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^^
Yes, the Roth 401k has most of the same withdrawal rules as a taxable 401k. In my estimation, most will want to do a rollover into a Roth IRA once they've separated employment. The main wrinkle with this is the 5-year aging rule...
The 5 yr rule is for withdrawals and not roll over. This is just one of the withdrawal rules while he could contribute post tax to a brokerage account without any of the retirement account rules.
Post tax contributions in employee sponsored accounts have no advantages other than matching contribution from the employer. Been there, done that, got the t-shirt
Quote:
Originally Posted by hikernut
^^
Yes, the Roth 401k has most of the same withdrawal rules as a taxable 401k. In my estimation, most will want to do a rollover into a Roth IRA once they've separated employment. The main wrinkle with this is the 5-year aging rule...
The 5 yr rule is for withdrawals and not roll over.
Yup.
Quote:
Originally Posted by 1ondoner
Post tax contributions in employee sponsored accounts have no advantages other than matching contribution from the employer. Been there, done that, got the t-shirt
The Roth may not have an advantage that you care about, but insisting there is no possible advantage for the OP is ridiculous.
I'm correcting the misinformation you are providing to the OP. I have no interest in whether OP contributes to a ROTH IRA or brokerage account.
Quote:
Originally Posted by hikernut
. Also, the Roth IRA does not have an RMD requirement, so you can leave as much or as little in that account as you wish, based on your own needs.
Quote:
Originally Posted by hikernut
In my estimation, most will want to do a rollover into a Roth IRA once they've separated employment. The main wrinkle with this is the 5-year aging rule...
Quote:
Originally Posted by hikernut
Yup.
The Roth may not have an advantage that you care about, but insisting there is no possible advantage for the OP is ridiculous.
What types of retirement plans require minimum distributions?
The RMD rules apply to all employer sponsored retirement plans, including
profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.
The RMD rules also apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive.
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Quote:
Originally Posted by 1ondoner
You've answered your own question.
...I max it(401k) out by the end of Summer. To continue receiving the company much I contribute post tax the minimum into a ROTH IRA. This way I get the company match that is usually spread out over 12 months.
That said, there is no advantage in contributing post tax dollars into a retirement account. You can do the same in a brokerage account where you will not be forced into retirement account rules such as RMD or early withdrawal penalties.
If you will have a lower tax rate when retired, then you can likely have a significant 401k (non-Roth), but do run the projected earnings and tax numbers through your whole life. (I had Fidelity do that for me (free) using eMoney, it indicated I had a risk of jumping from 12% to 26% tax rate post age 80 JUST due to RMD's) A large amount in taxable IRA (RMDs) can bump you into a very high tax bracket post age 80. Especially if you have used taxable tIRA or 401k for many years of contributions and earnings growth.
I determine my digestable tax bracket and try to get as much into my Roths as possible. (Thus, if able, I would max the Roth 401k to match company contributions.) and do Roth rolls in low earning years.
Roth is very flexible, so I pour my high growth stuff into Roths. I use my tIRA and 401k for my income producing investments, not growth. + your can pull out your Roth contributions for no tax (after 5 yrs). Basically an alternative Emergency Fund (hoping to never need that option, as then your potential earnings are lost on what you have to withdraw your principle from Roth).
I doubt tax rates will change significantly in your retirement, only go up, not down.
If you are benevolent, you can specifiy QCD for your RMD. (Charitable gifting)
I set up a DAF (donor Advised Fund) in my 30's for high tax yr charitable contributions that turn into lifetime gifting (per your specification). Worked very well for highly appreciated company stock and real estate deals. Now in retirement (no wage income since age 49), I can continue gfting to my charities. I finally ended up at Fidelity Charitable to handle that, very conveniently. The DAF was a superb tax planning tool during my earning yrs.
The 5 yr rule is for withdrawals and not roll over. This is just one of the withdrawal rules while he could contribute post tax to a brokerage account without any of the retirement account rules.
Post tax contributions in employee sponsored accounts have no advantages other than matching contribution from the employer. Been there, done that, got the t-shirt
There’s certainly an advantage in how much can be contributed when plans have after tax non Roth options. Most people know the limit of 20.5k which is employee pretax and Roth 401k total combined contributions, however with after tax non Roth you add those two buckets, employer matching and after tax non Roth to reach a total of 61k. I’ve done it the past few years and roll the after tax non Roth monies out after each contribution to my Roth IRA. That’s good for an additional 35-40k in Roth IRA contributions annually
It's also available as an app, at least for Apple products. I find the app easier to use. You might want to try both the app and the web version, if possible.
No calculator can accurately narrow this down as it can be 10-70 years or more before the math is played out. A more unconventional way of viewing it is despit your current tax rate diversifying at least part to post tax. 401k matching goes pretax so factor that into your current/future mix
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