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Thread: 401K vs IRA

  1. #11
    Platinum Member lostandhurt's Avatar
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    I think you have a better handle on this than you think. You are smart and know yourself and your budget and most of all your expectations in retirement.

    What I am doing is both. My company was late to offer Roth withholding out of our paychecks and dumb me didn't set one up until 5 years ago. My 457 plan is matched up to 3 percent by my employer and is pre tax. My 457 will more than likely fund my healthcare so I am hoping to be able to write some of that income off since I will be paying taxes on it as income but since the taxes are paid up front on the Roth I can use that money without paying income taxes on it twice.

    Taxes are not likely to go down but your circumstances and planning are in more of your control than anything. In retirement there are no children to write off, mortgage may be near the end of the interest portion you are paying and healthcare has a pretty high threshold to be able to write it off. Having a Roth for me will set me up better for sure.

    I agree if you are going to take a hit on a conversion setting up some sort of schedule that will not kill your budget is a great idea or if at the end of the year you end up with some surplus you could accelerate the conversions kind of like a catch up on a 401k.

    Lost

  2. #12
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    Move your ROTH IRA into your checking. Put those funds in your 401K. There should be zero penalties as long as you do it within a time frame. I've did this about three years ago.

  3. #13
    Platinum Member Jibralta's Avatar
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    Originally Posted by tattoobunnie
    Move your ROTH IRA into your checking. Put those funds in your 401K. There should be zero penalties as long as you do it within a time frame. I've did this about three years ago.
    It's a Roth 401K, not an IRA.

  4. #14
    Platinum Member Jibralta's Avatar
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    Originally Posted by lostandhurt
    My 457 will more than likely fund my healthcare so I am hoping to be able to write some of that income off since I will be paying taxes on it as income but since the taxes are paid up front on the Roth I can use that money without paying income taxes on it twice.
    Your strategy has given me some food for thought. Thanks.

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  6. #15
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    It's Roth IRA vs a 401K. A 401K is a company/employer sponsored retirement plan that allows workers to take out a portion of money from their daily paychecks, store it on a retirement plan account and earn interest tax-deferred

    A Roth IRA is a special retirement account where you pay taxes on money going into your account and then all future withdrawals are tax free.

    With a Roth 401(k), you pay taxes up front, but most companies offer a traditional 401K, so they can contribute to it for them employees and get the tax deduction. I feel the Roth 401K is pretty weird, since by the time you retire, you are in a different tax bracket, so why pay extra when you don't have to.

    I offer my staff a 401K with a 3% match, which I also partake. I'vealso had Roth IRAs for different reasons, and more recently set up one for my husband, since his work doesn't offer a 401K plan.

  7. #16
    Platinum Member Jibralta's Avatar
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    Tattoobunnie, thank you for your input but I have a Roth 401K in addition to the traditional 401Ks of which you speak. I do not have any IRAs at this time.

  8. #17
    Platinum Member Jibralta's Avatar
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    Originally Posted by tattoobunnie
    It's Roth IRA vs a 401K. A 401K is a company/employer sponsored retirement plan that allows workers to take out a portion of money from their daily paychecks, store it on a retirement plan account and earn interest tax-deferred

    A Roth IRA is a special retirement account where you pay taxes on money going into your account and then all future withdrawals are tax free.

    With a Roth 401(k), you pay taxes up front, but most companies offer a traditional 401K, so they can contribute to it for them employees and get the tax deduction.
    Thank you, dear. I am aware of this.

    Although I'd like to clarify that employers contribute to Roth 401Ks as well as traditional. However that affects their tax deduction is no concern of mine.

    I am moving my 401Ks into IRAs because IRAs offer more investment options.
    Last edited by Jibralta; 02-05-2019 at 05:37 PM.

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