Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Monica

At what I expect your total household income is, your top federal income tax rate is 15% + 6.2% for social security. So the difference in tax liability (not including state income taxes) is roughly $212 for each $1000 put into the Roth 401k rather than the traditional 401k.

Check the calculator here to see what the tax cut does for your family: https://taxfoundation.org/2018-tax-reform-calculator/

So the questions I have would be this:

Is the employer match on the entire amount contributed to the 401k or is it capped? That might influence my thinking a little bit.

Does the 401k allow for an in service rollover of the employer match into the Roth 401k?

Does the 401k plan allow for adjusting the relative contribution between the traditional 401k or Roth 401k during the year?

What I personally have done is slowly ramp up 401k contributions and proportionally decrease traditional contributions. This has kept take home pay fairly consistent over the past 2 years or so and increased the Roth pretty substantially. I'm looking into a rollover of pretax amounts into the Roth 401k, and will likely do that next year.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.