Author Topic: Wifes 401k limited to 11k but could do roth as well? Worth it?  (Read 742 times)

TheAnonOne

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Wifes 401k limited to 11k but could do roth as well? Worth it?
« on: December 15, 2016, 10:29:59 AM »
Hello!

Combined we make 200 to 220 so tax savings from the 401k traditional contributions are pretty important.

That being said, I max my 401k right at the 18k limit.

My wife on the otherhand makes 40 to 45k a year and her company limits the 401k deduction to 30% of her income. $470 twice a month.

This puts her at 11k and change and baring a company wide policy change, or a big raise she will be stuck at that level.

The company also has a roth 401k that allows an additional 30% contribution.

Thus the delema, is it worth trying to find a % to fill up the 7k left in her 401k for roth contributions? We already invest in vanguard as a taxable account and max our IRAs as well.

The additional cash, would go into a taxable account instead and not be spent on junk.

Thanks!

trammatic

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Re: Wifes 401k limited to 11k but could do roth as well? Worth it?
« Reply #1 on: December 16, 2016, 08:30:51 AM »
I don't see a problem with it, especially if you let it sit for a while.  The majority of FIers plan to keep their principle throughout retirement as basically a large emergency fund.  If you treat your roth earnings as your last spending bucket, then they can get especially valuable.  There are no minimum distributions after 71, and can be inheritable.  If you can keep it for a while, then contribute away!

NoStacheOhio

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Re: Wifes 401k limited to 11k but could do roth as well? Worth it?
« Reply #2 on: December 16, 2016, 09:09:28 AM »
Short of changing companies, there isn't really going to be a way around that limit. If it were me, I'd throw the remainder in Roth, because at least the growth is tax free.
The first step is acknowledging you have a problem, right?

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bender

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Re: Wifes 401k limited to 11k but could do roth as well? Worth it?
« Reply #3 on: December 16, 2016, 09:29:46 AM »
I agree - fill up the 7k roth 401k.  In addition, you should be doing 2x 5500 into backdoor roths as well before anything hits the taxable accounts.

Sibley

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Re: Wifes 401k limited to 11k but could do roth as well? Worth it?
« Reply #4 on: December 16, 2016, 09:33:26 AM »
Also, have your wife ask for the limitation to be removed/changed. It's not unreasonable.

seattlecyclone

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Re: Wifes 401k limited to 11k but could do roth as well? Worth it?
« Reply #5 on: December 16, 2016, 09:44:12 AM »
Roth is generally better than taxable.
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The Roth IRA was named after William Roth, who represented Delaware in the US senate from 1971-2001. "Roth" is a name, not an acronym. There's no need to capitalize the final three letters.