Roth 401K

Is/Has anyone converting/ed to a Roth 401K? Dh's company is now offering this and I'm trying to figure out the tax benefits.

I tried using some calculators, but it seems impossible to predict some of the variables...it seems like ROTH is better?

Re: Roth 401K

we offer a roth option with our 401(k) at work ... the contributions are deducted from your paycheck after tax and the investments grow tax free ... you have go try to predict whether you're in a higher tax bracket now than you will be when you retire (it's hard, i know) ... if you're at a higher rate now, it makes more sense to do the regular, pre-tax contributions ... if you anticipate you'll be in a higher bracket later in life, growing the post-tax contributions as "tax free" makes more sense ...
our advisor explained it like this when he visited our office last year -- assume you're 30 years old and you contribute $40k in roth contributions over the next 30 years ... come retirement, if the funds have grown to $200k, that's $140k in tax free investment income for you ...
i didn't put ALL of my retirement contributions in as roth contributions but i did put a little bit ...
it's a difficult decision to make ... hope i was some help! ...

Re: Roth 401K

I would imagine that we will be in a higher tax bracket right before retirement, but during retirement is a different story right (when we are not earning salaries)? Although I get a pension, so I guess that would be a factor.


We cannot do Roth IRAs or deductible traditional IRAs, so we do non-deductible IRA and convert to Roth, but that makes sense since we are not reaping any tax benefits from the trad IRA.

I think I'm leaning to splitting and then if Roth looks a lot better at a later date, we can change.

does it make a difference if DH probably won't be at this job until retirement?

Message edited 7/7/2011 8:15:22 PM.

Re: Roth 401K

i can't imagine it will make a difference where your DH is when he retires - any funds you contribute are fully vested and yours, regardless of whether he's employed there or not (funds can be rolled over to a new employer, if/when he does separate) ...
for most people, yes, you'll be in a lower tax bracket after you retire so it's beneficial to make the pre-tax contributions now and pay a lower tax rate on the funds later ... but honestly, the appeal of growing funds interest free is appealing, even if it's only 1% of your contributions ...