I understand Roth 401k money is post tax, however the contribution limit is the same for Roth and traditional. Is the Roth limit $22,500 pre-tax then that amount gets taxed per income and I end up with the after tax amount to grow tax free?

Or is it $22,500 limit after I’ve paid the tax? That would mean I’m contributing more to retirement than a traditional right?

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Posted by La Place Mike

West Florida Republic

Member since Jan 2004

28896 posts

Posted on 7/12/23 at 6:52 pm to JusTrollin

No matter how you slice it 22.5K goes in to the account.

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Posted by Newgene

Waveland, MS

Member since Nov 2005

7242 posts

Posted on 7/15/23 at 8:39 am to JusTrollin

quote:
That would mean I’m contributing more to retirement than a traditional right?

Effectively, yes. Side by side, you wind up with the exact same amount when you retire if you max both, but you pay no taxes on it when you take it out. So, you wind up with a bigger after tax retirement nest egg out of the same bucket.

Now, the counter to the argument is you have more money in your pocket today due to the tax advantage on the traditional. So, there is another parallel stream of investment income that could come from that tax savings. What you do with that is another discussion.

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Posted by reds on reds on reds

Birmingham

Member since Sep 2013

4223 posts

Posted on 7/19/23 at 8:08 am to JusTrollin

I am currently maxing my Roth 401K because it makes financial sense for me to do so now. My wife has 2 years left of her surgical residency and then I will likely have to reevaluate my contributions.

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