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Roth 401k vs regular 401k

Posted on 3/4/10 at 11:53 am
Posted by cdl2006
SCP
Member since Nov 2007
308 posts
Posted on 3/4/10 at 11:53 am
My company just started offering a Roth 401k. I have been putting my money in the regular 401k since I started working in 2006. What should I take into consideration when determining which 401k I should put my money in? Should I split it between the two? Any advice would be appreciated.
Posted by LSU0358
Member since Jan 2005
7915 posts
Posted on 3/4/10 at 12:06 pm to
Roth 401k all the way if it were me. The advantages are huge with this.

Will the company still match the same percent to the Roth 401k? Are those dollars already considered post tax?
Posted by Cash
Vail
Member since Feb 2005
37241 posts
Posted on 3/4/10 at 12:13 pm to
Go with the Roth.

company match goes into the regular
Posted by Jason9782003
Member since Aug 2007
3552 posts
Posted on 3/4/10 at 12:19 pm to
1. Put money in 401k to maximize company match
2. Put annual max in ROTH...if you can afford it
3. After ROTH is maxed out put more in 401k if you can
Posted by Cash
Vail
Member since Feb 2005
37241 posts
Posted on 3/4/10 at 12:22 pm to
quote:

1. Put money in 401k to maximize company match
2. Put annual max in ROTH...if you can afford it
3. After ROTH is maxed out put more in 401k if you can


that wasn't the question
Posted by Jason9782003
Member since Aug 2007
3552 posts
Posted on 3/4/10 at 12:37 pm to
quote:

that wasn't the question


quote:

Should I split it between the two? Any advice would be appreciated.


Doesn't sound like an either or question to me. Sounds like he can contribute to both and he's asking if he should split his contributions.

401k gives you pre-tax benefits. Lowers your taxable income and you probably get an employer match (free money)

ROTH - If the current laws remained unchanged your withdrawls won't be taxed

He should contribute to both to maximize benefits, not one or the other.
Posted by Cash
Vail
Member since Feb 2005
37241 posts
Posted on 3/4/10 at 12:39 pm to
He is asking about Roth 401k's vs. regular 401k's.

Not Roth IRA's.
Posted by CHElsu
Lake Charles, LA
Member since Feb 2005
105 posts
Posted on 3/4/10 at 5:30 pm to
Just so I am clear, do Roth 401k contributions count against the yearly limits on Roth IRA contributions? Also, are there income limits relating to Roth 401k contributions?

I figure one of you personal finance geniuses can school me up.
Posted by Cash
Vail
Member since Feb 2005
37241 posts
Posted on 3/4/10 at 7:04 pm to
No too both questions

However, highly compensated employees might be limited at your company on the contribution percentage in Roth 401k's just like in regular 401k's.
Posted by AUFanInSoCal
Orange County
Member since Nov 2007
1616 posts
Posted on 3/5/10 at 3:45 pm to
I'm always confused over this.

So I'm just gonna guess.

single, head of household...
401k maximum pre-tax contribution - 16,500
Roth IRA or Roth 401k max contribution - 5,000.00

Is this right?
Posted by Cash
Vail
Member since Feb 2005
37241 posts
Posted on 3/5/10 at 3:54 pm to
quote:

single, head of household...
401k maximum pre-tax contribution - 16,500
Roth IRA or Roth 401k max contribution - 5,000.00

Is this right?


Not exactly.

assuming under age 50

401k and Roth 401k combined max contribution- $16,500

traditional and Roth IRA combined max contribution- $5,000
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