ad2007,ad2007 wrote: ↑Fri May 18, 2018 10:12 pmOK...I'll play.KlangFool wrote: ↑Fri May 18, 2018 9:49 pmad2007,ad2007 wrote: ↑Fri May 18, 2018 9:25 pmKlangfool, (or anyone else who understands this)

Can you please go over again why it makes sense to direct money into Roth 401K once the tax deferred account reaches $1M? Or some magic number? How do figure that number?

Oh, and I've not gotten to the "OMG, I get it". Actually getting more confused.

Thanks,

ad

It is easier to explain if you state your marginal tax rate and whether you are filing single or married. If you are married, do you have kids?

Then, we can go over your numbers. It is easier for you because you know your own tax situation and how much tax that you pay now.

KlangFool

Married filling jointly, 2 kids, no state, fed: 39.5%, effective 30%

Combined 401K over $1M (hence my interest in that magic number), Roth $400K, no pension.

So... is there a number at which it I should switch from 401K to Roth? My plan was to keep going and during retirement, try to do Roth conversion.

39.5% no longer exist in 2018. Let's assume that it is 37%.

https://taxfoundation.org/2018-tax-brackets/

24K standard deduction. Let's assume 50K Social Security Income

It takes about 100K to reach 22%. Deducting Social Security Income of 50K, you get 25 X 50K = 1.25 million.

It takes about 24K + 165K = 189K to reach 24%. Minus 50K, you get 139K. 25 X 193K ~ 4.825 million

It takes about 24K + 315K = 339K to reach 32%. Minus 50K, you get 289K. 25 X 289 = 7.225 million.

It takes about 24K + 400K = 424K to reach 35%. Minus 50K, you get 374K. 25 X 374K = 9.35 million

Your answer is very simple. You should max your Trad. 401K forever. You will never reach that number.

KlangFool