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401K and Roth IRA Contribution

251 85 November 19, 2023 at 02:54 PM in Finance
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Last Edited by slicbrat November 19, 2023 at 02:58 PM
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My wife & I currently contribute to our 401K(s) at max levels. I am now beginning to wonder about Roth and thinking about contributing at max level there as well. Can we both contribute to Roth and can we do the max?

What things I need to take into account for Roth?
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slicbrat
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komondor
11-20-2023 at 06:19 AM.
11-20-2023 at 06:19 AM.
There are many questions that need to be answered, such as your age and incomes as well as what your employer offers.

Please check with whichever company manages your companies 401K, then just check with the IRS or another investment web site .
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slicbrat
11-21-2023 at 09:14 AM.
11-21-2023 at 09:14 AM.
Quote from komondor :
There are many questions that need to be answered, such as your age and incomes as well as what your employer offers.

Please check with whichever company manages your companies 401K, then just check with the IRS or another investment web site .
Thanks for your reply! I spoke to vanguard and its best for me to create a traditional IRA and backdoor into Roth IRA.

Based on vanguard, looks like the best thing to do is do a one time lump sum payment and do the conversion once instead of contributing on a bi-weekly, monthly...etc basis. I feel like I will be trying to time the market if I go this route.

Wondering what others are doing or recommend?
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komondor
11-21-2023 at 05:26 PM.
11-21-2023 at 05:26 PM.
Well it depends if you are in a low tax bracket now and are young a ROTH will probably work out well for you. Right now I am older and in a higher tax bracket so I want to use a regular 401K to reduce my taxable income, For 2023 I will be paying 24% for part of my income if I can move that money into a 401K then I will literally be saving 24% of that amount in not having it taxable. I expect to be in a lower bracket when I do retire.
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meranamjoker
11-23-2023 at 10:12 AM.
11-23-2023 at 10:12 AM.
check if your company allows mega backdoor roth too.
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SeriousTest440
11-24-2023 at 08:36 AM.
11-24-2023 at 08:36 AM.
Quote from slicbrat :
My wife & I currently contribute to our 401K(s) at max levels. I am now beginning to wonder about Roth and thinking about contributing at max level there as well. Can we both contribute to Roth and can we do the max?

What things I need to take into account for Roth?
Yes, you and your wife can both contribute to Roth IRAs, even if you are also contributing to your 401(k)s. Each individual can contribute up to the Roth IRA contribution limit, which is $6,500 in 2023 ($7,500 if you are 50 or older). However, your ability to make Roth IRA contributions may be phased out if your modified adjusted gross income (MAGI) exceeds certain limits. In 2023, the MAGI phase-out range for married couples filing jointly is $218,000 to $228,000 check more insights. If your MAGI is within this range, you may still be able to make some Roth IRA contributions, but the amount you can contribute will be reduced. You can use the IRS Roth IRA contribution calculator to determine your exact contribution limit.
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maddog55
12-02-2023 at 10:05 PM.
12-02-2023 at 10:05 PM.
Quote from komondor :
Well it depends if you are in a low tax bracket now and are young a ROTH will probably work out well for you. Right now I am older and in a higher tax bracket so I want to use a regular 401K to reduce my taxable income, For 2023 I will be paying 24% for part of my income if I can move that money into a 401K then I will literally be saving 24% of that amount in not having it taxable. I expect to be in a lower bracket when I do retire.
Agree 100% with your logic on all but the last sentence, which is really just a matter of timing. Likely true but when those RMDs kick in, you may find yourself in a higher tax bracket.
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komondor
12-03-2023 at 10:36 AM.
12-03-2023 at 10:36 AM.
I will need to take about 40K a year for my RMD with my pension 401K that makes 80K add in 55K for social security and that comes to about 135 k per year which is about 100K less than my household is making now.
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