Jill on Money with Jill Schlesinger

Episode: In-Plan Roth Conversions

Date: September 2, 2025
Host: Jill Schlesinger, CFP®
Producer/Co-host: Mark
Theme: Tackling financial questions with direct, jargon-free advice—focusing this week on in-plan Roth conversions, retirement strategy, decumulation concerns, insurance, and optimal ways to park cash.

Overview

Jill kicks off the post-Labor Day show reminding listeners not to put their own financial planning last as they return to routines like work and school. The episode is a listener Q&A, with questions touching on the IRS’s new in-plan Roth conversions for federal employees’ Thrift Savings Plans, retirement readiness, optimizing investments, choosing umbrella insurance, and smart ways to maximize savings account returns in the face of falling interest rates. Jill and Mark break down the nuances of each scenario with characteristic empathy, humor, and practical advice.

Key Discussion Points & Insights

1. In-Plan Roth Conversions (Federal TSP)

(Listener: Mark | 00:37–02:57)

• Listener’s Situation:
  Mark, a federal employee, plans to take advantage of the new option (starting Jan 2026) to convert traditional Thrift Savings Plan (TSP) money to Roth TSP.

  • Intends to convert $10,000/yr (about the amount of employer’s match).
  • Already contributes to Roth TSP.
  • Wants advice on the easiest, most tax-efficient way to cover the conversion tax: lump sum, estimated payments, or increased payroll withholding.

• Jill’s and Mark’s Guidance:

  • Both agree that adding extra payroll withholding is the easiest and most seamless method, especially for smaller conversion amounts.
  • “That would probably be my choice. That's like the path of least resistance. If someone can do it for me, I'm going to let them do it.” – Mark (02:49)
  • Jill highlights the opportunity: Federal employees should pay attention to this new flexibility. “If you can do this...you're able to convert enough to essentially get yourself in a place where you can just start slowly but surely converting.” – Jill (02:57)
  • They encourage federal workers to take advantage and reach out for tailored advice.

2. Retirement Readiness and Decumulation Anxiety

(Listener: Kiki | 02:57–07:28)

• Listener’s Details:
  Kiki, 45, single, federal worker, significant assets:

  • Home: $200K mortgage @ 4.375% (on a $350K home). Extra $100/mth toward principal.
  • TSP: $1.1M, split roughly half Roth/half traditional.
  • HSA: $35K (maxed out annually).
  • Brokerage: $760K, plus two accounts with $44K (bonds) and $43K (stocks).
  • Cash: $25K money market, $15K CD, monthly expenses $3,500.
  • Retirement goal: 57–59 (not counting government pension).

• Jill’s Advice:

  • On Mortgage: Stop extra principal payments—focus on investments instead.
    • “45, single, no kids. Stop putting that extra money down. Stop it.” – Jill (03:44)
  • On Retirement Readiness: Absolutely on track. Should include both pension and Social Security in plans.
    • “Why am I not including your government pension? That seems ridiculous.” – Jill (05:09)
    • “You don't have to plan on the worst possible scenario.” – Jill (07:28)
  • On Investing: Keep it simple. Use stock and bond indexes in IRAs, skip extra complexity.
  • On Decumulation Fears: “You're in great shape.” Mark and Jill reassure Kiki that with her discipline and portfolio, decumulation will be manageable.

3. How Much Umbrella Insurance?

(Listener: Jennifer | 07:28–09:34)

• Situation: Jennifer and her brother are evaluating the right amount of umbrella insurance for their 81-year-old mom (net worth: $6M, $1M current policy, owns 4 rental properties in a sole-prop LLC, drives, faces scam risk).

• Jill & Mark’s Rule of Thumb:

  • “I usually just say I will take the largest amount they will give me. So that's what I would say.” – Jill (07:41)
  • Seek quotes for $2-5M coverage; umbrella insurance is usually inexpensive.
  • Mark: “Umbrella policy in general is pretty cheap.” (09:26)
  • They note higher coverage might support arguments around safety and the appropriateness of driving.

4. SEP IRA Transfers and Tax Implications

(Listener: Mary | 09:34–11:08)

• Listener’s Concern: Vanguard discontinued her husband’s SEP IRA, money moved to T. Rowe Price. She’s concerned about higher fees and whether to sell, rebalance, and incur taxes.

• Jill’s Clarification:

  • In a SEP IRA, rebalancing does NOT trigger taxes.
    • “A SEP IRA? There's no tax that's due if you rebalance.” – Jill (10:34)
  • If other brokerage accounts are involved, that’s different—clarifies need for more info.
  • Mark expresses surprise at Vanguard’s move and suggests a straightforward IRA rollover might have been possible.

5. Where to Put High-Yield Savings as Rates Fall

(Listener: Sue | 11:08–14:24)

• Situation:

  • $250K in high-yield savings (now dropped from 5% to 3.75%).
  • $2.7M in managed investment accounts, $100K in regular savings/checking.
  • 2 rental properties and a paid-off primary residence. Net rental income: $80K/yr.
  • Early 60s, husband retired, wife works part-time for health insurance.

• Jill’s Recommendations:

  • CD ladders or bond ladders are smart, offering more yield and some liquidity.
    • “It would be great to get that money working, but not at a high risk.” – Jill (13:36)
  • Stagger maturities to match possible cash needs: 6-month, 1-year, and include longer-term treasuries.
  • No need to take extra risk; current financial position is excellent.

Notable Quotes & Memorable Moments

• On federal Roth conversions:
  “If you can do this…you're able to convert enough to essentially get yourself in a place where you can just start slowly but surely converting without going into a brand new tax bracket…This is great.” – Jill (02:57)

• On decumulation fear:
  “You don't have to plan on the worst possible scenario…Look at the most likely scenario, which is you're going to get this. Come on, you don't have to worry.” – Jill (07:28)

• On umbrella insurance:
  “I usually just say I will take the largest amount they will give me.” – Jill (07:41)
  “Umbrella policy in general is pretty cheap.” – Mark (09:26)

• On cash management:
  “It would be great to get that money working, but not at a high risk.” – Jill (13:36)

Timestamps for Key Segments

• 00:37 – Jill’s intro and first listener question about Roth TSP in-plan conversions
• 02:49 – Mark’s input: payroll withholding is simplest for Roth conversion taxes
• 02:57 – Jill’s praise for the new conversion option, invite for more federal employee stories
• 03:44 – Kiki’s comprehensive financial situation, mortgage, and investing habits
• 05:09 – Jill’s take on including government pension/Social Security in plans
• 07:28 – Mark and Jill on Kiki’s excellent progress and decumulation
• 07:41 – Umbrella insurance: get the largest practical policy
• 09:26 – Umbrella policy pricing is generally low
• 10:34 – SEP IRA rebalancing is not taxable
• 11:08 – Clarifying SEP IRA transfer options
• 13:36 – Safe strategies for deploying large cash balances

Conclusion

Jill and Mark field a variety of listener scenarios with straightforward, actionable advice:

• Take advantage of tax-smart Roth conversions when available.
• Keep investment strategies simple and resist overpaying your mortgage.
• Don’t underestimate your retirement readiness—plan for the likely, not the worst.
• Maximize insurance coverage for peace of mind.
• Park cash strategically in safe, higher-yield products like ladders.

Their tone is consistently supportive and empowering: “We love answering your questions. We love talking to you.” The episode is accessible, jargon-free, and focused on what really matters to listeners working to “change your work, change your wealth, change your life.”