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Old 04-26-2016, 09:08 AM
 
2,189 posts, read 3,307,044 times
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Quote:
Originally Posted by cdelena View Post
I would only max the 401 to the extent of a match. Then as much as possible in a Roth.
I think it depends on your tax bracket. Roth is great for lower income folks, high income will want to max the 401k first. So there is a tipping point in between somewhere. Where that occurs is open to debate and probably depends on individual circumstances.
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Old 04-26-2016, 09:12 AM
 
106,238 posts, read 108,237,907 times
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high income may very well want that roth because so many surcharges , additional taxes and penalty's are linked to retirement income with more coming . tax bracket changes have become the smallest reason to do roths ..

medicare surcharges

a 20% capital gains rate

what you pay for medicare

getting social security tax

required minimum distributions

amt taxes

zero capital gains bracket

and the fact that at 70-1/2 all future gains are taxed on your rmd's if invested while the roth has none .
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Old 04-26-2016, 10:14 AM
 
2,189 posts, read 3,307,044 times
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AMT is a big reason for high income earners to max 401k before Roth. As you get into the higher tax brackets and start approaching AMT your 401k contributions are one of the most helpful things keeping you out.
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Old 04-26-2016, 10:55 AM
 
Location: SoCal
20,160 posts, read 12,713,073 times
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It's not always true to every case. Some of us don't care about Medicare part B. My tax bracket is low now that I'm retired, much lower than then when I was contributing. But I still have deductions through my mortgage/ high property taxes. That might have save my bacon, I guess I'm not in the group that pays off your mortgage before you retire crowd. My friend is in this crowd and she has been paying lots of taxes.
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Old 04-26-2016, 11:29 AM
 
17,817 posts, read 15,478,142 times
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I most likely will not have my mortgage paid off by the time I retire. I'd practically need to double the payments to achieve a payoff in 10 yrs. I make a couple extra payments per year, sometimes as many as 3, but that only takes off maybe 7 or 8 years on a 30 yr mortgage term
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Old 04-26-2016, 11:54 AM
 
Location: Boise, ID
8,046 posts, read 28,418,388 times
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I do:


Enough in a Roth 401k to get full company match (husband's only, my job doesn't have 401ks offered)
Enough to max 2 Roth IRAs (mine and husband)
Additional into Roth 401k up to however much we want to invest.


I'm in a low income, low COL area (we gross around $70k combined), so hubby would have to invest like 80% of his net income (Roth 401k, so it is net) to reach the government max, and I don't think he is allowed to do that by the company, even if we wanted to (although we technically could afford to, if we stopped funding the IRAs). So saying "max your 401k" just isn't going to happen for the majority of people across the country, even those who live drastically below their means.
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Old 04-26-2016, 12:24 PM
 
5,342 posts, read 6,149,423 times
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401k to match, HSA, Traditional IRA (if tax deductible) otherwise Roth IRA, back to 401k to max, brokerage
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Old 04-26-2016, 12:39 PM
 
Location: Houston
581 posts, read 612,924 times
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Similar to above, 401k to match for both wife and I, two backdoor Roths at beginning of year fully funded, max HSA, and then back to the 401k's. Also max a dependant care FSA to take a little bite off the massive daycare bill for two kids in Houston....
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Old 04-26-2016, 04:52 PM
 
17,817 posts, read 15,478,142 times
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Quote:
Originally Posted by Lacerta View Post
So saying "max your 401k" just isn't going to happen for the majority of people across the country, even those who live drastically below their means.
The advice is always "contribute as much as you can, and up to the maximum allowed if you can ($18K or $24K)" Obviously not everyone can contribute the maximum amount allowed by the IRS. However, many people over the age of 40 or 45 have worked long enough and gotten enough incremental increases in salaried positions, that they can eventually max out their yearly contributions. I'm not talking about getting up to that elusive $53K yearly amount -- I see that as the purview of high salaried folk (over $150K/yr). I don't put $53K into my 401K, but I do add monies into other brokerage accounts throughout the year in addition to my 401K investments.

As one gets older and is looking at a retirement horizon of 10 years or less, it's vital to maximize whenever you can and while you can. I'm in that horizon which is why I've become so focused on it. I wish I had been this focused 25 years ago.

Whatever a working adult can contribute, it can only be beneficial to them when they do eventually retire.

In my case I want and need the deferral of some of my pay, so I'll always add to pre-tax contributions and balance that with my need to build up my Roth.
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Old 04-26-2016, 05:16 PM
 
Location: Spain
12,722 posts, read 7,533,782 times
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Quote:
Originally Posted by NewbieHere View Post
My tax bracket is low now that I'm retired, much lower than then when I was contributing.
Yep. In our final year working our expenses were about 25% of our gross income. I anticipate 401k contribution dollars that would have been taxed at 28% to be taxed at 0% and 10% in retirement.
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