Help! The Gov't wants my money!!

[anySmarterIdRunLinux]

and I don't think they're going to spend it wisely.

Hi All. Thanks for taking the time to read this drivel. I am a married 39 yr old with a new consulting business and am looking for a retirement strategy. Getting a very late start, so I want to be aggressive.

I am wondering about Roth 401k plans vs. tradditional 401k plans. My question: The $$ contributed ($15.5k) from my salary ($120k) will enter the Roth 401k as AFTER tax dollars. Will the profit sharing portion ($30k) enter the Roth 401k as PRE tax dollars? If so, how is that tracked for 'tax free disbursement' after retirement? If not, I guess I have to decide which type of 401K plan I want. Or maybe even a SEP. So far, I am leaning heavily to a 401k...

Or am I completely clueless? Actually, don't answer that.

I am wondering if I can create tax liability diversification within one retirement account. If not, am I simply better off with a 'standard' solo401K?

My company will generate about $165k / yr. I plan to take $120k as salary so that I can take full advantage of (Roth)401k plan. The other $45k or so will pay 7.5% SS tax, bills, etc. Am I barking up the right tree? Or am I way off base?

 

[MasterBlaster]

All Roth 401k's are with after tax dollars. So check your info. When you take the money out, providing you are 59.5 years old or greater then their will be no taxes.

Did you mean that the profit sharing dollars will be in a traditional 401k (not a Roth ) ? If that is the case then the money taken out will be taxed as ordinary income.

here is a recent forum thread that discusses very similar issues for Roth versus traditional IRA accounts. Most of the issues are pretty much the same. http://www.early-retirement.org/forums/f30/retirement-vehicles-and-tax-brackets-38263.html