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HatePayingTaxes started a thread on Trad 401k vs. Roth 401k for a younger worker. Most of the articles I've seen about Roth 401ks tout the advantages for younger workers.
I have only found a few articles talking about the advantages of a Roth 401k for a high earner. Next year I am going to be receiving a very large bonus and even if I contribute the maximum allowed to my Trad 401k, I'll still have too high a modified AGI (i.e. >$160K) to contribute to my Contributory Roth IRA. So I am considering whether to switch to a Roth 401k next year.
Pros: I have the means to make the full contribution and shoulder the extra taxes easily. Doing this would increase the percentage of retirement assets held in non-taxable accounts -- I have most of my retirement moneys in tax-deferred accounts right now and I am concerned about being able to control required distributions down the line. I'm not in danger of being hit by any other tax phaseouts because I don't use the deductions affected by those (such as itemizing deductions).
Cons: I would have yet another retirement account to manage. Sure, they are all One Big Happy Portfolio but in reality each one adds a little to the overhead of managing them all. And it may be advantageous for me to switch back to a Trad 401k after this one special bonus year, leaving another 'small' retirement account in place in the process.
So.... anything else I should be considering in this decision? I love analysis, but hate the paralysis that I sometimes yet . . .
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