Making the Most of an Early Inheritance

Summary

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Podcast Summary: Jill on Money with Jill Schlesinger

Episode: Making the Most of an Early Inheritance
Date: June 25, 2026
Host: Jill Schlesinger, CFP®
Producer/Co-host: Mark
Theme: Navigating Early Inheritance, Generational Gifts, and Smart Use of Windfalls

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Episode Overview

In this listener Q&A episode recorded from London, Jill Schlesinger answers a series of real-life financial questions sourced from listener emails. The central theme explores the challenges and strategies around receiving a significant early inheritance, giving or receiving financial gifts with or without strings attached, and how to make the most of such windfalls, particularly in the context of family expectations and long-term goals. Jill and producer Mark provide clear, practical advice without jargon and highlight the emotional dimensions of money transfers within families.

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Key Discussion Points & Insights

1. Rollover and Tax Questions as Required Minimum Distributions (RMDs) Approach

(Starts at 03:13)

• Listener Question (Brenda):
  Can stocks in a traditional IRA/401(k) be moved to a Roth to avoid RMDs and taxes? Should funds be used to pay off a mortgage?
  • Jill:
    • You can't just "move" pre-tax funds to a Roth; you must convert them and pay taxes on the conversion amount.
    • "No, you can’t just take the money out and move it over. But what you can do is convert the money that hasn’t been taxed yet into a Roth." (04:12)
    • Using outside funds to pay the conversion tax makes this strategy more effective.
    • If your mortgage rate is below 5%, likely not worth paying it off early.
    • RMDs don’t apply to Roth IRAs, making conversion appealing for legacy planning.

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2. Should You Buy Gold as an Inflation Hedge?

(06:03)

• Listener Question (Deborah):
  With rampant gold ads, is the dollar losing value and is gold a smart investment?
  • Jill:
    • Gold-bug marketing preys on fear—don’t buy into the hype.
    • "In my experience as a former gold trader... maybe even inflation, I’m not even sure gold does it in the same way it used to." (06:25)
    • If you want some exposure, limit it to 3–5% within a retirement account via a commodity fund, not physical gold.
    • "Maybe stop watching so much late night cable." (06:50)

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3. How to Make Large Financial Gifts: Tax & Practical Considerations

(07:00)

• Listener Question (Leslie):
  Wants to give her daughter $100,000 for a home, asks about gift tax implications and future risks.
  • Jill:
    • Annual gift tax exclusion is $19,000 per person per year ($38,000 for couples).
    • Gifts above this require filing a gift tax return—just a record, very unlikely to trigger actual taxes for most.
    • "People who are just giving their kids money willy nilly forget to file a gift tax return and you should and it’s not a big deal at all." (07:46)
    • No concerns for most; the federal estate exemption is very high barring drastic legislative change.

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4. Early Inheritance with Strings Attached—Financial and Emotional Implications

(08:19)

• Listener Question (Nathaniel):
  Mid-20s, offered $100,000 by parents who want him to use it to buy real estate; Nathaniel prefers financial independence and flexibility.
  • Financial summary:
    • Strong saver and investor, but no emergency fund left
    • Parents are insistent about real estate
    • Nathaniel inclined to start with an emergency fund and a brokerage account instead
  • Mark:
    • "So they want to give him a hundred thousand dollars, but they want to tell him how to spend it?… This is not called a gift. This is called a gift with strings, right?" (10:21)
    • Recommends establishing an emergency fund first, considering cost of living (NYC).
  • Jill:
    • Advises honesty with parents, suggesting he could “park” the money in a brokerage account and consider buying later if and when ready.
    • "Parents, man, you guys got to, like, back off… Just because that’s what worked for you doesn’t mean that’s what’s going to work for him. So back off." (11:00)
    • A true gift should be without strings. If conditions exist, it’s not a true financial gift.

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5. Roth Conversion vs. 401(k) Withdrawal for Filling Tax Bracket Space

(12:23)

• Listener Question (Val):
  Should I convert 401(k) funds to Roth or withdraw to a brokerage to “top off” my current tax bracket?
  • Jill:
    • The answer depends on the usage horizon and underlying goals.
    • Converting to Roth makes sense if you want tax-free growth and eventual legacy transfer.
    • Withdrawing to a brokerage is simpler if you need liquidity or plan to spend soon.
    • "It has to do with the when, and what else is happening in your life." (12:33)

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Notable Quotes & Memorable Moments

• Jill on Roth Conversions:
  “But what you can do is you can convert the money that hasn’t been taxed yet into a Roth… you absolutely have to pay the tax that’s due.” (04:15)

• Jill on Gold Hype:
  “Do not do this. This is a very traditional tactic of cable television that has these commercials that scare the you-know-what out of you.” (06:10)

• Mark on Conditional Gifts:
  "So they want to give him a hundred thousand dollars, but they want to tell him how to spend it? … this is not called a gift. This is called a gift with strings." (10:21)

• Jill on Parent Pressure:
  "Parents, man, you guys got to, like, back off... Just because that’s what worked for you doesn’t mean that’s what’s going to work for him." (11:00)

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Timestamps for Important Segments

• 03:13 – RMDs, Roth conversions & mortgage payoff as retirement nears (Brenda)
• 06:03 – Should you buy gold as a hedge against inflation? (Deborah)
• 07:00 – Large financial gifts: gift tax forms and pitfalls (Leslie)
• 08:19 – Early inheritance: navigating strings and setting priorities (Nathaniel)
• 12:23 – Roth conversion vs. 401(k) withdrawal for tax brackets (Val)

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Episode Tone & Style

• Candid, direct, and slightly irreverent: Jill and Mark don’t shy away from calling out common financial mistakes, emotional dynamics, or industry scams.
• No-nonsense pragmatism: Emphasis on practical advice—what works in the real world, not theoretical best cases.
• Empathetic and listener-centered: Jill’s advice always circles back to “what matters most for you and your goals.”

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Practical Takeaways

• Don’t convert retirement accounts to Roth without planning for the tax impact—and ideally, use non-retirement funds to pay the taxes.
• Avoid falling for gold/commodity hype as an insurance policy against economic doom.
• Gifts should be given freely—if you attach stipulations, they aren’t really gifts.
• Establish an emergency fund before tying up cash in investments or real estate, especially in a high-cost city.
• Consider the purpose and timing for Roth conversions versus more flexible, taxable investing.

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For additional listener questions or to appear on-air, visit jillonmoney.com

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Transcript

[A]

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[B]

Oh, yeah, Mammoth Coffee. It's always. If I. Anytime I can get it, I'll take it. But I know it's a pain.

[A]

That's what I can do. It is, but, you know, for you, I might do it.

[B]

And then. And now that you actually see me. Right.

[A]

So you don't.

[B]

You don't have to wait to get it to me or arrange some special meetup.

[A]

I know.

[B]

Yeah, make that happen.

[A]

Okay. All right. Mark is talking about our other program called Money Moves, where we are seeing each other now in a studio, which he swore he would never do again. But if I can bribe him with coffee gang, isn't it worth it? Totally is. Hey, if you've got a financial question or you want me to get something for you in London, hurry up. I'll be back before you know it. Go to jillonmoney.com, click the contact us button, write us a note. And if you'd like to join us on the air live, you can check the box for audio, you can check the box for video. You can just send us a video clip. Just upload it and say, hey, my name is Jill and I'm from New York, and I have a question about blank. And you give us some details, and we'll be happy to help you out. Today we are going to do emails because I'm out of town, and so let's get to it. And the first email is from Brenda, who writes, I have a fair amount of money in my 401k and IRA accounts. In a few years, I will be required to take my distributions. Okay, here's a question. Can I transfer the stocks that I have in this account into my Roth to avoid the taxes and avoid being forced to take the money? Should I take some of the money and pay off my mortgage? All right, let me start with the mortgage question. If you've got an interest rate of below, say, 5%, I would say, probably, no, don't pay off the mortgage. But good try on this idea of preserving the amount of money that you have in these accounts by trying to move it to a Roth. No, you can't just take the money out and move it over. But what you can do is you can convert the money that hasn't been taxed yet into a Roth. Again, we don't know the amounts, but, Brenda, let's just pretend you had a million dollars in money that has not yet been taxed. You could take 100,000, $200,000 out, convert it into a Roth, and then pay the tax on that amount. Of money that you've converted and then the money lands in the roth. You do not have to take a required minimum distribution from a roth. But if you're thinking, can I just send the money over to the roth? No, this is a tax event. You absolutely have to pay the tax that's due. Here's the thing. This only really works well if you have money outside of these retirement accounts to pay the tax that's due. So if you don't, then you may just want to start to take some of the money out and pay the tax so that you're minimizing the distribution amount that will be required. Get in touch with us and follow up. If you've got like the exact dollar amounts and you want more information, we'd be happy to help you out. Okay, next up. Hold on. I went the wrong direction. Here we go. Deborah writes, keep seeing commercials about buying gold. Is it true that the dollar is losing value? How important is it to buy gold or silver, et cetera? Thank you so much. I value your input. Okay, Deborah, do not do this. This is a very traditional tactic of cable television that has these commercials that scare the you know what out of you. And in my experience as a former gold trader, if you would like to be in the position of trying to own some commodities, some hedge against dollar devaluation or maybe even inflation, I'm not even sure gold does it in the same way it used to. But if you want to, you can do it inside of a retirement account. You can buy a little commodity fund for yourself. No more than 3 or 5%. But no, do not buy gold directly. And maybe stop watching so much late night cable. Okay. Leslie was on the show a couple years ago and she said that we assured her that they weren't going to run out of money. Thank. I think I'm hopeful, Mark, that she's not going to. Now, this next sentence is. Well, we have. So let's cross our fingers about the next sentence. Okay, here's the next sentence. Our daughter is hoping to buy a home this summer. Her choice. And that's very funny. Not because we're putting any pressure on her to do so, you know, because I get nervous with you guys that you're all kind of making your kids crazy. So good. Her choice. Okay, so Leslie says we would like to help her by giving her $100,000. And we know that we would have to file a form, a gift tax form for 62 grand. It is extremely unlikely that our eventual estate will be anywhere near the federal estate tax Exemption amount unless something some drastic legislation occurs. Do you have any concerns with people giving large gifts and filing gift tax return? Is there something in the future that I'm not considering? Okay, I've got no problem with a gift tax return. I think it's great. Now if everyone's trying to figure out the math, the math is you can give 19 grand a year away to anybody. And 19 times two if you're married. So that's 38,000. If you give the kid $100,000, you must file a gift tax refer return. Which is basically saying to the government, hey, we're giving this money in excess of the annual gift tax exclusion. That 19 grand per person. And it just says to the government, we want to flag this to you because when we die in the future we've used up some of our gift tax allowance and estate allowance. I'm fine with it. I love that you asked this question because people who are just giving their kids money willy nilly forget to file a gift tax return and you should and it's not a big deal at all. Okay. Oh, here we go. This is hysterical. Here's a second question. This is from Nathaniel whose parents have offered to give him $100,000. How nice is that, Mark? Okay, here we go. Nathaniel's in his mid-20s. He has $92,000 of which it sounds like we have a 401k Roth 2,500 traditional retirement account 20,000, a Roth IRA, 52,000 HSAs at 16,500 and cash savings of 500. He says I had about three grand but I depleted it to maximize my Roth contributions before the deadline. Each year I max my Roth IRA and HSA. I get a non elected profit sharing contribution of 7.5% and contribute a small amount to my 401k total contributions to investment accounts. Last year $22,000 or 27% of his savings rate. Wow. Conventional wisdom. According to your show, I listen to it each morning. Who says I don't have young listeners? Mark, Dang it. Here's a 20 something year old. Okay, Conventional wisdom states I should take some of this inheritance money for an emergency fund that would be about 35 grand and potentially fund a brokerage account. However, my parents want me to use a majority of this to purchase real estate. This is awesome. My parents want me to use a majority of this money to purchase real estate, which isn't necessarily a financially savvy move. How can I best use this opportunity? I'd like to be able to start working towards a fine or Fire, Meaning financial independence, new endeavor, or retirement early by my 40s. Any advice? Greatly appreciated. Mark, what do you think about Nathaniel's situation? He's got 100 grand, and his parents would love it if he bought something. What do you think?

[B]

So they want to give him a hundred thousand dollars, but they want to tell him how to spend it? Yes.

[A]

This is not called a gift. This is called a gift with strings. Right?

[B]

Strings attached. I mean, it doesn't sound like he's too keen on buying the real estate. I think his initial assumption is spot on. You know, they give him $100,000. Yes. Set up an emergency reserve, because right now he doesn't have one and he's living in New York City. Very high cost of living. So I would get that up and running.

[A]

Yeah.

[B]

Just like he said. Yeah. I would set up a brokerage account. I don't know. You know, unless here's.

[A]

Here's how we can thread the needle. I think you say to your parents, oh, this is great. I'm not ready to buy right now. I'm in my 20s and I'm single, and, like, life can change. But, like, you know, here's the deal. I'm going to put it in a brokerage account and I'll see. Like, I think that's a way for me to kind of consider buying something when I feel ready to do so. I don't feel ready to do that right now, but the brokerage account will leave the money accessible to me, and then you've done what you need to do. I mean, parents, man, you guys got to, like, back off. Why do you think it's such a great idea for this kid to buy? He's 20 years old. As Mark says, he lives in a high cost of living area. And, like, just because that's what worked for you doesn't mean that's what's going to work for him. So back off. Or don't give the gift if that's so important to you. Or you can just buy the place yourself. What about the guy who had the sibling just bought the house? Like, so if they're. Maybe they're really, really, really rich and they want them to buy a place, that's fine. But, like, this doesn't make sense to give a gift like that. That is not a gift. That is a gift with strings. No, thank you. No, thank you. Okay. Question mark. This is from Val. Are there any considerations when it comes to converting a 401k to Roth versus withdrawing from a 401k and then depositing the money to a brokerage account. I would use both to top off my current tax bracket. I mean, it doesn't really make it depends how old you are and when you think you're going to use the money or what it's for. Like if I were, if you were very wealthy and you're like, oh, I'm going to just convert to a Roth because I want my kids to have that money and they're going to inherit that money. That's awesome because you're paying the tax now. But if it's just for you, you can just put the money in the, in a brokerage account and be fine. You know, you know, you can just pull the money out, but it has to do with the when and what else is happening in your life. So I hope that's helpful. Oh, Mark, it's just flew by. Fantastic. Thank you for everything and for all of you listening. If you've got a financial question, all you need to do is get in touch with us by going to jill on money.com click the contact Us button, let us know if you want to come on the air by checking the box. You can upload a video you can see, send us a video. You can appear on our other program, Money Moves. Just all that stuff and information is at jill on money.com hey, don't forget to subscribe to Our free weekly newsletter comes out on Fridays. You can subscribe to us on the Odyssey app or wherever you find your favorite podcast. Don't forget to do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

[C]

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