So I’m pretty sure there are no income limits to contributing to a Roth 401k like there are to a Roth IRA. if anything i would expect it to average her wages down with yours possibly making the payment lower. Roth 401k Limits Vs Traditional/page/8 https://www.bankrate.com/calculators/retirement/401-k-or-roth-ira-calculator.aspx. 401(k) vs. Roth 401(k): How are They Different? I’ve now adjusted my future contributions to 22% pretax (just under the limit) and now have $125 leftover per paycheck. Press question mark to learn the rest of the keyboard shortcuts. (the answer probably changes depending on income and time to retirement). Roth 401K vs. also keep in mind that 16 years is a lot of time. In a month, they will begin contributing 3.5% (not a match, just a contribution) to the traditional. When I retire and withdraw my funds (contributions + earnings), those are not taxed at all. Your correct, there is no income limit in the Roth 401(k). Hi everyone, this is my first time posting to this sub Reddit. If we file separately, the payment is several hundred dollars less per month. The outcome here is going be dominated by your wife's career and savings and your filing status. I recently started contributing to my traditional 401k (Amazon matches 50% to 4%). There's really no right answer to this. So the IRA is able to fill this … pretax 401k tends to be better. I didn’t think about state taxes. Why? A 401(k) is a retirement plan that allows eligible employees of a company to invest a portion of their income on a tax-deferred basis. It is solely managed by the individual (possibly with assistance from a professional investment advisor). Some folks are afraid that laws regarding Roth will change, I’m very skeptical that will happen, but taxes going up, I think that’s probably likely. hide. Retirement. Thanks for the reply. My employer's 401k plan offers numerous low … This will inevitably give you more retirement money regardless. One consideration I have made that I’m interested in feedback on: I am maxing out my Roth IRA in my first two years of … I will continue at 8% but, but of course it will be post-tax so a smaller total going into the account (though don't discount the additional 3.5% from the company starting, which more than covers the tax). Traditional 401k vs Roth 401k. I can’t afford to contribute the same amount via Roth. You might we'll pay more in taxes now than you will in retirement. 401k vs Roth 401k. So without knowing more about wife's savings plans, best guess is switch to Roth and re-evaluate in a couple years. By using our Services or clicking I agree, you agree to our use of cookies. However, all the calculators I use assumes a 15% tax in retirement, so I'm failing to see the benefit of paying at my 22% (formerly 25%) brackets now, but I'm sure I'm missing something. That’s unless, of course, you’re a very high income earner. This question is asked a lot here. If you make enough and can do all Roth 401(k) and IRA I say do it. Traditional 401k vs Roth 401k for expats. Thanks this is helpful. But, as that's the case, bonuses and those types of things don't really happen. Some deets: Age: 27 Income: $85k 401k contribution: 15% 401k balance: $20k, Can anyone help clarify the advantages of a 401k vs a Roth 401k? That said, your point is valid that he income has the potential to go up more significantly that we expect (though on the other side of the coin, could drop in a hurry as they did in 2008/09). If you contribute to it now, you‘re probably going to lower your tax bracket in the future. First make sure if you get a company match that it still applies if you direct your money to the Roth, it probably does but I think I’ve seen a few cases where they don’t. Dtg367 Oct 9, 2020 5 Comments Bookmark; function; I'm from Europe and moved to US last year. save. My employer matches 50% of the first $6,500 ($3,250) annually. Read this: https://www.reddit.com//r/personalfinance/wiki/rothortraditional. Can anyone help clarify the advantages of a 401k vs a Roth 401k? My employer's 401k plan allows for the mega-backdoor roth IRA. However, if you contribute to your Roth and not to an IRA your missing out, and theoretically if you max our your contribution 19,500, you can save something like 5,000 in taxes if you use traditional. More than 58 million people have one, and they held a collective $6.2 trillion as of Dec. 31, 2019, according to the Investment Company Institute. Since you’re company match is allocated there, if you go Roth your diversifying your tax free and tax deferred growth. 3.5 % ( not a match, just a contribution ) to the Roth 401 ( )! 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