Episode Summary: Roth vs Pre-Tax 401(k) Contributions

Podcast: Jill on Money with Jill Schlesinger
Date: January 8, 2026
Host: Jill Schlesinger, CFP® (co-host: Mark)
Main Theme:
This episode focuses on helping listeners weigh the choice between Roth and pre-tax 401(k) retirement contributions, alongside real-life listener questions about Social Security, retirement withdrawals, mortgages, and the differences between mutual funds and ETFs. The hallmark Jill on Money style is present: conversational, no-nonsense advice, and an emphasis on both “math and emotions” in financial decisions.

Key Discussion Points and Insights

1. Retirement Withdrawals & Sustainable Planning ([04:12], [07:39])

Caller: Kathleen

• A retired couple in their 60s living on a mix of Social Security, savings withdrawals, and planned IRA distributions.
• Main question: Is their plan to withdraw $4,500 monthly from an IRA (approx. 5% withdrawal rate) sustainable? Should they drain their cash reserves or adjust withdrawals after an annuity comes due?
• Jill’s advice:
  • Use the $134,000 annuity when it becomes available in April, likely over the next two years, before tapping the IRA heavily.
  • IRA should then be the main withdrawal source until both are on Social Security.
  • Emphasis on keeping a cash buffer for emergencies: “preserve the money that we have in cash accounts as our emergency, sleep at night money.” ([06:44])
  • Avoid paying down too much from cash reserves too soon; use them only if the market tanks, pausing IRA withdrawals in bad years.
• Relationship with Advisors:
  • The couple doesn’t feel a connection with their current wealth manager.
  • Jill: “You don’t want to be dealing your finances with somebody who you don’t feel connected to. This is all your money. Come on.” ([07:47])
  • Recommends finding a new advisor, or at minimum, a second opinion.

2. Should You Pay Off a Low-Rate Mortgage? ([08:35], [10:14])

Caller: Tish

• Age 59, plans to work until 70. Undecided between taking a pension as monthly income or lump sum ($400,000). Has cash, 401(k), and a mortgage at 4%.
• Jill’s firm stance: “Absolutely do not pay off the mortgage.” ([09:21])
  • At 4% interest, it’s better to keep the mortgage and maintain liquidity.
  • Social Security and the pension will cover expenses, mortgage included.
  • “I don’t know why people would pay off 4% loans. It’s completely batty.” – Jill ([10:10])
  • If considering the pension/lump sum, wait until closer to retirement for a decision, and assess if the pension has a cost-of-living adjustment.

3. Switching from Traditional to Roth 401(k): Practical Steps ([11:40])

Caller: Chelsea

• Employer just began offering a Roth 401(k) option. She and her husband (both age 36) are in the 22% tax bracket and already have both Roth and Traditional IRAs.
• Jill and Mark’s guidance:
  • Switch contributions to Roth but start with a small percentage (suggest 4-5%) and see how the new, lower paycheck feels.
  • Gradually increase Roth contributions if it feels manageable.
  • Use the IRS Withholding Estimator if needed, but real-life trial is best for understanding cash flow impact.
  • Mark: “You’ll figure it out. You’re just going to have to tweak with it over probably…the first three months of the year.” ([11:53])

4. Mutual Funds vs. Exchange Traded Funds (ETFs) ([13:02])

Caller: Pamela

• Wants basic advice for UTMA accounts for her kids, and for her own SEP IRA.
• Mark’s simple rule: Big-picture, they’re basically the same except for how/when you trade.
  • “With an ETF, you can trade intraday…with a mutual fund, if you make a transaction, it’s whatever the market closes at that day.” ([13:02])
  • For most investors not trading daily, either is fine.
  • Most important: Choose low-cost indexed funds—mutual fund or ETF. Sometimes expense ratios are near zero! ([14:00])
• Additional tip: If saving for college for kids, consider 529 plans instead of UTMA accounts.

Notable Quotes & Memorable Moments

• On emotional aspects of money:
  “It’s not that you’re crazy or anything. ... Some of it is financial, some of it is math, but some of it is just getting out of your way and trying to provide you with a pathway.” – Jill ([02:17])

• On advisor fit:
  “You don’t want to be dealing your finances with somebody who you don’t feel connected to. This is all your money. Come on.” – Jill ([07:52])

• On paying off low-rate mortgages:
  “I don’t know why people would pay off 4% loans. It’s completely batty.” – Jill ([10:10])

• Tactical advice on Roth switch:
  “Go up another percent, see how it is. If it’s no big deal, go up another percentage. … You’ll figure it out, you’re just going to have to tweak with it.” – Mark ([11:53])

• On ETFs vs. mutual funds:
  “Big picture is they are basically the same thing… In your case, I would just stick with the mutual fund.” – Mark ([13:02])
  “Sometimes [fees are] even zero now.” – Mark ([14:00])

Timestamps for Important Segments

• [04:12] Kathleen’s retirement withdrawal planning
• [07:39] The importance of advisor fit
• [08:35] Tish’s mortgage and pension/lump sum question
• [10:14] Discussion on low mortgage rates
• [11:40] Chelsea’s switch from traditional to Roth 401(k)
• [13:02] Mutual funds vs. ETFs explained

Final Takeaways

• Fit with your financial professional is crucial—don’t settle for someone who doesn’t “get” you.
• Don’t pay off low-rate (sub-5%) mortgages hastily if cash flow is healthy and liquidity is important.
• Experimenting with Roth 401(k) contribution rates gives you real insight into your cash flow before committing.
• Low-cost, diversified funds are key—the form (mutual fund vs. ETF) is less important for long-term investors.
• Always seek a plan that lets you “sleep at night”— financial security is about more than numbers.

Useful for those seeking to clarify their own retirement, mortgage, or investment choices, this episode offers clear, actionable advice without jargon, delivered in Jill and Mark’s engaging, supportive style.