Newer to the game compared to many of you, trying to decide if splitting 401k contribution between traditional and Roth is worth it.
Let’s assume I am not in a higher income tax bracket at retirement (current base is 100). Is it still worth it to split contributions between Roth or traditional (6% trad to get match, rest would be Roth)? Some different proportion split? TIA.

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For me it will mentally feel better to have $3M of tax free money in my 401k when I retire than $3M of taxable that will actually be like $2M. I understand I should have $1M in a brokerage account to pay the taxes based on how the math works “today” but what if you spend the $1M instead of saving it, etc. so that’s why I’m saying mentally it feels better to me (others can and should feel differently) so I do Roth. We’re currently in the 24% marginal tax bracket, when we get higher I will switch to traditional tho.

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Yep which is why I said it mentally feels better for me and others can and should feel differently but people only want to hear options that agree with their own 🙄

Up to you on how you want to split it up. I prefer 100% roth and use the 6% match in my 401K. I would suggest for most people to just do the company match and open up an individual Roth at your preferred broker and contribute any excess savings in that. Primary reason is you have unlimited investment options versus just the handful of investment options VZ provide with fidelity.
You can find plenty of low cost Fidelity ETFs, or add some stocks of your choice to your portfolio. However, it requires some manual cash movement and placing your own orders depending on the security type

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My thing is you can’t predict the future, so I can’t be sure that I’ll be in a higher bracket later even if it’s likely.

May be a reasonable choice. I would lean toward traditional but without any information a split might be best

The choice boils down to your tax bracket now vs your tax rate when withdrawing in retirement. We don’t know either.

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Think about it like this, do you plan to work or have an income during retirement? Most people do not plan to work, and therefore will more than likely be in a lower tax bracket.

How much are you planning to use yearly in retirement? Cause you only are taxed on withdrawals and unless you are spending over roughly $110k a year you pay a 12% tax which is almost 100% less tax than you are paying now if you plan to withdraw 100k a year in retirement

The rule of thumb I use here relates to marginal tax rates. If your combined federal and state marginal rate is >30%, go all traditional. <25%, all Roth. Anywhere from 25-30% is a grey area and you may be better off doing some kind of mix, pushing more towards traditional as you get closer to 30%. There are a lot of variables in play in retirement that may heavily lower the tax burden on any distributions you withdraw, but it’s hard to know what that will look like in 30-40 years. Best to have a mix of pre- and post-tax dollars so you can use both in retirement in a way that benefits you most.

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