No announcement yet.

401K versus Roth 401K

  • Filter
  • Time
  • Show
Clear All
new posts

  • 401K versus Roth 401K

    My new job out of fellowship will have the option to place money into a regular 401K or a Roth 401K (combined total of 18K).  Is there any logic to putting all of the 18K into the Roth (for future tax free withdrawals, estate planning, inability to have tax free growth in other accounts) or does it make more sense to place the 18k in the 401K because I will be bumping up tax brackets so gaining the tax benefit now makes more sense?

  • #2
    My first year out I'm placing it in a roth because I'm only earning attending money for 6 months and my tax bracket won't be as high. Starting in january ill go to a traditional 401k.


    • #3
      There is endless debate on this topic and the answer is always "it depends". My rule of thumb is if I will be in the 25% or higher tax bracket do the traditional IRA, otherwise the Roth is too good to pass up. If you think you will be in the same tax bracket in retirement a Roth becomes more beneficial. I expect to be in a much lower tax bracket when I retire so I'm doing traditional 401k.


      • #4
        The first two replies are both sensible solutions.

        Here are a few more posts and discussions with additional conversation on the topic:

        Traditional 401k versus Roth 401k

        Tax-deferred Retirement Accounts: A Gift from the Government

        Should You Make Roth or Traditional 401K Contributions?


        I'm a fan of putting as much as possible into tax deferred accounts, and doing a backdoor Roth. Like The Happy Philosopher, I am quite certain I will be in a much lower tax bracket in retirement, at least under current tax law.





        • #5
          I'm no expert - but I plan to diversify a bit.  I'm thinking of doing 10-15% as Roth.