I'm in big law, and my firm won't match my 401k contributions. They have a profit sharing structure with no minimum contributions necessary as long as I participate in their 401k program. Should I still max out my 401k? The tax argument doesn't appeal to me since I'll be paying taxes when I withdraw anyways, and I'll likely be in a higher income bracket by then.

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Why do you think you’ll be in a higher tax bracket when you retire? Do you have the option for a Roth 401k, if you feel you will be in higher tax bracket when you retire? Is there anything else you can do with that cash that you think will get you higher returns? if not it might be better to still max out the 401k

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EY 2 maybe maybe not. For most yes, but for some no. Depends on individual facts

The tax argument should appeal to you because the 401k is only taxed once. If you invest outside the 401k, in a taxable brokerage for example, you will be taxed twice because you’re investing with post tax dollars. The 401k effectively allows you to avoid capital gains tax. The only reason not to contribute to a 401k when you have not hit the cap is if you value financial flexibility of not having a significant amount of your funds being locked away for retirement.

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Totally agree with ASM1. And since there is a relatively low $6K cap on Roth IRA, the Mega Backdoor Roth to put in much more via eligible employer retirement plan after-tax contributions converted to Roth is the way to supersize this no brainer. (Max is $37.5K minus employer 401k match amount)

Unless you have a pension or other retirement income. There is a good chance you will be in a lower bracket in retirement. You need to understand how your plans work. What would you do if you don’t use 401k? Would it go in a taxable brokerage? Can you do Roth 401k? Too many unanswered question to be much help.

I cantdo Roth 401k. Just Roth IRA available.

I would be investing in etfs and index funds since I can access those funds anytime with a lower tax rate than my income tax. As explained in a previous comment, I don't think I'll retire at 59 when I can start withdrawing from 401ks. Since I'll keep working, I'll be at a higher tax bracket. I also don't see any point in sitting on millions of dollars until I'm 59 when there's no telling how long I'll have to spend that money.

That’s fair I understand that logic. My roommate is in big law so we have these conversations every now and then. It really depends on your spending habits but here’s my advice. You probably make enough money to max out the 401k and still invest the rest in a taxable account so might as well take advantage of it so your not paying taxes on the dividends/gains (if you have a Roth option). I understand that anything could happen so why sit on millions until retirement, but I think in big law you make enough to find the balance between saving in a retirement account vs saving in a taxable account. Like you said anything can happen in the future there’s a chance you could lose your job, things could go wrong, make some bad investments etc. you have ability to build a nest egg right now why not take advantage

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Can you contribute to Roth 401k through employer?

Are you sure you understand the employer plan. Employers don’t offer iras. Is it really a Roth 401k?

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