We had the similar experiences and agree 100% with your post.Definitely while in the 12% tax bracket (as you mentioned, probably the lowest tax bracket of your career) & 40-50 years for these 401k contributions to grow, the Roth 401k is the way to go this year; max out if you can. I believe the 2024 maximum is $23,000.
You can move to the tax deductible 401k when you move up to a higher tax bracket next year as your full salary comes into play.
Roth IRAs & Roth 401Ks weren’t available until I was close to 50 years old & in the highest tax bracket of my career. I did max out my tax deductible 401k throughout most of my career.
Even though I did max out Roth IRAs once they became available in 1998 until I left my job at age 69, my retirement assets were 94% tax deductible/6% Roth. When I started Rollover IRA required minimum distributions (RMDs) & started SS at age 70, I was in a higher tax bracket than when I was working. Of course, not a bad problem to have.
If Roth retirement accounts were available when I was in my 20s, I definitely would have put as much into them as I could.
Fund that Roth 401k this year along with your Roth IRA going forward. Your 65 year old retired self will thank you!
bill
Statistics: Posted by smitcat — Wed Jul 24, 2024 7:59 am — Replies 9 — Views 558