Roth 401K vs Traditional 401K

[KellyInBaconville]

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

[sailaway]

It really depends on your unique situation and requires a bit of guestimating if you are still far from retirement.

https://www.bogleheads.org/wiki/Traditional_versus_Roth

[KlangFool]

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

KellyInBaconville,

90+% of the time when someone posted this question, it is always wrong to contribute to Roth 401K.

Trad 401K and Roth IRA is the best combination for 90+% of the people.

A) Do you file your own taxes?

B) What is your current tax deferred account size? 1 million? 500K?

C) What is your current marginal tax rates?

D) Do you pay state income tax?

E) Do you have a pension?

KlangFool

[aristotelian]

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

Actually traditionally is better for most people. No matter how much wealth you accumulate, most will have less taxable income in retirement due to not having W2. Exceptions might be if you are currently low income or expect a pension in retirement.

Your retirement calculator may not be sophisticated enough to calculate the difference

[Watty]

Is it always advantageous to open a 401K Roth?

For the vast majority of people a deductible 401k is likely the best default choice unless you have lower income and lots of deductions, like lots of kids, and will be the zero percent federal tax bracket which is not that uncommon for people with modest income.

Most people are a long way from being wealthy and in a high retirement tax bracket.

Currently a married couple can have over $100K in taxable income and still be in the 12% federal tax bracket so if your retirement budget is expected to be lower than that choosing a Roth is a lot harder to justify.

Your age also matters a lot. If you are five years from retirement your likely retirement finances may be pretty clear. If you are 25+ years from retirement then a lot can change before you retire and you may even decide to retire early in a lower than expected tax bracket.

There can be all sorts of special cases like if you are pretty sure that you will retire in a state with much higher state income taxes but for me it would take a compelling situation to pay the taxes decades before you need to.

Roth's are still great once you have maxed out your deductible retirement accounts so some people will max out their traditional work 401k and contribute to a Roth outside of work.

[pennsylvania211]

I've been seeing a lot of articles and even some books that paint a Roth 401k is the gold standard. It is not.

Roth 401k is worse than traditional 401k if you fall into a lower tax bracket in retirement. The reasons for falling into lower tax bracket during retirement can be foreseen reasons (calculate savings rate) or unforeseen reasons (health issues, job loss, divorce, major market crash, etc).

Some people claim that the main benefit of Roth 401k is protecting your income from higher taxes in the future. Trying to predict the future is market timing. If you can do that (and no one can do it reliably), please find the next Apple or Nvidia or whatever and you won't have to worry about taxes ever.

[dknightd]

It might be worth opening both a Roth 401k and a Roth IRA just to get the 5 year clock running. Especially if you are over 54.5 years. Even a token deposit will get the clock running. Having Roth accounts might be useful one day. They are more useful once the 5 year clock has finished.

[Harmanic]

Is it always advantageous to open a 401K Roth?

For the vast majority of people a deductible 401k is likely the best default choice unless you have lower income and lots of deductions, like lots of kids, and will be the zero percent federal tax bracket which is not that uncommon for people with modest income.

Not necessarily. High income people can benefit if they end up with a lot of other taxable income, such as stock options, taxable brokerage, social security, pensions, royalties, rental income, etc. In such cases, having large Roth accounts provide some tax diversification that improves planning options.

[Harmanic]

I've been seeing a lot of articles and even some books that paint a Roth 401k is the gold standard. It is not.

Roth 401k is worse than traditional 401k if you fall into a lower tax bracket in retirement. The reasons for falling into lower tax bracket during retirement can be foreseen reasons (calculate savings rate) or unforeseen reasons (health issues, job loss, divorce, major market crash, etc).

Some people claim that the main benefit of Roth 401k is protecting your income from higher taxes in the future. Trying to predict the future is market timing. If you can do that (and no one can do it reliably), please find the next Apple or Nvidia or whatever and you won't have to worry about taxes ever.

I think you hit the nail on the head, namely we don't know the future. Everyone has a plan until they get punched in the face. In other words, no amount of planning will create optimal outcomes. Luck will play a huge role. So what do you do? You make the best guess and have a plan, realizing that you might get punched in the face a few times. But it is still better than no plan at all. Personally, I like having all of the above, taxable, tax-deferred, and Roth.

[ThankYouJack]

Actually traditionally is better for most people. No matter how much wealth you accumulate, most will have less taxable income in retirement due to not having W2. Exceptions might be if you are currently low income or expect a pension in retirement.

Some other exceptions could be if one decides to not retire early, one expects their income to increase as their career progresses, moving to a state with higher state income taxes, tax filing status changes, tax rates change, etc.

Lots to consider and tough to predict but the wiki page does a good job explaining.

[smitcat]

Actually traditionally is better for most people. No matter how much wealth you accumulate, most will have less taxable income in retirement due to not having W2. Exceptions might be if you are currently low income or expect a pension in retirement.

Some other exceptions could be if one decides to not retire early, one expects their income to increase as their career progresses, moving to a state with higher state income taxes, tax filing status changes, tax rates change, etc.

Lots to consider and tough to predict but the wiki page does a good job explaining.

Agreed - expecially since 'most people' do not pay a signifant amount of tax to warrant traditional and that many of the others have pensions, lower earnings years, deferred incomes, inheritances, etc.

[Wiggums]

Without knowing your exact numbers, I would go with the deductible 401(k).

[steadyosmosis]

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

[KellyInBaconville]

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

[KlangFool]

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

[aristotelian]

Actually traditionally is better for most people. No matter how much wealth you accumulate, most will have less taxable income in retirement due to not having W2. Exceptions might be if you are currently low income or expect a pension in retirement.

Some other exceptions could be if one decides to not retire early, one expects their income to increase as their career progresses, moving to a state with higher state income taxes, tax filing status changes, tax rates change, etc.

Lots to consider and tough to predict but the wiki page does a good job explaining.

Agreed - expecially since 'most people' do not pay a signifant amount of tax to warrant traditional and that many of the others have pensions, lower earnings years, deferred incomes, inheritances, etc.

Sure, I should say most people who can afford to save for retirement. Yes, there are exceptions that prove the rule.

[hitchman]

I would add one note - in almost all companies the 401k match is into a traditional account. I see this as a decent hedge in the event the govt comes with a one-time levy on Roth balances or something like that. In my case (I am 43, spouse is 41, we both work in investments and finance), I expect to have retirement income that puts me in a bracket equivalent to my current tax rate or higher (ignoring tax rate changes). While I don't think tax planning is the same as market timing, I can say I am confident I won't see tax rates this low again for some time. I use a Roth 401k with traditional matches, back-door my Roth IRA, and have taxable on top of that. SS, RMDs, and taxable draws will be my sources. FWIW, I find the notion of forced taxable RMDs in the future to be unappealing, and that outweighs a minor tax savings now.

If you are young and able to max out retirement accounts (401k and IRA), I think it is more than reasonable to have more retirement income than salary compensation. Compound timing is everything, of course. You really need to have an idea of your projected retirement income sources and how they are taxed. Understand the ladder of taxes, how your projected SS income will be taxed and how it affects your taxable income, etc. It sounds daunting, but I find it's really a once a year touch.

Sidenote - I wonder if anyone can comment on how companies are doing matches into Roth 401ks. If your company does them, how are the taxes handled?

Hitchman

[breakfastinbed]

I would say that for the vast majority of people, traditional is better.

There are exceptions depending on circumstances; in medicine for example it is recommended that medical residents contribute Roth, then later switch to traditional, because their expected retirement tax bracket is likely to be higher than their tax bracket while in residency.

There are some arguments out there that a mix is actually best to account for future uncertainty. I believe a certain Canadian investment podcast I listen to recommends a mix, because in Canada, based off of historical numbers, it is uncertain but not unlikely that an investor might pay a greater percentage of their income in taxes for a given income; based off of historical numbers here in the US, this is uncertain but unlikely, so it makes less sense to do this.

If you are in the 12% bracket and approaching retirement, I think the difference is more unclear, and may be small, depending on your specific numbers.

[steadyosmosis]

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

So true.
If you can reach the tax credits, even 12% may be too high of a cost for Roth.

[KellyInBaconville]

Yes we do. It’s nice.

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

[ThankYouJack]

Yes we do. It’s nice.

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

OP, how much was your Saver's Credit last year?

[KellyInBaconville]

I don’t have this at hand. I can get it when I get home tonight.

Yes we do. It’s nice.

We are definitely at the 12%.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

OP, how much was your Saver's Credit last year?

[ThankYouJack]

I don’t have this at hand. I can get it when I get home tonight.

Yes we do. It’s nice.

We are definitely at the 12%.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

OP, how much was your Saver's Credit last year?

It can be tough to get the Saver's Credit (being non-refundable) to amount to anything much.

Also, any idea/guesses what your tax rate will be in retirement?

[FiveK]

We are definitely at the 12%.

See what the already-referenced Traditional versus Roth wiki has to suggest in that case (note: link goes directly to the section where it is mentioned).

But note that it is your marginal tax rate, not bracket, that matters.

Unless you are very close to a saver's credit tier, the increased marginal tax rate due to that credit is often minimal. If you really want to dive into gory details, see the Saver's credit section of the t vs. R wiki.

If you can use Excel, the Personal finance toolbox can show you your marginal tax rates for any range of 401k contributions you would consider.

[teen persuasion]

Yes we do. It’s nice.

We are definitely at the 12%.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

Which one? Saver's, or EITC? What about CTC?

EITC has a pretty steep phaseout rate, which bumps up your marginal tax rate - the one to look at, not tax bracket. EITC is also fully refundable, while Saver's credit is non refundable - at best it can offset all tax owed, but by the time your AGI is low enough to qualify for max Saver's credit, your AGI is so low you owe little tax.

CTC is partially refundable, so it can also offset some tax owed with the nonrefundable portion.

[KellyInBaconville]

It was $400

Yes we do. It’s nice.

We are definitely at the 12%.

If you can get dollars into Roth status for federal tax cost of 12% or less, I vote Roth.
Otherwise, traditional.

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

OP, how much was your Saver's Credit last year?

[KellyInBaconville]

Opened up last years Turbo Tax.
Summary page says effective tax rate 2.94%.

We are definitely at the 12%.

See what the already-referenced Traditional versus Roth wiki has to suggest in that case (note: link goes directly to the section where it is mentioned).

But note that it is your marginal tax rate, not bracket, that matters.

Unless you are very close to a saver's credit tier, the increased marginal tax rate due to that credit is often minimal. If you really want to dive into gory details, see the Saver's credit section of the t vs. R wiki.

If you can use Excel, the Personal finance toolbox can show you your marginal tax rates for any range of 401k contributions you would consider.

[FiveK]

Opened up last years Turbo Tax.
Summary page says effective tax rate 2.94%.

See what the already-referenced Traditional versus Roth wiki has to suggest in that case (note: link goes directly to the section where it is mentioned).

But note that it is your marginal tax rate, not bracket, that matters.

Unless you are very close to a saver's credit tier, the increased marginal tax rate due to that credit is often minimal. If you really want to dive into gory details, see the Saver's credit section of the t vs. R wiki.

If you can use Excel, the Personal finance toolbox can show you your marginal tax rates for any range of 401k contributions you would consider.

And you definitely don't want to use "effective" tax rate for this choice.

See Marginal Vs Effective Tax Rates And When To Use Each

[TravelforFun]

Without knowing your exact numbers, I would go with the deductible 401(k).

Without knowing the exact numbers, we wouldn't know how to advise the OP. They could be in a low or 0% tax bracket, and contributing to a 401k would not be beneficial to them.

TravelforFun

[KellyInBaconville]

Finally figured out how to get an old post updated.
Here.
viewtopic.php?t=400619

[KellyInBaconville]

That’s what I’ve come to a conclusion on. I do wonder though on RMD when that time comes.
DW retired, I have 9 years or so.

Is it always advantageous to open a 401K Roth?

For the vast majority of people a deductible 401k is likely the best default choice unless you have lower income and lots of deductions, like lots of kids, and will be the zero percent federal tax bracket which is not that uncommon for people with modest income.

Most people are a long way from being wealthy and in a high retirement tax bracket.

Currently a married couple can have over $100K in taxable income and still be in the 12% federal tax bracket so if your retirement budget is expected to be lower than that choosing a Roth is a lot harder to justify.

Your age also matters a lot. If you are five years from retirement your likely retirement finances may be pretty clear. If you are 25+ years from retirement then a lot can change before you retire and you may even decide to retire early in a lower than expected tax bracket.

There can be all sorts of special cases like if you are pretty sure that you will retire in a state with much higher state income taxes but for me it would take a compelling situation to pay the taxes decades before you need to.

Roth's are still great once you have maxed out your deductible retirement accounts so some people will max out their traditional work 401k and contribute to a Roth outside of work.

[ThankYouJack]

I do wonder though on RMD when that time comes.

Seems like you and your spouse's traditional space is pretty large (high 6 figures combined, right?). Because of that, I'd go Roth to fill up the ~12% space.

[lazydavid]

One side detail to just be aware of: Starting in 2026, if you make $145,000 or more and are eligible to make catch-up contributions, those MUST be made to a Roth 401k. Your standard contributions can still go Traditional or Roth depending on your preference, but you are no longer able to choose for the catch-up.

[KellyInBaconville]

Yes, high 6 figures. I can’t really believe it. Never made much money, just lived beneath our means.

I do wonder though on RMD when that time comes.

Seems like you and your spouse's traditional space is pretty large (high 6 figures combined, right?). Because of that, I'd go Roth to fill up the ~12% space.

[grabiner]

Do you qualify for the saver's credit and/or earned income tax credit if you contribute to the Trad 401K?

https://www.bogleheads.org/wiki/Saver%27s_credit

KlangFool

So true.
If you can reach the tax credits, even 12% may be too high of a cost for Roth.

One other potential tax benefit is increasing your premium tax credit if you get insurance through the Affordable Care Act marketplace; this isn't relevant if you have insurance through your employer.

But if you don't have any additional tax benefit from reducing your income the Roth is likely better in the 12% bracket. The reason is that if you retire in the 12% tax bracket, your marginal tax rate is likely to be 18% or 22.2% once you start Social Security because of the phase-in of Social Security taxation. Thus, if the marginal tax rate is 12% now, it is better to use the Roth.

[rs9876lg]

One side detail to just be aware of: Starting in 2026, if you make $145,000 or more and are eligible to make catch-up contributions, those MUST be made to a Roth 401k. Your standard contributions can still go Traditional or Roth depending on your preference, but you are no longer able to choose for the catch-up.

This is the first time I am hearing about this. Does this mean that every 401K plan will have to have Roth 401K by 2026?
Does this also mean that if I had never contributed to Roth 401K, my 5 year clock will start in 2026? Do I still have 5-year clock if I am 68
year old in 2026? I have After tax 401K bucket but Roth 401K and After tax 401K would under different "sources" if I understand my 401k plan.

P.S. Looks like I can get all my answers from Copilot. It confirms what LazyDavid has posted.

[JWP1982]

I would add one note - in almost all companies the 401k match is into a traditional account. I see this as a decent hedge in the event the govt comes with a one-time levy on Roth balances or something like that. In my case (I am 43, spouse is 41, we both work in investments and finance), I expect to have retirement income that puts me in a bracket equivalent to my current tax rate or higher (ignoring tax rate changes). While I don't think tax planning is the same as market timing, I can say I am confident I won't see tax rates this low again for some time. I use a Roth 401k with traditional matches, back-door my Roth IRA, and have taxable on top of that. SS, RMDs, and taxable draws will be my sources. FWIW, I find the notion of forced taxable RMDs in the future to be unappealing, and that outweighs a minor tax savings now.

If you are young and able to max out retirement accounts (401k and IRA), I think it is more than reasonable to have more retirement income than salary compensation. Compound timing is everything, of course. You really need to have an idea of your projected retirement income sources and how they are taxed. Understand the ladder of taxes, how your projected SS income will be taxed and how it affects your taxable income, etc. It sounds daunting, but I find it's really a once a year touch.

Sidenote - I wonder if anyone can comment on how companies are doing matches into Roth 401ks. If your company does them, how are the taxes handled?

Hitchman

You and I are in a similar boat but I do not do a back-door Roth IRA. It's complicated but I have a professionally managed IRA that I'd rolled over and I just haven't gotten it where I can do the post . I max my ROTH 401k and my companies 9% match is in traditional funds so I figure I have a decent split. I never expect for my tax rate to be lower than it is now at 24%. We'll have forced RMD's at some point with a 7 figure inherited IRA. Rental incomes, SS, Pensions, land, etc.

[rs9876lg]

Something tells me that when computing how much to put in to retirement account at age 40, you are assuming medicore market returns and collapse of social security. However, to determine if retirement saving should go in traditional or Roth, you are going to assume normal market returns and full social security to estimate your future RMD/IRMAA tax bomb.

I guess that is normal planning but I find it amusing.

[KellyInBaconville]

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

Without knowing your exact numbers, I would go with the deductible 401(k).

Without knowing the exact numbers, we wouldn't know how to advise the OP. They could be in a low or 0% tax bracket, and contributing to a 401k would not be beneficial to them.

TravelforFun

[FiveK]

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

Based on

Me 58, still working
DW 67, retired, drawing SS.
Tax bracket
Fed-12%
State-5.93%
...

the way Taxation of Social Security benefits works, the marginal tax rate effect grabiner mentioned in this post may also be affecting you now.

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

[grabiner]

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

Based on

Me 58, still working
DW 67, retired, drawing SS.
Tax bracket
Fed-12%
State-5.93%
...

the way Taxation of Social Security benefits works, the marginal tax rate effect grabiner mentioned in this post may also be affecting you now.

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

With only one spouse taking SS, and the other one still working, it is likely that they have already hit the maximum 85% SS taxation. If her SS benefit is $20,000, non-SS income of $46,941 would make the whole SS benefit taxable (50% phase-in from $24,000-34,000, then 85% beyond that until $17,000 of the SS is taxable at $46,941).

A large contribution to a traditional 401(k) could get them under the maximum, and would thus be partly deducted at 12% federal and partly at 22.2%. But even then, I would probably prefer the Roth, because the withdrawals of these traditional 401(k) contributions, after both of them are taking SS, are more likely to be in the phase-in and taxed at 22.2% federal (or 27.75% if the tax rates revert in 2026).

[FiveK]

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

With only one spouse taking SS, and the other one still working, it is likely that they have already hit the maximum 85% SS taxation. If her SS benefit is $20,000, non-SS income of $46,941 would make the whole SS benefit taxable....

Yes, that would. A $30K SS benefit and $40K W-2 income would paint a much different picture. It depends on KIB's actual situation....

[freedom5555]

When you’re both are taking SS and RMDs on 2 mil. plus IRAs. That’s when you wish you had put more in Roths.
Plus your children will like Roths much more.

[KellyInBaconville]

Zero clue how…

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

Based on

Me 58, still working
DW 67, retired, drawing SS.
Tax bracket
Fed-12%
State-5.93%
...

the way Taxation of Social Security benefits works, the marginal tax rate effect grabiner mentioned in this post may also be affecting you now.

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

[ruralavalon]

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

It's not always advantageous to contribute to a Roth 401k.

Most people (without a significant pension or very large balances in traditional tax-deferred accounts) will likely be in a lower tax bracket during retirement. So for most people traditional contributions will likely be better.

Will either or both of you be eligible for both a substantial pension and Social Security benefits.
?

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

It looks like you currently have about $711k in traditional tax-deferred accounts.

Me 58, still working
DW 67, retired, drawing SS.
Tax bracket
Fed-12%
State-5.93%

How much (in dollars) do you contribute annually to your 401k?

[KellyInBaconville]

We will receive no pension.
That amount is about right.
Last year I contributed $8286 to the 401k.
About all I can do while filling HSA to max.

Is it always advantageous to open a 401K Roth?
My employer started one up to coincide with the traditional.
I plugged what I contribute into AARP comparison calculator and it showed a wash between them.
Now I’m not sure if it includes the no RMD distribution on the Roth.

It's not always advantageous to contribute to a Roth 401k.

Most people (without a significant pension or very large balances in traditional tax-deferred accounts) will likely be in a lower tax bracket during retirement. So for most people traditional contributions will likely be better.

Will either or both of you be eligible for both a substantial pension and Social Security benefits.
?

I updated my old thread here.
viewtopic.php?p=8014932#p8014932

It looks like you currently have about $711k in traditional tax-deferred accounts.

Me 58, still working
DW 67, retired, drawing SS.
Tax bracket
Fed-12%
State-5.93%

How much (in dollars) do you contribute annually to your 401k?

[FiveK]

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

Zero clue how…

OK, you are not alone. Let's see what we can do, starting with:

If you can use Excel, the Personal finance toolbox can show you your marginal tax rates for any range of 401k contributions you would consider.

Can you use Excel?

[ThankYouJack]

Can you use Excel?

If not, taxcaster could also help - https://turbotax.intuit.com/tax-tools/c ... taxcaster/

[FiveK]

Can you use Excel?

If not, taxcaster could also help - https://turbotax.intuit.com/tax-tools/c ... taxcaster/

Any of the Tax estimation tools listed there could be used, but only one provides an Automated marginal rate chart. For the others, it may take much more work (calculate taxes one step at a time and then calculate the marginal rates "by hand") but it can be done if Excel is not available.

[KellyInBaconville]

No, I have thought of opening up a new return on Turbo Tax and play with numbers.
Never thought we’d save this much on what we make.

Have you charted your marginal tax rates over the $0 to $30K range of traditional 401k contributions available to you?

Zero clue how…

OK, you are not alone. Let's see what we can do, starting with:

If you can use Excel, the Personal finance toolbox can show you your marginal tax rates for any range of 401k contributions you would consider.

Can you use Excel?