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Jan 16, 2020
7:50:42am

ebv All-American

It's free money. 4% is decent. 6% plus is good.

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ebv

Bio page: ebv
Joined: Jan 12, 2011
Last login: May 4, 2024
Total posts: 11,897 (679 FO)

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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.

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.

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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