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401K questions
Posted on 4/3/19 at 6:47 pm
Posted on 4/3/19 at 6:47 pm
1. My company matches 3% of my 6%. Should I put more than 6% in my 401k?
2. Should I put my 401k contributions in Roth or not?
2. Should I put my 401k contributions in Roth or not?
7
Posted on 4/3/19 at 7:26 pm to bleedpg
Put in 6% to get the company match, then max out Roth IRAs, then if you have more money available put it into the 401K.
Posted on 4/3/19 at 7:55 pm to bleedpg
1. Max company match next fund Roth IRA then fund 401k up to max.
2. If you're in a relatively low tax bracket and expect to be in higher one at retirement then fund Roth 401k. If in a higher tax bracket you may prefer to use traditional 401k contributions to reduce taxable income now.
That's very generic advice. Best strategy depends on your specific situation and retirement plans. For instance, if you're aiming for early retirement you may want to put more in taxable investments to take advantage of low or zero long term capital gains rates.
2. If you're in a relatively low tax bracket and expect to be in higher one at retirement then fund Roth 401k. If in a higher tax bracket you may prefer to use traditional 401k contributions to reduce taxable income now.
That's very generic advice. Best strategy depends on your specific situation and retirement plans. For instance, if you're aiming for early retirement you may want to put more in taxable investments to take advantage of low or zero long term capital gains rates.
This post was edited on 4/3/19 at 8:46 pm
Posted on 4/3/19 at 7:58 pm to bleedpg
quote:
1. My company matches 3% of my 6%. Should I put more than 6% in my 401k?
2. Should I put my 401k contributions in Roth or not?
I believe it is still the case that the company match can't be in the Roth401K, has to be in the traditional 401K.
Posted on 4/3/19 at 9:14 pm to TigerintheNO
You can choose to contribute to Roth or traditional. Either way the company match will go into traditional. So that shouldn't change your decision.
Posted on 4/3/19 at 9:36 pm to bleedpg
Are you in debt still?
Posted on 4/4/19 at 1:27 am to gobuxgo5
When people are talking about maxing out 401k. Isn't that like 1500 a month going into retirement? Think the max for most companies is like 19,000 a year.
Posted on 4/4/19 at 7:32 am to bluewing
I figured it was 56k between employee and company
Posted on 4/4/19 at 9:23 am to bleedpg
quote:
1. My company matches 3% of my 6%. Should I put more than 6% in my 401k?
2. Should I put my 401k contributions in Roth or not?
Good luck on your learning quest. At least you are thinking about it.....
1) You should definitely save more than 6%. I personally think 15% of "your" money (don't consider matching in that) toward retirement starting out of college is the sweet spot for most. I would say after your 6%, put the next $6k in an IRA. Then if you still haven't hit 15% savings, put the rest in the 401k until you get to 15% savings rate of your money.
2) Verify the details of your employer match. Sometimes employers will only match what you put in a traditional 401k and not what you put in the Roth side of the 401k. If they will match the Roth side then great. Whether to prioritize Roth over traditional varies based on each individual's situation. If you don't want to go through the full analysis to figure out what you think is best for you, going 50/50 between traditional and roth is a nice way to hedge bets.
Posted on 4/4/19 at 10:00 am to TorchtheFlyingTiger
quote:
You can choose to contribute to Roth or traditional. Either way the company match will go into traditional. So that shouldn't change your decision.
my wife's company will only match the % in the traditional
Posted on 4/4/19 at 5:36 pm to EA6B
quote:
Put in 6% to get the company match, then max out Roth IRAs, then if you have more money available put it into the 401K.
I'm trying to figure out why this post got four downvotes.
No more personal/income information than the OP provided, I agree with you EA6B. If he has access to an HSA (especially if there's a match arrangement attached to that too), I'd probably put that one place ahead of the 401K top-off.
Posted on 4/4/19 at 6:31 pm to bleedpg
The max 401K contribution for 2019 is $19,000. If you are 50+ you can add an additional $6K.
Always good to put in as much as you can afford cash flow wise. It's pre-tax so lowers your tax basis. If you are close to a tax rate break, doing it can put you in the lower bracket.
Always good to put in as much as you can afford cash flow wise. It's pre-tax so lowers your tax basis. If you are close to a tax rate break, doing it can put you in the lower bracket.
Posted on 4/4/19 at 8:49 pm to bleedpg
I contribute 401k to match, put 6k in Roth then contribute again to 401k until 19k limit then anything left to taxable accounts if it's a good year.
Posted on 4/4/19 at 11:04 pm to Jag_Warrior
quote:Agreed. 401k to match, Roth IRA, HSA, and then I would decide between how much else to add to the 401k vs a brockerage account. Personally I would rather have access to that money if needed instead of a place I can’t touch without penalty until I’m retired.
If he has access to an HSA (especially if there's a match arrangement attached to that too), I'd probably put that one place ahead of the 401K top-off.
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