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Message
re: 401k vs Roth 401k
Posted on 12/13/25 at 11:05 am to BigDaddy6612
Posted on 12/13/25 at 11:05 am to BigDaddy6612
To all the downvotes, you must work a 9-5.
0
Posted on 12/13/25 at 11:10 am to Rize
I understand your play being that you’re not self employed and they match. You appear to have your shite together and decent bankroll, real estate is where the real returns lie with all the tax benefits. I guarantee you everyone that downvoted me has zero real estate investments. 401k is rainy day money. You can 10x your portfolio thru real estate. At the end of the day, it’s what matters to you and makes you happy.
Posted on 12/13/25 at 11:13 am to GeekedUp
Do you work a 9-5 or self employed? It’s only odd to someone that works for someone else.
Posted on 12/13/25 at 11:23 am to BigDaddy6612
quote:
I understand your play being that you’re not self employed and they match. You appear to have your shite together and decent bankroll, real estate is where the real returns lie with all the tax benefits. I guarantee you everyone that downvoted me has zero real estate investments. 401k is rainy day money. You can 10x your portfolio thru real estate. At the end of the day, it’s what matters to you and makes you happy.
I’ve got a lot of equity in my primary home and have part of a ranch that I may improve a sell at some point. My goal is to live here then sell and downsize somewhere further out at a cheaper price and pay cash.
Posted on 12/13/25 at 12:38 pm to Rize
Like I said you’re still young. No reason to pay cash for your home. Use that cash to buy multiple properties. Cash flow coming in like clock work. If you pay cash for a home and it’s more than 20-30% of your net worth is foolish. Your real estate investments will pay your mortgage and keep you cash strong to continue the cycle. 3-5 yrs and you’re on autopilot!
Posted on 12/13/25 at 1:32 pm to Rize
I'm a big believer in having both Traditional and Roth. One thing I haven't seen mentioned is that Roths are not subject to Required Minimum Distributions. Between Social Security and RMDs from our Traditional IRAs we have more than we need to live comfortably.
Let the Roths grow and know they are available in case of a severe emergency with no negative tax consequences.
Let the Roths grow and know they are available in case of a severe emergency with no negative tax consequences.
Posted on 12/13/25 at 2:51 pm to Rize
Traditional contributions save you at your top marginal rate today but on withdrawal it is taxed at your effective rate which could be much lower especially if little or no other taxable income source.
This post was edited on 12/13/25 at 3:43 pm
Posted on 12/13/25 at 2:58 pm to Rize
quote:
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.
Typically Roth is last thing you want to tap. Best left to grow tax free. Plus, better to draw down traditional first before SS stacked on top and taxed and before higher taxable income triggers IRMAA. May be a case for Roth first for ACA subsidies and zero LTCG rate etc but often not the optimal solution. As others have said having some of both gives you options to optimize tax strategies later but may not be worth paying high rate now.
Posted on 12/13/25 at 3:48 pm to TorchtheFlyingTiger
I’m in the 32% now and will probably be in the 24% once I retire. Once SS kicks in I’ll just withdraw less and let SS supplement the difference.
8% is a big difference.
8% is a big difference.
This post was edited on 12/13/25 at 3:49 pm
Posted on 12/13/25 at 6:10 pm to Rize
I contribute the max to my 401K (24,500) in 2026 but in 2027 I can up it to at least $32,500. I choose 401K instead of Roth 401K I want the tax breaks now to help keep my income levels in the 22% tax bracket since I file single
Max out my Roth in 2026 (7500) more in 2027 depending on a few things
Then I contribute $500 bi weekly to my taxable account into a core of funds.
I too got started late due to some unforeseen decisions but I’m playing catch up now.
Also own 200+ acres of land in 3 parishes
Max out my Roth in 2026 (7500) more in 2027 depending on a few things
Then I contribute $500 bi weekly to my taxable account into a core of funds.
I too got started late due to some unforeseen decisions but I’m playing catch up now.
Also own 200+ acres of land in 3 parishes
This post was edited on 12/13/25 at 6:14 pm
Posted on 12/13/25 at 6:26 pm to BigDaddy6612
quote:You seem to be ignoring the free money that is called a match.
401k is the last place I would ever invest my money.
Posted on 12/14/25 at 3:15 am to Rize
32% today 24% projected at retirement, sounds like traditional is probably the way to go. Plus, the effective tax rate on traditional withdrawals would be even lower unless you have other income sources filling the bottom brackets. Simply comparing current and future marginal rates often overlooks the benefit of filling lowest brackets with tax deferred traditional withdrawals.
If you want to build more in Roth as well for future tax optimization consider Roth conversions on spouse's trad IRA so she can backdoor. Or, better yet rollover into her current 401k if possible.
If you want to build more in Roth as well for future tax optimization consider Roth conversions on spouse's trad IRA so she can backdoor. Or, better yet rollover into her current 401k if possible.
Posted on 12/14/25 at 7:40 am to TorchtheFlyingTiger
quote:
32% today 24% projected at retirement, sounds like traditional is probably the way to go. Plus, the effective tax rate on traditional withdrawals would be even lower unless you have other income sources filling the bottom brackets. Simply comparing current and future marginal rates often overlooks the benefit of filling lowest brackets with tax deferred traditional withdrawals. If you want to build more in Roth as well for future tax optimization consider Roth conversions on spouse's trad IRA so she can backdoor. Or, better yet rollover into her current 401k if possible.
Yeah I wouldn’t covert because the taxes would be over $100,000 so it’s probably better to roll and start back dooring a Roth for her.
I say $100,000 but I’m not sure. If I did the roll over all at once, and I’m already in the 32% bracket, would it be on just the contributions or contributions plus gains?
Posted on 12/14/25 at 9:48 am to BigDaddy6612
quote:
I guarantee you everyone that downvoted me has zero real estate investments. 401k is rainy day money.
I have been in real estate for 20+ years and downvoted you. Your post was terrible advice.
Posted on 12/14/25 at 1:18 pm to Rize
quote:
If I did the roll over all at once, and I’m already in the 32% bracket, would it be on just the contributions or contributions plus gains?
If you convert trad IRA to Roth the entire conversion is taxable (you didn't pay tax on contributions so any growth is also taxable). Converting at 32% probably isnt a great idea (no different than the Roth 401k contributions you're considering tax wise). On other hand, rollover from IRA to 401k isnt a taxable event.
Posted on 12/14/25 at 1:52 pm to KWL85
How many income properties do you own? You’re in real estate in what capacity? Realtor or investor
Posted on 12/14/25 at 3:19 pm to BigDaddy6612
quote:
How many income properties do you own? You’re in real estate in what capacity? Realtor or investor
I only own a couple of rentals now, but have owned 10 or so. I dealt with rentals for 20+ years. I am an investor and prefer new construction. We buy land and building lots, hire builders, and hire realtors to sell them new. Have also owned commercial. Your advice was terrible. Investing in real estate is great, but advising that the OP should not have money in a retirement account is poor advice.
Posted on 12/14/25 at 3:49 pm to KWL85
I said that a 401k is the last place I’d invest. Any business owner would agree.
Posted on 12/14/25 at 4:29 pm to BigDaddy6612
Everyone should have a 401k or similar retirement account. Both traditional and roth. You sure have a strange outlook. I am a business owner and disagree with you. Why would owning a business affect this?
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