Jill on Money with Jill Schlesinger Roth or Pre-Tax 401(k)?
13 snips
Dec 10, 2025 Fred, a caller seeking retirement and tax planning advice, shares insights about his financial situation, including his 401(k) and savings breakdown. The discussion highlights the potential tax implications of large pre-tax balances, prompting Jill to recommend shifting to a Roth 401(k) to take advantage of current tax rates. They also touch on strategies for boosting his 529 savings and reviewing life insurance and estate planning, ensuring Fred has a solid financial game plan for the future.
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Start Converting To Roth Now
- Convert some pre-tax 401(k) money to Roth to pay tax now and diversify future tax exposure.
- Jill recommends moving toward Roth contributions given likely higher future taxable RMDs and your strong savings position.
Fred's Retirement Balances
- Fred reports a $334,000 current 401(k) and a $774,000 rollover IRA, mostly pre-tax.
- He also has a small Roth IRA and plans full retirement contributions now at age 49 going on 50.
Big Pre-Tax Balances Raise Future Tax Risk
- Large pre-tax balances can create big required minimum distributions and push you into high tax brackets.
- Jill projects a $3M balance could require six-figure RMDs that raise future taxable income substantially.
