.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} If you go Trad 401k, you'd get that 32-35% back as part of your take home pay. If it’s in a Roth, there’s no taxes. That being said, would you believe a t401k would be the best option? Cookies help us deliver our Services. Looking to get some validation about 401(k)s - specifically traditional 401k vs Roth 401k. You are pretty much the prototypical high earner/early retiree for whom the 401k was designed. Like to hear some ideas on the matter. You guys should not be combining finances until you are legally married. Although everyone says that it depends on tax rates now vs retirement, please remember the other huge advantage of a Roth 401k. Traditional vs Roth My gf and I are just starting our FIRE journey and hoping that we're choosing the right types of accounts for our situation. It seems for people pursuing FIRE heavily, 401k makes most sense. This is an excellent post, POF. FIRE Goal: 35 years old with $1.5M NW. Right now, federal income taxes are the lowest they've been in a long time. If you guys want to FIRE, do that, but to so 100% separately. I've thought about it. Convert the nondeductible IRA contribution to your Roth IRA. Another aspect is the more subtle difference between a Roth and a Traditional IRA. Couple that with large growth in the stock market. Traditional 401(k): Study Finds a Clear Winner People end up saving at the same rate with both—giving the advantage to Roth . Would you rather pay extra taxes on your income when it's over $150k or extra taxes on your income when it's $40k? What Is a Traditional 401(k)? That's ~$6000 a year extra if you're maxing out your 401k. We keep our finances separate besides the bills we share: rent/food/electric/etc., Been together for 8 years (lived together for 3) and are fairly stable and figure ourselves out as lifelong partners. Happily lives off of $1,400 per month ($16,800 per year) 5. the rate at which the last dollar you made is taxed) but withdrawals may be taken at much lower rates. You could use that to max out a Trad IRA and then backdoor convert to Roth. Reply. Roth vs. There are Roth vs. The Roth IRA is one of the best ways to save for retirement. Press question mark to learn the rest of the keyboard shortcuts. Traditional. Which 401k … I'm Mike Piper, the author of this blog. Not saying I wouldn't do it, but that could change after a family comes along. Context: Gf makes approximately 140k a year (hourly pay so it may … If you put the money into a traditional … It has so much flexibility and use it while you can. Traditional 401(k) vs. Roth 401(k) A traditional 401(k) is also an employer-sponsored retirement saving and investment account. very few people consider that with ROTH 401k you can contribute more than with traditional 401K. Good information! Apart from the differences outlined above, traditional IRAs and Roth IRAs share a range of common features. It just saved you $300,000 out of every $1 million—give or take. Reddit; LinkedIn; Print; More; Related. Roth IRA vs. traditional IRA vs. 401(k), Click here to see the full list. I’ll be generous and consider the 401k … This is one of the biggest differences between Roth and traditional IRAs. Since the value of using a Roth account over a traditional account is stable at $12,280, the total advantage of contributing to a traditional account under these new assumptions is negated and Roth … ._3-SW6hQX6gXK9G4FM74obr{display:inline-block;vertical-align:text-bottom;width:16px;height:16px;font-size:16px;line-height:16px} If you make too much money to deduct traditional IRA contributions from your taxable income, a Roth IRA is the better option. Published: June 28, 2016 More in: TSP. 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. Roth IRAs are a personal retirement planning vehicle that … - … With equal tax rates, tax-deferal (dudctible traditional IRA) and tax-free growth (Roth … This is a place for people who are or want to become Financially Independent (FI), which means not having to work for money. I think Roth is a great idea for younger folks. ._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} You’re very welcome. So yeah, I’m going with a Roth. You should be Roth all the way. ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} I have a higher income and max out 401k, HSA, Roth IRA, and contribute to a taxable account. Press question mark to learn the rest of the keyboard shortcuts, https://thefinancebuff.com/case-against-roth-401k.html. “ Roth vs. With that income why don't you work a little longer and build a larger retirement/brokerage fund and keep it as a retirement inheritance for children and grandchildren (if you have them later)? TLDR: Does a traditional 401(k) w/ Roth Conversion or Roth 401(k) make the most sense for a high income earner? For people retiring at a traditional age, it seems Roth makes more sense. Looks like you're using new Reddit on an old browser. 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. One advantage of Roth IRAs: you can withdraw up to the amount you contributed at any time penalty-free. The most important consideration in the Roth vs Traditional 401(k) debate is your tax rate and how it will change when you retire. Read other reviews on Amazon; May 23, 2016 . Just remember if you move to another state when you start doing withdrawals/Roth conversions, you could pay state income tax. Press J to jump to the feed. Roth vs. Traditional 401k, no question. The 401(k)is one of the most popular retirement plans around. ._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)} I'm trying to figure out what would make the most sense between the two. But when you withdraw money after you retire, you owe zero taxes on that money. However, I wanted to seek validation here before I update my 401k account. A Testimonial: "A wonderful book that tells its readers, with simple logical explanations, our Boglehead Philosophy for successful investing." Plus, if you already have a 401k, having a Roth IRA gives you … That’s what you’re facing here. 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 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. I think we are somewhere in the middle, and will hedge our bets and put contributions into both. And I graduated from college debt free. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} 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. Traditional vs. Roth IRA: Similarities. Our plan is when we retire to do the roth ira laddering. Tax breaks for contributing, eit… ._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} You might even want to have BOTH! Taxes The main difference between the Roth 401(k) and the traditional is when the money is taxed. I make about the same as your girlfriend and that’s exactly how I do it. 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. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/IdCard.0f76af1b61e8e247d28f.css.map*/. There are only four factors that impact the wealth outcome when choosing between a Roth or traditional IRA (or other retirement account). I know that’s pretty generic advice but I was actually talking about it with my mom today. In other words, if you’ve got $1 million in there and $900,000 of it is growth and you get taxed on that, the taxes are $300,000. It's all about tax rates. Invests $30,000 per year into taxable investing account 7. Fidelity Investments vs Vanguard for IRA accounts, Roth IRA, Rollover, SEP, SIMPLE. Invests in a 75% stocks/25% bonds portfolio of l… This community is a place for everybody from the curious to the experienced to discuss FI/RE. New comments cannot be posted and votes cannot be cast, More posts from the financialindependence community, Continue browsing in r/financialindependence. By fighting for your financial freedom, you can begin to control your own destiny. Currently at around $160k NW. I ended up splitting the difference with half Roth, half tax-deferred contributions in my 401K. Thanks everyone for your help. When you invest in a Roth account, you pay with after-tax dollars. Don’t contribute to a traditional IRA except when doing backdoor. Expects a 5% inflation-adjusted real rate of return on investments 6. mpi vs roth ira reddit, So I started a Roth IRA when I was 18 or so and never put any more money into it after my initial $1,000 investment (I know, I should have). I do blend my 401k with a majority traditional (~$14k) and minority Roth … If you put the money into a traditional account and withdraw it at a rate of $40k/year in retirement (and assuming no tax law changes, for simplicity), you'll pay an effective tax rate of around 8% on that money. Unsure of what state I would FIRE. - Taylor Larimore, author of The Bogleheads' Guide to Investing. FI/RE (Financial Independence / Retiring Early) is a money movement that's sweeping the nation. and I feel like I'm going in circles. ._9ZuQyDXhFth1qKJF4KNm8{padding:12px 12px 40px}._2iNJX36LR2tMHx_unzEkVM,._1JmnMJclrTwTPpAip5U_Hm{font-size:16px;font-weight:500;line-height:20px;color:var(--newCommunityTheme-bodyText);margin-bottom:40px;padding-top:4px}._306gA2lxjCHX44ssikUp3O{margin-bottom:32px}._1Omf6afKRpv3RKNCWjIyJ4{font-size:18px;font-weight:500;line-height:22px;border-bottom:2px solid var(--newCommunityTheme-line);color:var(--newCommunityTheme-bodyText);margin-bottom:8px;padding-bottom:8px}._2Ss7VGMX-UPKt9NhFRtgTz{margin-bottom:24px}._3vWu4F9B4X4Yc-Gm86-FMP{border-bottom:1px solid var(--newCommunityTheme-line);margin-bottom:8px;padding-bottom:2px}._3vWu4F9B4X4Yc-Gm86-FMP:last-of-type{border-bottom-width:0}._2qAEe8HGjtHsuKsHqNCa9u{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-bodyText);padding-bottom:8px;padding-top:8px}.c5RWd-O3CYE-XSLdTyjtI{padding:8px 0}._3whORKuQps-WQpSceAyHuF{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-actionIcon);margin-bottom:8px}._1Qk-ka6_CJz1fU3OUfeznu{margin-bottom:8px}._3ds8Wk2l32hr3hLddQshhG{font-weight:500}._1h0r6vtgOzgWtu-GNBO6Yb,._3ds8Wk2l32hr3hLddQshhG{font-size:12px;line-height:16px;color:var(--newCommunityTheme-actionIcon)}._1h0r6vtgOzgWtu-GNBO6Yb{font-weight:400}.horIoLCod23xkzt7MmTpC{font-size:12px;font-weight:400;line-height:16px;color:#ea0027}._33Iw1wpNZ-uhC05tWsB9xi{margin-top:24px}._2M7LQbQxH40ingJ9h9RslL{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-actionIcon);margin-bottom:8px} But like HSAs, Roth IRAs have some limitations, and you're limited on how you can use the account now. Qualifying exceptions to the penalty tax . It's almost always better to go with a Roth. I would tell her not to let her boyfriend make that decision for her because he could up and leave her tomorrow. Employers and employees both make contributions to … Traditional contributions to a retirement account are tax-deductible when you make the contribution to the account, and taxed when withdrawn. 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. .FIYolDqalszTnjjNfThfT{max-width:256px;white-space:normal;text-align:center} I didn’t cast this as a negative of Roth’s, b/c the numbers are so close, but Traditional is NOT worse in this regard. Traditional . In fact since her expenses are low and she can afford the tax bill, it might be a good idea to do Roth 401k instead to not worry about tax on this contribution in the future. Touche, that'll be a nice game to win! Once you contribute to a Roth IRA, the money grows tax-free, and you can take tax-free withdrawals once you reach age 59½. .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} For a Roth you pay only on the contributions, NOT the gain on those contributions. ._12xlue8dQ1odPw1J81FIGQ{display:inline-block;vertical-align:middle} 43 thoughts on “Traditional TSP vs. Roth TSP” Rick says: April 2, 2014 at 5:56 pm . Roth IRA vs. traditional IRA vs. 401(k), Click here to see the full list. I’ve also heard in the long run the calculation for traditional vs. roth is exactly the same in the end? Some of the most important features include the following: 1. Welcome. Traditional 401(k): Kate earns $100 which she contributes directly into her traditional 401(k) without paying any income taxes. Plans to utilize a 4% withdrawal rate(adjusted annually for inflation) during retirement 8. Deciding which account to use is confusing to many residents. She actually discovered FIRE first and introduced it to me. The Traditional vs. Roth Decision for Medical Residents. 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. this is false, Roth 401k means you're accepting the tax % today, the contribution … $18,500 in a ROTH is worth $18,500 while in a traditional it would be worth $18,500 … Traditional —I don’t understand the difference.” However your employees phrase it, one thing is clear: The decision to save in a Traditional 401(k), a Roth 401(k), or both is a difficult one. With traditional, most early withdrawals will trigger a 10% penalty. Income will likely increase by 10-15% annually. Roth IRAs and traditional IRAs are both retirement accounts that individuals open on their own, rather than through an employer. Plus the Traditional would still be better even with equal incomes. I think you're right in staying with Roth 401k for you. Regardless of which plan you choose, 401(k) plans have some things in common. Roth vs. You fund Roth IRAs and Roth 401(k)s with after-tax dollars. The Grounded Engineer. Return to main page. I’ve been aware of the trade offs, but you summarized the pros and cons of traditional vs Roth so elegantly! Both 403(b) plans and Roth IRAs are vehicles designated for use in retirement planning. Overview of Vanguard vs Fidelity For IRA Investors who want good value in brokerage services often turn to Fidelity or Vanguard. The Roth convention allows you to defer your compensation tax-free, as a separate source of money, meaning the amount deferred is included in gross income for that year and current taxes must be paid. Appreciate all of the guidance and insight that I see on here everyday. Everyone loves to spoil children but resisting will keep you on track. .ehsOqYO6dxn_Pf9Dzwu37{margin-top:0;overflow:visible}._2pFdCpgBihIaYh9DSMWBIu{height:24px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu{border-radius:2px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:focus,._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:hover{background-color:var(--newRedditTheme-navIconFaded10);outline:none}._38GxRFSqSC-Z2VLi5Xzkjy{color:var(--newCommunityTheme-actionIcon)}._2DO72U0b_6CUw3msKGrnnT{border-top:none;color:var(--newCommunityTheme-metaText);cursor:pointer;padding:8px 16px 8px 8px;text-transform:none}._2DO72U0b_6CUw3msKGrnnT:hover{background-color:#0079d3;border:none;color:var(--newCommunityTheme-body);fill:var(--newCommunityTheme-body)} However, I was raised to fight for everything I've had and I would prefer to instill those same values to the future family. The lowest they 've been in a 75 % stocks/25 % bonds portfolio l…. 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