Anyone have a Roth 401K? Hubby's work may be offering this option soon

http://www.cbsnews.com/8301-50514...t-for-you/

Quote from nizzy1115 : http://www.cbsnews.com/8301-50514...t-for-you/

Thanks for the info. It's number crunching time.

I have one personally. Company matches up to 6% on it as well. so 6% (12% with company match) into my roth 401K, which is taxed now, so when I withdraw there are no taxes I have to pay. The only thing I need to figure out is if the match is pre-tax or after tax. I'm only 21, so I feel it's a good option for me.

23 and company Matches 50% up to $2500, i put it into roth and it is after tax match.

I have the option available and I actually split my contribution 5% to Roth, and 5% to traditional.

As my earning potential is reasonably up in the air as well as future tax rates, I figure it is a good way to hedge my bet either way and still come out ahead.

Employer matches up to 4%

Quote from boonkauc : I have the option available and I actually split my contribution 5% to Roth, and 5% to traditional. As my earning potential is reasonably up in the air as well as future tax rates, I figure it is a good way to hedge my bet either way and still come out ahead. Employer matches up to 4%

I'm not sure that's an option but I will definitely ask hubby about it. Seeing how taxes are changing, you seem to have a good plan.

There is no possible way that your tax rate will be lower when you retire then it is now. Roths allow you to pay in at your current rate, and everything the account makes in investment increases are tax-free forever once you are able to withdraw. Take advantage of this while it is available. With the way we are going, if the country is still even around, your tax rate could be 85% when you are withdrawing the money.

Quote from dealgate : There is no possible way that your tax rate will be lower when you retire then it is now. Roths allow you to pay in at your current rate, and everything the account makes in investment increases are tax-free forever once you are able to withdraw. Take advantage of this while it is available. With the way we are going, if the country is still even around, your tax rate could be 85% when you are withdrawing the money.

Not true for high earners - it is quite possible their tax rate could be lower when they retire. Also keep in mind that if the government is willing to go to that extreme on the top rate, it could also decide to bust the Roth exemption when you withdraw. If the fiscal situation got that bad, I don't think anything would be off the table.

I think a 50/50 split Roth and non-Roth is a good way to go given all the uncertainty.

My company recently started offering a Roth 401k option and I currently contribute 100% of my savings to it. My company match goes to a pre-tax (traditional 401k) account. I plan to continue this track until my roth account is on par with my traditional 401k account. This will give me options when I retire.

A side note for high earners, there are roth conversion loopholes that allow for 1) contribution to a roth IRA even if your income exceeds the limits and 2) contributions in excess of $17k/year to the roth 401k by taking advantage of annual roth conversions:

http://www.dailyfinance.com/2012/...e-earners/

For a guy living in a state such as NC, I am not sure if ROTH 401k or ROTH IRA is attractive considering the high state income tax. The neighboring state - TN does not have state income tax and I am OK with living in TN after I retire.

If you are paying state income tax, consider the options and savings.

Quote from dnaren : For a guy living in a state such as NC, I am not sure if ROTH 401k or ROTH IRA is attractive considering the high state income tax. The neighboring state - TN does not have state income tax and I am OK with living in TN after I retire. If you are paying state income tax, consider the options and savings.

Thanks in the information. We do have a state income tax. We're looking at the numbers right now and seeing it's worth making a change.

A split is a great way to go. When you retire, you can take your "first" money out of your traditional IRA at 0%, your next money out at 15% tax rate (or even 25% if you want a lot of money out...). You wouldn't have paid any taxes on the 0% stuff -- now or in retirement. Then, you can take additional money out of your Roth. It will have been taxed at whatever your marginal rate is now (presumably 15% or 25%). Having a mix of pretax, Roth and "personal" (non IRA of any form) gives great flexibility when you want to withdraw your money.

Also, keep in mind that Roth IRAs can be used for a sort-of emergency fund (401ks cannot without penalty). So you might mix in some Roth IRAs with traditional IRAs just like having a mix of Roth 401k / traditional 401k. You can withdraw your Roth IRA principal without penalty under certain circumstances and timing (5 year rule).

D

Quote from StarNova : Thanks for the info. It's number crunching time.

Quote from nizzy1115 : http://www.cbsnews.com/8301-50514...t-for-you/

i corroborated what that commentator in that article wrote. the article writer is conflating Roth IRA with Roth 401k

Quote : What types of retirement plans require minimum distributions? The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. The RMD rules also apply to Roth 401(k) accounts. However, the RMD rules do not apply to Roth IRAs while the owner is alive. http://www.irs.gov/Retirement-Pla...tributions