For the 1st 14 years of my employment at my former employer I contributed to a traditional 401k, then for the last 6 years of my employment at my former employer my employer added a Roth 401k option and I was one of the few who elected to contribute to a Roth 401k. My entire 401k portfolio from my former employer (both Roth and non-Roth) is currently 25% Roth 401k and 75% non-Roth 401k.
I left my former employer in early 2017 to go out on my own, and now I contribute to a SepIRA, which allows much more per year to be tax sheltered than my old 401k allowed. I never rolled the 401k from my former employer into an IRA. The investment options in the old plan meet my needs, so I am letting that $1M+ grow in place for now.
Here is my question: When I retire, should I begin by taking distributions from the taxable money or the tax free Roth money?
Asked another way, is it better to pay ordinary income tax on the 401k distributions and let the Roth moneys continue to grow tax free?
I imagine someone has played this out and knows the answer. Which one makes better sense mathematically?
Thanks.
I left my former employer in early 2017 to go out on my own, and now I contribute to a SepIRA, which allows much more per year to be tax sheltered than my old 401k allowed. I never rolled the 401k from my former employer into an IRA. The investment options in the old plan meet my needs, so I am letting that $1M+ grow in place for now.
Here is my question: When I retire, should I begin by taking distributions from the taxable money or the tax free Roth money?
Asked another way, is it better to pay ordinary income tax on the 401k distributions and let the Roth moneys continue to grow tax free?
I imagine someone has played this out and knows the answer. Which one makes better sense mathematically?
Thanks.
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