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Since your tittle is consultant 100% do Roth 401k now
Traditional 401k break even is at the jump from the 24% to 32% marginal fed tax rate
> 197k annual income = traditional 401k
<197k annual income = roth 401k
You should do both if you can - but max out your 401k first, especially if your employer has a 401k match
Theory is that you’ll get a higher compounding return with the higher limit ($23,500 vs $8,000) even with taxes. Looking at ~32 years @ 4.5 CAGR for each you get -
401K @ $23,500 annual limit: $94,069 ($75 - 56k after taxes, est higher end given this may be your only income at retirement)
Roth IRA @ $8,000 annual limit: $32,719.85
Woops, read it as 401K vs Roth IRA
Technically the advice is still sound, given rule of thumb is Roth 401K for when you’re lower income vs traditional for higher given implications to your taxes
e.g., Roth 401k is “cheaper” when your income is lower since you have a lower tax bracket, Trad 401K is “cheaper” when your income is higher since it reduces your taxable income now and defers taxes on the 401k until later
Of course assumption here is OP’s AGI leans towards the latter
401k Match > Roth IRA > 401k
Not the question
Everyone always talks about higher taxes in the future. But if you look it up, taxes have only gone down over time.
It s'more about accounting for your personal taxes than trying to predict tax policy though
I plan to be at the 32% marginal rate at retirement
I am at the 24% marginal rate now
Unless I anticipate a large swing in tax policy roth is a better option
Most people will pay lower taxes in retirement.
Retirement income for many people is social security and Traditional 401k/IRA withdrawals.
Unless you already have a large Traditional balance you should be filling up that account not Roth.
You could consider splitting your contribution to each type of account given no one knows how much you’ll earn in retirement or what will happen to tax policy. I also like the comfort of seeing the Roth balance and knowing that balance is my real number (I don’t have to account for paying taxes from it, I know it’s all mine)