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Traditional 401k or Roth 401k
Old 12-18-2006, 11:57 PM   #1
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Traditional 401k or Roth 401k

Hi,

My company is offering both of these 401k and wanted to get some feedback.

Right now, I'm at 28% fed and 9% state. I know this decision depends on my future rate at retirement but I'm 27 and who knows what it'll be 30 yrs from now.

What I know currently is the following:
- I can afford to max out roth IRA and roth 401k but that'll leave little room for taxable account investing.
- I'm always looking for beginning of the year because I can max out my roth IRA (I know this sounds nerdy).
- I expect to hit 35% rate in couple of years.
- I expect to stay with my current company for 2-3 yrs and who knows if my future employer will be offering roth 401k.

I know my comments are leading to roth 401k but just wanted to get some feedbacks I might be overlooking.

One more question.... is it possible to rollover my 401k to traditional or roth IRA at the end of the year even though I'm still employed with the same company? Our company expense ratio is quite high so just thinking about this option.

Thanks in advance for the inputs.
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Re: Traditional 401k or Roth 401k
Old 12-19-2006, 08:42 AM   #2
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Re: Traditional 401k or Roth 401k

Take the traditional 401(k). This thread suggests that no one is in a higher tax bracket in retirement:
http://early-retirement.org/forums/i...?topic=11064.0

Plus you will probably move to a no-state-income tax state when you retire.

It is not possible to do a 401(k) rollover while still employed at the same company.
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Re: Traditional 401k or Roth 401k
Old 12-23-2006, 07:11 PM   #3
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Re: Traditional 401k or Roth 401k

I'm going to do the Roth 401(k) for 2007. Another tool in the tool box. I will max 401(k) and IRA.
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Re: Traditional 401k or Roth 401k
Old 12-30-2006, 08:50 PM   #4
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Re: Traditional 401k or Roth 401k

I still wonder if its not better to eliminate some of the unknown ?
Plus if you get hit with mandatory withdrawls you may be taking out a lot more than the 35k mentioned in the other post.
You may be better off investing outside the 401k if its not a roth in a taxable account. After you get the company match of course.
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Re: Traditional 401k or Roth 401k
Old 12-30-2006, 10:59 PM   #5
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Re: Traditional 401k or Roth 401k

Quote:
Originally Posted by LOL!

It is not possible to do a 401(k) rollover while still employed at the same company.
This depends on your plan administrator (employer). Some plans DO permit rollovers......I have done several of these.
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