401K questions

[BAM]

DH and I are trying to decide if doing the pre-tax 401K contributions actually makes sense for us.
 
We've been maxing his 401K for a couple years (didn't have it available before that). He does get a match for 6% of his income.
This seemed like a good idea until we started thinking about our taxes. Since we have 9 kids and a couple of those are in college, we don't pay any federal tax at this time. We do pay some state taxes on his income and, of course, we pay soc security and medicaid.
 
Would it make more sense to only contribute for the 6% match, have the rest come to us on the paycheck and invest that in ROTHs and other investments? Or keep doing what we've been doing and maxing the 401K?

Thanks!

[kendallf]

It's basically about current tax bracket vs. tax bracket when you withdraw the money.. and it's pretty hard to beat 0% currently.  Does your 401k offer a Roth 401k option, by chance?  That would be your best way to shield substantial amounts from future taxes.  Failing that, contribute to the match, fill up your Roth IRAs, and invest anything else you can in taxable accounts.  Pick tax efficient options for any taxable accounts; fortunately, index funds are usually among the most tax efficient funds.

[BAM]

That's what we were thinking. Just hard to wrap our brains around it when it's recommended to max the 401K.
Thank you!

[Steeze]

Definitely look into the Roth 401k option. Sounds like tax free in, tax free dividends, and tax free out. Win win win. I have a horrible 401k plan and it still offers Roth contributions.

[BAM]

Thanks.
My husband will talk to the finance guy on Monday about the Roth possibility.