Roth 401k

Agree, buy low and build wealth!

Poster above hits it (limit is limit, tax timing)

Some light context:

Your future 72yo self will thank you for the Roth (ex, basis today’s laws, won’t have required minimum distributions (forced to withdraw to trigger taxes for all the years sheltered from taxes in traditional 401k)) on Roth balance. Your traditional 401k will have RMDs.

Your future 65yo self (ex retirement age) will thank you for traditional 401k, that grew tax-free (bigger and faster) than if you used after-tax contribution like that of Roth 401k. And your present self paid less income tax each year that you invested in traditional 401k. When you use at 65, generally you will have lower tax rate in retirement Han you do now.

I was all in to traditional 401k for these tax reasons. I am blessed to be able to do back door Roths to supplement.

Good luck!

The United States has $30 trillion in debt and social security is nearly broke, I don't see taxes going down in the future.

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married, it’s a $196,000 income max for Roth right?

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For a Roth IRA. 401k roth or traditional has no income limit.

And it's $214k max for married in 2022 roth ira. It starts phasing out at $204k butcan still contribute some up to $214k income.

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Should I be switching to my Roth 401k option instead?

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A very big consideration, at least under current law, is that you don't have to take any Required Minimum Distributions from a Roth. In my situation that is a important.

I agree with a previous poster that said it is good to have both.

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Should I be switching to my Roth 401k option instead? A very big consideration, at least under current law, is that you don't have to take any Required Minimum Distributions from a Roth. In my situation that is a important.

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Roth IRAs don’t have RMDs, however Roth 401Ks are subject to the same RMD requirements that traditional 401Ks are.

Roth 401(k) accounts are subject to the same required minimum distribution (RMD) rules that apply to traditional 401(k) accounts.

Roth IRA’s have no RMD requirements.

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If married, it’s a $196,000 income max for Roth right?

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You start to phase out of contributions to a Roth IRA there.


But you can contribute to a traditional IRA. You won’t be eligible for a deduction on that money since you’re covered by a qualified pension (your 401k).
You may contribute the maximum allowed to a traditional IRA ($6,000 for 2022 for the young crowd, and an additional $6,000 for a spousal IRA, regardless of whether they have an income- different rule than for a 401k here).
You can then take that money that you didn’t get a deduction for and do one of two things:
1) Let it grow with basis
2) convert some or all (please don’t do just some of it) into Roth


It gets screwy if you have any other account ending in “IRA” (SEP, SIMPLE, or a big traditional)- you’ll lose a fair amount of the benefit while gaining a roughly similar amount of headache if you aren’t willing/able to convert all of it and pay the associated tax bill if you have one of these other accounts.
Fun scenario: let’s say you do have $100,000 in a traditional/SEP/SIMPLE IRA that is tax deferred but you want to start making Roth contributions “through the back door” as above, but you don’t want to be subject to the pro rata rule in retirement but can’t afford taxes on $100,000 of additional income. You can:
1) apply for an EIN
2) make some income by taking online surveys, cutting your neighbors’ yard for $20, nude modeling, etc
3) file a tax return for the business
4) open a solo 401k for the business that has $10 of book income. Make sure you do it at a brokerage that allows 401k rollovers
5) roll the old tax-deferred IRA into this account
6) do the above backdoor Roth contribution strategy.




Rules are fun.

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open a solo 401k for the business that has $10 of book income. Make sure you do it at a brokerage that allows 401k rollovers

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Which national brokerages (if any) are you partial to? Fees and service experience?

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I’m projected to have like $12k/mth in social security in future dollar terms,

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How does one make this calculation?