annual income of approximately $511,000. Their financial discipline has led them to accumulate significant savings:

• Pre-Tax Accounts: $706,000
• Roth Accounts: $516,000
• After-Tax Accounts: $380,000
• Total Savings: Over $1.6 million

Notable Quote [05:04]:
William: "We've really focused on the Roth. And at that time we were making $240,000."

3. The Core Issue: Roth vs. Traditional Accounts

William seeks advice on whether to continue maximizing Roth contributions or to pivot towards traditional pre-tax retirement accounts due to their increased income and resulting tax burdens.

Notable Quote [08:52]:
William: "Should we basically go back to a pre-tax retirement contribution because our tax bracket has gone up substantially?"

4. Co-host Mark's Perspective

Mark, Jill's co-host, weighs in by emphasizing the long-term benefits of Roth accounts for high earners. He argues that high-income individuals like William and his wife are unlikely to see a reduction in their tax brackets in the future, making Roth contributions more advantageous.

Notable Quote [10:10]:
Mark: "Everything is Roth or brokerage and that's it. [...] It's highly unlikely you're not going to be high earners going forward."

5. Jill's Analysis and Long-Term Tax Implications

Jill underscores the concept of the "ticking tax bomb," referencing financial expert Ed Slott. She explains that while reducing taxable income now may offer short-term relief, it can lead to substantial tax liabilities in the future when funds are withdrawn from traditional accounts.

Notable Quote [11:50]:
Jill: "It's just that you're kicking the can down the road. So weirdly, even though you make a half a million dollars a year... you're concentrating on the wrong thing."

6. Tax Credits and Deductions Considerations

William brings up concerns about qualifying for tax credits and deductions, such as the Child Tax Credit, under his current income level. He questions whether reducing taxable income to access these benefits is worth the trade-off.

Notable Quote [09:38]:
William: "We could go from 511 and we could contribute and be below 400 grand of, of you."

7. Practical Recommendations

Jill advises William to consult with a CPA to perform a detailed tax analysis, considering the impact of recent tax laws like the SALT deduction cap. However, she leans towards maintaining Roth contributions given their long-term benefits and the uncertainty surrounding future tax rates.

Notable Quote [14:05]:
Jill: "Have you ever heard us talk on the show when we're talking to somebody and they're like, I want to reduce my income because I want to not pay that extra fee when I get Medicare... We're like, what are you talking about?"

8. Final Thoughts and Conclusion

Mark reinforces his stance against shifting to traditional accounts, emphasizing that the growth of pre-tax savings will inevitably lead to higher tax brackets upon withdrawal. Jill wraps up by highlighting the importance of focusing on long-term financial health over short-term tax strategies.

Notable Quote [17:45]:
Mark: "Not one dollar to pre-tax. That's my last word."

Jill's Closing Remarks [17:47]:
Jill: "William, keep rocking on. Put some more money in that 529 plan. Call us in a few years. Hope there's not a pandemic in between."

9. Key Takeaways

• High Earners Benefit from Roth Accounts: Given the likelihood of maintaining or increasing their income and tax brackets, Roth contributions offer tax-free withdrawals in retirement.
• Long-Term Tax Strategy Over Short-Term Relief: While reducing taxable income now may offer immediate benefits, it can lead to significant tax liabilities later.
• Professional Financial Advice is Crucial: Consulting with a CPA can provide personalized insights, ensuring tax strategies align with overall financial goals.
• Diversification of Savings Accounts: Maintaining a mix of pre-tax, Roth, and after-tax accounts can offer flexibility and resilience against future tax changes.

10. Notable Quotes with Timestamps

• William on Past Focus [05:04]:
  "We've really focused on the Roth. And at that time we were making $240,000."

• William's Central Question [08:52]:
  "Should we basically go back to a pre-tax retirement contribution because our tax bracket has gone up substantially?"

• Mark on Roth Strategy [10:10]:
  "Everything is Roth or brokerage and that's it. [...] It's highly unlikely you're not going to be high earners going forward."

• Jill on Tax Implications [11:50]:
  "It's just that you're kicking the can down the road. So weirdly, even though you make a half a million dollars a year... you're concentrating on the wrong thing."

• Jill Advises Consultation [14:05]:
  "Have you ever heard us talk on the show when we're talking to somebody and they're like, I want to reduce my income because I want to not pay that extra fee when I get Medicare... We're like, what are you talking about?"

• Mark's Final Word [17:45]:
  "Not one dollar to pre-tax. That's my last word."

• Jill's Closing [17:47]:
  "William, keep rocking on. Put some more money in that 529 plan. Call us in a few years. Hope there's not a pandemic in between."

This episode provides valuable insights for high earners contemplating their retirement savings strategies. By weighing the immediate benefits against long-term implications, Jill and Mark offer guidance to navigate the complex landscape of tax-efficient investing.