- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Employer Offering Roth 401K
Posted on 7/13/23 at 9:16 am to Dav
Posted on 7/13/23 at 9:16 am to Dav
Look at your present top marginal tax rate and your expected top marginal tax rate in retirement. IF you are in a 32% tax bracket now but expect to be in a 22% tax bracket in retirement, put most of your money in a traditional 401K and a little in a Roth. If you put it all in a Roth, you are paying 32% (or more) now to avoid paying 22% later.
This is the way it works for most people, but some people have different situations.
Roth's offer tax flexibility, but it may come with a price as shown above, but it would seem like a good thing to have some Roth assets so that if you decide you want a new car when you are 80, pulling 100K out of the Roth to pay for it won't drive you up to a higher tax bracket.
So in my opinion, for most people, plan on saving in traditional 401K to provide retirement income and plan on Roth for unplanned or unscheduled or otherwise irregular large retirement expenditures.
Maybe a 70/30 % split between the two would be best for most people. Some people have totally different situations.
This is the way it works for most people, but some people have different situations.
Roth's offer tax flexibility, but it may come with a price as shown above, but it would seem like a good thing to have some Roth assets so that if you decide you want a new car when you are 80, pulling 100K out of the Roth to pay for it won't drive you up to a higher tax bracket.
So in my opinion, for most people, plan on saving in traditional 401K to provide retirement income and plan on Roth for unplanned or unscheduled or otherwise irregular large retirement expenditures.
Maybe a 70/30 % split between the two would be best for most people. Some people have totally different situations.
3
Posted on 7/13/23 at 11:22 am to CharlesUFarley
I expect that I'm in a higher tax bracket now than in retirement.
However, I use every economic downturn to thrust money into Roth.
I call it buying on-sale with funds growing tax free with a quick 20%+ bump in equity.
I also increase my contribution percentage until the market recovers (or I max out).
However, I use every economic downturn to thrust money into Roth.
I call it buying on-sale with funds growing tax free with a quick 20%+ bump in equity.
I also increase my contribution percentage until the market recovers (or I max out).
Posted on 7/14/23 at 8:12 am to CharlesUFarley
Good advice. Having tax flexibility is important. Many unknowns in the future. I am retired from working, but an active investor. I wish I had more Roth money now. Going to get slammed this year because of a large purchase being funded with a chunk of standard 401k money.
Posted on 7/14/23 at 8:44 am to CharlesUFarley
quote:
Maybe a 70/30 % split between the two would be best for most people.
And when considering this split, be mindful that any company match is typically in a traditional since you are not paying taxes on the match.
Also, when considering the tax bracket questions/concerns now vs when you retire; I have been advised you can't just look at the tax rate that may be applicable on those funds. If you are going to receive SS benefits, the amount of those benefits you will be taxed on will be affected by your taxable income. Your healthcare options/costs are also affected by your taxable income. And Roth plans are not subjected to required minimum distribution amounts.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News