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Hello Guyss!!,
YOE: 5.2
Tech Stack: React.js, Typescript (Frontend Dev)
Wells Fargo => 24L (fixed) + 1.8L ( variable) + 2L (JB)
Publicis Sapient => 22L (negotiable) (Senior Associate L1)
Please advice better one for me to join considering perks and benefits and career growth. I know WLB is better at Wells.
TIA
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This depends on your current income level, generally the lower it is, the better a Roth is. If you’re looking to max out the account, a Roth will provide exponentially more value than a traditional account because 19k tax free is worlds better than 19k tax deferred.
Another strategy is to contribute to your traditional 401k and then a Roth IRA as well, as you can get better returns pulling from your 401k in years where you need minimal distributions (effectively tax free) and your Roth IRA in years when you need large distributions (40k+)
The Roth does not provide more value in the long run, investing in a traditional 401k and using the tax savings to invest in a regular taxable brokerage yields the highest overall benefit.
I often hear the short-sided argument in favor of Roth that ‘taxes will be higher in the future so Roth is better’, however that is far from the whole story. The most important thing to remember is that taxes are progressive and while marginal rates may increase (possibly substantially), your tax liability is likely to decease even as marginal rates rise.
With even the smallest amount of planning, you should be able to avoid ever paying taxes on your 401k if you can draw from a Roth IRA, as 401k and a regular taxable brokerage.
Roth 401k is a huge drag on wealth accumulation.
Roth 401k is (almost) always a bad deal. Its a REALLY bad deal if you are earning enough that you need to backdoor your Roth IRA contribution.
Traditional 401k without a doubt. See my earlier response to A1.
If you are making enough to need the backdoor Roth (and know what it is), I would advise to use the traditional 401k for the up front tax breaks. Use any additional funds for a taxable account. I agree with SM1.
Roth accounts make sense in the long (>5 years) since the money grows tax free (rather than tax deferred).
I don’t plan working past 45 (5 years past my FI number), just another reason Traditional made so much more sense than a Roth.
I recommend traditional regardless of income level. You already have Roth IRA for tax deferred gains. Depending on when you retire and potential down years on income, you can convert traditional to Roth and pay very little taxes on them. Look up Traditional 401k laddering
Here just to see answers because IBM gives new hires both options to choose from and not sure what to do
Think about the amount you will withdraw per year in retirement. Look at that in terms of today’s dollars and look at the tax rate today for that amount. If paying that amount of tax on your withdrawal makes you queasy or angry go all Roth.
Sorry, but I have to ask - is it not supposed to make you queasy if you’re paying it now, but should in retirement?
There are non financial market investments too you can consider . Most people in our industry can afford to buy a small investment house if you save for down payment for a few years .
Okay so I’m also curious about all of this. Sounds like max out traditional 401k. Then what would be your next step to saving for retirement?
Next step would be HSA, Roth IRA, or traditional savings. The Roth IRA has some advantages over traditional brokerage accounts, but should only be used if you’ve exhausted your tax deferred options