So, I've just started embracing Mustachianism and of course now I'm looking to get all of my retirement ducks in a row; the company I work for now pays ~ 57k/yr and offers a Roth 401k or traditional (2% company match), and I'm eligible to contribute to an IRA with my meager income. My question is this: should I opt for the Roth 401k or the Traditional, and should I be stacking my IRA dollars into a Roth or Traditional?
I've crunched the tax numbers, and I'll be paying about $5700 less in taxes by fully funding the Traditional tax-deferred plans, which is a cool $5700 that I can then also invest in a personal account. Needless to say, another $5700 to invest is VERY alluring, even though I know that I'll have to pay taxes to convert to Roth accounts later (because I plan on retiring well before 59.5) AND on the interest from my personal investment account.
On the other hand, fully funding the Roth counterparts eliminates that tax down the line and also has the added benefit of the already having matured to that sweet 5-year penalty free withdrawal of principal point, and the rollover of the 401k being trivial and tax free.
So, at the heart of this post is the question of whether or not that $5700 in tax savings in the taxable accounts is the better deal versus having a withdrawal ready, tax-free Roth system set up. Any advice here would be greatly appreciated!
How about splitting my contributions 50/50 between Roth and traditional?