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URL:  http://boards.fool.com/1-does-contributing-to-a-roth-401k-in-any-way-29022465.aspx

Subject:  Re: Roth 401(k) & Roth IRA Date:  1/11/2011  6:37 PM
Author:  CABob Number:  68207 of 75340

1) Does contributing to a Roth 401(k) in any way subtract from the $5,000 per year contribution she is allowed to make to the Roth IRA or are they unrelated?

They are unrelated. Contributions to a 401k plan either traditional or Roth does not preclude contributions to a Roth IRA.

2) Anyone have opinions (good or bad) on contributing to both a Roth 401(k) and Roth IRA instead of the traditional methods?

There is nothing inherently wrong with contribution to both a Roth 401k and Roth IRA. I think the decision really is whether you want to contribute to a Roth 401k vs. a traditional 401k. IF tax rates are currently the same as they will be at time of withdrawal from the 401k the two are mathematically the same. The chances, however, that taxes will be the same in the future as they are currently are somewhere between slim and none. Whether they will be higher or lower at time of withdrawal is more difficult to predict.
I think that it is highly desireable to have accounts that are tax deferred, tax free, and taxable at time of withdrawal to give one some options and control of taxes at the time.
In most cases the decision comes down to whether the current tax deduction is more or less desireable than having the money tax free at retirement.

Bob
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