Author Topic: Roth or max out 401k first?  (Read 1406 times)

Jules13

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Roth or max out 401k first?
« on: March 29, 2014, 12:56:41 PM »
I always thought that one should fully invest/max out a Roth before maxing out 401k, but I have seen other do differently.  We max out Roth IRAs for both myself and husband, but we are not fully investing in the 401k.  We contribute 10% with a 6% match.  I don't know the exact amount off hand, but I'm think it's around $9000/yr, not including the match.

Thoughts? 

mcneally

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Re: Roth or max out 401k first?
« Reply #1 on: March 29, 2014, 01:27:40 PM »
Depends how much you make now, how much you will make (spend) in retirement and how you expect tax laws/ brackets to change. Most people in this crowd will do better with traditional accounts that Roth. If you only spend $29k in retirement, it will cost you $1k in taxes to convert $30k on a joint return (at today's rates). If you added that $30k to you're income today (because you made a Roth contribution rather than traditional), you'd pay $4,500 (15% bracket), $7,500 (25% bracket) etc.

Eric

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Jules13

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Re: Roth or max out 401k first?
« Reply #3 on: March 29, 2014, 03:59:22 PM »
Thanks.  Will check that link out and try to decipher that math.