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The Roth 401k is a work sponsored plan.
The Roth IRA is your own account.
-- both are after taxes
-- BUT there are different income -- and contribution limits
-- you can put a lot more in the work sponsored Roth 401k
(however depending on your income you'd be putting just as much in your own Roth anyway so the contribution limits may not be an issue)
-- AND company match, however, MUST go into the Trad 401k (so even if YOU put YOUR contributions into the Roth side of the 401k, you will end up with TWO kinds of balances in the Roth, both pre and post tax.
-- and of course work plan 401k investment options are more limited than, where you might choose to put your own Roth IRA
-- The Roth 401k is subject to 401k rules regarding, required minimum distributions (RMDs) at 70 1/2
-- YOUR Roth IRA, once the money is in there are no RMDs.
-- In any/either case Roth withdrawals don't count as income for MAGI (modified adjusted gross income) for federal tax purposes where as Trad 401k withdrawals DO count as income
The Roth 401k is a work sponsored plan.
The Roth IRA is your own account.
-- both are after taxes
-- BUT there are different income -- and contribution limits
-- you can put a lot more in the work sponsored Roth 401k
(however depending on your income you'd be putting just as much in your own Roth anyway so the contribution limits may not be an issue)
-- AND company match, however, MUST go into the Trad 401k (so even if YOU put YOUR contributions into the Roth side of the 401k, you will end up with TWO kinds of balances in the Roth, both pre and post tax.
-- and of course work plan 401k investment options are more limited than, where you might choose to put your own Roth IRA
-- The Roth 401k is subject to 401k rules regarding, required minimum distributions (RMDs) at 70 1/2
-- YOUR Roth IRA, once the money is in there are no RMDs.
-- In any/either case Roth withdrawals don't count as income for MAGI (modified adjusted gross income) for federal tax purposes where as Trad 401k withdrawals DO count as income
I don't really see where this should be an issue, if you are still working for the company sponsoring the plan it doesn't apply I don't think and if you are no longer working for the company you simply roll it over to a Roth IRA and avoid the issue
I don't really see where this should be an issue, if you are still working for the company sponsoring the plan it doesn't apply I don't think and if you are no longer working for the company you simply roll it over to a Roth IRA and avoid the issue
RMDs matter a lot when you're 70 1/2 and doing tax planning. For a lot of people with current tax law, they get nailed by the "tax torpedo" where their required minimum distribution from their tax-deferred savings makes their Social Security check taxable. It can also increase your means-tested Medicare premium. With the tax law in flux, it's hard to plan for it. It's pretty likely that having some Roth will help.
RMDs matter a lot when you're 70 1/2 and doing tax planning. For a lot of people with current tax law, they get nailed by the "tax torpedo" where their required minimum distribution from their tax-deferred savings makes their Social Security check taxable. It can also increase your means-tested Medicare premium. With the tax law in flux, it's hard to plan for it. It's pretty likely that having some Roth will help.
Try reading it again as I was discussing RMDs with Roth 401k so your entire post is off base
If you are already maxing the match and have money left over to invest, look into bumping up your HSA contributions, preferably to the max. HSA contributions made directly from payroll are not subject to payroll taxes or income taxes. Your HSA account may have investment options.
Good thinking. I planned to deposit $1700 by Nov 30th to my HSA since I do not have an HDHP beyond Nov 30th or Dec 30th. Not exactly sure when.
I just dump as much as I can into my 401k. Less that gets taxed the better imo.
my 401k has high fees which cannot be offset by the earnings of S&P500 and riskier stocks aren't an option. My HSA has no fees whatsoever and $$ grows. Just wanted to add that tidbit in case you have a high deductible health plan or didn't know it
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