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OP, if you’re planning to go to grad school, you could opt for a Trad 401K vs Roth 401K for the next few years, then convert from former to latter when you’re in school (and presumably in a much lower tax bracket).
Hi, jumping in late. Could someone explain why the idea of a Roth 401k early on in a career doesn’t make sense 99% of the time? I’ve seen multiple threads and excel models point to a Roth being better than traditional early on.
I’m fine hearing in-the-weed explanations or good easy to digest links
Very helpful, thank you
Pro
Outdated number wise
Chief
In addition to the flowchart I would add:
HSA even before Roth IRA
Traditional 401k over Roth 401k
Chief
^^ Exactly what A1 said 👍
My wealth advisor says to split between Roths and traditionals as much as you can so you have optionality when you retire depending on your tax situation.
Chief
This is bad advice, there’s no need to hedge your bet with a Roth 401k when the traditional is a winner 99% of the time.
Also you can easily bypass income limits for Roth IRA, it’s a well established and legal practice that takes 5 minutes called “backdoor Roth contributions”.
Thanks everyone, especially S1. Thinking I’ll shift back to traditional 401k (only have had 2 paychecks go into Roth 401k so far) then and also start contributing to Roth IRA as well.
My 23 year old self and future retiring self thank you all!!
Chief
Would also look into something called mega backdoor Roth.
If Deloitte offers both an “after-tax 401k” (not Roth 401k) as well as “non-hardship in-service distributions” then this is an advanced method to funnel an additional $20-30k per year into a Roth IRA