Should I Change My Traditional 401k to a ROTH 401k

[kdk0425]

I am 34 years old and have been maxing out my 401k for about 8 years now. Our 401k provider now has the options of the ROTH 401k. I am in the 175-200k income range. It looks to me like going with the Roth will be a huge tax advantage for me even though I am foregoing the tax deductibility now. I just want to see what others are doing and make sure it is worth waving that tax advantage now so it can be tax free later... I am in no way an expert in this and appreciate all of you professionals that can help me

 

[xrac]

Personally I would do the Roth. Although you save takes now by doing the traditional 401K. In the long run you will be paying compound taxes plus you do not know what tax rates will be when you want to access the money.

 

[0b1kanobee]

Why not do both?

This way you are prepared either way. Best of both worlds.

 

[kdk0425]

I defintely will have BOTH ... because my 401k now is traditional style... and from here on would be in the ROTH structure... I think that is the way to go... I just think the tax situation is not going to be favorable for me in 20 or 30 years....

 

[Franz Kafka]

I defintely will have BOTH ... because my 401k now is traditional style... and from here on would be in the ROTH structure... I think that is the way to go... I just think the tax situation is not going to be favorable for me in 20 or 30 years....

You can accumulate half of your retirement money in taxable accounts and the other half in non-taxable accounts. This way you can decide your own tax bracket (when you retire) depending on the rule of the year. JMO

 

[kdk0425]

Franz... I never really thought of it that way... You half half in a taxable account and half in your Roth.... That way you can somewhat be in control of what tax bracket you would be in... that is a great advantage.... I currently have about 200k in the traditional (taxable) 401k... from here on out would you recommend putting my FULL contribution into the ROTH 401k or split it 50/50 between the traditional 401k and ROTH 401k??? thanks again for your time and help.

 

[0b1kanobee]

Franz... I never really thought of it that way... You half half in a taxable account and half in your Roth.... That way you can somewhat be in control of what tax bracket you would be in... that is a great advantage.... I currently have about 200k in the traditional (taxable) 401k... from here on out would you recommend putting my FULL contribution into the ROTH 401k or split it 50/50 between the traditional 401k and ROTH 401k??? thanks again for your time and help.

That is what I was trying to tell ya! geez lol
Start doing both now.....50/50 IMO

 

[kdk0425]

hey kanobee.. thanks.... why not set your own tax bracket... right??

 

[Franz Kafka]

Franz... I never really thought of it that way... You half half in a taxable account and half in your Roth.... That way you can somewhat be in control of what tax bracket you would be in... that is a great advantage.... I currently have about 200k in the traditional (taxable) 401k... from here on out would you recommend putting my FULL contribution into the ROTH 401k or split it 50/50 between the traditional 401k and ROTH 401k??? thanks again for your time and help.

If I were single and paid a lot of taxes I would max out the traditional 401K. The surrender value inside a WL can be part of the non-taxable income (and also protected in case of disability). JMO

 

[kdk0425]

Franz...I am single at the moment.... who knows for how long.... so you think put everything into the traditional 401k instead of the ROTH 401k??? What are your thoughts on that???