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Jan 15, 2020
4:41
:37
pm
RdF3
All-American
Actually they aren't. One can make post-tax contributions into a traditional IRA/401(k) that then grows tax deferred.
The details are tracked on form 8606 showing how much of your IRA is post tax. When you withdraw the funds that amount will come out tax free.
This message has been modified
Originally posted on Jan 15, 2020 at 4:41:37pm
Message modified by RdF3 on Jan 15, 2020 at 4:42:07pm
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RdF3
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swishh_15
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RdF3
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Nov 4, 2011
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Jun 16, 2024
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Messages
Author
Time
Question for the financial gurus: when funding a retirement account, is it better to choose pre-tax, Roth, or post-tax?
John Doe
All-American
1/15/20 4:25pm
Usually a roth.
JAGA97
1/15/20 4:26pm
At his age? I'd plow it into a Roth.
ebv
1/15/20 4:27pm
Good advice here based on his tax bracket.
bluecougar1985
1/15/20 4:50pm
This is a great approach!
ebv
1/15/20 6:00pm
I would do roth
cougfanz
1/15/20 4:30pm
roth and post tax are the same thing btw
Cougforgood
1/15/20 4:38pm
Actually they aren't. One can make post-tax contributions into a traditional IRA/401(k) that then grows tax deferred.
RdF3
1/15/20 4:41pm
Never mind
CopperLix
1/15/20 4:48pm
So Roth is better?
JuicyJam
1/15/20 5:25pm
How about for the first 19,000 they are the same (assuming pre 50 and 401k)
Cougforgood
1/15/20 5:42pm
Not the same either. One always has the option to make post tax contributions
RdF3
1/15/20 6:09pm
And why would you?
Cougforgood
1/15/20 7:51pm
When you’ve run out of better places to put money you’d look at doing it
KSwiss
1/16/20 1:37am
Probably a roth because he's likely not making too much right out the chute so
gmj81
1/15/20 4:43pm
I think people are way to fast to spit out Roth.
Lance71
1/15/20 4:43pm
It’s definitely situational. If he scarcely has a tax liability I’d say Roth.
bluecougar1985
1/15/20 4:51pm
Probably Roth since his tax rate is most likely lower than it will be later
RH84025
1/15/20 4:56pm
Great, thanks guys!
John Doe
1/15/20 5:25pm
If he can do a 401k (pre-tax) and then a Roth IRA as well, do both.
Mitty
1/15/20 5:45pm
He has choices between pretax 401(k), Roth IRA, and post tax 401(k). He can split money between all 3 if he wants.
John Doe
1/15/20 5:57pm
Don’t do post tax 401(k). That’s a huge headache and not meant for his situation. Move it either to the Roth or pre tax.
RdF3
1/15/20 5:59pm
This. He'd have to be making mid six figures to really see any benefit there.
ebv
1/15/20 6:03pm
Unless he is hitting the maximums and has no choice, agreed.
Mitty
1/15/20 6:58pm
He's an hourly employee for Amazon. He won't hit the max anytime soon.
John Doe
1/15/20 9:03pm
Is his employer contributing to 401k or matching?
ebv
1/15/20 6:02pm
Employer is matching 50% up to 4% total for the pretax or Roth.
John Doe
1/15/20 6:13pm
Nice! That's a decent match.
ebv
1/15/20 7:18pm
It is? I guess I’d have to disagree
KSwiss
1/16/20 1:41am
It's free money. 4% is decent. 6% plus is good.
ebv
1/16/20 7:50am
How much is he making? If tax burden < 25% match in the Roth.
jvquarterback
1/16/20 11:07am
RE: How much is he making? If tax burden < 25% match in the Roth.
John Doe
1/16/20 11:16am
Roth > post-tax 401k because the principle can be withdrawn at any time.
jvquarterback
1/16/20 11:30am
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