Roth Conversions Leading to Early Retirement?

Summary

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Jill on Money with Jill Schlesinger

Episode: Roth Conversions Leading to Early Retirement?

Date: January 13, 2026
Host: Jill Schlesinger, CFP®
Producer/Co-host: Mark

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Overview

In this episode, Jill Schlesinger and co-host Mark tackle pressing listener questions centered on Roth conversions, early retirement strategies, and fee-only financial planning. The show features nuanced, jargon-free discussions about when—if ever—it makes sense to convert traditional pre-tax retirement funds to Roth accounts and how timing, tax brackets, liquidity, and individual retirement goals should influence your decision. Other listener questions address selecting a financial planner and best practices for estate and pension planning.

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Main Discussion Points & Insights

1. Listener "SL": Should I Convert My Traditional 401(k) to a Roth?

[03:17 – 06:52]

• Listener Profile:

  • 49, single, no kids.
  • Targeting retirement readiness by 55 with $200k+/yr after-tax income.
  • $2.7M in brokerage, $600K in money market, $170K cash, $1.25M in traditional 401(k), $165K Roth, $40K HSA, $350K in a cash-balance pension.

• Listener’s Question:
  Should I convert my sizeable traditional 401(k) to a Roth IRA now (and pay taxes now), or wait until I'm in a potentially lower tax bracket? And should I shift future contributions to Roth?

• Jill & Mark’s View:

  • Liquidity: “We love conversions. We do think you need the liquidity to do this.” – Jill [04:24]
  • Timing Consideration:
    • Since SL is currently in the top bracket, converting now would mean hefty taxes.
    • "I just wonder if we might get a shot to be at a lower tax bracket," Mark advises, suggesting a strategic wait until early retirement, when taxable income may drop. [06:40]
  • Definitive Advice:
    • On Future Contributions: "The last part for me is a no brainer... Yes, I would switch going forward. You don't need any more tax deferred money." – Mark [05:53]
    • On Big Conversion: They recommend possibly waiting until after retiring at 55, when lower income could offer a better tax environment for conversions.

• Notable Quote:

  • "You're so close [to retirement]. It's only six years away and I would agree with Mark absolutely. You should put money into the Roth bucket as opposed to pre-tax at this point. Let's not compound the problem." – Jill [06:52]

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2. Listener "Chris": How Do I Find a Fee-Only Financial Planner?

[07:32 – 08:43]

• Listener’s Frustration:
  Finding an advisor in California who doesn’t push products or manage assets.

• Jill’s Solution:

  • NAPFA: “National Association of Personal Financial Advisors... that’s N-A-P-F-A dot org.” [07:59]
  • XY Planning Network: For those wanting just a plan, not asset management: “xyplanningnetwork.com... this is a really good option.” [08:12]

• Notable Quote:

  • “Both of those things are possibilities for you.” – Jill [08:36]

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3. Listener "Brooke": Roth Conversions and Early Retirement

[08:41 – 13:36]

• Listener Profile:

  • Age 35, married, two kids, sole provider.
  • $640K in traditional, $160K in Roth, $200K ESOP, $360K taxable brokerage, home paid off.
  • Living on $70K/year with goal to retire or semi-retire by 45–50.

• Key Questions:

  • Should I start small annual Roth conversions in the 22% tax bracket?
  • Is Rule 72(t) (substantially equal periodic payments from retirement accounts before age 59.5) a logical early-retirement strategy?

• Jill & Mark’s Analysis:

  • On Conversions: Cautious about big conversions now; if retirement income will drop within a decade, there may be better opportunities later for conversions in a lower bracket.
  • Rule 72(t): Supported as a useful option for early penalty-free withdrawals, but only with careful planning.
  • Compounding Growth Caveat:
    • "It’s very hard to do these small conversions... the accounts are going to grow at such a clip… It’s very hard to move the needle." – Mark [13:10–13:24]
  • Practical Tip:
    • Keep using Roth for new contributions; consider conversions only if they don't push you into higher tax brackets.

• Memorable Quote:

  • “The growth is going to, you know, probably surpass whatever amount you convert.” – Mark [13:30]

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4. Listener "Steve": Estate Plan, Trusts and Beneficiaries

[13:35 – 15:10]

• Listener’s Situation:

  • Pension ($266K), $200K savings, $45K in 403(b), $116K IRA, $400K from house sale, $1,600/month Social Security.

• Estate Planning Concern:

  • Should retirement accounts, house proceeds, and other assets go into a trust?

• Jill’s Clarification:

  • Retirement accounts and pensions pass by beneficiary designation.
  • Trusts might help with non-retirement assets or for protecting assets against long-term care costs.
  • Discussion Encouraged: Speak with family and professionals for personalized guidance.

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5. Listener "Victor": Military Survivor Benefit Plan

[15:14 – 16:14]

• Listener’s Question:
  Should I elect the survivor benefit plan for my military pension?

• Jill & Mark’s Guidance:

  • Depends on household needs, spouse’s finances, and relative life expectancy.
  • Generally recommended if a spouse is younger/has less other income.
  • More personal details are needed for a firm recommendation.

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Notable Quotes & Moments

• On Roth Conversions:
  • "We do think you need the liquidity to do this." – Jill [04:24]
• About Waiting on Conversions:
  • "You’re so close. It’s only six years away... let’s not compound the problem." – Jill [06:52]
• On Finding a Planner:
  • “Check out NAPFA or XY Planning Network—both good options if you want just the plan, not a product being sold.” – Jill [08:12]
• On Small Roth Conversions:
  • “The accounts are going to grow at such a clip… it’s very hard to move the needle.” – Mark [13:10]
• On Military Pensions:
  • “If you have a spouse who’s really relying on you... we’re often saying, let’s do the survivor benefit.” – Jill [15:36]

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Key Timestamps

• [02:20] – Show start, mission statement
• [03:17] – SL’s Roth conversion dilemma
• [05:53] – Mark’s take: Yes to future Roth, maybe wait on conversions
• [07:32] – Chris asks about fee-only planning
• [08:41] – Brooke’s Roth conversion and early retirement plan
• [13:35] – Steve’s trust/estate question
• [15:14] – Victor’s military pension survivor benefit question

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Final Takeaway

Jill and Mark emphasize the importance of personalized, tax-aware strategy with big retirement account decisions, particularly for high earners considering Roth conversions or early retirement. Their advice consistently steers listeners away from blanket solutions and toward thoughtful timing, awareness of tax brackets, and consulting with reputable, fee-only planners.

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Transcript

[Jill]

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[Mark]

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[Mark]

Welcome to the Jill on Money Show.

[Jill]

It's Tuesday, January 13th and we are here trying to help you navigate that financial journey of whatever path is in front of you. Maybe there's a few different ways to.

[Mark]

Get where you want to go.

[Jill]

Maybe you want to test some different ways out. Maybe you just need another set of.

[Mark]

Ears and eyes on your situation. Mark and I are both certified financial planners. We love talking to you.

[Jill]

This program is so wonderful because you guys do all the work.

[Mark]

We just listen to you and try to take some of the emotions out of the decisions that you are confronting. So if you'd like to get in touch with us, just go to our website, jillonmoney.com, click the contact us button in the upper right hand corner. Write us a note if you would like to join us on the air. Check the box.

[Jill]

Mark will do everything else. Don't forget to sign up for our.

[Mark]

Free weekly newsletter that also entitles you.

[Jill]

To the blog post that we put up there.

[Mark]

So check that out. Okay, let's take some emails.

[Jill]

We're starting with one from sleep who.

[Mark]

Writes, I recently discovered your podcast and love your show. I've been binge listening during my driving time ever since. I find the content and your advice practical, relevant and relatable. See, I wish this person were on the air with us. Mark, come on. I want that. That's a snippet that we can put out there. Okay. Please keep the content coming. All right, Mark, here's the question. To convert or not to convert? I've gathered you seem generally opposed to Roth conversions, particularly if you don't have adequate liquidity outside of retirement accounts to pay the tax due. No, we like Roth conversions, but we really want to make sure you have the money to pay the tax that's due. And sometimes for some people it works great. And some people need to maybe do some planning around that because it pops them into different tax brackets. So we're not against. We love conversions. We do think you need the liquidity to do this. Okay, so SL says I have the liquidity. I think converting my traditional giraffe could make sense to put the deferred future tax liability behind me and simplify my financial picture. Okay, 49 years old, single, no kids. Targeting age 55 to be positioned financially for retirement. Targeting initial $200,000 in after tax retirement income, which I would want to keep up with inflation. Currently in the top marginal federal tax bracket and also state income tax, about 5%. $2.7 million in after tax brokerage account, $600,000 in money markets, another $170,000 in cash reserves. So what are we looking at, Mark? We're looking at a traditional 401k that has one and a quarter million dollars. The rest he's got about like 165 grand in Roth assets, $40,000 in an HSA, $350,000 in a qualified cash balance pension. So basically it's actually more like $1,600,000 in retirement assets. So question Mark, you ready to answer? Get ready. Do you think asks SL I should pull the trigger and convert my traditional 401k balance into a Roth Alternatively or perhaps in addition should I shift my pre tax 401k contributions to Roth going forward? That's what SL wants to know. Mark, what do you think?

Well, the last part for me is a no brainer. Even though he's in the top tax bracket. Yes, I would switch going forward. You don't need any more tax deferred money. Whether or not to convert 1.25 million. That's going to be some check that person have to write.

Yeah. Here's a couple of things to consider because you're going to retire early. I don't know, that may be the time to do it. That's what I'm thinking. Like think about this SL from age 55 to 75 like those 20 years where you will have the ability to attack that 401k potentially at a lower tax bracket. Now of course as you note, you got the money that's available if you just want to get it done.

[Jill]

It's just like, you know, you're in.

[Mark]

The highest tax bracket and I just wonder if we might get a shot to be at a lower tax bracket. So single ordinary income at 37% is over 626 grand. So the dude's making a lot of money. I think at 55 you're going to have a lot more information. I guess. What's the downside? Mark is he waits and the tax law changes and he's screwed anyway. I think I would roll the dice and wait till 55. You're so close. It's only six years away and I would agree with Mark absolutely. You should put money into the Roth bucket as opposed to pre tax at this point. Let's not compound the problem. Next up, this is an email from Chris. The subject is finding a CFP who doesn't any products. Oh brother, this is a toughie. Anyway, Chris writes hello, I listen to.

[Jill]

Your shows daily and I've heard you.

[Mark]

Mention a few times that people should work with fee only financial planners. Well, I'm in California and it seems that most of the folks out there are selling products or services like wealth management. I'm looking for someone who can just guide us any help or contacts you may recommend would be greatly appreciated. Thanks Chris. Chris, I think it is worth going to the national association of Personal Financial Advisors. That's napfa N A P F a dot org and you can look into who will actually do a financial plan for you.

[Jill]

There are some places that they'll just do the work.

[Mark]

I don't know if we've looked at XY Planning. That is another firm that tends to do. I think that they do fee only financial planning and, and you can find some information about those [e-mail] and read in on that. But I think that for many people who are willing to take a financial plan and execute it themselves, this is a really good option. So napfa or again maybe you check out XY Planning. Both of those things are possibilities for you. Okay, this is from Brooke who writes I'm currently contributing the maximum annual amount to my Roth 401K. In addition, 3% of my after tax pay is converted to Roth. The most my company plan allows. This after tax contribution is required to receive the full 7% employer match. My salary is $130,000. I typically receive a 3 to 5% raise each year. My company contributes 7% of my salary annually to a tax deferred account. Plus check this out, Mark. An estimated 13 to 15% of my salary in ESOP shares. ESOP is employee stock ownership plan and our ESOP has historically grown at about 10% a year. Okay, here are the questions. Pay attention Mark, because my throat hurts while I'm in the 22% bracket, married, filing jointly. Should I begin making small annual Roth conversions to build my Roth basis and that way I can access it early in retirement and reduce future required minimum distributions? Mark, answer.

I don't know yet. I'm waiting for some more details.

All right, let's go. Keep going. Does the Rule 72T seem like a logical strategy in early retirement? Mark, would you like to explain Rule.

72T, the periodic equal distributions?

Yeah.

Yeah. I mean if I'm assuming she's already done her homework and her, her plan allows that. So I mean it's good to know that she has that option if necessary.

So this she says she's figured out that she could draw $40,000 on an annual basis and she said Roth conversion with another account that would be put me at the top of the lower bracket and then I would supplement my income with other long term capital gains. I've already completed $30,000 Roth conversion in 24, 35,025. Let me just get to the assets here. Okay. Because I think that's easier. Okay. Brooke is 35. My goal is to retire or at least shift into semi retirement between the ages of 45 and 50. I'm 35. I am married. My wife is the same age. We have two children that will hopefully be launched by our ages 35 and 37. We live off of $70,000 annually, no debt, and Brooke is the sole provider to the family. You ready for the money? Here we go. Mark, wait a second.

I'm just. How do they have two kids that are going to be launched by the time she's 35? 37, isn't that in like two years?

Maybe they mean. Maybe it means 45. 47. All right, that's possible. I don't know. That seems very odd. Okay, so we have $640,000 in traditional assets. Okay. 160 in Roth assets, 200 in the employee stock ownership, and $360,000 in a brokerage account, taxable. Their home is paid off. $320,000. All right. Are we ready to start converting? Mark, what do you think?

I don't know. I don't know if I would be in such a hurry to do it. I would keep doing everything Roth, obviously, which this person is doing, going, going forward. But if, you know, if you know that you're going to be retiring early, that could be the window to do it.

Right. That's what I always think is like, hey, before we start converting right this second, I mean, maybe you'll never be in anything less than the 22%. I guess you could keep doing it at 22, but if you think about it, in 10 years, what's your income going to be, you know, and even if you get 40 grand from your 72T distribution, right, and then you're using some of your. Your money in the brokerage account, you might be in a much lower tax bracket. I mean, it's possible, it really is possible that you go instead of being in 22, I guess. I don't know. I think you'll probably be in 22 for most of your life because that's up to about two hundred and some thousand. Maybe you do a little bit to stay in 22, but once you go down, right. Once you go down to 12%, that the, that bracket is, as of right now, it's just about 97,000 is the top of that bracket. So I don't know, maybe they won't make it, but maybe they could.

It's very hard to do these small conversions you know, do a little bit this year. A little bit this year. A little bit. You'd never, you know, the accounts are going to grow at such a clip unless something. Unless the economy just goes in the tank. It's very hard to, you know, to get that.

Move the needle. Yeah, right.

Yeah. And the growth is going to, you know, probably surpass whatever amount you convert.

So true. Anyway, come on the air with us. This is when I want to talk to people on the air. Steve writes, I'm going to live with my daughter and the family, and here's what's going on. A pension of $266,000. That must be the lump sum savings. About $200,045,000 in a 403B, 116 in a rollover IRA.

[Jill]

Hmm.

[Mark]

House that is going for sale, $400,000, $1,600 a month into Social Security. I need to know how to pull all this into a trust. Or do I. What do I change? Okay, let's have a deep breath here. Pension assets, retirement assets, all pass by contract. You name a beneficiary, the savings and the proceeds of the house. That's different. I don't know if you need a trust, you might. I don't know if you're talking about a trust to protect you if you needed to go into, like, a nursing home or you just want to have a trust that will distribute your assets cleanly. If it's just the trust to distribute your assets cleanly, then I might just do a transfer on death brokerage account and call it a day. But I think it's worth having a conversation with your kids and making sure that you're paying what you need to pay to, you know, pay your way. I'm not sure I do a trust. So get back in touch with us. I'm not sure if we're doing a trust to protect assets against spending them down or just distribution of assets for regular old estate planning. Okay, last one, Victor. I'm retiring from the military in a few years. Ultimately, should I take the survivor benefit plan?

[Jill]

When is it okay not to take it?

[Mark]

Should people always take it? Oh, Victor, this is completely predicated on what is going on in your life. And the survivor benefit is usually something where we tend to lean into. Like, if you have a spouse who's really relying on you and your spouse is younger than you, or you're married to a woman who has a longer life expectancy, we're often saying, let's do the survivor benefit. Mark, when's a no to the survivor benefit. If you have a spouse.

If you have a spouse. I mean, unless that spouse also has a huge pension or, you know, is a high earner and you already have substantial amount of savings. But, you know, usually, I don't know, I need to know, you know, how much of a haircut it's going to be.

Yeah, we like to just know a little bit more about you before we make that comp. Make that decision with you, you know, or just at least guide you. So get back in touch with us. Okay, gang, that is it. That's the program. Get in touch with us. Go to jillonmoney.com, click the contact Us button, write us a note. And if you want to join us live, check the box. Mark will do everything else. Don't forget to sign up for the free weekly newsletter and of course, check out our subscription service, Jill on Money Live. Big changes at Jill on Money Live this year. Access to quarterly live webinars, the back catalog of those webinars, bonus audio and video content, all for 45 bucks for the next 12 months. No change there, but we are introducing a per webinar ability for you. If you just want to buy one webinar at a time, cost you 15 bucks. So pretty good deal. I think you can subscribe to us on the Odyssey app or wherever you find your favorite favorite podcasts. Try to put your hands metaphorically on someone's back. Change your work, change your wealth, change your life. Thank you for listening. We'll talk to you tomorrow.

[Jill]

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