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Message
Company suspended 401k match. Should I shift savings to ROTH until it returns?
Posted on 12/17/20 at 9:42 am
Posted on 12/17/20 at 9:42 am
This happened about 6 months ago so I really should have asked this then but the difference in my take home will only be something like $40 a month to shift my pre tax deductions from my 401k to max out my Roth. I’m not getting a match so I’d rather get this money taxed now and grow “tax free” for the next 40 years. I’m at the beginning of my career if that matters at all mid 20s.
5
Posted on 12/17/20 at 9:44 am to jlovel7
......and keep adding when the company resumes the 401
Posted on 12/17/20 at 9:53 am to jlovel7
You also could use this opportunity to knock out any debt assuming you have some.
Posted on 12/17/20 at 9:55 am to jlovel7
quote:This only matters if your taxes will be higher at time of withdrawal. You want to pay taxes in or out at a lower rate.
I’m not getting a match so I’d rather get this money taxed now and grow “tax free” for the next 40 years
Posted on 12/17/20 at 10:04 am to jlovel7
Piggybacking here. My new company 401k options suck badly.
Should I cut back to 8% for my free match and start a Roth IRA. Already have a little chunk in my old compays 401k that's doing well.
Should I cut back to 8% for my free match and start a Roth IRA. Already have a little chunk in my old compays 401k that's doing well.
Posted on 12/17/20 at 10:32 am to ReadyPlayer1
quote:
My new company 401k options suck badly. Should I cut back to 8% for my free match and start a Roth IRA.
I would. You'd be diversifying the tax implications, as well as being more in control of the investments. Also, in case of a real emergency, you'd have free access to your invested portion (but avoid that if at all possible).
Posted on 12/17/20 at 11:06 am to ReadyPlayer1
work for yourself and get out that problem.
This post was edited on 12/17/20 at 11:09 am
Posted on 12/17/20 at 11:14 am to Jag_Warrior
Ya it would have to be extremely bad for me to take money out. I like the deversifying part also. Appreciat the response !
Posted on 12/17/20 at 12:21 pm to ReadyPlayer1
Not sure of your financial situation or compensation, but I would recommend putting whatever % that will makeup the contribution limit each year. Next year max is unchanged from this year at $19,500.
Posted on 12/17/20 at 12:52 pm to jimbeam
quote:
This only matters if your taxes will be higher at time of withdrawal. You want to pay taxes in or out at a lower rate.
This is only only matters if you assume the tax rates will be the same now as they may be in 30 years.
Posted on 12/17/20 at 12:54 pm to ReadyPlayer1
You might max out your 401k contributions first for the tax reduction.
If you are allowed to take a deduction for a traditional IRA you could do that instead of a roth so you can afford to save more. If you are making too much money for deduction for the traditional then do the roth
If you are allowed to take a deduction for a traditional IRA you could do that instead of a roth so you can afford to save more. If you are making too much money for deduction for the traditional then do the roth
Posted on 12/17/20 at 1:08 pm to go ta hell ole miss
Do you know what they will be in 30 years?
Posted on 12/17/20 at 4:13 pm to jimbeam
quote:
Do you know what they will be in 30 years?
Of course not, but if I had to guess I would say they will be higher across the board. Pay now v. pay later is just not an easy analysis because of so many variables/unknowns.
Posted on 12/17/20 at 11:46 pm to jlovel7
How much are you putting aside if the difference is $40? Not trying to be a smartass just helping understand the amounts.
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