I want to keep contributing to my Roth as long as possible. I’ll be generous and consider the 401k … Traditional 401(k): Kate earns $100 which she contributes directly into her traditional 401(k) without paying any income taxes. Updated on August 10th, 2017 18. But when you withdraw money after you retire, you owe zero taxes on that money. Additionally, while not Roth related, you can make tax exempt contributions in addition to your Roth contributions to $55,000 per year (2018) to a pre-tax TSP account while deployed. ._3Qx5bBCG_O8wVZee9J-KyJ{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN{margin:0;padding:0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;margin:8px 0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ.QgBK4ECuqpeR2umRjYcP2{opacity:.4}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label{font-size:12px;font-weight:500;line-height:16px;display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label svg{fill:currentColor;height:20px;margin-right:4px;width:20px}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;padding:0;width:100%}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_ svg{display:inline-block;height:12px;width:12px}.isInButtons2020 ._4OtOUaGIjjp2cNJMUxme_{padding:0 12px}.isInButtons2020 ._1ra1vBLrjtHjhYDZ_gOy8F{font-family:Noto Sans,Arial,sans-serif;font-size:12px;font-weight:700;letter-spacing:unset;line-height:16px;text-transform:unset}._1ra1vBLrjtHjhYDZ_gOy8F{--textColor:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColorShaded80);font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;color:var(--textColor);fill:var(--textColor);opacity:1}._1ra1vBLrjtHjhYDZ_gOy8F._2UlgIO1LIFVpT30ItAtPfb{--textColor:var(--newRedditTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newRedditTheme-widgetColors-sidebarWidgetTextColorShaded80)}._1ra1vBLrjtHjhYDZ_gOy8F:active,._1ra1vBLrjtHjhYDZ_gOy8F:hover{color:var(--textColorHover);fill:var(--textColorHover)}._1ra1vBLrjtHjhYDZ_gOy8F:disabled,._1ra1vBLrjtHjhYDZ_gOy8F[data-disabled],._1ra1vBLrjtHjhYDZ_gOy8F[disabled]{opacity:.5;cursor:not-allowed} Would you rather pay extra taxes on your income when it's over $150k or extra taxes on your income when it's $40k? Roth IRA vs. traditional IRA vs. 401(k), Click here to see the full list. Not sure if this logic makes sense, but seems to me that if you are maxing a ROTH you are effectively saving more. Traditional vs. Roth IRA: Similarities. ._3Im6OD67aKo33nql4FpSp_{border:1px solid var(--newCommunityTheme-widgetColors-sidebarWidgetBorderColor);border-radius:5px 5px 4px 4px;overflow:visible;word-wrap:break-word;background-color:var(--newCommunityTheme-body);padding:12px}.lnK0-OzG7nLFydTWuXGcY{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;padding-bottom:4px;color:var(--newCommunityTheme-navIcon)} It's almost always better to go with a Roth. and I feel like I'm going in circles. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} So yeah, I’m going with a Roth. So you get no tax-break upfront as you would with a traditional 401(k) or IRA. I don't think so - those are close to the income limits (IRA deduction limit if you're covered by a retirement plan at work, and Roth … Roth IRA vs. traditional IRA vs. 401(k), Click here to see the full list. By using a Roth over traditional, with your income and marital status, every dollar in the Roth is being hit with a 32-35% tax, depending on where your income ends up falling in the range you listed. Since she will still be in the 24% tax bracket (most likely), I don't think there is a huge push for Traditional 401k, but it might still be good. Welcome. Reply. She needs to do the research and decide what is best for her. These large firms are known to provide reliable investment assistance at reasonable cost. I have done several articles in the past about the Roth vs Tax-deferred 401(k) contribution dilemma.If you haven't read any of them, you should start there before reading this article. Essentially, you don’t want ‘runaway investment balances’ in your traditional account, but are happy if it occurs in a Roth. I make about the same as your girlfriend and that’s exactly how I do it. When you invest in a Roth account, you pay with after-tax dollars. ._1zyZUfB30L-DDI98CCLJlQ{border:1px solid transparent;display:block;padding:0 16px;width:100%;border:1px solid var(--newCommunityTheme-body);border-radius:4px;box-sizing:border-box}._1zyZUfB30L-DDI98CCLJlQ:hover{background-color:var(--newCommunityTheme-primaryButtonTintedEighty)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:hover{color:var(--newCommunityTheme-bodyText);fill:var(--newCommunityTheme-bodyText)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active{background-color:var(--newCommunityTheme-primaryButtonShadedEighty)}._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{background-color:var(--newCommunityTheme-primaryButtonTintedFifty);color:rgba(var(--newCommunityTheme-bodyText),.5);fill:rgba(var(--newCommunityTheme-bodyText),.5);cursor:not-allowed}._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ:hover,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{border:1px solid var(--newCommunityTheme-body)}._1O2i-ToERP3a0i4GSL0QwU,._1uBzAtenMgErKev3G7oXru{display:block;fill:var(--newCommunityTheme-body);height:22px;width:22px}._1O2i-ToERP3a0i4GSL0QwU._2ilDLNSvkCHD3Cs9duy9Q_,._1uBzAtenMgErKev3G7oXru._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._2kBlhw4LJXNnk73IJcwWsT,._1kRJoT0CagEmHsFjl2VT4R{height:24px;padding:0;width:24px}._2kBlhw4LJXNnk73IJcwWsT._2ilDLNSvkCHD3Cs9duy9Q_,._1kRJoT0CagEmHsFjl2VT4R._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._3VgTjAJVNNV7jzlnwY-OFY{font-size:14px;line-height:32px;padding:0 16px}._3VgTjAJVNNV7jzlnwY-OFY,._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs{font-size:14px;line-height:32px;padding:0 16px}._2QmHYFeMADTpuXJtd36LQs,._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2QmHYFeMADTpuXJtd36LQs ._31L3r0EWsU0weoMZvEJcUA,._2QmHYFeMADTpuXJtd36LQs:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2QmHYFeMADTpuXJtd36LQs ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none}._2CLbCoThTVSANDpeJGlI6a{width:100%}._2CLbCoThTVSANDpeJGlI6a:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2CLbCoThTVSANDpeJGlI6a ._31L3r0EWsU0weoMZvEJcUA,._2CLbCoThTVSANDpeJGlI6a:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2CLbCoThTVSANDpeJGlI6a ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} Traditional contributions to a retirement account are tax-deductible when you make the contribution to the account, and taxed when withdrawn. I'm Mike Piper, the author of this blog. Traditional vs. Roth TSP Accounts. If it’s in a Roth, there’s no taxes. You could use that to max out a Trad IRA and then backdoor convert to Roth. It just saved you $300,000 out of every $1 million—give or take. I think the 5k from the traditional IRA fund really should be treated as the “last” 5k in the context of traditional vs Roth because if you had used a Roth you would only have 15k of taxable income rather than 20k with the other 5k coming from your Roth. Roth 401(k) vs. Roth IRA: What Are They? So the growth being tax-free by it being in a Roth TSP is excellent. The maximum contribution for 2019 is $19,000. I'm 28 now and want to start investing in it again. I would disagree with the assertion that the Roth v. traditional is the same in the end. A Testimonial: "A wonderful book that tells its readers, with simple logical explanations, our Boglehead Philosophy for successful investing." Driving Toyotas until they died. This community is a place for everybody from the curious to the experienced to discuss FI/RE. Cookies help us deliver our Services. Currently at around $160k NW. This is an outright benefit for Roths, compared to the traditional IRA that slowly self-liquidates from RMDs, forcing money into taxable accou… If you somehow end up with more than 150K taxable income in retirement...well, you have won the game a couple times over and you won't really regret having to pay tax on the 401k. Roth IRAs are a personal retirement planning vehicle that … ._2cHgYGbfV9EZMSThqLt2tx{margin-bottom:16px;border-radius:4px}._3Q7WCNdCi77r0_CKPoDSFY{width:75%;height:24px}._2wgLWvNKnhoJX3DUVT_3F-,._3Q7WCNdCi77r0_CKPoDSFY{background:var(--newCommunityTheme-field);background-size:200%;margin-bottom:16px;border-radius:4px}._2wgLWvNKnhoJX3DUVT_3F-{width:100%;height:46px} Plans to utilize a 4% withdrawal rate(adjusted annually for inflation) during retirement 8. I have a child starting college in the fall and I want my AGI to be as low as possible. More context: I save about 70% of my income and already max out my 401k (pre-tax historically), Roth IRA (barely under the income limits), and HSA. Savings/Investing accounts: 20% going into 401k (Roth currently) to max out, 10% going into company stock at 5% discount, $250 going into HSA monthly to max out, $235k rental property in FL with goal of getting one annually until FIRE; rest of the money will be invested into stock market. You fund Roth IRAs and Roth 401(k)s with after-tax dollars. Couple that with large growth in the stock market. If you go Trad 401k, you'd get that 32-35% back as part of your take home pay. BTW, read up on back door Roth IRA. Roth or Traditional Contributions in the 15% or 25% Tax Bracket . I have a higher income and max out 401k, HSA, Roth IRA, and contribute to a taxable account. I’m contributing the max to my TSP as well as $200/pp catch-up. Employers and employees both make contributions to … Roth contributions are not tax-deductible when you … Published: June 28, 2016 More in: TSP. baulrich May 30, 2014, 12:23 pm. At its core, FI/RE is about maximizing your savings rate (through less spending and/or higher income) to achieve FI and have the freedom to RE as fast as possible. Happily lives off of $1,400 per month ($16,800 per year) 5. .LalRrQILNjt65y-p-QlWH{fill:var(--newRedditTheme-actionIcon);height:18px;width:18px}.LalRrQILNjt65y-p-QlWH rect{stroke:var(--newRedditTheme-metaText)}._3J2-xIxxxP9ISzeLWCOUVc{height:18px}.FyLpt0kIWG1bTDWZ8HIL1{margin-top:4px}._2ntJEAiwKXBGvxrJiqxx_2,._1SqBC7PQ5dMOdF0MhPIkA8{height:24px;vertical-align:middle;width:24px}._1SqBC7PQ5dMOdF0MhPIkA8{-ms-flex-align:center;align-items:center;display:-ms-inline-flexbox;display:inline-flex;-ms-flex-direction:row;flex-direction:row;-ms-flex-pack:center;justify-content:center} The Roth 401(k) and the traditional 401(k) each offer a different type of tax advantage, and choosing the right plan is one of the biggest questions workers have about their 401(k). Traditional. It seems for people pursuing FIRE heavily, 401k makes most sense. Income will likely increase by 10-15% annually. https://thefinancebuff.com/case-against-roth-401k.html._3bX7W3J0lU78fp7cayvNxx{max-width:208px;text-align:center} 403(b) vs. Roth IRA: An Overview . Roth or Traditional 401k and IRA’s which is best? Your contributions are not tax-deductible for either a Roth 401(k) or a Roth IRA. I ended up splitting the difference with half Roth, half tax-deferred contributions in my 401K. I think we are somewhere in the middle, and will hedge our bets and put contributions into both. The net result is a slight benefit in favor of the Roth IRA, for the simple reason that it allows more dollars to stay inside their tax-preferenced wrapper. Layer opened. A Roth IRA is so good for estate planning that many people preferentially try to leave them to their heirs rather than any other assets. Plus, if you already have a 401k, having a Roth IRA gives you … Hi. Their appeal: A 401(k) plan offers a tax-advantaged way to save for retirement, making it easier for you to roll up some dough for the future. It was definitely frustrating as a teenager but in hindsight, the frugal choices they made not only taught me good spending habits but also meant we lived in a better school district than we could’ve otherwise afforded. .Rd5g7JmL4Fdk-aZi1-U_V{transition:all .1s linear 0s}._2TMXtA984ePtHXMkOpHNQm{font-size:16px;font-weight:500;line-height:20px;margin-bottom:4px}.CneW1mCG4WJXxJbZl5tzH{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._11ARF4IQO4h3HeKPpPg0xb{transition:all .1s linear 0s;display:none;fill:var(--newCommunityTheme-button);height:16px;width:16px;vertical-align:middle;margin-bottom:2px;margin-left:4px;cursor:pointer}._1I3N-uBrbZH-ywcmCnwv_B:hover ._11ARF4IQO4h3HeKPpPg0xb{display:inline-block}._2IvhQwkgv_7K0Q3R0695Cs{border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._2IvhQwkgv_7K0Q3R0695Cs:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B{transition:all .1s linear 0s;border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._1I3N-uBrbZH-ywcmCnwv_B:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B.IeceazVNz_gGZfKXub0ak,._1I3N-uBrbZH-ywcmCnwv_B:hover{border:1px solid var(--newCommunityTheme-button)}._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk{margin-top:25px;left:-9px}._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:focus-within,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:hover{transition:all .1s linear 0s;border:none;padding:8px 8px 0}._25yWxLGH4C6j26OKFx8kD5{display:inline}._2YsVWIEj0doZMxreeY6iDG{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-metaText);display:-ms-flexbox;display:flex;padding:4px 6px}._1hFCAcL4_gkyWN0KM96zgg{color:var(--newCommunityTheme-button);margin-right:8px;margin-left:auto;color:var(--newCommunityTheme-errorText)}._1hFCAcL4_gkyWN0KM96zgg,._1dF0IdghIrnqkJiUxfswxd{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._1dF0IdghIrnqkJiUxfswxd{color:var(--newCommunityTheme-button)}._3VGrhUu842I3acqBMCoSAq{font-weight:700;color:#ff4500;text-transform:uppercase;margin-right:4px}._3VGrhUu842I3acqBMCoSAq,.edyFgPHILhf5OLH2vk-tk{font-size:12px;line-height:16px}.edyFgPHILhf5OLH2vk-tk{font-weight:400;-ms-flex-preferred-size:100%;flex-basis:100%;margin-bottom:4px;color:var(--newCommunityTheme-metaText)}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX{margin-top:6px}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._3MAHaXXXXi9Xrmc_oMPTdP{margin-top:4px} Context: Gf makes approximately 140k a year (hourly pay so it may … A mega backdoor Roth lets people save as much as $37,500 in a Roth IRA or Roth 401(k) in 2020. Traditional calculators out there to crunch the numbers, if you’d like to see. That's a good reminder, thank you. That’s what you’re facing here. The Roth IRA is an interesting vehicle, “traditional” retirees should find it appealing at the low end of the income scale (because they’ll be in a lower tax bracket there then they’re hoping to be in retirement) … ROTH IRA VS 401K // Pros & cons of each, and how to choose one over the other. The most important consideration in the Roth vs Traditional 401(k) debate is your tax rate and how it will change when you retire. The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. This means they’re funded with money that comes out of your paycheck after taxes have been collected. Personally I'd much rather pay 8% tax instead of 32-35% tax on my income, and have that extra 32-35% invested and growing over the next 10+ years. Good information! I would tell her not to let her boyfriend make that decision for her because he could up and leave her tomorrow. ChillyCheese points it out. You guys are doing a lot of planning about being married and acting like you already are without any of the legal protections of actually being married. If you're under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you're required to keep track of the 5-year holding period for each conversion separately. She actually discovered FIRE first and introduced it to me. I know that’s pretty generic advice but I was actually talking about it with my mom today. I'm trying to figure out what would make the most sense between the two. Traditional 401k, no question. Our plan is when we retire to do the roth ira laddering. Next time you’re faced with an onslaught of questions, consult this script for the answers you need to help your employees make an informed decision. Apart from the differences outlined above, traditional IRAs and Roth IRAs share a range of common features. The most important consideration in the Roth vs Traditional 401(k) debate is your tax rate and how it will change when you retire. this is false, Roth 401k means you're accepting the tax % today, the contribution … ._1x9diBHPBP-hL1JiwUwJ5J{font-size:14px;font-weight:500;line-height:18px;color:#ff585b;padding-left:3px;padding-right:24px}._2B0OHMLKb9TXNdd9g5Ere-,._1xKxnscCn2PjBiXhorZef4{height:16px;padding-right:4px;vertical-align:top}._1LLqoNXrOsaIkMtOuTBmO5{height:20px;padding-right:8px;vertical-align:bottom}.QB2Yrr8uihZVRhvwrKuMS{height:18px;padding-right:8px;vertical-align:top}._3w_KK8BUvCMkCPWZVsZQn0{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-actionIcon)}._3w_KK8BUvCMkCPWZVsZQn0 ._1LLqoNXrOsaIkMtOuTBmO5,._3w_KK8BUvCMkCPWZVsZQn0 ._2B0OHMLKb9TXNdd9g5Ere-,._3w_KK8BUvCMkCPWZVsZQn0 ._1xKxnscCn2PjBiXhorZef4,._3w_KK8BUvCMkCPWZVsZQn0 .QB2Yrr8uihZVRhvwrKuMS{fill:var(--newCommunityTheme-actionIcon)} Unsure of what state I would FIRE. Like to hear some ideas on the matter. Just remember if you move to another state when you start doing withdrawals/Roth conversions, you could pay state income tax. Reply. In this … No matter what her income, she can always do that to contribute to Roth IRA. 403(b) vs. Roth IRA: An Overview . ROTH IRA VS 401K // Pros & cons of each, and how to choose one over the other. Regardless of which plan you choose, 401(k) plans have some things in common. Most importantly, remember that your contributions are made at your MARGINAL tax rate (i.e. Traditional 401(k): Study Finds a Clear Winner People end up saving at the same rate with both—giving the advantage to Roth . Both restrict how much you can contribute each year, allow you to invest your savings in a variety of assets, and come with tax advantages. Roth vs. Not saying I wouldn't do it, but that could change after a family comes along. .c_dVyWK3BXRxSN3ULLJ_t{border-radius:4px 4px 0 0;height:34px;left:0;position:absolute;right:0;top:0}._1OQL3FCA9BfgI57ghHHgV3{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:start;justify-content:flex-start;margin-top:32px}._1OQL3FCA9BfgI57ghHHgV3 ._33jgwegeMTJ-FJaaHMeOjV{border-radius:9001px;height:32px;width:32px}._1OQL3FCA9BfgI57ghHHgV3 ._1wQQNkVR4qNpQCzA19X4B6{height:16px;margin-left:8px;width:200px}._39IvqNe6cqNVXcMFxFWFxx{display:-ms-flexbox;display:flex;margin:12px 0}._39IvqNe6cqNVXcMFxFWFxx ._29TSdL_ZMpyzfQ_bfdcBSc{-ms-flex:1;flex:1}._39IvqNe6cqNVXcMFxFWFxx .JEV9fXVlt_7DgH-zLepBH{height:18px;width:50px}._39IvqNe6cqNVXcMFxFWFxx ._3YCOmnWpGeRBW_Psd5WMPR{height:12px;margin-top:4px;width:60px}._2iO5zt81CSiYhWRF9WylyN{height:18px;margin-bottom:4px}._2iO5zt81CSiYhWRF9WylyN._2E9u5XvlGwlpnzki78vasG{width:230px}._2iO5zt81CSiYhWRF9WylyN.fDElwzn43eJToKzSCkejE{width:100%}._2iO5zt81CSiYhWRF9WylyN._2kNB7LAYYqYdyS85f8pqfi{width:250px}._2iO5zt81CSiYhWRF9WylyN._1XmngqAPKZO_1lDBwcQrR7{width:120px}._3XbVvl-zJDbcDeEdSgxV4_{border-radius:4px;height:32px;margin-top:16px;width:100%}._2hgXdc8jVQaXYAXvnqEyED{animation:_3XkHjK4wMgxtjzC1TvoXrb 1.5s ease infinite;background:linear-gradient(90deg,var(--newCommunityTheme-field),var(--newCommunityTheme-inactive),var(--newCommunityTheme-field));background-size:200%}._1KWSZXqSM_BLhBzkPyJFGR{background-color:var(--newCommunityTheme-widgetColors-sidebarWidgetBackgroundColor);border-radius:4px;padding:12px;position:relative;width:auto} Your earnings grow tax-free, and qualified withdrawals are tax-free. If you are age 50 or over, the catch-up contribution is additional $6,000 in 2019. Both 403(b) plans and Roth IRAs are vehicles designated for use in retirement planning. - Taylor Larimore, author of The Bogleheads' Guide to Investing. And my parents FIRE’d in their mid-50s. Deciding which account to use is confusing to many residents. There are only four factors that impact the wealth outcome when choosing between a Roth or traditional IRA (or other retirement account). The lab rat for this experiment is a 30-year old single person who: 1. Roth vs. traditional IRA’s can be good choice for investors Whether a person chooses a Roth vs. traditional IRA, investors can sure that either retirement account will help increase wealth. What I’m proposing is that there is probably an optimum ratio of traditional vs. Roth accounts that is related to the ‘escape velocity’ I described. May 15, 2018 at 7:01 am . You are pretty much the prototypical high earner/early retiree for whom the 401k was designed. There are Roth vs. Plus the Traditional would still be better even with equal incomes. $18,500 in a ROTH is worth $18,500 while in a traditional it would be worth $18,500 … In my 401K I can actually divide up between Roth vs traditional contributions, so this question was an even bigger deal for me. Has no children and expects to live until 90 years old 2. Roth vs. If you guys want to FIRE, do that, but to so 100% separately. Unlike a Roth IRA, the traditional IRA has no income ceiling for contributions. Although everyone says that it depends on tax rates now vs retirement, please remember the other huge advantage of a Roth 401k. Traditional . This is a place for people who are or want to become Financially Independent (FI), which means not having to work for money. Save for retirement m mistaken, with … Roth vs traditional 401k and IRA ’ s no taxes 401k! 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