401k

I was advised about 5 years ago to meet the minimum of the 401k, and then flood my Roth. The advisor told me that many of his clients cant really dig into the 401k without getting a huge tax hit. The Roth will allow for a larger sum upfront while living off of the 401k.

I'm putting 11% 401k and 15% Roth.

What age are you wanting to retire at?

Do you expect to have a higher income, lower income or the same income level when you retire?

Do you think in general that income tax rates will go up or down in the future?

Does your company provide a matching contribution? If so, the match portion would already be on a pretax basis, meaning you could still maintain a certain amount of tax diversification going forward even if you contribute 100% towards the Roth.

yes company matches up to 5%

For those that have switched or split between a regular 401k to a Roth 401k, have you seen a change in your take home pay and/or taxes at the end of the yr? I just started splitting this year but I’m hesitant to put more into the Roth until I see what it does to me come tax time next yr.

quote:

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For those that have switched or split between a regular 401k to a Roth 401k, have you seen a change in your take home pay and/or taxes at the end of the yr? I just started splitting this year but I’m hesitant to put more into the Roth until I see what it does to me come tax time next yr.

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That is easy to calculate. Use your highest marginal tax rate to do the calculation.

For example:
- $5,000 to 401k previously = zero taxes
- $2,500 to 401k = zero taxes
- $2,500 to roth 401k = $705 in taxes (assuming 22% marginal tax rate)

If you don't want your take home pay to change, reduce the Roth contribution so that your Roth + taxes = the amount you reduced the traditional by.

Be sure to get any match offered because some don’t match on the Roth side. Then put 50-100% toward Roth account.

Taxes will be higher than current rates at some point and will have ability to control you’re tax rate with Roth distributions