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Message
401k vs Roth 401k
Posted on 12/13/25 at 6:10 am
Posted on 12/13/25 at 6:10 am
The company I work for has never had a Roth option for 401k. Starting January 1st I will have the option to contribute to both. I do back door a Roth but got started a little late so after Jan 1st I’ll have $95,000 in my Roth. I’m the only one that has a Roth because my wife has an IRA so no Roth option available currently.
My wife and I both contribute to our 401k’s pre tax(I think she has a Roth option also). Right now I’ve got a 55/45 split between my 401k/IRA and brokerage accounts with the brokerage accounts being a little higher.
So do I split my contributions or just keep rolling into 401k?
I’m 44.
My wife and I both contribute to our 401k’s pre tax(I think she has a Roth option also). Right now I’ve got a 55/45 split between my 401k/IRA and brokerage accounts with the brokerage accounts being a little higher.
So do I split my contributions or just keep rolling into 401k?
I’m 44.
10
Posted on 12/13/25 at 6:15 am to Rize
Depends on if you think your taxes will be higher now or then.
Posted on 12/13/25 at 6:21 am to Bestbank Tiger
quote:
Depends on if you think your taxes will be higher now or then.
That’s the hard part. Right now I really enjoy my job and the freedom I have so feel like I could do this until I’m 59. If I work till I’m 59 it will probably be the same tax bracket I’m in now and higher once SS kicks in. If I leave at 55 it will be lower. That’s if everything works out accounting to plan
Posted on 12/13/25 at 6:27 am to Bestbank Tiger
One other thing is if I get my Roth contributions high enough in the next 11 to 15 years I may be able to draw that my first year or two and show little to no income. Could supplement out of my brokerage accounts to be low income for those years.
I’m also capped at 6% on contributions into my 401k because I’m considered an HCE and fall short of the 23,500 cap on contributions. I doubt it will happen but if they have no restrictions on the Roth side and I can contribute extra into the Roth side up $24,500 then it would be a no brainer, but I haven’t heard back on that yet.
I’m also capped at 6% on contributions into my 401k because I’m considered an HCE and fall short of the 23,500 cap on contributions. I doubt it will happen but if they have no restrictions on the Roth side and I can contribute extra into the Roth side up $24,500 then it would be a no brainer, but I haven’t heard back on that yet.
This post was edited on 12/13/25 at 6:37 am
Posted on 12/13/25 at 6:50 am to Bestbank Tiger
quote:
Depends on if you think your taxes will be higher now or then.
It also depends on whether you want to pass tax free money on to your kids.
Posted on 12/13/25 at 7:50 am to Rize
Roth, this is a no brainer.
Posted on 12/13/25 at 8:11 am to Skippy1013
Do the Roth. Your company match is likely non-Roth so you will have a good balance of both.
Posted on 12/13/25 at 8:21 am to Rize
Roth all day. Especially because as you get older, your income is likely to rise to the point where you'll be ineligible to contribute to a Roth anyway.
Posted on 12/13/25 at 8:47 am to LemmyLives
quote:
Roth all day. Especially because as you get older, your income is likely to rise to the point where you'll be ineligible to contribute to a Roth anyway.
Wife and I have both been capped for 12 plus years. I just back door one but didn’t realize there was that option until 7 years ago so missed out on a a few years. Heck 12 years ago I was only putting in 3% into my 401k
Got a promotion and upped my 401k and looked into other options but thought I couldn’t do a Roth. This post was edited on 12/13/25 at 8:49 am
Posted on 12/13/25 at 8:54 am to Skippy1013
quote:
Roth, this is a no brainer.
I’m thinking having my wife continue to contribute 4300 to HSA and $24,500 to 401k to reduce taxable income. If I go Roth my taxable income will raise by about 12.5 to 15k depending on the year.
Posted on 12/13/25 at 9:20 am to Rize
quote:
I’m thinking having my wife continue to contribute 4300 to HSA and $24,500 to 401k to reduce taxable income. If I go Roth my taxable income will raise by about 12.5 to 15k depending on the year.
Max HSA first. Nothing is better.
Posted on 12/13/25 at 9:20 am to Rize
A mix is best approach. It is good to have tax diversity options down the road. There are many variables that are hard to foresee and having options puts you in position to reduce future taxes. Future tax rates, future tax laws are unkowns. If you run into managing AMT in your good years, having both types of money can be important.
Posted on 12/13/25 at 9:46 am to Rize
You’re 44. Meaning you have time and the ability to take calculated risks. 401k is the last place I would ever invest my money.
Posted on 12/13/25 at 9:58 am to BigDaddy6612
quote:
You’re 44. Meaning you have time and the ability to take calculated risks. 401k is the last place I would ever invest my money.
I still invest my outside of my 401k and take advantage of the employer match.
Before-Tax
$13,655.66
Additional Contributions
$23,645.62
New Employer Match
$5,260.64
New ESOP
$204.80
New Profit Sharing
$18,180.18
All contributions
Total
$37,301.28
Here’s the breakdown of my 2023 contributions. The profit sharing always seems to be my biggest contribution.
I’m guessing my contributions would be roughly $24,000 into my 401k and the other $13,000 would go into the Roth. Some years it not as high on the contributions.
I also reinvest my dividends which is about $1700 per year. Not a lot but it helps.
This post was edited on 12/13/25 at 10:16 am
Posted on 12/13/25 at 10:01 am to Skippy1013
quote:
Roth, this is a no brainer.
Not really, imo. He’s 44, markets are near all-time highs. A decade long bear market is certainly possible in the near future, which would completely wipe out the benefit of ROTH investing.
Not arguing for or against, just pointing out it’s definitely not a no brainer. If he was 34, then yea, no brainer
Posted on 12/13/25 at 10:07 am to Rize
quote:
I still invest my outside of my 401k and take advantage of the employer match.
Agree. I was going to ask for clarification here. Sees like you’d always take advantage of the company match and pre-tax benefit.
Posted on 12/13/25 at 10:17 am to Rize
Depends on what your highest tax bracket is IMO. If you can avoid the 24% tax bracket by contributing to a traditional 401k then it might make sense. Do you think you be withdrawing that much money once retired and your cost of living is lower?
There is no easy answer. I was told for years to avoid future taxes but switched back to traditional this year because I can’t predict the future…but know what my tax liability is right now.
Also, I never got the wisdom in Roth conversions. Paying guaranteed taxes today at a high bracket for a perceived future benefit seems like a crap shoot.
There is no easy answer. I was told for years to avoid future taxes but switched back to traditional this year because I can’t predict the future…but know what my tax liability is right now.
Also, I never got the wisdom in Roth conversions. Paying guaranteed taxes today at a high bracket for a perceived future benefit seems like a crap shoot.
This post was edited on 12/13/25 at 10:22 am
Posted on 12/13/25 at 10:21 am to GeekedUp
quote:
Agree. I was going to ask for clarification here. Sees like you’d always take advantage of the company match and pre-tax benefit.
Being capped at 6% forced me to find other options to invest in which has helped a lot. This board has helped me with a couple big things:
Don’t keep a shite ton of money in checking and savings making nothing. After reading this board I finally opened a HYSA a couple years ago.
Don’t let my HYSA build up too high especially because my brokerage accounts were lacking. Started investing in funds and playing with a few stocks(suck at it) but it’s extra cash and I want to ride the highs and lows with y’all
Found out about the back door Roth here years ago so that was my first time investing outside of my 401k.
Posted on 12/13/25 at 10:26 am to Rize
For sure. I was referring to the poster who said 401k was the last place they’d invest. Seems odd.
This post was edited on 12/13/25 at 10:26 am
Posted on 12/13/25 at 10:27 am to SquatchDawg
quote:
Paying guaranteed taxes today at a high bracket for a perceived future benefit seems like a crap shoot.
Ding ding ding.
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