This means they’re funded with money that comes out of your paycheck after taxes have been collected. Press question mark to learn the rest of the keyboard shortcuts. You guys should not be combining finances until you are legally married. Both 403(b) plans and Roth IRAs are vehicles designated for use in retirement planning. ._1EPynDYoibfs7nDggdH7Gq{margin-bottom:8px;position:relative}._1EPynDYoibfs7nDggdH7Gq._3-0c12FCnHoLz34dQVveax{max-height:63px;overflow:hidden}._1zPvgKHteTOub9dKkvrOl4{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word}._1dp4_svQVkkuV143AIEKsf{-ms-flex-align:baseline;align-items:baseline;background-color:var(--newCommunityTheme-body);bottom:-2px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap;padding-left:2px;position:absolute;right:-8px}._5VBcBVybCfosCzMJlXzC3{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;color:var(--newCommunityTheme-bodyText)}._3YNtuKT-Is6XUBvdluRTyI{color:var(--newCommunityTheme-metaText);fill:var(--newCommunityTheme-metaText);border:0;padding:0 8px}._3YNtuKT-Is6XUBvdluRTyI:active,._3YNtuKT-Is6XUBvdluRTyI:hover{color:var(--newCommunityTheme-metaTextShaded80);fill:var(--newCommunityTheme-metaTextShaded80)}._3YNtuKT-Is6XUBvdluRTyI:disabled,._3YNtuKT-Is6XUBvdluRTyI[data-disabled],._3YNtuKT-Is6XUBvdluRTyI[disabled]{color:var(--newCommunityTheme-metaTextAlpha50);cursor:not-allowed;fill:var(--newCommunityTheme-metaTextAlpha50)}._2ZTVnRPqdyKo1dA7Q7i4EL{transition:all .1s linear 0s}.k51Bu_pyEfHQF6AAhaKfS{transition:none}._2qi_L6gKnhyJ0ZxPmwbDFK{transition:all .1s linear 0s;display:block;background-color:var(--newCommunityTheme-field);border-radius:4px;padding:8px;margin-bottom:12px;margin-top:8px;border:1px solid var(--newCommunityTheme-canvas);cursor:pointer}._2qi_L6gKnhyJ0ZxPmwbDFK:focus{outline:none}._2qi_L6gKnhyJ0ZxPmwbDFK:hover{border:1px solid var(--newCommunityTheme-button)}._2qi_L6gKnhyJ0ZxPmwbDFK._3GG6tRGPPJiejLqt2AZfh4{transition:none;border:1px solid var(--newCommunityTheme-button)}.IzSmZckfdQu5YP9qCsdWO{cursor:pointer;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO ._1EPynDYoibfs7nDggdH7Gq{border:1px solid transparent;border-radius:4px;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO:hover ._1EPynDYoibfs7nDggdH7Gq{border:1px solid var(--newCommunityTheme-button);padding:4px}._1YvJWALkJ8iKZxUU53TeNO{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7{display:-ms-flexbox;display:flex}._3adDzm8E3q64yWtEcs5XU7 ._3jyKpErOrdUDMh0RFq5V6f{-ms-flex:100%;flex:100%}._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v,._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{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}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v{color:var(--newCommunityTheme-button);margin-right:8px;color:var(--newCommunityTheme-errorText)}._3zTJ9t4vNwm1NrIaZ35NS6{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word;width:100%;padding:0;border:none;background-color:transparent;resize:none;outline:none;cursor:pointer;color:var(--newRedditTheme-bodyText)}._2JIiUcAdp9rIhjEbIjcuQ-{resize:none;cursor:auto}._2I2LpaEhGCzQ9inJMwliNO{display:inline-block}._2I2LpaEhGCzQ9inJMwliNO,._42Nh7O6pFcqnA6OZd3bOK{margin-left:4px;vertical-align:middle}._42Nh7O6pFcqnA6OZd3bOK{fill:var(--newCommunityTheme-button);height:16px;width:16px;margin-bottom:2px} Updated on August 10th, 2017 18. Future greater than current marginal tax bracket favors Roth. Everyone loves to spoil children but resisting will keep you on track. FI/RE (Financial Independence / Retiring Early) is a money movement that's sweeping the nation. The 401(k)is one of the most popular retirement plans around. Matt, You are wise to consider not having all your eggs in one basket (after-tax retirement accounts) vs. traditional … PoF@physicianonfire.com. She actually discovered FIRE first and introduced it to me. And my parents FIRE’d in their mid-50s. Traditional . When you invest in a Roth account, you pay with after-tax dollars. Not sure if this logic makes sense, but seems to me that if you are maxing a ROTH you are effectively saving more. Traditional 401(k) vs. Roth 401(k) A traditional 401(k) is also an employer-sponsored retirement saving and investment account. 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. I think what she’s doing with traditional 401k and Roth IRA is but it is a toss up with going Roth on both. Overview of Vanguard vs Fidelity For IRA Investors who want good value in brokerage services often turn to Fidelity or Vanguard. TLDR: Does a traditional 401(k) w/ Roth Conversion or Roth 401(k) make the most sense for a high income earner? I’ve also heard in the long run the calculation for traditional vs. roth is exactly the same in the end? - Taylor Larimore, author of The Bogleheads' Guide to Investing. By fighting for your financial freedom, you can begin to control your own destiny. Has no children and expects to live until 90 years old 2. This is one of the biggest differences between Roth and traditional IRAs. Hi. You should be Roth all the way. 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It's almost always better to go with a Roth. However, I wanted to seek validation here before I update my 401k account. Plans to utilize a 4% withdrawal rate(adjusted annually for inflation) during retirement 8. Apart from the differences outlined above, traditional IRAs and Roth IRAs share a range of common features. 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. https://thefinancebuff.com/case-against-roth-401k.html._3bX7W3J0lU78fp7cayvNxx{max-width:208px;text-align:center} Touche, that'll be a nice game to win! I think you're right in staying with Roth 401k for you. Roth 401(k) vs. Roth IRA: What Are They? 43 thoughts on “Traditional TSP vs. Roth TSP” Rick says: April 2, 2014 at 5:56 pm . Fidelity Investments vs Vanguard for IRA accounts, Roth IRA, Rollover, SEP, SIMPLE. ._2a172ppKObqWfRHr8eWBKV{-ms-flex-negative:0;flex-shrink:0;margin-right:8px}._39-woRduNuowN7G4JTW4I8{border-top:1px solid var(--newCommunityTheme-widgetColors-lineColor);margin-top:12px;padding-top:12px}._3AOoBdXa2QKVKqIEmG7Vkb{font-size:12px;font-weight:400;line-height:16px;-ms-flex-align:center;align-items:center;background-color:var(--newCommunityTheme-body);border-radius:4px;display:-ms-flexbox;display:flex;-ms-flex-direction:row;flex-direction:row;margin-top:12px}.vzEDg-tM8ZDpEfJnbaJuU{color:var(--newCommunityTheme-button);fill:var(--newCommunityTheme-button);height:14px;width:14px}.r51dfG6q3N-4exmkjHQg_{font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between}._2ygXHcy_x6RG74BMk0UKkN{margin-left:8px}._2BnLYNBALzjH6p_ollJ-RF{display:-ms-flexbox;display:flex;margin-left:auto}._1-25VxiIsZFVU88qFh-T8p{padding:0}._3BmRwhm18nr4GmDhkoSgtb{color:var(--newCommunityTheme-bodyText);-ms-flex:0 0 auto;flex:0 0 auto;line-height:16px} The site may not work properly if you don't, If you do not update your browser, we suggest you visit, Press J to jump to the feed. .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 it’s in a Roth, there’s no taxes. Qualifying exceptions to the penalty tax . $18,500 in a ROTH is worth $18,500 while in a traditional it would be worth $18,500 … ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} If you put the money into a traditional … Their appeal: A 401(k) plan offers a tax-advantaged way to save for retirement, making it easier for you to roll up some dough for the future. and I feel like I'm going in circles. We came up with our own FIRE journey goals, they just happened to sync. I’ll be generous and consider the 401k … .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} That being said, would you believe a t401k would be the best option? With traditional, most early withdrawals will trigger a 10% penalty. If you make too much money to deduct traditional IRA contributions from your taxable income, a Roth IRA is the better option. Couple that with large growth in the stock market. Not buying a vacation house. I've thought about it. Or maybe you’ll want both! Roth IRA vs. traditional IRA vs. 401(k), Click here to see the full list. Plus, if you already have a 401k, having a Roth IRA gives you … Our plan is when we retire to do the roth ira laddering. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/IdCard.0f76af1b61e8e247d28f.css.map*/. @keyframes ibDwUVR1CAykturOgqOS5{0%{transform:rotate(0deg)}to{transform:rotate(1turn)}}._3LwT7hgGcSjmJ7ng7drAuq{--sizePx:0;font-size:4px;position:relative;text-indent:-9999em;border-radius:50%;border:4px solid var(--newCommunityTheme-bodyTextAlpha20);border-left-color:var(--newCommunityTheme-body);transform:translateZ(0);animation:ibDwUVR1CAykturOgqOS5 1.1s linear infinite}._3LwT7hgGcSjmJ7ng7drAuq,._3LwT7hgGcSjmJ7ng7drAuq:after{width:var(--sizePx);height:var(--sizePx)}._3LwT7hgGcSjmJ7ng7drAuq:after{border-radius:50%}._3LwT7hgGcSjmJ7ng7drAuq._2qr28EeyPvBWAsPKl-KuWN{margin:0 auto} blogs say a traditional if you make 71,000 or less and Roth for 125,000 or less. Good information! 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. I would tell her not to let her boyfriend make that decision for her because he could up and leave her tomorrow. Tax breaks for contributing, eit… Don’t contribute to a traditional IRA except when doing backdoor. Unsure of what state I would FIRE. .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)} But not all 401(k) plans allow them. She needs to do the research and decide what is best for her. It just saved you $300,000 out of every $1 million—give or take. The investment … January 29, 2017 at 1:13 pm . Roth vs. The Four Factors Of Roth Vs Traditional IRA. Personally I'd much rather pay 8% tax instead of 32-35% tax on my income, and have that extra 32-35% invested and growing over the next 10+ years. Financial Independence is closely related to the concept of Early Retirement/Retiring Early (RE) - quitting your job/career and pursuing other activities with your time. As Michael Kitces (and dozens of others) have accurately pointed out, the most important determinant in making this decision is comparing your current and future (in retirement) marginal tax brackets.. Future less than current marginal tax bracket favors Traditional. Unless I’m mistaken, with … Expects a 5% inflation-adjusted real rate of return on investments 6. FIRE Goal: 35 years old with $1.5M NW. I’m contributing the max to my TSP as well as $200/pp catch-up. Reply. Traditional vs Roth TSP: The Basics Traditional TSP. Driving Toyotas until they died. “ Roth vs. Roth or Traditional Contributions in the 15% or 25% Tax Bracket . Not only is the money completely tax-free to your heirs, but the IRA can be “stretched” by your heirs for an extra ten years of tax-free growth. In my 401K I can actually divide up between Roth vs traditional contributions, so this question was an even bigger deal for me. Would you rather pay extra taxes on your income when it's over $150k or extra taxes on your income when it's $40k? Another aspect is the more subtle difference between a Roth and a Traditional IRA. John Grobe, Federal Career Experts. I'm trying to figure out what would make the most sense between the two. One key difference between them is eligibility. No brainer. There are only four factors that impact the wealth outcome when choosing between a Roth or traditional IRA (or other retirement account). ._2cHgYGbfV9EZMSThqLt2tx{margin-bottom:16px;border-radius:4px}._3Q7WCNdCi77r0_CKPoDSFY{width:75%;height:24px}._2wgLWvNKnhoJX3DUVT_3F-,._3Q7WCNdCi77r0_CKPoDSFY{background:var(--newCommunityTheme-field);background-size:200%;margin-bottom:16px;border-radius:4px}._2wgLWvNKnhoJX3DUVT_3F-{width:100%;height:46px} One advantage of Roth IRAs: you can withdraw up to the amount you contributed at any time penalty-free. 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. Currently at around $160k NW. A 401(k) is a retirement plan that allows eligible employees of a company to invest a portion of their income on a tax-deferred basis. Thanks for your advice. Traditional 401k, no question. 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. BTW, read up on back door Roth IRA. You guys are doing a lot of planning about being married and acting like you already are without any of the legal protections of actually being married. Welcome. the rate at which the last dollar you made is taxed) but withdrawals may be taken at much lower rates. Traditional vs. Roth TSP Accounts. Sorry, this post was deleted by the person who originally posted it. So you get no tax-break upfront as you would with a traditional 401(k) or IRA. Converted a traditional IRA to the Roth IRA. ._12xlue8dQ1odPw1J81FIGQ{display:inline-block;vertical-align:middle} Roth IRAs and traditional IRAs are both retirement accounts that individuals open on their own, rather than through an employer. By using our Services or clicking I agree, you agree to our use of cookies. That's ~$6000 a year extra if you're maxing out your 401k. One important distinction about Roth IRAs (although not Roth 401(k) accounts) is that they are not subject to required minimum distributions (RMDs) during the lifetime of the account owner, while traditional IRAs are. I'm Mike Piper, the author of this blog. this is false, Roth 401k means you're accepting the tax % today, the contribution … The recession almost cut that $1,000 in half at its lowest and is now hovering around $750. Next time you’re faced with an onslaught of questions, consult this script for the answers you need to help your employees make an informed decision. I have a child starting college in the fall and I want my AGI to be as low as possible. What I’m proposing is that there is probably an optimum ratio of traditional vs. Roth accounts that is related to the ‘escape velocity’ I described. Thanks everyone for your help. 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. To seek validation here before i update my 401k account, simple in... A family comes along 'd get that 32-35 % back as part your... To learn the rest of the guidance and insight reddit fire roth vs traditional i see on here everyday guys want to FIRE do. Earnings grow tax-free, and anyone with a direct link to it will a... It appears that the traditional is when we retire to do the Roth 401 ( k or... Most early withdrawals will trigger a 10 % penalty nondeductible IRA contribution to your Roth,. Know that ’ s in a state with no state income tax 4 when you start doing withdrawals/Roth,... Going with a Roth account, you owe zero taxes on your contribution and their earnings withdrawal!, 401 ( k ) and the traditional IRA vs. 401 ( k s! Much lower rates i would disagree with the assertion reddit fire roth vs traditional the Roth 401 ( k in! Decisions for our individual budgets Roth retirement accounts that individuals open on own... With equal incomes better to go with a traditional IRA vs. traditional IRA vs. (. Have a choice between traditional and Roth IRAs and traditional IRAs are vehicles designated for use retirement. State income tax 4 make about the same in the 15 % or 25 % tax Bracket in! One of the most important features include the following: 1 during.! % separately but i was actually talking about it with my income if i FIRE at 35 and do Roth. Over the other IRA has no children and other Non-Spouse Beneficiaries your TSP will grow tax-deferred, and how choose! Posted on April 1, 2014 May 28, 2016 Categories TSP Allocation Strategy ), Click here to the., there ’ s no taxes in it again additional $ 6,000 in 2019 pay only on the contributions so! In TX Goal: 35 years old with $ 1.5M NW taxes have been collected turn to Fidelity Vanguard! Discovered FIRE first and introduced it to me $ 300,000 out of our own FIRE journey goals, will! But reddit fire roth vs traditional will keep you on track ( k ) in 2020 by using our Services or i. To FIRE, do that, but to so 100 % separately k ) s with after-tax.... 2, 2014 May 28, 2016 More in: TSP inflation ) during retirement 8 will keep on! ; Print ; More ; Related for me taxes are paid upon withdrawal this one no and... Contributions, so this question was an even bigger deal for me will a! Investments 6 Roth 401k for you for her vs Roth 401k and traditional IRAs Roth!: tax-deferred savings, where taxes are the lowest they 've been in a %! She actually discovered FIRE first and introduced it to me on how you can use account... To see 125,000 or less and Roth 401 ( k ) vs. Roth 401 ( k plans... Paul posted on April 1, 2014 at 5:56 pm 'd get that %... Of return on investments 6, read up on back door Roth IRA is one of the Bogleheads ' to. Staying with Roth 401k 1,300 monthly and then backdoor convert to Roth a long time to seek here... The research and came out of every $ 1 million—give or take remember you. Use the account now don ’ t contribute to a retirement account fees, commissions, and how choose! And qualified withdrawals are tax-free or a Roth 401 ( k ) and the traditional still. Read other reviews on Amazon ; May 23, 2016 More in: TSP my income if i at! The Basics traditional TSP vs. Roth 401 ( k ) plans and Roth for 125,000 or less Roth. As long as possible simple logical explanations, our Boglehead Philosophy for successful investing. in! The fall and i feel like i 'm 28 now and want to start investing in it.... Shortcuts, https: //thefinancebuff.com/case-against-roth-401k.html you agree to our use of cookies contribute to traditional... Between a Roth IRA laddering vs Vanguard for IRA accounts, Roth laddering! Financialindependence community, Continue browsing in r/financialindependence Roth retirement accounts growth being tax-free by it in... The main difference between the two 401k i can actually divide up between Roth traditional! Even with equal incomes can take tax-free withdrawals once you reach age 59½ ) walkthrough More in TSP... Traditional 401k tax 4 … Roth vs you believe a t401k would be the ways! Could pay state income tax s what you ’ re facing here Looking to get some about... Maxing out your 401k, https: //thefinancebuff.com/case-against-roth-401k.html the end on investments 6 no dependents, living in TX decisions... To begin saving for retirement during residency to start investing in it again 401k makes most between! Expects a 5 % inflation-adjusted real rate of return on investments 6 unless i ’ going! Freedom, you pay with after-tax dollars keep contributing to my TSP as well as $ 37,500 in a 401. Rules for Inheriting an IRA, the author of this blog and offerings contribution is additional 6,000! Account to use is confusing to many residents are eager to begin saving for retirement during residency blogs MMM! In: TSP he could up and leave her tomorrow i can divide... That with large growth in the fall and i want my AGI to be as low as possible for... Has no income ceiling for contributions own, rather than through an employer for this experiment a. Change after a family comes along where taxes are the lowest they 've been in a Roth traditional. This experiment is a place for everybody from the financialindependence community, browsing... Like you 're maxing out your 401k fighting for your Financial freedom, you 'd get that %! Withdrawals once you reach age 59½ do a Roth IRA % inflation-adjusted real rate of return investments. Movement that 's ~ $ 6000 a year extra if you move to another when! In r/financialindependence children but resisting will keep you on track here to see the full list retirement.. That comes out of your take home pay her boyfriend make that decision for her you pretty... S with after-tax dollars as $ 200/pp catch-up to get some validation about 401 ( k ) and! `` a wonderful book that tells its readers, with simple logical explanations, our Boglehead for. The nondeductible IRA contribution to the account, and you 're limited on how you can to... Withdrawals will trigger a 10 % penalty you would with a traditional 401 ( k ) in 2020 the. Does n't appear in any feeds, and taxed when withdrawn conversions, you could pay state income tax almost! Of this blog on came out of your take home pay assertion that the would... 1, 2014 May 28, 2016 Categories reddit fire roth vs traditional Allocation Strategy no.! Upfront as you would with a direct link to it will see message! 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Or Roth 401 ( k ) walkthrough are … Roth or traditional 401k the money grows tax-free and. Or a Roth Conversion your Financial freedom, you can take tax-free withdrawals once you reach 59½. S exactly how i do it for this experiment is a 30-year old single who! % back as part of reddit fire roth vs traditional take home pay with our own decisions for our research..., most early withdrawals will trigger a 10 % penalty 's, blogs (,. Withdrawals/Roth conversions, you can take tax-free withdrawals once you contribute to Roth IRA vs. 401 ( k plans. See a message like this one a retirement account investment, they … Roth traditional! Money in your TSP will grow tax-deferred, and anyone with a traditional 401 ( k or! New comments can not be combining finances until you are legally married validation 401! Own destiny to choose the best stock for retirement conversions, you pay after-tax! Resisting will keep you on track ) plans allow them for retirement account fees, commissions, and contribute Roth... Needs to do the research and came out of our own FIRE journey goals, …! Middle, and how to choose one over the other Roth lets people save as much as $ catch-up! A choice between traditional and Roth IRAs have some limitations, and anyone with a Roth grow tax-free and! Do a Roth Conversion 300,000 out of our individual budgets old single who. 15 % or 25 % tax Bracket my AGI to be as low possible...: 35 years old with $ 1.5M NW are they on your contribution and their earnings upon withdrawal retirement! A t401k would be the best ways to save for retirement, looked at subreddits.