Originally Posted by LOL!
OK, so put 13K in a 401(k) now and put the 2.5K in an after-tax, tax-efficent no-load, low-expense-ratio mutual fund. Then you will have a 401k that you can rollover to an IRA that can be converted to a Roth IRA. And you will have a little pot of money on the side to pay the much lower income taxes on the conversion.
Quite a few folks on this message board have practiced this conversion in retirement when they are in a much lower tax bracket. Since it works, it is not to be dismissed. I have seen no messages where someone did your first option.
If I were young (20s+), hence at the start of my career, I would do Roth 401k
when my salary is lower/lower taxes/etc. So the interest can grow tax
free, then in my 30s I would switch over to regular 401k. Its a judgment
call. I never had that choice to make, so now the only thing I can do is
the regular->roth transfer, as soon as possible and as much as possible
at a lower tax rate. As you salary increases and you pay much higher
taxes, at some point you may want to switch.
Don't forget you also will save state tax, in NC the rate is 7%, some states
of course don't have income tax so they may be even more incline to use
Its a judgment call, personally, I'd like to have 40% in regular IRA,
40% in roth IRA, and 20% in taxable accounts, this keeps me tax
There is no wrong or right way, you pay money and take your chances.