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Get full employer 401k match, max roth... then taxable acct or more 401k?

Posted on 3/13/15 at 11:49 am
Posted by SomeGuyFromLA
Texas
Member since Dec 2014
139 posts
Posted on 3/13/15 at 11:49 am
The fee's on the funds in my 401k are .41% vs .07% in my index funds in the taxable account.

What is the best route to go here?

401k makes it easier to DCA because I don't have to do anything and don't have transaction fees.

thoughts?
Posted by Teddy Ruxpin
Member since Oct 2006
39553 posts
Posted on 3/13/15 at 11:53 am to
We need a general rule posted at the top of the board for this question.

401k to match
Max Roth
HSA to max if you have one
401k to Max
taxable

Of course if you're saving for a house down payment greater than 5 years that may be in a taxable account, but that's a separate issue from retirement savings order of operations
This post was edited on 3/13/15 at 11:54 am
Posted by tigersnipen
Member since Dec 2006
2085 posts
Posted on 3/13/15 at 5:26 pm to
What if you can't contribute to a ROTH should you go

401k to match
Max Traditional IRA (Backdoor to Roth?)
HSA to max if you have one
401k to Max
taxable
Posted by TheIndulger
Member since Sep 2011
19239 posts
Posted on 3/13/15 at 5:53 pm to
Why do people think it's beneficial to do a Roth IRA vs max 401k? One gets taxed now, one gets taxed later, mathematically it's the same yes?
Posted by DawgCountry
Great State of GA
Member since Sep 2012
30541 posts
Posted on 3/13/15 at 5:58 pm to
Depends on your tax bracket when you retire
Posted by Anfield Road
Liverpool Fan
Member since May 2012
1940 posts
Posted on 3/13/15 at 6:24 pm to
I think the HSA is severely underrated. No other tax advantaged vehicle is potentially completely untaxed.
Posted by Fat Bastard
coach, investor, gambler
Member since Mar 2009
72505 posts
Posted on 3/13/15 at 6:39 pm to
quote:

What is the best route to go here?


REAL ESTATE
Posted by Fat Bastard
coach, investor, gambler
Member since Mar 2009
72505 posts
Posted on 3/13/15 at 6:44 pm to
quote:

Why do people think it's beneficial to do a Roth IRA vs max 401k?


1) better choice of funds
2) better expense ratios
3) more control of ROTH
4) more flexible, can withdraw contributions without penalty
Posted by player711
Member since Jun 2006
285 posts
Posted on 3/13/15 at 10:58 pm to
Your 401k definitely has more fees than that. You have a sales load, trading fee, annual expense ratio. You may have a minimum total fee of 1.5%
Put more money into a tax free vehicle.
The match from a 401k will be wiped out from the taxes you take out.
Google truth concepts videos on qualified plans and let me know your thoughts.
Posted by Fat Bastard
coach, investor, gambler
Member since Mar 2009
72505 posts
Posted on 3/14/15 at 8:34 am to
quote:

You have a sales load,


maybe, depends what funds he is in. That is why i did not include that.
Posted by LSUtigerME
Walker, LA
Member since Oct 2012
3789 posts
Posted on 3/14/15 at 10:45 am to
quote:

Why do people think it's beneficial to do a Roth IRA vs max 401k? One gets taxed now, one gets taxed later, mathematically it's the same yes?

Generally, Roth is better when you believe tax rate today is lower than tax rate in retirement (tax rate increases in future, tax bracket/income increases, etc.). It always bothers me that this board blankets "Roth is better!" Generally, it may be true, but it's not always the case. As evidenced by the financial goals thread, there's some high earners around here. Why get taxed today at that high rate?

I agree with a Roth, but it should be a tax diversified approach. And things such as a Roth 401k are never even considered.
This post was edited on 3/14/15 at 3:08 pm
Posted by BestBanker
Member since Nov 2011
17474 posts
Posted on 3/14/15 at 2:28 pm to
quote:

401k to match
Max Roth
HSA to max if you have one
401k to Max
taxable

I respectfully disagree with general statements like these because everyone earns, spends, and is taxed differently with differing deductions, credits, and depreciation schedules.

Current use of taxable investment options typically allows for better total ROI when joined with tax benefits at younger ages, prior to having lost most ordinary tax credits at retirement age.
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