Should I Tap a CD or My Roth?

Summary

Podcast Summary: Jill on Money with Jill Schlesinger

Episode: Should I Tap a CD or My Roth?
Date: April 7, 2026
Host: Jill Schlesinger, CFP® (A)
Executive Producer/Co-host: Mark (B)

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Main Theme

In this episode, Jill Schlesinger and her producer Mark answer financial questions from listeners via email, focusing on common dilemmas around college savings, handling rental property, navigating pension and retirement choices, and making smart withdrawal decisions between CDs and Roth IRAs. The hosts offer accessible, jargon-free advice informed by practical experience, tailored to real listener scenarios.

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Key Discussion Points & Insights

1. 529 Plans & Grandparent Contributions (02:00–03:30)

• Listener Lisa’s Question: Is a traditional 529 plan disadvantageous for college savings for grandchildren because it will adversely affect their FAFSA? She seeks advice on tax-free ways to save for kids' college.
• Mark’s Update (02:55):
  "Very recently they changed this. When it comes to accounts owned by the grandparents, as long as the grandparent is the owner and the child is listed as the beneficiary, it is not reported on the FAFSA. So that was a change."
  • Key Insight: Grandparent-owned 529s are not reported on the FAFSA due to a recent rules update effective 2024-25.
• Jill’s Additional Tips (03:21):
  • If grandparents want to help but are concerned about gifting rules or taxes, they can write a check directly to the institution to avoid gift tax implications.
  • Consider whether retirement assets or Roth IRAs could be used creatively for education funding.

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2. Rental Property: Pay Off Mortgage vs. Reinvest (04:20–06:20)

• Listener Russell’s Scenario: Owns a fully depreciated rental property that breaks even, still owes $50,000 at a 6% variable rate. He’s now required to take RMDs and wonders if he should pay off the mortgage or reinvest the funds.
• Jill’s Analysis (05:11):
  "If it's not making any money, I might sell it. But you have to then...maybe you do a like-kind exchange—that 1031 exchange."
  • Key Insight: If the property isn’t profitable, consider selling and using a 1031 exchange to defer taxes; paying off the mortgage may not be best. More info needed about Russell’s big-picture goals.

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3. Withdrawing from a CD vs. Roth IRA (06:21–06:40)

• Listener Lisa’s Dilemma: Needs to withdraw funds for a car purchase; deciding between breaking a 24-month CD (recently renewed) or taking money from her Roth IRA.
• Mark’s Take (06:21):
  "I'm going to assume that the CD is not her emergency reserve. If that's the case, I would tap the CD."
• Jill’s Nuance:
  • If the CD is the emergency reserve, check for other sources (traditional IRA or brokerage) before invading retirement accounts.
  • It’s better to use regular funds over retirement assets due to tax consequences and future RMDs.

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4. Pension Lump Sum vs. Monthly Payout—And Gifting to Family (06:41–08:32)

• Listener Susan’s Query: At 66, holds a $220,000 pension (option for $1,300/month or lump sum), has $2 million in other retirement savings, and considers taking the lump sum to help her son buy a house.
• Jill’s Concern (08:08):
  "I don't see why you wouldn't just roll this $220k over and not take this huge tax hit on $200,000."
  • Key Insight: Taking a lump sum now incurs significant taxes and potential higher bracket; rolling over defers taxes and keeps more money invested. More info about her son’s house purchase needed.

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5. Retirement Timing & Social Security Claims (08:33–10:35)

• Listener Stephanie: Retiring at 62, solid savings across brokerage and retirement accounts; her broker advises taking Social Security immediately for a ~$1,950/month benefit.
• Jill’s Rebuttal (09:50):
  "There doesn't seem to me to be a real need for you to take Social Security now...has this person, your quote, unquote broker, advisor, have they run a retirement planning scenario for you?"
  • Key Insight: Without knowing Stephanie’s spending, proper advisement isn’t possible. Delaying Social Security may offer higher payouts and overall stability. Financial advisors must provide holistic retirement planning, not just product-focused advice.

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6. Listener Success Story: CFP Exam Motivation (10:45–13:14)

• Drake’s Email:
  Inspired by Jill on Money to take and pass the CFP exam after years in the financial industry:
  "Mark made the comment, 'this would be like a case study every day for someone prepping for the exam.' At that point I thought, gosh darn it...let's go for it. While studying the past few months, there were so many times that things I had learned on your show came into play. Mark was right. I passed." (12:15)
• Mark’s Reply (13:09):
  "Yeah, sure, I have no problem. Let's go. Beer and tennis. What could be better?"
• Jill’s Reflection:
  • The show helps industry professionals understand the real concerns and questions of everyday clients—an “on the ground floor” perspective.
  • Call to listeners in the industry: “If anybody out there is listening in the industry, pass it along. Come on, tell us your story.”

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Notable Quotes

• Jill (03:21):
  "So what's important there, I think from Lisa's perspective, is when you have this money and it's owned by the grandparent, him or herself, then it's fine."
• Jill (05:11):
  "If it's not making any money, I might sell it...Maybe you do a like-kind exchange...I'd love it if you could make this property a better working property."
• Jill (08:08):
  "I don't see why you wouldn't just roll this $220k over and not take this huge tax hit on $200,000."
• Jill (09:50):
  "If you don't tell us how much you spend, it's hard for us to make a recommendation to you...If this person has not created a retirement planning scenario for you, then I would not plan on retiring."
• Drake (12:15):
  "While studying the past few months, there were so many times that things I had learned on your show came into play. Mark was right. I passed [the CFP exam]."

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Timestamps for Important Segments

• 02:00 – 529 Plans and FAFSA changes
• 04:20 – Rental property analysis and depreciation
• 06:21 – CD vs. Roth IRA withdrawal for car purchase
• 06:41 – Lump sum pension, gifting strategy, and tax implications
• 08:33 – Retirement timing, Social Security strategy, and advisor criticism
• 10:45 – Listener success story: Passing the CFP exam
• 13:14 – Closing thoughts; advice for financial industry professionals

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Episode Tone & Final Advice

Jill combines warmth, humor, and straight talk—encouraging listeners to give detailed financial info, especially about spending, for better advice. She emphasizes practical planning over quick fixes or tax-heavy moves, and the importance of advisors who actually run holistic retirement scenarios. The show is equally relevant for consumers and industry professionals who want to understand real-world financial issues.

Final Words (paraphrased, 14:35):
If you write in for advice, give full details, especially about what you spend. "It’s the most important piece of information for these mini-plans."

Transcript

[A]

Hey, gang. Now you know that we have not yet gotten into the merch business full time, but I was thinking about how easy it could be after I created these beautiful pullovers at vistaprint. I chose a pullover. But boy, the options are incredible. And what stands out is how vistaprint makes it simple for small businesses like ours to look professional without the headache. Their design tools are so easy to use, and if you need extra help, real people are ready to guide you. Whether you're creating merch, signage or thoughtful gifts for your audience, vistaprint helps you do it all quickly, easily, and within your budget. It definitely inspired me to think bigger about the podcast. So now we're looking at other items that we could customize. Maybe something like a water bottle. It's so easy. Vistaprint print your possible. Right now, new customers get 20% off with code NEW20@Vistaprint. Welcome to the Jill on Money show. It's Tuesday, April 7th, and we are here trying to help guide you through whatever financial issue, or maybe it's not even an issue. That sort of seems negative. Whatever financially is on your mind, could be good, could be bad. Maybe you got a big raise, Maybe you're starting a new job, maybe you're thinking about retirement. Maybe you're just starting your career. Maybe you're calling for a friend, whoever that may be. Maybe it's you. Whatever is going on, Mark and I are both certified financial planning planners and we really love hearing from you. So if you've got something noodling around, just go to jillonmoney.com click the contact us button. Let us know if you would be willing to come on the air live with us by checking the box. Mark does everything else because he is the best executive producer in the whole wide world. Because in addition to producing this program and our weekend show and a radio show, he also manages the entire website. He. He also manages my social media. He does everything. He also puts together our weekly newsletter which comes out on Fridays. And you should subscribe to it. Cause it's free. And free is good. You know that gang, right? Okay, let's do some emails today, Mark, and you're gonna help me out because you know I can't do this all by myself. It's much more fun when you join me. So here we go. This is from Lisa, who writes the subject saving for grandchildren's college. And she writes, I'm concerned about a traditional 529 in that the account will show up in the child's name and adversely affect fafsa. That's the financial aid form. Any recommendations for tax free savings for kids? Mark? We always love the 529. It is the best way to save for college. But what about Lisa's question for the grandkid? That money that's in the kid's name when the kid's a beneficiary of the 529 does count against the kid when applying for aid, right?

[B]

No, they changed this. I believe it was either last year or the year before. But very recently they changed this. When it comes to accounts owned by the grandparents, as long as the grandparent is the owner and the child is listed as the beneficiary, it is not reported on the FAFSA form. So that. That was a change.

[A]

So when did that change?

[B]

I think it was, I want to say 24, 25.

[A]

Interesting.

[B]

But it has to be owned by the grandparents.

[A]

Oh, okay. So what's important there, I think from Lisa's, Lisa's perspective, is when you have this money and it's owned by the grandparent, him or herself, then it's fine. Also another idea, by the way, is if you have the money available and it's in your retirement account, maybe this is a way for you to pull some money out of the retirement account. If it's traditional, maybe it's a way to get money out and start putting, you know, paying the tax on it. Gifting that. If you have a Roth, that's another way to use it. And if you have a brokerage account or a checking account and you're somehow worried about bumping up against gift tax problems, you can always write a check directly to an institution, by the way, that escapes any gift tax. So, Mark, you've educated me, so thank you very much. Okay. Russell writes that this is about rental property and the idea of paying off a loan versus keeping the money invested. So Russell writes, I've owned rental property for many years, but the passive rules prevent me from claiming losses on Schedule E since. Okay, so this is about owning rental property when it is not your primary business. Okay, so this is like as a side hustle kind of. Okay, so the property is fully depreciated and now it breaks even. Current mortgage has $50,000 on the balance, a variable rate of about 6%. I am now required to take required minimum distributions. Should I pay off this mortgage or reinvest the money? I don't really understand. If you've got a fully depreciated building and it breaks even. So are you saying that it breaks even on your taxes or Are you saying that like you own rental property that's not making money for you?

[B]

That's how I would read it.

[A]

That is not making any money. If it's not making any money, I might sell it. But you have to then capture the. Maybe you do an exchange. Maybe you do a like kind exchange that you know when you, when you look at doing. I don't know if you're interested in this or not, but there's a. Something called a 1031 exchange which would allow you to take the money from this property that's fully depreciated, sell it and buy something else. I would love it if you could just make this property a better working property for you because kind of sounds like you're stuck right now. I wouldn't necessarily pay the mortgage off, but I might consider selling it, especially if I want to reinvest it. But you're taking RMD, so you're in your 70s. So what's the plan with this property? I really need more information on this one. Sorry, guys. Lisa says she's got a 24 month CD and she has a Roth IRA. She said I need to withdraw money out of one to help me purchase a newer car. The CD renewed this past November. Which one would be better withdraw money from? I realized the bank will charge a fee for withdrawing from the cd. Mark, you want to tap the Roth for Lisa or you want to just break the CD and pay the fee?

[B]

I'm going to assume that the CD is not her emergency reserve. If that's the case, I would tap the cd.

[A]

Yeah, me too. But if it is your emergency reserve, I'm wondering if there's any other money because maybe you have. Do you have any traditional money? I'm sort of interested in that also because maybe this is a reason, like just pull the money out, pay the tax and move on. So again gang, we want that traditional pile of money to not be a burden to you later when the government forces you to take money out of it. Okay. All right. Susan is writing about a pension. She's 66. She has an old fashioned pension from my former employer. It has an ex. A cash lump sum value of approximately $220,000. Okay. Susan says I could take the pension now and the monthly amount would be $1,300. This is crazy. She says I often forget I have the pension. I understand I can roll it into another ira, but I'm thinking of taking the lump sum. Oh my goodness. Check this out. Mark, cue the hate mail. I have $2 million in other 401ks and IRAs, I will receive $3200 a month from Social Security once I start to claim it. The reason I'm thinking about the lump sum is to have cash to help our son buy a house. I believe the $220,000 would have 20% federal tax withheld and would be regular income, which would put us in a higher tax bracket. Do you think taking this pension as a lump sum now is an okay thing to do or not advisable. And Susan is a regular listener. I hate to take that tax hit, Mark, and push her into another tax bracket.

[B]

All for the sun.

[A]

Do we really? I mean, I need to know more about the sun. Why is the sun buying a house? Is this something you want or he wants? You're 66. You can always pull money out. But why? I don't see why you wouldn't just roll this 220 over and not take this huge tax hit on $200,000. I don't know.

[B]

I mean, does he really. Does he need the whole $200,000 to buy a house?

[A]

I don't know. Like, how much of a house is he buying? And why are you buying the whole thing? And I need. Susan, come back. Come to us. Come on the air. And bring your kid so we know your adult child. Okay. Stephanie writes that she's planning on retiring at the end of the year. She'll be 62. She said we've got a brokerage account with a big company. There's $350,000. There's mutual funds. There's a unit investment trust. There's a small. Ann. They've got 160 grand in a Roth. A thrift savings plan of. See, it's hard for me to read this on the screen. I think it's a half a million dollars. Most of this is all is traditional. About 100 grand in Roth. Okay. Husband gets 30 grand a year from Social Security. She'll get a small pension and then 600, give or take after. Blah, blah, blah, blah, blah. Brokerage person said take Social. Okay, listen to this, Mark. Here's the key. Our brokerage person told me to start taking the Social Security right away, which would be $1,950. What are your thoughts on me taking Social Security right away, Stephanie? I might fire that advisor. What do you think, Mark? You want to fire him?

[B]

Well, I think she's obviously leary herself. That's why she wrote to us. Otherwise she would have just done what he said. But yeah, I mean, we need some other Info, but they've got a lot of money saved. You've got a lot of what they spend.

[A]

Yeah, here's the thing. You don't tell us what you spend. Your husband's getting Social Security already. I'm not sure why you would take Social Security right now. I really don't. And also, so, I mean, you've got your own. You have your own retirement account. You have some money. But if you don't tell us how much you spend, it's hard for us to make a recommendation to you. But what I can tell you is that there doesn't seem to me to be a real need for you to take Social Security now. And also, has this person, your quote, unquote broker, advisor, have they run a retirement planning scenario for you? I mean, so here's what I'm thinking. I'm like, okay, why would she take Social Security right now? Her own Social Security is pretty close to her husband's, right? He's getting 30. He gets 2,500amonth. She gets 2 grand. I wonder what happens when she waits until her full retirement age. She'll make a good chunk of money if she waits. The real question is, what's the game plan? This dude is just telling you to take Social Security so you don't invade your accounts. I understand that, but, like, what is the game plan? And if this person has not created a retirement planning scenario for you, then I would not plan. I would not plan on retiring. I'll tell you that much. Unless you tell me that you spend a lot less than your 30 grand a year from your husband's Social Security. And, you know, whatever, it's going to be $450,000 a month. You're going to essentially have about $1,000. So you're going to have $42,000 a year in income. If you spend less than that, then you might be on track to retire. If you spend a lot more than that, then you may not be able to. But I don't think claiming Social Security is the early is the answer. My two cents. Okay. Oh, Mark. Oh, my God. I love this already. This is like the greatest thing ever. Okay, here's the ready for the mess? Subject Jill on money inspired me to take the CFP exam. Okay. Hi, Jill and Mark. This is from Drake. I work in wholesaling a 401k platform to financial advisors. Don't worry, Jill. You say good things about us. Good. Earlier in my financial services career, I had gone through the CFP coursework, but I never took the test Once I dove into the wholesaling realm, Jill on Money has been my first listen on my morning jog for a couple of years. And one day this fall, Mark made the comment, this would be like a case study every day for someone prepping for the exam. At that point I thought, gosh darn it, Drake. Not my name, but he's playing in the background while I write this. Let's go for it. While studying the past few months, there were so many times that things I had learned on your show came into play. Mark was right. I passed. Not exactly sure how this factors into my future, but thank you so much for your amazing show and all you do to help people, including me. Mark, I am a washed up college tennis player, two time redacted City Bankers Tennis league champion and will be in New York City in May if you want to grab a beer and watch the French Open. Mark, did you respond or not?

[B]

Yeah, I did, I did, I did. Yeah, sure, I have no problem. Let's go. Beer and tennis. What could be better?

[A]

Oh my God, you're the best. I love this so much. It is incredible. I mean, first of all, I love that people are listening in the industries and gosh, isn't that incredible to be able to like inspire people to, to do what these, you know, these kinds of things. And also, if anyone out there is thinking about getting into industry, I'll tell you what, you'd be better off just in my two cents. Like I know you're listening to other shows and maybe it's more technical and all that. You should hear the questions that we are fielding because this is the show that kind of is on the, like literally on the ground floor of what people need and want from their advisors. They're coming to us because the industry is not serving them. Okay? That's the truth. And so if anybody out there is listening in the industry, pass it along. Come on, tell us your story. So happy. So Mark, I think that's a great way to end. So if you're in the industry, get in touch with us. You can tell us if we're doing something wrong. That's okay. Go to jillonmoney.com, click the contact us button, write us a note. And gang, if you are not coming on the air with us, then please give us a lot of information and most importantly, tell us how much money you spend. Spend. That to me is the absolute number one thing that you need to do. Give us how much money you spend. It's really the, the most important piece of information that we can glean when doing these kinds of, you know, sort of mini plans on the air. Okay, good. Excellent. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Please leave us a rating and review wherever you listen. And of course, course, please lift someone up. Change your work, change your wealth, change your life. Thank you for listening, and we'll talk to you tomorrow.

[C]

Understanding power requires more than headlines. I'm Peter Hamby, host of the Powers that Be, a podcast from Puck, examining politics, economics, and media. To provide context, analysis, and clarity without sensationalism, we ask how power operates, who benefits, and what's at stake. If you want to move beyond breaking news to deeper understanding, join us on the Powers that Be new episodes every weekday. Follow the Powers that Be wherever you get your podcasts.