Author Topic: Silly question  (Read 2363 times)

medinaj2160

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Silly question
« on: November 03, 2013, 08:37:36 AM »
My company offers a roth 401k and 401k. I currently contribute to my 401k. I wonder if I can contribute to both of them?

I plan on maxing out my 401k, my IRA but I have some money leftover to invest.

Thanks

arebelspy

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Re: Silly question
« Reply #1 on: November 03, 2013, 09:00:11 AM »
Your contribution limit remains the same, so you can dump it all in one or the other or split it, but not go above your contribution amount.

You may want to explore contributing some to both, many people would love to have access to a Roth 401k, and it gives you tax flexibility in the future.
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engineerjourney

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Re: Silly question
« Reply #2 on: November 03, 2013, 09:52:49 AM »
My company offers the same.  We currently do traditional 401K and Roth IRA.  We do this because my husband and I are making really good money and don't have children yet so around now is when we are making a lot of money and need the tax deduction of $17,500 each.  We don't expect to make this much money in retirement but we are still doing the $5,500 to Roth to hedge our bets.  We have thought about splitting up the 401K money to traditional and Roth but it doesnt seem worth it right now.  When we have kids we may shift some over to the Roth 401K since they will provide a tax credit as well.  Hopefully that makes sense. 

You can only contribute $17,500 to your 401K but depending on your situation it might make sense for you to split.  I don't know if your company is the same but if you contribute to both my company puts their match into the trad first and will only contribute to the Roth if you dont contribute enough to the trad to get the whole match. 

Zaga

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Re: Silly question
« Reply #3 on: November 03, 2013, 12:10:12 PM »
What's your tax bracket?  I have the same setup at my work and we can contribute to either one or a combination of both.  Since our taxes are high, we go for all traditional 401-K, but for other people that may not be the best answer.

medinaj2160

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Re: Silly question
« Reply #4 on: November 03, 2013, 01:38:49 PM »
What's your tax bracket?  I have the same setup at my work and we can contribute to either one or a combination of both.  Since our taxes are high, we go for all traditional 401-K, but for other people that may not be the best answer.

25% me and wife make 117K

Yeah I think that's what we are going to have to do to get in the 15% tax bracket.

Zaga

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Re: Silly question
« Reply #5 on: November 03, 2013, 02:41:43 PM »
What's your tax bracket?  I have the same setup at my work and we can contribute to either one or a combination of both.  Since our taxes are high, we go for all traditional 401-K, but for other people that may not be the best answer.

25% me and wife make 117K

Yeah I think that's what we are going to have to do to get in the 15% tax bracket.
Your income and tax bracket are very close to ours.  I wish I could get down to the 15% bracket!  Sadly it's just not possible with only 1 401-K right now.