Agree 100% on Roth - But Don't you lose out on the company match for 401ks which is basically a 100% return on your contribution - say up to 6% match for example?
I covered in the video how a company match might be one of the very limited situations where a 401k contribution makes sense (at least up to the match).
What if you're planning a FIRE strategy where you can eventually quit, have very low earned income, and start moving money from the traditional IRA to the Roth IRA, while staying in the bottom income bracket? Effectively using the Roth IRA to convert traditional IRA funds with ultra low or no tax.
Don't Roth IRA contributions come out of your top marginal tax bracket though? Whereas when you withdraw from a Traditional, you are taxed all the way up the brackets so your effective tax rate is lower? Assuming tax rates stay the same
I think this could be true in specific scenarios, maybe? For example, if your retirement income is mostly or all from a traditional IRA then this might be a factor to weigh. But I think the goal should be to have a diverse source of income in retirement. So unless you’re planning for failure, I wouldn’t worry about this scenario. But I might be missing something. I was hoping to see in this video some scenarios comparing things like this. I know others have done that before, so probably why she didn’t bother.
@@sharonwinsmithThank you for the insight, what's your opinion on roth 401k then ? It behaves the same as roth ira with the exception of rmd's.. other than that any other flaws (yup i understand flexibility and other points covered under trad. 401k but since roth ira were recommended, i was curious abt roth 410k and mxing it out opinions)
hello Sharon, I do have a traditional 401k, in which I hope not to do a rollover to traditional ira very soon because I enjoy liquidity and I'm 26, soon 27, so, a long time before I actually retire. Is it worthwhile to take it all this year? or should it be withdrawn on a periodic basis? or is there any way to convert traditional 401k to roth ira without paying the penalty?
It’s always good to come across a channel that provides facts about investing and no fluff. Thank you😊
Thank you so much! 😀
Great points!
One thing worth adding is that 401ks have creditor protection that IRAs don't have.
You are spillng the 🍵 tea😮...facts nothing but facts
Haha this made my day! Appreciate it! 🙂
Agree 100% on Roth - But Don't you lose out on the company match for 401ks which is basically a 100% return on your contribution - say up to 6% match for example?
I covered in the video how a company match might be one of the very limited situations where a 401k contribution makes sense (at least up to the match).
What if you're planning a FIRE strategy where you can eventually quit, have very low earned income, and start moving money from the traditional IRA to the Roth IRA, while staying in the bottom income bracket?
Effectively using the Roth IRA to convert traditional IRA funds with ultra low or no tax.
I remember some guy called Mad Fientist called it the Mega Backdoor ROTH strategy.
Don't Roth IRA contributions come out of your top marginal tax bracket though? Whereas when you withdraw from a Traditional, you are taxed all the way up the brackets so your effective tax rate is lower? Assuming tax rates stay the same
I think this could be true in specific scenarios, maybe? For example, if your retirement income is mostly or all from a traditional IRA then this might be a factor to weigh. But I think the goal should be to have a diverse source of income in retirement. So unless you’re planning for failure, I wouldn’t worry about this scenario. But I might be missing something. I was hoping to see in this video some scenarios comparing things like this. I know others have done that before, so probably why she didn’t bother.
What’s the difference between Roth 401 vs Roth IRA?
Roth 401ks are usually offered by a large employer. There are differences in how 401ks and IRAs are administered and the regulatory rules that apply.
@@sharonwinsmith Thank you!
@@sharonwinsmithThank you for the insight, what's your opinion on roth 401k then ? It behaves the same as roth ira with the exception of rmd's.. other than that any other flaws (yup i understand flexibility and other points covered under trad. 401k but since roth ira were recommended, i was curious abt roth 410k and mxing it out opinions)
hello Sharon, I do have a traditional 401k, in which I hope not to do a rollover to traditional ira very soon because I enjoy liquidity and I'm 26, soon 27, so, a long time before I actually retire. Is it worthwhile to take it all this year? or should it be withdrawn on a periodic basis? or is there any way to convert traditional 401k to roth ira without paying the penalty?