Bonus Mailbag #26: The Ultimate Guide To IRAs (2026)

Saving money on bonus mailbag ultimate iras does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.

Key Takeaways

• We’re tackling all your IRA questions, from rollovers to conversions to backdoor contributions, with Jean Chatzky and IRA expert Ed Slott.&n...
• That’s why we created this dedicated Mailbag episode to accompany our bigger IRA breakdown with Ed Slott, which you can listen to here , thi...
• Ed is a CPA, a columnist for AARP, his company is the nation’s leading provider of technical IRA education for financial advisors, and his b...

We’re tackling all your IRA questions, from rollovers to conversions to backdoor contributions, with Jean Chatzky and IRA expert Ed Slott. 

There’s so much to unpack with IRAs , individual retirement accounts , that we aren’t surprised that questions on the topic frequently pop into the HerMoney mailbox. That’s why we created this dedicated Mailbag episode to accompany our bigger IRA breakdown with Ed Slott, which you can listen to here , think of it as your guide to IRAs. Ed is a CPA, a columnist for AARP, his company is the nation’s leading provider of technical IRA education for financial advisors, and his book: The New Retirement Savings Time Bomb just debuted a few weeks ago. 

In this special Mailbag episode where we guide you through the world of IRAs, Jean and Ed tackle eight key IRA questions that were submitted by listeners just like you. (If you have a question for Jean to tackle on an upcoming episode, please drop us a line here!) 

Listen in as Jean advises a listener who is a recent college grad and planning to set her parents up with IRAs… She’s doing such a wonderful thing to ensure her parents have a secure retirement, but she’s unsure where to start. We also hear from a woman who is 45 years old and has two long-funded Roth IRAs, in addition to a 401(k) and a pension, but she’s not sure if she’s doing enough for retirement and is considering investing a traditional IRA. Should she do it? 

We also tackle the classic conversion question: Should I convert my traditional IRA to a Roth IRA? Then, we hear from a 38-year old married mom who rolled over an annuity valued at $22,000 from an old employer into a Roth IRA in January… Knowing that the money will be considered taxable income, she’s now trying to come up with as numerous different ways to bring down her AGI as possible. Jean and Ed weigh in. 

The pair then offer advice to a woman who is making a career pivot and is curious if she should roll over her 401k to her IRA this year AND do a backdoor IRA conversion? (She’s unsure what her tax bracket will be in 2022, so she’s thinking time is of the essence.) 

We also hear from a listener with a simple question: Does it ever make sense to contribute to an IRA if you are above the income limit to receive a tax deduction? (She’s a bit behind in her retirement funding, so she wants to save as much as possible!) 

Lastly, we dive into the main benefits of investing in an IRA vs. a 401(k). Our listener asks: “Is the primary benefit of an IRA the extra options of funds to invest in? Is there another reason I’m missing why I should go with an IRA over a 401(k)?” Jean and Ed tackle it all, and you don’t want to miss it.

Transcript

Jean Chatzky: (00:00) HerMoney is brought to you by Fidelity investments. Moms, is your money working hard enough for you? Join us for a candid WomenTalk Money conversation with moms and access resources to help you create a roadmap for your family’s financial future. Visit Fidelity.com/HerMoney to learn more.

Jean Chatzky: (00:20) Hey everybody, it’s Jean. Chatzky. Welcome to our special mailbag, all about things IRA IRA-related. I’ve got Ed Slott with me for this mailbag. We’re going to switch it up. Do it a little bit differently this time. I’m going to ask the questions and he’s going to help me answer them. He’s got a new book out called The New Retirement Savings Time Bomb, and it’s all about IRAs. If you haven’t listened to the first portion of this show, the one that proceeded the mailbag, and you want an education on IRAs, go back. Pick it up. But for right now, Ed, thank you so much for being with me again and let’s jump into our listener questions.

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Ed Slott: (01:03) Okay. Sounds good.

Jean Chatzky: (01:05) All right. Question number one comes from Libby. And Libby writes, hi there. Should I convert my traditional IRA to a Roth IRA? I’m 64 years old and already retired. I have a traditional IRA with Vanguard. The current value is $613,000. It’s got $597,000 in stock funds and $16,000 in bond funds. I also have $487,000 in a 457 plan, all stock funds. I don’t expect to need this money or social security until I’m 70. Current expenses are covered by a small pension and taxable savings. Thanks for your thoughts on this. So, Ed, I think, you know, in terms of her question, does everybody always go with a Roth? Are there certain situations where a Roth isn’t the right move and what would you say to her specifically?

Ed Slott: (02:01) Well, specifically, it sounds like she’s doing fine and she should probably have a plan to, over time, convert at least a 600,000 to a Roth IRA. Because you know how in investments, I’m sure you say this all the time. Everybody says it. Don’t put all your eggs in one basket, always diversify. But it’s the same thing with tax risk. You need to diversify your tax risk. It sounds like she has a lot of her eggs in one big taxable basket. I think she said she had an IRA or a 457 or both. That’s all taxable money. At some point she should start converting that because can you imagine, she said she’s 65 or 66?

Jean Chatzky: (02:44) She said she is 64 years old and already retired.

Ed Slott: (02:49) All right, let’s take it from the point of view, if she does nothing, can you imagine how much that account, or both of those retirement accounts will grow by the time she is forced to take it out at age 72. She’ll have massive tax bills for the rest of her life because of required minimum distributions. She’s in a good spot now, because she has the ability to convert before required minimum distributions begin. She can do an amount each year, maybe 50,000, whatever she can afford to pay tax on. Now that’s a big issue too. We didn’t cover this in the other segment. We talked all about Roth conversions and you actually made sure right up front, you said you have to have the money, and I prefer outside, which she said she does, to pay the tax. But you must have money to pay the tax, because after the tax cuts and jobs act, it changed the way we look at Roth conversions. Once you convert now, it’s permanent. You can’t go back. There’s no backsies. There’s no do-overs. The next year you will owe the tax. Now I wouldn’t have that deter you from converting to a Roth, but make sure you have the money to pay the tax. So I think in her case, she should probably do, if she can afford it, 50 to a hundred thousand a year of Roth conversions each year to empty that IRA I think she said she had. So that will lower her tax bill come age 72 and she’ll have more diversification. It seems like, if she does that, she’ll have half a funds in taxable accounts and the other half of her retirement funds in all tax-free accounts that require no RMDs.

Jean Chatzky: (04:26) Yeah, I think that makes sense. And again, a point you made earlier in the other show was if she doesn’t have enough money to convert that much each year, you can convert less. You don’t have to convert such a sizable chunk. But I agree with you. I think that’s a good move. Next question is from somebody at the other age end of the spectrum. Hi Jean and the HerMoney team. My name is Cheyenne. I’m 23 years old and I’ve been an active listener to your show for about a year and a half. Kudos to you, Cheyenne, for getting on the money bandwagon so young. As a 2020 college grad, your advice has really helped me prepare for my adult life. So thank you. Thank you again for listening, Cheyenne. Okay. Here’s the question. With all the knowledge I have now, I can definitely see how my parents have not prepared for retirement at all. My parents, age 54 and 50, currently work jobs as independent contractors. They have no 401k plans and benefits. And from my understanding have exhausted all funds from previous 401ks through a plethora of bad financial decisions. I planned on helping them set up Schwab Roth IRAs and invest in the same low-maintenance mutual fund I’m currently investing in. They both seem open to the idea, but I’m not sure I can count on them to consistently add funds and invest them. How do I create some sense of urgency for retirement savings when they’re still young and active? Is there a way to automate these investments? I’m sure if I had to, I could log into their accounts and do it for them, but I want them to have some independence and I don’t want to babysit their money. My dad really enjoys his job and will work past the average retirement age, but I want to make sure they’re well taken care of. Once I pay off my student loans, I also plan on setting up some kind of brokerage account to contribute as well since I’m sure I will have to help take care of them eventually. Thank you for your advice. Oh my gosh, Cheyenne, you are wise beyond your years. And I don’t think I’ve ever seen Ed Slott’s eyes so big.

Ed Slott: (06:31) Yeah. Well, I mean the first saying that comes to my mind, you can lead a horse to water, but you can’t make them drink. I don’t know how you’re going to force a change in behavior, somebody in their fifties. It’s nice you’re doing that and you’re worried, but they have to want to do it themselves. They may do it for, you know, to get you off their back, but it doesn’t seem like they’re in that mode.

Jean Chatzky: (06:56) It doesn’t to me either but I think, Cheyenne, that automation is the key.

Ed Slott: (07:00) Right.

Jean Chatzky: (07:00) And if you can sit with them and you can get them to set up an account wherever you want to set it up and just arrange so that a certain amount of money is withdrawn from each of their accounts and moved into a Roth IRA every single month, then that money will continue to just go there and hopefully grow. And what I hope will happen is that your parents will have the same sort of eye-opening moment that you’ve had and that I saw that my son had. So my son, when he got his first job did not have a job with benefits. He’s five years in now. He still does not have a job where they’re contributing for him. But very early on, we opened a Roth for him and he started making monthly contributions and has been watching, for the last five years of this bull market, his money adding up. And he actually turned to me about two years in and said, oh my God, mom, why didn’t we do this sooner? And that’s what I hope happens with your parents. So encourage them to open the account. And then when you’re with your parents, go with them and visit their money. Make sure that you are watching them look at the growth. Make sure you are helping them revel in their progress. And I think that, if anything, has a chance of changing their mind.

Ed Slott: (08:25) Yeah. I liked the idea of doing it with them. She mentioned going to wherever she’s going to go, .Schwab, Fidelity, wherever she’s going. And go there with them. And everybody do it together as a family thing.

Jean Chatzky: (08:36) Yeah. Love that. All right. Next question. This one is from Brenda. She writes, hi. IRA question. Hubby and I have solid retirement planning status. We’re 45 and 46, have two long-funded Roths, one pension and one 401k, and investments in an HSA. We’re probably halfway to a million I believe, with a decent time period before considering official retirement. The Roths and HSA are maxed out, but I choose not to supplement the pension because it’s totally out of my control to manage. The 401k is good, but I’m content with staying at the company match for it. Fees are a little high. It also gets safe harbor contributions, occasionally, which add up impressively. I assume you’re familiar with safe harbor, she writes, I’m still a little fuzzy on it. Safe harbor, just FYI for all of you, is a fairness mechanism to make sure that your company contributes for you while they’re contributing a l

Final Thoughts

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Originally published at savingswitch.com.