My compary is offering a ROth 401 plan starting in January 2007. I am wodering whether contributing to this plan would be a good idea.
Although both DH and I have Roths, we are no longer able to contribute because our income is too high. Currently we contribute the minimum to our 401 to get the company match and save the remainder of our disposable money in taxable accounts. Our plan is to retire in about 3 years when my DH is 60.
I realize that we will be in a lower tax bracket when we retire, but we pay taxes on the money we put into our taxable accounts and their earnings. If some of this money was squirreled away in the Roth 401, we could let it grow for many years and then avoid taxes when it was withdrawn.
Does this make good sense?
Although both DH and I have Roths, we are no longer able to contribute because our income is too high. Currently we contribute the minimum to our 401 to get the company match and save the remainder of our disposable money in taxable accounts. Our plan is to retire in about 3 years when my DH is 60.
I realize that we will be in a lower tax bracket when we retire, but we pay taxes on the money we put into our taxable accounts and their earnings. If some of this money was squirreled away in the Roth 401, we could let it grow for many years and then avoid taxes when it was withdrawn.
Does this make good sense?