Roth vs. Traditional 401k: Which is right for me?

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  • #93036 Reply

      I’m a bit new to all this and I’m having difficulty deciding whether to contribute my 401k (up to match) to my traditional 401k or Roth 401k. Again I’m comparing those two specifically. Leave Roth IRA out bc I already plan to max that out lol.

      Could someone give examples of different retirement scenarios where the Roth would’ve made more sense and where the traditional would’ve made more sense? Like how do I attempt to figure out what tax bracket I’ll be in after retirement?

      I’m 31 and in the beginning of my career trajectory for context. Currently in the 22% bracket, see myself moving up as I move forward in my career.

      #93037 Reply

        It’s all about tax brackets now vs future. If you see yourself in a higher bracket later in your career or in retirement, then now is the time to do Roth contributions. If you foresee a lower income phase somewhere in the future due to career, education, retirement, etc. then conversions during that period might make sense.

        If you’re unsure, can you split your contributions 50/50 or change back and forth each year?

        #93038 Reply

          Roth. Traditional if you are in a high tax bracket 32+

          #93039 Reply

            Roth now.

            Give those tax free dollars as much time as possible to compound and grow.

            Your tax rate will likely go up later as well.

            Your employer match will always be pretax. As you near the next higher tax bracket, you can adjust some of your contributions into pretax in order to lower your taxable income back down firmly into the lower bracket.

            Consider browsing: Mega Backdoor Roth setup 34yo $150k+Bonus tax implications?

            #93040 Reply

              I’d probably do Roth based on the information given.

              #93041 Reply

                From what you have provided Roth is probably best, but no one knows the future. We are in a similar situation and do 50/50 Roth and Traditional 401k contributions for now.

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