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Message
Investment question 401k IRA
Posted on 6/1/25 at 7:23 pm
Posted on 6/1/25 at 7:23 pm
My employer matches up to 8%. 70% on the first 4% and 50% on the next 4%.
I contribute 12% of my pay into the 401k pre tax.
They also offer an option of an after tax IRA.
Should I put 8% in the 401k and 4% in the IRA?
I have been putting the entire 12% in the 401k.
Just wondering if I should leave it as is or split it up.
Retiring in 3-5 years. What would you do?
Thank you.
I contribute 12% of my pay into the 401k pre tax.
They also offer an option of an after tax IRA.
Should I put 8% in the 401k and 4% in the IRA?
I have been putting the entire 12% in the 401k.
Just wondering if I should leave it as is or split it up.
Retiring in 3-5 years. What would you do?
Thank you.
6
Posted on 6/1/25 at 8:05 pm to jake wade
I put 15% in 401k and then $8k in Roth IRA. The reason being that I can remove money from the IRA penalty free if I have an emergency.
Posted on 6/1/25 at 9:28 pm to jake wade
That's a little less than 5%, not 8
Posted on 6/1/25 at 11:56 pm to jake wade
I put $7000 in a Roth every year then contribute the remaining $16000 (for total of $23,000 ish) into my company match 401K I’m not sure the exact % but company matches first 5% I put in.
Posted on 6/2/25 at 7:32 am to jake wade
Your employer offers an IRA? Thats a bit weird, if they offer a 401k I dont understand how an employer can offer an IRA, it's an individual (as in not through employer) retirement account. Do they just recommend going through some specific place for the IRA or something? An IRA is not "through" an employer like a 401k is. Again, Individual Retirement Account (As in, not through an employer).
Or are you talking about they offer you to contribute to your 401k via ROTH instead of pre-tax?
Or are you talking about they offer you to contribute to your 401k via ROTH instead of pre-tax?
This post was edited on 6/2/25 at 7:33 am
Posted on 6/2/25 at 8:21 am to jake wade
just to get some clarity on this thread, you are confusing some things.
Employers offer a 401k retirement plan. That plan can have a traditional (pre-tax) side and a Roth (post-tax) side.
IRA is an "individual retirement account." It would be an account you would have on your own. Companies cannot put matching funds into your IRA.
It sounds like you are asking about putting money in your 401k and your Roth 401k, correct?
Employers offer a 401k retirement plan. That plan can have a traditional (pre-tax) side and a Roth (post-tax) side.
IRA is an "individual retirement account." It would be an account you would have on your own. Companies cannot put matching funds into your IRA.
It sounds like you are asking about putting money in your 401k and your Roth 401k, correct?
Posted on 6/2/25 at 9:28 am to notsince98
Sorry guys, it is a Roth. My bad
Posted on 6/2/25 at 9:48 am to jake wade
Do you have need quickly accessible cash at retirement? If not and you are ready to for retirement, put the money in traditional and not Roth as you are likely currently in the highest tax bracket you will ever be in.
Having said that, in the slight chance your retirement income will be greater than your current income, then put what you can on the Roth side while still getting the full company match.
Having said that, in the slight chance your retirement income will be greater than your current income, then put what you can on the Roth side while still getting the full company match.
Posted on 6/2/25 at 9:50 am to jake wade
Someone more knowledgeable than me will surely reply soon, but it depends on where you’re at tax bracket-wise, and where you expect to be during retirement. Roth can be attractive for a variety of reasons, even if you’re close to retirement.
Just make sure it is truly a Roth 401K option, and not just an After-tax option.
My employer offers before-tax, Roth, and after-tax. I max the Roth 401k but also contribute to my after tax which I later rollover to my Roth IRA. I also have ~16 years before I plan to retire.
Keep in mind that you’re over 50, you can make catchup contributions to both 401K and IRA.
Just make sure it is truly a Roth 401K option, and not just an After-tax option.
My employer offers before-tax, Roth, and after-tax. I max the Roth 401k but also contribute to my after tax which I later rollover to my Roth IRA. I also have ~16 years before I plan to retire.
Keep in mind that you’re over 50, you can make catchup contributions to both 401K and IRA.
Posted on 6/2/25 at 12:42 pm to jake wade
You have to estimate what your income sources will be in retirement and what your income tax rates will be. If you have enough money to go a couple of years with zero income (say you had a massive savings account you could live on for a few years), then you would be better off putting everything in the traditional 401K now and converting it to Roth when you retire, that way you could keep your Roth conversions in the 12% or lower FED bracket, whereas if you save in a Roth now will probably be paying 22% or 24% FED on that money.
On the other hand, if you have to use your IRA/401K early in retirement, or have a pension, that math won't work the same.
Short version: compare what you would pay on the Roth today compared to what you would pay on the same money withdrawn from traditional in retirement, keeping in mind you have plenty of time to do Roth conversions after you retire, but they will be most attractive before you are old enough for RMD.
Roth's have advantages beyond just the future tax savings, but you want to be careful to avoid paying 24% FED now to save 12% FED in retirement.
On the other hand, if you have to use your IRA/401K early in retirement, or have a pension, that math won't work the same.
Short version: compare what you would pay on the Roth today compared to what you would pay on the same money withdrawn from traditional in retirement, keeping in mind you have plenty of time to do Roth conversions after you retire, but they will be most attractive before you are old enough for RMD.
Roth's have advantages beyond just the future tax savings, but you want to be careful to avoid paying 24% FED now to save 12% FED in retirement.
Posted on 6/2/25 at 3:21 pm to CharlesUFarley
You all have been SUPER helpful.
Thank you very much!
Thank you very much!
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