Yup. I started my 401k in 1987 three months before Black Monday. When they gathered all of us new hires to explain all of our benefits back then I asked that 401k representative what happens over 30 years from now and did not like what I heard. Fortunately we had aftertax as well as pretax so I maxed out aftertax and when the Roth was included I maxed that out as well. Not only did I max it out but also contributed up to more than $45k each year. Not many people can say they have over 1.4 million in a Roth.
Yeah putting money in like that when the market is down is dumb. I'm about the same age as you. I haven't really followed the market since it's a scam. I'll bet the dow is around 2000 now. I'm so glad I bought that cd.
I bought Facebook, Microsoft, Apple, Google, Adobe, Alteryx, Wells Fargo, Twitter. TRUST THE PROCESS. The stock market goes up in the long term because it takes 2 steps forward for every 1 step backward. Cash is trash, it loses to inflation.
Yup, my priority is very similar. Since I have kids, mine goes 401k match, max HSA, Roth, 529 (up to what we think would pay for state university when they turn 18), then back to max 401k.
I do 15% (including match) to my 401k, max IRA, then the rest into brokerage. I want to retire early, perhaps 50-52, and it'll be a reasonable bridge method.
Taking a similar approach, growing my 401k until the growth without further investment will take care of my basic needs. Looking at a retirement growth calculator - maxing out a 401k every year with even modest growth will leave you with a very very comfortable monthly distribution (except maybe HCOL areas) With the max 401k limits this should take ~4 years. There are probably some more ideal scenarios of splitting between the two earlier on may give a ROTH 401K more time to grow before needing withdrawals
I max out 401k, Roth IRA, HSA, taxable brokerage account, 529, figure out taxes later. Uncle Sam taxes a lot now and will tax a lot in the future just concentrate on earnings and maximizing your growth
Great video. My 401K also allows you to convert your pretax company match dollars into Roth. This is kinda cool because it allows you to pick how much you want to convert each year. My pension income will be taxed in retirement, which also makes Roth now more appealing.
I am happy my company matches and provides a Roth 401k along with a traditional 401k contribution options to contribute so I have a healthy mix so planing can work around what needs to be done later on. I am doing some catch-up right now since my prior job paid so little that contributing to the 401k was mediocre at best. I hope SS still exist or be at a level I could use when I retire hahah! Great Video!
I'm 70 and Dustin has it completely right! I switched to contributing to a Roth IRA starting in 1998. I have some IRA, which is ok. 2/3 of my money is in non-retirement accounts. Great possibilities for "modulating my taxes" by pulling from various buckets. My RMD will be quite mild and manageable and until that time, it is Roth Conversions each year. I don't expect to ever spend my Roth. My errors can inherit that.
Good move. Same general plan here. Heirs inherit Roth IRA tax free, and taxable account at stepped up basis. I'm converting Trad IRA to Roth in increments to lessen the taxes form RMDs and inheritance.
@@freddieh5539 Cool. I use the tax estimator at dinkytown . net along with spreadsheets. I increment the Roth Conversion or capital gains to come up with the best plan. I don't mind paying extra taxes now as my brackets are lower compared to who gets my stash.
My job allows us to buy in to both a 401k and Roth 401k. Had no idea what I was doing but I had to double check 😂 so altogether is 12% contributing. Had no idea what's Roth 401k. Now I'm glad I accidentally did both lol.
ROTH 401Ks are pretty popular now. Depending on your salary level one may be better than another for reducing taxes (video idea?). One kid is doing Trad 401K and another is doing ROTH 401K. Both doing ROTH IRAs.
Generally only a good idea if your income is low. If you make 80k but only plan to use 40k a year in retirement, the traditional 401k is going to be better since you're in a higher tax bracket
Doing both is the best option for most. What is your current tax bracket, and what bracket do you expect at retirement. Right now, contributing to that 401K could easily drop you from 22% to 12% for ALL your income. That is worth doing. And if you retire at 55 (and before SS), your 401K can be used and likely would only be taxed at 12% with no SS to consider. My taxes in retirement plummeted, so having tax deferred money for it is great.
I would contribute up to 22 percent in regular 457b and 22 percent in the Roth 457 b and then max out my the HSA then max out the Roth IRA account....then put the rest into my savings account and brokerage account
If you haven't already, you should do a more detailed video on provisional income. Learned about it from The Power of Zero book, and was the reason I did a ROTH conversion the past few years to take advantage of a 12% tax bracket. You can illustrate where annual 24k social security and polling out annually 12,399 from 401k to remain below standard deduction. Results in no taxes owed.
It is a government obligation. It is a benefit you paid for, along with Medicare. The Feds (the Chump excluded) know better than to mess with it. Who wants a hundred million senior citizens marching on their offices in a Geritol stupor armed with clubs, torches, and walking frames?
@@5610winston the way things are going those funds will run out sooner rather than later. It's not a matter of them messing with it, it will be depleted.
I clicked on to see if you were going to say one reason is to make sure you max out the HSA first. Dang, oh well, I am still doing that plan. Great Vanguard funds on the investment side of my HSA plan.
I'm 53 and have created a large tax bomb in my 401K. I've started contributing 13% of my income to Roth 401K and I still have 10% going into the regular 401K with a 7% match. I plan on retiring about 58-59 with about 56K pension income between my wife and I. Would I be better off buying my wife and myself Roth outside my 401 only taking the 7% match?
@trufiend138 We contributed to our pre tax 401K's at the federal max and have for years. I don't know what our effective tax rate was, but I don't think we paid anything at more than 22% because of pre tax contributions. A tax bomb means that we be paying a lot in taxes when we get to RMD age for money we probably won't need. It seems that accountants want the tax break now, and financial planners want it in retirement. My wife is a school administrator. I'm in energy.
If your combined retirement income is a dollar over the 25K threshold, does ALL of the social security portion of your retirement income become partially taxable?
Wouldn’t it be best to max out your 401(k), even if no employer match, for the tax deduction, and later you can roll it over to a Traditional IRA and set up a Roth IRA conversion ladder or similar? (Converting the appropriate amount each year so as to minimize your tax bracket)
Only if you max out your private Roth IRA and your spouse's Roth if you are eligible for a Roth based on your income. Then if you have the ability to max out your 401K contributions and the backdoor conversion still exists (they keep threatening to remove it) then you could do so. The biggest mistake people contributing to a 401K make is not investing or spending the tax savings wisely. If you aren't using that tax savings from the maxed out 401K towards your high interest debt, additional principal to your mortgage, student loans, an HSA, a 529 college fund, your Roth, your spousal Roth, etc then you aren't fully maximizing your savings. I would invest the tax savings in a private brokerage with investments that have low turnover like individual stocks or ETFs like the S&P 500. Even if you had dividends (qualified usually) as long as you kept it for long term (over a year) you could let it grow and only have to deal with capital gain taxes when you withdraw funds. For most it would be 15% and for some it could be 0% and other making over 400K taxable income at retirement it would be higher. You would then have another investment bucket to withdraw from at retirement. Especially since the Trump tax cuts will expire and it is highly unlikely that they will extend them since they need to feed Fedzilla. So our tax rates will be higher and when I look at what I will have at retirement with a pension, pre-tax and social security I don't see us paying taxes in the lowest tax bracket especially if we max out pre-tax. And when I die my wife will be in the single tax bracket and will be pushed up into higher brackets losing the benefit of Married filing Jointly.
The government will start taxing Roths down the road when those pools became large enough, just like they do with Social Security. Diversifying tax buckets is wise
@@rickyaz8640 The difference is that the gov't offers a tax deferred and a tax up front option. Previously there was no option to pay into social security upfront. It would nullify the whole point of a Roth.
No the point is the government can change the rules at any time. If you think they’ll let people retire with $3 million Roth IRAs for very long you aren’t paying attention. Once the numbers get big enough they’ll change the rules in the name of “equality”. Taking advantage of some up front tax savings via the trad route is just getting some while it’s available. All Roth which makes sense under today’s rules runs the risk of the rules being changed
It was Republicans that raided social security by taxing it. They want to kill in (entitlements) as they see them completely. If the government comes after Roth's, it will be Republicans again. All will be fine so long as people stop voting against;t their best interest.
Hello I have to question I’m new to this i have 401 k and Roth IRA. Is it wise to invest some in a ETF before maximizing the 401 k then ofcouse I max my Roth IRA every year. . Can someone please advise
Well, I work at FedEx and they don't offer a Roth 401k so I have about $425k in it so seeing that I'm 57, I really don't see that there's much I can do now. I realize now that I'm getting old I should've done something different 20yrs ago. But, I think I'll be ok.
@@rdr6276 you could just go on your vanguard and open a roth IRA with them. Takes like 10 minutes. You could call them and ask their opinion on your best move. Get with your tax guy if you have one as well. That factors in on what you should do. If your income is way down in retirement maybe just holding onto the pretax 401 would be better than what I said before about roth conversion
Yeah open a Roth immediately as it needs to be 5 years old to enjoy all the benefits. When you retire rollover the 401k to a traditional Ira, from there do Roth conversions up until you claim social security. Pay for a bit of advice as it can be worth it
So if I have a Roth 401K but no match, should I be maxing it out or should I be maxing out other retirement avenues first? I understand with a Roth IRA you can withdraw principle without penalty, but I'm not looking to withdraw anything prior to retirement. Haven't been able to find information on this anywhere.
I currently max out my Roth IRA and am contributing 22 percent pretax to my traditional 401k. My employer recently offered Roth 401k. Curious if I should split contributions between the traditional 401k and Roth 401k?
I stopped putting into my 401k when the my company cut my salary and used covid as an excuse to not match the whole year. Now it all goes in my Roth ira. My ira handpicked mutual funds are performing 4 times better then the limited funds I can pick in the 401k anyway.
Teddy Ruxpin - thanks 😊. But, I wasn’t asking the question you answered. I was asking about having 2 diff types of 401K’s - a “norm” 401K & a Roth401k in the same year- any guidance there?
@@jjowhal He did answer your question. The limit for 50 and under for both a Roth 401K and Traditional 401K is $19,500. So it doesn't matter if you put $10k in the Traditional, and fill out the remainder with $9500 in the Roth 401k, the max you can contribute to a 401K (Roth or "norm") is $19,500. If you have a Roth IRA, which it sounds like you do, then you are probably already contributing the $6000 max. That is separate from 401K contribution money. You can decide how you want to contribute to the Roth or Traditional 401K based on your employer's plan. I use Principal with my employer, and they give me a way to set what I want to contribute to either. If you're really lucky, then the employer plan let's you do after tax contributions to the 401K that let's you do a mega backdoor Roth conversion. But I don't know how common that is. My plan does not allow that.
@@georgecastillo2773 -Thanks for replying and giving more clarification, I have a Roth IRA, which is already maxed out at the $6K for 2020, ( i am under 50yo) ...I am self employed, so I have a solo 401K, which I contribute to as both employEE ( at the mx of $19.5K & employER- match . I wasnt sure if I could also do a ROTH 401K in same year? sounds like you are saying yes, but Id still be capped at the same limits as the solo 401K ..
If I was aggressive right out of college and in the first 2 years of my job maxed out my 401k at my company (they only offer traditional, unfortunately), but now only go up to the match. Is there a way I would be able to convert it to after-tax dollars in the future before retirement age? I'm sitting on a decent chunk of contributions growing tax-free and I can only imagine how large it will get within the next 30 years. I don't want to pay tax on all of that in retirement. Can I willingly take the hit now? If so, how? Thanks!
It's called a Roth conversion. Check with your plan if it offers a Roth 401k as well as offer a means to convert into a Roth 401k. If not, some plans allow you to rollover your plan while you are working. Otherwise, just rollover your plan when you change jobs into an IRA, then convert the IRA into a Roth IRA.
Pensions and 401k/traditional IRA withdrawals are treated as ordinary income. Sorry, but that's just the way it is. I found out the hard way when I retired 4 years ago. Now I'm trying to dig my way out of a hole by converting traditional IRA to Roth IRA. Yes, you have to pay taxes on the converted amount, but if you don't do it, you gat a nasty surprise when RMDs start at age 70. If this crap doesn't make sense, find a good fiduciary tax planner and work out the numbers.
Can I even open a Roth? I was a stay-at-home mom and I get an "allowance" from my spouse, obviously tax-free ;) My spouse has his own Roth and investments. I am unable to work now due to chronic illness. (Which was so not in the plan!) I even went to nursing school with 6 kids still at home, got my R.N. and BAM! struck with paralyzing illness.
So u get an Roth IRA separately or u just will transfer those money to it bc I know they will force u to take your 401k out if not u will being charge for it plus tax
@@alrocky they are probably talking about the 1500 or 2500 that you don't pay in taxes when you contribute to the traditional...not seeing that all the growth will be taxable when you take it out...smh
@@dec1slh "smh" ... sigh you simply don't understand that the tax savings resides in the traditional IRA and is *NOT* in your pocket with which to invest in a taxable account.
@@jessicantina -. Not true. It will be there, but payments will be reduced by 20-25% if govt doesn't change the taxing process. Still, it's a good idea to have retirement resources outside of SS.
Never leave taxes for later, Bad advice. Tax free growth is the way to go. And what if companies cancel the matching in a 401k account and add it to employees hourly pay or salary...?
Max out your 401k with a combination of pre-tax and Roth contributions. Also, max out your Roth IRA contributions each year. You can withdraw your ROTH contributions prior to 59.5 without penalty. Don’t make this harder than it should be.
one reason to do the pretax 401K: retire earlier at age 55. with roth 401k, you can't take out until after age 59.5. the rule of 55, it's only for people who quit jobs at age 55 with pretax 401k.
If you quit your job at 55 or any age you can roll Roth 401k into Roth IRA, then you can access it before 59.5...depending on whether or not you Roth IRA meets the 5 year rule requirements
@@JustinTuchek I plan on retiring at 55. My company match goes to pretax, I have some of my contributions in pretax, but now contribute most to Roth. I think that I will be able to live off they pretax for at least 5 years (probably a lot longer).
Yup.
I started my 401k in 1987 three months before Black Monday.
When they gathered all of us new hires to explain all of our benefits back then I asked that 401k representative what happens over 30 years from now and did not like what I heard.
Fortunately we had aftertax as well as pretax so I maxed out aftertax and when the Roth was included I maxed that out as well.
Not only did I max it out but also contributed up to more than $45k each year.
Not many people can say they have over 1.4 million in a Roth.
Yeah putting money in like that when the market is down is dumb. I'm about the same age as you. I haven't really followed the market since it's a scam. I'll bet the dow is around 2000 now. I'm so glad I bought that cd.
Roth 401k are a Godsend... So glad my Employer offers one... I've been Maxing it out plus match, as we speak as well as my Roth IRA. Love it!
I have a Roth 401K as well. I’m doing that and the Roth IRA. Too bad the company match isn’t after tax ☹️
@@Wbrundog Yeah, still free money 😊 ... My match goes into my Roth 401K as well though, very lucky.
What if they offer it but dont match ? Would you still contribute?
Eman namE may as well just do the Roth IRA then, more choices
Good advice. It seems that having a mix of tax-deferred and tax-free investments would maximize income in retirement and while working.
I bought Facebook, Microsoft, Apple, Google, Adobe, Alteryx, Wells Fargo, Twitter.
TRUST THE PROCESS. The stock market goes up in the long term because it takes 2 steps forward for every 1 step backward.
Cash is trash, it loses to inflation.
401k match, fill hsa,Roth ira, back to max 401k, rest brokerage.
You forgot bitcoin😆
Yup, my priority is very similar. Since I have kids, mine goes 401k match, max HSA, Roth, 529 (up to what we think would pay for state university when they turn 18), then back to max 401k.
I do 15% (including match) to my 401k, max IRA, then the rest into brokerage. I want to retire early, perhaps 50-52, and it'll be a reasonable bridge method.
Max out until you get to 100K, a major milestone that’ll help your future compounding, then look for tax friendly options.
Taking a similar approach, growing my 401k until the growth without further investment will take care of my basic needs. Looking at a retirement growth calculator - maxing out a 401k every year with even modest growth will leave you with a very very comfortable monthly distribution (except maybe HCOL areas)
With the max 401k limits this should take ~4 years. There are probably some more ideal scenarios of splitting between the two earlier on may give a ROTH 401K more time to grow before needing withdrawals
I max out 401k, Roth IRA, HSA, taxable brokerage account, 529, figure out taxes later. Uncle Sam taxes a lot now and will tax a lot in the future just concentrate on earnings and maximizing your growth
We have to put the max in our 401k otherwise we would be in high tax brackets since we don't have any other debt.
I'm 33.....social security is not even a wisp of a thought in my mind 👍
I've been maxing out a roth while my work 401k is only at 70%...this video really helped make me feel like Good WIll Hunting. Apples anyone?
Great video. My 401K also allows you to convert your pretax company match dollars into Roth. This is kinda cool because it allows you to pick how much you want to convert each year. My pension income will be taxed in retirement, which also makes Roth now more appealing.
It easy become a millionaire in 401k then Ira. You put 18k instead 5500k . That big differences
This makes sense for people in the low tier tax bracket. So wish I was smarter years ago and used Roth.
Another thing to keep in mind is these calculations are based on current rules and regulations. Those can change over time.
I am happy my company matches and provides a Roth 401k along with a traditional 401k contribution options to contribute so I have a healthy mix so planing can work around what needs to be done later on. I am doing some catch-up right now since my prior job paid so little that contributing to the 401k was mediocre at best. I hope SS still exist or be at a level I could use when I retire hahah! Great Video!
Social security wont be around 40 years later when i retire
But we have endless money for other countries???
@@bellamarino524 that's why the US dollar won't be worth the paper it's printed on I 10 - 20 years.
I'm 70 and Dustin has it completely right! I switched to contributing to a Roth IRA starting in 1998. I have some IRA, which is ok. 2/3 of my money is in non-retirement accounts. Great possibilities for "modulating my taxes" by pulling from various buckets. My RMD will be quite mild and manageable and until that time, it is Roth Conversions each year. I don't expect to ever spend my Roth. My errors can inherit that.
Good move. Same general plan here. Heirs inherit Roth IRA tax free, and taxable account at stepped up basis. I'm converting Trad IRA to Roth in increments to lessen the taxes form RMDs and inheritance.
@@freddieh5539 Cool. I use the tax estimator at dinkytown . net along with spreadsheets. I increment the Roth Conversion or capital gains to come up with the best plan. I don't mind paying extra taxes now as my brackets are lower compared to who gets my stash.
@@daveschmarder-1950 -. Great minds think alike.
My main reason is.....I don't make enough.
Fidelity Roth IRA is easy to setup. Took minutes...I even signed up both daughters each of their own because they have a small part time job.
I will continue to max :)
Thank for the info Dustin.
Omg 😱 freaking great info love it
My job allows us to buy in to both a 401k and Roth 401k. Had no idea what I was doing but I had to double check 😂 so altogether is 12% contributing. Had no idea what's Roth 401k. Now I'm glad I accidentally did both lol.
Doing both is likely not the most tax efficient.
@@alrocky it's okay. Helps me save. I gain about 20%. Fine by me.
ROTH 401Ks are pretty popular now. Depending on your salary level one may be better than another for reducing taxes (video idea?). One kid is doing Trad 401K and another is doing ROTH 401K. Both doing ROTH IRAs.
Generally only a good idea if your income is low. If you make 80k but only plan to use 40k a year in retirement, the traditional 401k is going to be better since you're in a higher tax bracket
Thanks Dustin alot of good points
Good deal, JW. Thanks for the quick one.
Fu%%#*king great info bro like it
Doing both is the best option for most. What is your current tax bracket, and what bracket do you expect at retirement. Right now, contributing to that 401K could easily drop you from 22% to 12% for ALL your income. That is worth doing. And if you retire at 55 (and before SS), your 401K can be used and likely would only be taxed at 12% with no SS to consider. My taxes in retirement plummeted, so having tax deferred money for it is great.
@trufiend138 For IRA yes, for 401K no.
Everyone thinks they know what their tax bracket will be in retirement
@@dec1slh Most are told by advisers their tax bracket could be high in retirement to get them to shift stuff around unnecessarily.
@@billyrayband no one knows what tax brackets will be, not even tax advisers.
So why not use exclusively Roth if possible especially if you aren’t old? Most of it is growth and 0% is better than any tax savings you have now
I max out the Roth 457b and Roth IRA...also my work takes mandatory 18% from my check and match it at 22%.
what job is that at thats sick i love that
I would contribute up to 22 percent in regular 457b and 22 percent in the Roth 457 b and then max out my the HSA then max out the Roth IRA account....then put the rest into my savings account and brokerage account
You can move to the 12 states that don't tax your retirement income. 😁
But, the federal government will ...
State tax is minimal compared to Federal....in most states
If you haven't already, you should do a more detailed video on provisional income. Learned about it from The Power of Zero book, and was the reason I did a ROTH conversion the past few years to take advantage of a 12% tax bracket. You can illustrate where annual 24k social security and polling out annually 12,399 from 401k to remain below standard deduction. Results in no taxes owed.
Would love it if you provided more examples with say Dividend income and other taxable incomes such as Real Estate. Future video content I hope!
Btw that blackboard is super hard to read. Whiteboard please.
I wont have social insecurity when I'm retirement age
It is a government obligation. It is a benefit you paid for, along with Medicare.
The Feds (the Chump excluded) know better than to mess with it. Who wants a hundred million senior citizens marching on their offices in a Geritol stupor armed with clubs, torches, and walking frames?
@@5610winston the way things are going those funds will run out sooner rather than later. It's not a matter of them messing with it, it will be depleted.
I don’t believe Social Security is be here by that time.
I clicked on to see if you were going to say one reason is to make sure you max out the HSA first. Dang, oh well, I am still doing that plan. Great Vanguard funds on the investment side of my HSA plan.
I'm 53 and have created a large tax bomb in my 401K. I've started contributing 13% of my income to Roth 401K and I still have 10% going into the regular 401K with a 7% match. I plan on retiring about 58-59 with about 56K pension income between my wife and I. Would I be better off buying my wife and myself Roth outside my 401 only taking the 7% match?
@trufiend138 We contributed to our pre tax 401K's at the federal max and have for years. I don't know what our effective tax rate was, but I don't think we paid anything at more than 22% because of pre tax contributions. A tax bomb means that we be paying a lot in taxes when we get to RMD age for money we probably won't need. It seems that accountants want the tax break now, and financial planners want it in retirement. My wife is a school administrator. I'm in energy.
If your combined retirement income is a dollar over the 25K threshold, does ALL of the social security portion of your retirement income become partially taxable?
Wouldn’t it be best to max out your 401(k), even if no employer match, for the tax deduction, and later you can roll it over to a Traditional IRA and set up a Roth IRA conversion ladder or similar? (Converting the appropriate amount each year so as to minimize your tax bracket)
Why not just max out the IRA?
Only if you max out your private Roth IRA and your spouse's Roth if you are eligible for a Roth based on your income. Then if you have the ability to max out your 401K contributions and the backdoor conversion still exists (they keep threatening to remove it) then you could do so. The biggest mistake people contributing to a 401K make is not investing or spending the tax savings wisely. If you aren't using that tax savings from the maxed out 401K towards your high interest debt, additional principal to your mortgage, student loans, an HSA, a 529 college fund, your Roth, your spousal Roth, etc then you aren't fully maximizing your savings.
I would invest the tax savings in a private brokerage with investments that have low turnover like individual stocks or ETFs like the S&P 500. Even if you had dividends (qualified usually) as long as you kept it for long term (over a year) you could let it grow and only have to deal with capital gain taxes when you withdraw funds. For most it would be 15% and for some it could be 0% and other making over 400K taxable income at retirement it would be higher. You would then have another investment bucket to withdraw from at retirement. Especially since the Trump tax cuts will expire and it is highly unlikely that they will extend them since they need to feed Fedzilla. So our tax rates will be higher and when I look at what I will have at retirement with a pension, pre-tax and social security I don't see us paying taxes in the lowest tax bracket especially if we max out pre-tax. And when I die my wife will be in the single tax bracket and will be pushed up into higher brackets losing the benefit of Married filing Jointly.
The government will start taxing Roths down the road when those pools became large enough, just like they do with Social Security. Diversifying tax buckets is wise
If they Tax Roth's there will be hell to pay. I doubt it.
Social Security used to be exempt from taxes. What is legal isn’t forever
@@rickyaz8640 The difference is that the gov't offers a tax deferred and a tax up front option. Previously there was no option to pay into social security upfront. It would nullify the whole point of a Roth.
No the point is the government can change the rules at any time. If you think they’ll let people retire with $3 million Roth IRAs for very long you aren’t paying attention. Once the numbers get big enough they’ll change the rules in the name of “equality”. Taking advantage of some up front tax savings via the trad route is just getting some while it’s available. All Roth which makes sense under today’s rules runs the risk of the rules being changed
It was Republicans that raided social security by taxing it. They want to kill in (entitlements) as they see them completely. If the government comes after Roth's, it will be Republicans again. All will be fine so long as people stop voting against;t their best interest.
All of this is moot if you have a Roth 401k then, right?
Oh you mentioned this, lol. Guess I should wait until the end of the video to comment 😅
Hello I have to question I’m new to this i have 401 k and Roth IRA. Is it wise to invest some in a ETF before maximizing the 401 k then ofcouse I max my Roth IRA every year. . Can someone please advise
So amazing! I should consider that in my upcoming VIDS. 😉
Well, I work at FedEx and they don't offer a Roth 401k so I have about $425k in it so seeing that I'm 57, I really don't see that there's much I can do now. I realize now that I'm getting old I should've done something different 20yrs ago. But, I think I'll be ok.
Do you have a roth IRA? In service distributions? Could do a roth conversion. Pay taxes now and let it grow tax free until you retire
@@marksweetser6312 No I don't have a Roth IRA. Our 401k is with the Vanguard. I'm just not sure what I could do.
@@rdr6276 you could just go on your vanguard and open a roth IRA with them. Takes like 10 minutes. You could call them and ask their opinion on your best move. Get with your tax guy if you have one as well. That factors in on what you should do. If your income is way down in retirement maybe just holding onto the pretax 401 would be better than what I said before about roth conversion
Yeah open a Roth immediately as it needs to be 5 years old to enjoy all the benefits. When you retire rollover the 401k to a traditional Ira, from there do Roth conversions up until you claim social security. Pay for a bit of advice as it can be worth it
@@marksweetser6312 Thanks for the advice!
Max it out so the stock market can crash and take it all … f that ..
So if I have a Roth 401K but no match, should I be maxing it out or should I be maxing out other retirement avenues first? I understand with a Roth IRA you can withdraw principle without penalty, but I'm not looking to withdraw anything prior to retirement. Haven't been able to find information on this anywhere.
Q1 No.
Generally you should contribute $6,000 Roth IRA before considering maxing out ($19,500) to Roth 401(k) that has no company match.
What about a Roth 401k?
Max out 401k Roth!
Dial it to 11 with mega backdoor 401k
I currently max out my Roth IRA and am contributing 22 percent pretax to my traditional 401k. My employer recently offered Roth 401k. Curious if I should split contributions between the traditional 401k and Roth 401k?
Are you in relatively high or low tax bracket?
Yup split or contribute 10 percent in Roth 401k and 15 percent in regular 401k
So....the Government considers the rich as making over $32k a year....
I stopped putting into my 401k when the my company cut my salary and used covid as an excuse to not match the whole year. Now it all goes in my Roth ira. My ira handpicked mutual funds are performing 4 times better then the limited funds I can pick in the 401k anyway.
Thanks for the life hack!
Don't most companies offer Roth 401Ks now?
Can one contribute to a Roth 401k & a 401K in same year? Are their income limits to the the Roth 401 K?
yes you can contribute to both. 401k limit is $19500 and roth/traditional limit is $6000. Catchup is more at 50 or over.
Teddy Ruxpin - thanks 😊. But, I wasn’t asking the question you answered. I was asking about having 2 diff types of 401K’s - a “norm” 401K & a Roth401k in the same year- any guidance there?
Teddy Ruxpin - I already have a Roth & a solo 401 K.
@@jjowhal He did answer your question. The limit for 50 and under for both a Roth 401K and Traditional 401K is $19,500. So it doesn't matter if you put $10k in the Traditional, and fill out the remainder with $9500 in the Roth 401k, the max you can contribute to a 401K (Roth or "norm") is $19,500. If you have a Roth IRA, which it sounds like you do, then you are probably already contributing the $6000 max. That is separate from 401K contribution money. You can decide how you want to contribute to the Roth or Traditional 401K based on your employer's plan. I use Principal with my employer, and they give me a way to set what I want to contribute to either. If you're really lucky, then the employer plan let's you do after tax contributions to the 401K that let's you do a mega backdoor Roth conversion. But I don't know how common that is. My plan does not allow that.
@@georgecastillo2773 -Thanks for replying and giving more clarification, I have a Roth IRA, which is already maxed out at the $6K for 2020, ( i am under 50yo) ...I am self employed, so I have a solo 401K, which I contribute to as both employEE ( at the mx of $19.5K & employER- match . I wasnt sure if I could also do a ROTH 401K in same year? sounds like you are saying yes, but Id still be capped at the same limits as the solo 401K ..
If I was aggressive right out of college and in the first 2 years of my job maxed out my 401k at my company (they only offer traditional, unfortunately), but now only go up to the match. Is there a way I would be able to convert it to after-tax dollars in the future before retirement age? I'm sitting on a decent chunk of contributions growing tax-free and I can only imagine how large it will get within the next 30 years. I don't want to pay tax on all of that in retirement. Can I willingly take the hit now? If so, how? Thanks!
It's called a Roth conversion. Check with your plan if it offers a Roth 401k as well as offer a means to convert into a Roth 401k. If not, some plans allow you to rollover your plan while you are working. Otherwise, just rollover your plan when you change jobs into an IRA, then convert the IRA into a Roth IRA.
Dustin, I thought Soc Sec was taxed only when your EARNED INCOME exceeded a certain amount (not interest income)?
Pensions and 401k/traditional IRA withdrawals are treated as ordinary income. Sorry, but that's just the way it is. I found out the hard way when I retired 4 years ago. Now I'm trying to dig my way out of a hole by converting traditional IRA to Roth IRA. Yes, you have to pay taxes on the converted amount, but if you don't do it, you gat a nasty surprise when RMDs start at age 70. If this crap doesn't make sense, find a good fiduciary tax planner and work out the numbers.
Oh, and interest income is treated as ordinary income, too.
I don’t match the max in order to put the remainder into crypto, gold and silver
Can I even open a Roth? I was a stay-at-home mom and I get an "allowance" from my spouse, obviously tax-free ;) My spouse has his own Roth and investments. I am unable to work now due to chronic illness. (Which was so not in the plan!) I even went to nursing school with 6 kids still at home, got my R.N. and BAM! struck with paralyzing illness.
yes
Yes as long as your spouse earns at least 12k.
Max the traditional 401k, retiring at 55 with irs rule of 55. Use the tax savings for roth IRA
So u get an Roth IRA separately or u just will transfer those money to it bc I know they will force u to take your 401k out if not u will being charge for it plus tax
@ *cutehumor* there is no investable "tax savings" that results by contributing to a traditional 401(k).
@@alrocky they are probably talking about the 1500 or 2500 that you don't pay in taxes when you contribute to the traditional...not seeing that all the growth will be taxable when you take it out...smh
@@dec1slh "smh" ... sigh you simply don't understand that the tax savings resides in the traditional IRA and is *NOT* in your pocket with which to invest in a taxable account.
@@alrocky Roth account and taxable account are different. Isn't it better for the growth to occur tax-free not tax-deferred
What happens if later on there’s no ss money 💴 ?? Then what
Watching as a millennial: Welp, not a problem I'll have.
And why have you counted yourself out? It ain’t over till it’s over.
its attitude like this is why you will always be down and out. Like catfood?
I mean because social security won't exist by 2050.
@@jessicantina -. Not true. It will be there, but payments will be reduced by 20-25% if govt doesn't change the taxing process. Still, it's a good idea to have retirement resources outside of SS.
You guys are such whiners
I'd much rather take full advantage of a Roth Ira and a IUL strategy
whatever, ss maybe not be around in the future.
That’s right. Most likely not.
moving 401k to roth IRA,do you have to pay the taxes on the 401k?
yes
Yes but your taxes amount is dependent on the amount of income you make when you transfer it.
Never leave taxes for later, Bad advice. Tax free growth is the way to go. And what if companies cancel the matching in a 401k account and add it to employees hourly pay or salary...?
Max out a Roth 401k
Can you give a scenario why anyone would chose a traditional over a Roth. Every scenario I run Roth wins by a large margin.
High tax bracket
Most people look at the short game, saving on taxes now (that's the benefit....if you see it that way).
Roth 401k is too often overlooked.
Max out your 401k with a combination of pre-tax and Roth contributions. Also, max out your Roth IRA contributions each year. You can withdraw your ROTH contributions prior to 59.5 without penalty.
Don’t make this harder than it should be.
Max it out if your employer offers a Roth 401K.
one reason to do the pretax 401K: retire earlier at age 55. with roth 401k, you can't take out until after age 59.5. the rule of 55, it's only for people who quit jobs at age 55 with pretax 401k.
Interesting - as somebody who looked at the rule of 55 as a way to exit early. Hope it's still around in a few decades
If you quit your job at 55 or any age you can roll Roth 401k into Roth IRA, then you can access it before 59.5...depending on whether or not you Roth IRA meets the 5 year rule requirements
@@JustinTuchek I plan on retiring at 55. My company match goes to pretax, I have some of my contributions in pretax, but now contribute most to Roth. I think that I will be able to live off they pretax for at least 5 years (probably a lot longer).
WRONG. That's not what my estate planning attorney says.
mrpmj00 what does he say??
He probably tells him not to be a troll
Both you and your estate planning attorney are idiots. Prove me wrong.
@@MetalSportsJ oh yeah
🙌🏼
Good advice buy real estate these bs tax shelters are for people who never took a risk.
First!