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Started By
Message
401K or Roth IRA
Posted on 7/15/24 at 2:34 pm
Posted on 7/15/24 at 2:34 pm
Started a new job and trying to decide how I’d rather invest mine and my company match (5%)
It’s through fidelity if that matters. Thanks for the advice. Since I’m 47 I’m going to be aggressive
I am in a higher tax bracket
Here are my investment options
It’s through fidelity if that matters. Thanks for the advice. Since I’m 47 I’m going to be aggressive
I am in a higher tax bracket
Here are my investment options
This post was edited on 7/15/24 at 2:44 pm
8
Posted on 7/15/24 at 2:38 pm to bulldog95
Tax rates can change.
So I’d probably max the pretax plan or at least fund it to get the max match.
So I’d probably max the pretax plan or at least fund it to get the max match.
Posted on 7/15/24 at 2:50 pm to bulldog95
if you are in a higher tax bracket you max out both.
Posted on 7/16/24 at 10:47 am to bulldog95
I have done a 50/50 split in my company's Traditional 401k and Roth 401k options and haven't looked back. Got tired of trying to predict whether I would be better off paying taxes now or later so now I pay half now with the Roth and I'll pay half later with the Traditional.
Posted on 7/16/24 at 5:52 pm to bulldog95
Try to get as much Roth money as you can.....
Posted on 7/16/24 at 7:31 pm to elposter
quote:
have done a 50/50 split in my company's Traditional 401k and Roth 401k options and haven't looked back. Got tired of trying to predict whether I would be better off paying taxes now or later so now I pay half now with the Roth and I'll pay half later with the Traditional
This is my plan to. Right now I’m contributing 15% with 5% company match. Next year gonna up it to 25% with 5% company match.
Posted on 7/16/24 at 7:34 pm to TigerDoug
quote:
Try to get as much Roth money as you can.....
The OP said he was in a higher tax bracket. For a lot of people, maybe even most, they will be in a lower tax bracket in retirement. In that case, they may be better off to use a traditional 401K or IRA, because they save a higher tax rate now, but pay a lower tax rate later.
In retirement, for a married couple, under today's tax laws, pretty much the first $100K is in the 12% federal tax bracket. It doesn't make sense to pay 24% now to save it in a Roth just to avoid paying 12% later.
Roth's are very useful for a lot of things in addition to tax benefits, and it is a good idea to save some in a Roth, but the tax benefits are not one size fits all.
Posted on 7/17/24 at 8:00 am to CharlesUFarley
quote:
In retirement, for a married couple, under today's tax laws, pretty much the first $100K is in the 12% federal tax bracket. It doesn't make sense to pay 24% now to save it in a Roth just to avoid paying 12% later.
And that 12% is the marginal rate. The effective tax rate on that $100k in retirement is probably closer to 8-9% but it has been a while since I did that calc.
I am in this situation. My retirement plan is just to ride the maximum of the 12% bracket. Right now that is around $100k/yr which is definitely enough for us. Every dollar I'd invest in Roth right now would be 24% just in federal taxes. That doesn't even count state and other taxes. If I move to an income tax free state in retirement, I'll never pay state income taxes on that retirement money.
This post was edited on 7/17/24 at 8:01 am
Posted on 7/17/24 at 12:01 pm to bulldog95
You didn't mention it but since you said you're starting a new job, I thought I'd mention it.
If you have a high deductible HSA plan as an option for your health insurance, be sure and give that a look. Depending on your family's health situation and your company's HSA contributions, those can be one of your best investment options.
If you have a high deductible HSA plan as an option for your health insurance, be sure and give that a look. Depending on your family's health situation and your company's HSA contributions, those can be one of your best investment options.
Posted on 7/17/24 at 1:56 pm to notsince98
quote:
if you are in a higher tax bracket you max out both.
This is quite literally the opposite of what most people should do.
Posted on 7/17/24 at 1:59 pm to bulldog95
Take advantage of the company match then Roth
Posted on 7/17/24 at 2:45 pm to FinleyStreet
quote:
This is quite literally the opposite of what most people should do.
So most people should not save anything? Bold move, Cotton.
Posted on 7/17/24 at 2:56 pm to bulldog95
I can't read your options but my company 401k is with Fidelity. If you have the option for Fidelity Advisor Growth Opportunities Fund Class I (FAGCX) that's what I'm in and since I started in January 2023 it is up 32%.
This post was edited on 7/17/24 at 2:58 pm
Posted on 7/17/24 at 4:18 pm to notsince98
My bad I thought you typed "roth" when you typed "both."
Although I would still disagree with maxing out Roth while in a high tax bracket.
Although I would still disagree with maxing out Roth while in a high tax bracket.
Posted on 7/17/24 at 4:58 pm to bulldog95
quote:
I am in a higher tax bracket
taco bell doin work
Posted on 7/17/24 at 5:30 pm to Champs
quote:
taco bell doin work
LOL glad some folks still got humor
Posted on 7/17/24 at 5:35 pm to Phate
quote:
can't read your options but my company 401k is with Fidelity. If you have the option for Fidelity Advisor Growth Opportunities Fund Class I (FAGCX) that's what I'm in and since I started in January 2023 it is up 32%.
Here’s a better pic
Posted on 7/17/24 at 9:01 pm to bulldog95
You should be putting all of your input into the Roth 401k, you will pay taxes now, but as the tax rate only increases in time, you won't be paying whatever that rate is in the future.
Your match will be put into a traditional and you will be responsible for taxes on that on the back end anyway.
Roth also has other benefits, especially once you have been putting paying into it for over 5 yrs.
Your match will be put into a traditional and you will be responsible for taxes on that on the back end anyway.
Roth also has other benefits, especially once you have been putting paying into it for over 5 yrs.
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