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Pros and cons of investing in 401k if your company doesn’t match more than for first 3-6%?

likefunny
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Tax savings is the biggest one

likesmartfunny

Invest in this order.. 401k to full match for the match Roth if eligible to max, for the tax benefit 401k to max for the tax benefit

like

Main reason I use Roth 401k and Roth IRA is to avoid RMDs

Pro = Less taxable income. More time for growth & compounding. Con = You have less disposable income today.

Always get the match it's free money. Anything above and beyond that should be discussed with a financial advisor.

As a former financial advisor, contributions to a 401(k) are not something you need a financial advisor to figure out

likefunny

Agree on doing upto the full match number from employer as anything above that is waste as you will end up paying the taxes (in the range of 20-30%) withdrawing at 60-65 age. It’s just that you are not paying taxes on it now but uncle Sam will get ya one day. Plus there is always a risk of market driven growth that most of these funds are invested. Am I missing something?

D2 - There's no one right answer to Roth vs. Traditional. Some people choose Traditional for the reason you mentioned. I choose Roth because 1) I'm betting on the certainty of current tax rates over the uncertainty of future tax rates, 2) I'm young, with low COL, and can 'afford' to take the tax hit now in favor of a tax-free retirement.

Depends on the 401k plan. Some of them have management fees of >1% or have bad investment options. I’ve worked at companies with no fees and solid index funds available so I max out even after the match. If you have a bad 401k plan focus on your personal IRA first.

My fees are about .03% through index funds. Target funds are about .1%. Not sure who charges 1%

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