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Post by Just Beth on Jul 3, 2019 13:00:58 GMT
I have two jobs. Community Hospital has the option for a Roth 401k in addition to the traditional 401k but I am a casual employee now and am not eligible for an employer match any longer. HMO Hospital has a company match for my contributions but no Roth 401k option. I will contribute the IRS max for each year. I prefer not to use both employer's plans since I came within $10 of accidentally exceeding the IRS limit last year by trying to contribute some to each one. I do not want to hassle with trying to have excess contributions returned after the year is up.
I am leaning toward the company match at HMO hospital because hey free money but I am bummed to lose out on the Roth 401k. I cannot contribute to my Roth IRA any longer due to IRS rules so that is not an option. What would you do?
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pancakes
Drama Llama
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Post by pancakes on Jul 3, 2019 13:10:32 GMT
I guess it depends on the amount of the company match. My first job would match up to 7%.
Do you think that will outweigh the benefits of having a tax free withdrawal layer? Are you concerned about being in a higher tax bracket now?
In general, a Roth 401k is the better choice since you don’t get taxed on anything except for the principal, when you put it in. But if your employer match is really high...I would have a hard time passing that up.
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Post by Just Beth on Jul 3, 2019 13:26:36 GMT
I guess it depends on the amount of the company match. My first job would match up to 7%. Do you think that will outweigh the benefits of having a tax free withdrawal layer? Are you concerned about being in a higher tax bracket now? In general, a Roth 401k is the better choice since you don’t get taxed on anything except for the principal, when you put it in. But if your employer match is really high...I would have a hard time passing that up. The match is 5% |
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Deleted
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Aug 18, 2025 19:40:19 GMT
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Post by Deleted on Jul 3, 2019 13:51:48 GMT
How much will you lose if you don't do the employee match? Figure out that number then determine if you want to do without it.
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Post by pjynx on Jul 3, 2019 15:10:00 GMT
For me, the one with the company match is the better option because it's free money and would help reduce my tax liability right now.
If you contribute to a Roth contribution, it is still taxed. It does not reduce your taxable income in the year you contribute. But since you pay the tax now, when you start drawing on it, it is tax free. This is great if you are in a low tax bracket right now but expect to be in a higher one later. Whereas a normal 401k is not taxed in the year you contribute. It reduces your taxable income now, but is taxable when you withdraw. This is a better tax savings if you are in a higher bracket right now than what you expect to be upon retirement.
Pam
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Post by Darcy Collins on Jul 3, 2019 15:17:14 GMT
I'd take the company match personally.
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Post by Just Beth on Jul 3, 2019 15:35:36 GMT
For me, the one with the company match is the better option because it's free money and would help reduce my tax liability right now. If you contribute to a Roth contribution, it is still taxed. It does not reduce your taxable income in the year you contribute. But since you pay the tax now, when you start drawing on it, it is tax free. This is great if you are in a low tax bracket right now but expect to be in a higher one later. Whereas a normal 401k is not taxed in the year you contribute. It reduces your taxable income now, but is taxable when you withdraw. This is a better tax savings if you are in a higher bracket right now than what you expect to be upon retirement. Pam Yes. This is why I am bummed to not be able to contribute some money in this way for later. I’m 44 so not too old, not too young 😉 |
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Post by 16joy on Jul 3, 2019 15:43:12 GMT
I would think the 401K with a match is better unless the investment options are absolutely awful and you're staying a long time. Run the numbers for 5, 10 and 15 years using last year's returns on the options you'd chose for each company being sure to include the match for that company
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Post by freecharlie on Jul 3, 2019 16:48:13 GMT
I'd do the match.
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moodyblue
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Jun 26, 2014 21:07:23 GMT
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Post by moodyblue on Jul 3, 2019 21:37:46 GMT
Another consideration is that, whether lower bracket now, higher later, or higher bracket now, lower later, you don’t really know what the brackets will be when it comes time to withdraw money. You DO know what tax rate you will pay now.
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peaname
Pearl Clutcher
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Post by peaname on Jul 4, 2019 12:05:06 GMT
The match is free money!
Can you do a back door Roth IRA? Contribute the max to a grad IRA and then convert it to a Roth paying the taxes it’s legal, look into it.
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Post by littlemama on Jul 4, 2019 13:21:59 GMT
Always take the free money. Contribute to the roth in a low enough percentage that you can't go over (or do a flat amount for each, rather than a percentage)
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SweetieBsMom
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Post by SweetieBsMom on Jul 4, 2019 13:36:31 GMT
Another consideration is that, whether lower bracket now, higher later, or higher bracket now, lower later, you don’t really know what the brackets will be when it comes time to withdraw money. You DO know what tax rate you will pay now. This. |
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kelly8875
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Post by kelly8875 on Jul 4, 2019 14:28:19 GMT
The match is free money! Can you do a back door Roth IRA? Contribute the max to a grad IRA and then convert it to a Roth paying the taxes it’s legal, look into it. This is what I do. I am lucky enough to max out my 401k annually, and take the full employer match along with it. Free money. I’m also above the income limits for a Roth IRA, but just have IRA, we just do the funky legal stuff. |
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Post by Just Beth on Jul 4, 2019 16:03:32 GMT
The match is free money! Can you do a back door Roth IRA? Contribute the max to a grad IRA and then convert it to a Roth paying the taxes it’s legal, look into it. I have done backdoor Roth IRA contributions in previous years so I might end up doing it again next year. |
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Post by SweetieBugs on Jul 4, 2019 16:13:43 GMT
I'm wondering why it is one or the other?? Our plan offers regular and ROTH contributions AND an employer match up to 4%.
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Post by Just Beth on Jul 4, 2019 16:22:40 GMT
I'm wondering why it is one or the other?? Our plan offers regular and ROTH contributions AND an employer match up to 4%.
It’s because I have two jobs. One job gives me a company March but doesn’t have a Roth option for the 401k. The one with the Roth 401k doesn’t give me a match. I can only do percentages not flat contributions to each and my hours vary so it’s hard to contribute as much as possible without accidentally going over. |
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Post by mikklynn on Jul 5, 2019 12:53:59 GMT
I'd take the match. If they match 1 to 1 for your contribution, that is a 100% return. If they match $1 to your $2, that is still a 50% return.
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Post by Crack-a-lackin on Jul 5, 2019 16:10:51 GMT
Are you holding firm to not wanting two accounts? I think your best option is to max out the Roth, then put the rest in the traditional 401k so you get the match.
As I understand it, with a Roth it’s not as much about your tax bracket as it is the growth. You’ve already paid taxes on the money when you put it in so the balance grows tax free. This could be significant as you’ll have 20+ years of growth. With a traditional your money goes in tax free but when you pull it out you’re taxed on the entire amount.
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