Podcast Summary: "Should I Switch to Roth 401(k)?"
Jill on Money with Jill Schlesinger
Release Date: December 27, 2024

In this episode of "Jill on Money," host Jill Schlesinger, CFP®, delves into the complexities of retirement planning, financial management within marriages, and strategic investment decisions. The episode primarily revolves around the listener question, "Should I Switch to a Roth 401(k)?", but also addresses various other financial concerns submitted by the audience. Below is a detailed summary capturing the essence of the discussions, insights, and conclusions from the episode.

1. Introduction and Community Engagement [00:55 - 02:04]

Jill Schlesinger opens the show by encouraging listeners to engage with the podcast through the website jillonmoney.com, inviting questions via email, and promoting the weekly free newsletter and the subscription service "Jill on Money Live." She highlights the benefits of personalized financial guidance and the growing community of listeners seeking financial enlightenment.

Notable Quote:

Jill Schlesinger: "Maybe we're just helping you figure out what your priorities should be."

2. Protecting Personal Finances in Marriage [02:14 - 08:44]

Listener: David
Topic: Financial Infidelity in Marriage

David shares his concerns about managing finances separately from his spouse, who has significant credit card debt and IRS issues. Despite being married for 18 years, they maintain separate bank accounts and retirement funds. David seeks advice on ensuring his financial security amidst his spouse's financial mismanagement.

Discussion Points:

• Maintaining Financial Separation: Jill and co-host Mark Tularcio emphasize the importance of not commingling finances to protect oneself from financial infidelity.
• Strategies for Protection: Suggestions include avoiding joint credit cards, bank accounts, and ensuring separate tax filings.
• Emotional Aspect: Acknowledgment of the emotional strain caused by financial deceit within a marriage.

Notable Quotes:

Jill Schlesinger (04:30): "You want to make sure that you never have a joint credit card. You make sure that you don't have joint bank accounts."

Mark Tularcio (05:15): "That's a rough one. I'm not going to comment on what you should do and, like, end your relationship or not."

3. Early Retirement Decision Analysis [08:44 - 15:43]

Listener: Martin
Topic: Early Retirement Planning

Martin, 60, with a spouse aged 59, seeks Jill's opinion on his decision to take early retirement at 60. He details his financial situation, including assets, retirement accounts, Social Security plans, and health considerations.

Discussion Points:

• Financial Stability: Jill and Mark assess Martin's robust retirement portfolio, lack of debt, and sufficient income streams.
• Health and Longevity: Consideration of family health history influencing the decision to retire early.
• Financial Planning Confidence: Martin's reliance on his financial planner's advice and the sufficiency of his assets.

Notable Quotes:

Jill Schlesinger (09:00): "I really do feel good about Martin's situation. I really do."

Mark Tularcio (11:00): "He's good. He does not have to go back into the workforce and just keep doing the things."

4. Decision on Switching to Roth 401(k) [09:25 - 09:51]

Listener: Tom
Topic: Transitioning to Roth 401(k)

Tom, age 46, has been contributing to a traditional pre-tax 401(k) for 18 years. His employer now offers a Roth 401(k) option, and he is uncertain whether to continue with the traditional plan or switch to the Roth option.

Discussion Points:

• Tax Implications: The difference between pre-tax (traditional) and post-tax (Roth) contributions.
• Future Tax Benefits: Roth accounts offer tax-free withdrawals in retirement, which could be advantageous if tax rates increase.
• Long-Term Strategy: Assessing current tax rates versus expected rates in retirement.

Advice Given:

• Jill and Mark lean towards advising Tom to switch to the Roth 401(k), highlighting the benefits of tax-free withdrawals in the future.

Notable Quotes:

Mark Tularcio (09:51): "All done. I love that. Yeah, we're all in for the Roth. Go for it, go for it."

Jill Schlesinger (09:25): "What you put in now, pre-tax, eventually you're going to have to pay tax on that money. You put it into a Roth. It's all post-tax money. There's no deduction right now. But when you take that money out down the road, what you see, it's all yours."

5. Using 529 Plans for Personal Loans [11:42 - 12:03]

Listener: A.C.
Topic: Utilizing 529 Plan Funds for Home Repairs and Student Loans

A.C. inquires about the feasibility and penalties of transferring money from her son's 529 college savings account to her own 529 account to pay off a personal student loan and fund essential home repairs.

Discussion Points:

• Penalties and Restrictions: Assessing the tax implications and penalties associated with withdrawing 529 funds for non-educational purposes.
• Alternative Solutions: Considering borrowing from retirement accounts as an alternative to accessing 529 funds.
• Financial Prioritization: Weighing the urgency of home repairs against long-term educational savings.

Advice Given:

• Jill and Mark advise against using the 529 funds for personal expenses due to potential penalties and suggest exploring other funding options.

Notable Quotes:

Mark Tularcio (12:03): "It seems unnecessary to me. You're so close."

Jill Schlesinger (11:42): "Do you want to take that money out of the 529? Alternatively, we have $10,000 in a high yield savings account."

6. Investment Strategy for Retirees – 10-Year Treasuries [13:10 - 15:43]

Listener: Lewis
Topic: Incorporating 10-Year Treasuries into a Retirement Portfolio

Lewis, a retired individual aged 70, discusses his investment strategy focused on preservation and moderate growth, primarily through a conservative portfolio of stocks, bonds, and cash. He contemplates adding 10-year Treasury notes to his portfolio to match his 5% annual withdrawal rate.

Discussion Points:

• Current Portfolio Health: Lewis's well-balanced and conservative investment approach.
• 10-Year Treasuries Utility: Evaluating the benefits of including Treasuries for steady income versus market timing risks.
• Market Predictions: Jill and Mark express skepticism about significant rate increases, suggesting that timely market predictions are challenging.

Advice Given:

• Jill recommends incorporating 10-year Treasuries as part of the bond portfolio without attempting to time the market.
• Mark concurs, emphasizing the unpredictability of treasury rate movements.

Notable Quotes:

Jill Schlesinger (14:00): "If you could get a 4% or 4 plus percent, that's great too. Do you have any differing opinion on this, Mark?"

Mark Tularcio (15:39): "I don't think that you're going to start bringing up inverted yield curve and this and the other thing. I think it's going to correct on the other side."

7. Closing Remarks and Additional Information [15:43 - 17:19]

Jill wraps up the episode by encouraging listeners to send detailed financial questions via email, subscribe to the podcast on various platforms, and leave ratings and reviews. She also mentions the role of her executive producer, Mark Tularcio, in managing the podcast's web presence.

Notable Quotes:

Jill Schlesinger (16:00): "Don't forget to give us a lot of the detail because without that detail it's kind of hard to answer those questions."

Mark Tularcio (16:20): "Try to lift someone up. Change your work, change your wealth, change your life."

Conclusion

This episode of "Jill on Money" provides valuable insights into retirement planning, the strategic benefits of Roth 401(k)s, managing financial complexities within marriages, and cautious investment strategies for retirees. Jill Schlesinger, alongside co-host Mark Tularcio, offers practical advice tailored to individual financial situations, emphasizing the importance of informed decision-making and proactive financial management.

Listeners gain actionable information on navigating retirement transitions, optimizing investment portfolios, and safeguarding personal finances amidst varying life circumstances. The episode underscores the significance of personalized financial planning and staying informed to make the most of one's financial resources.

Additional Resources:

• Website: jillonmoney.com
• Subscribe: Available on the Odyssey app and other popular podcast platforms.
• Contact: Email questions to jillonmoney@gmail.com