Traditional 401K or Roth 401K?

[Tradd]

My 401K has the option for traditional pre-tax plus Roth post tax contributions? Would it make sense to do some Roth contributions as well?

[iris lilies]

Tradd, I’m sorry you are not getting any responses to your question. I don’t know what’s best for you.

there are pros and cons, of course, but for me having a Roth grow and grow tax free at my advanced age and I don’t really need the money, well, that’s just nice. my other retirement account is a regular IRA and if I want to remove money for my own use, not for charitable purposes, I have to pay tax on it.

[Tybee]

Tradd, I know there are people wiser than me who have given this one a lot of thought. I have a couple of tiny Roth IRA's and a small Roth 401k in addition to traditional rollover IRA's. At one point Schwab told me not to convert the traditional because it wouldn't pay to do sobut the new guy says convert the traditional, but I can't make the numbers come out well to convert.

I would keep doing my regular 401k at work but add another amount to add to a Roth 401k. That's what I did--I think I put 20% of my paycheck in a regular 401k and another 5 in the Roth. But I am older than you by quite a bit and you have more years to grow the money, which argues for more in a Roth.

If your money is with say, Fidelity, check out the website and see what they say, and call them up, whoever has the money. Call them up and ask for an opinion and let them tell you why what they say is better than the alternative.

[Tradd]

Thanks, Tybee. I’m not going to convert. I’m just wondering about contributing at all to the Roth option in work 401K. Seems like a mix of both would be good. I definitely need the tax advantages of traditional 401K contributions right now.

[Tybee]

Thanks, Tybee. I’m not going to convert. I’m just wondering about contributing at all to the Roth option in work 401K. Seems like a mix of both would be good. I definitely need the tax advantages of traditional 401K contributions right now.

Yes, like you, I decided to have both, that there were probably advantages to that while in retirement.

[happystuff]

I actually have both. Had one through an old job and another from a different job. In the past, if I made a contribution, it was into the post-tax one.

[jp1]

I’m not an expert but off the top of my head it seems like there are two scenarios where one would want to do the Roth 401k. First, young people whose savings will be growing a lot over time. Take a modest tax hit up front and then get a large tax free windfall when you remove the money. Second, people who earn lower incomes and aren’t in a high tax bracket. I suppose a potential third case would be people currently in a no income tax state who are thinking of retiring to an income tax state. Another benefit, at least for Roth IRAs (not sure about 401ks) is that you can take out the original amount without penalty. Before
59.5 age.