In short, RMDs no longer a limitation for Roth 401k so Allocation options is main advantage as mentioned in video. Roth IRA has more options and less fees than the 401k.
But you can contribute more to the 401k, so if you have tons of income do both, but not so much income you are disqualified for Roth IRA.
ADR: Always Do Roth. Reason #1: If you can afford to pay the tax, the entire amount in a Roth 401k is 100% yours. You can't say that about a traditional 401k. The traditional 401k leaves you fiscally married to the government. Yeah, you get an upfront tax break but with trillions in debt, the US is not the business partner I want. Way too much risk. Reason #2: Traditional 401ks require RMDs unless you do Roth conversions. Wouldn't it just be easier to do Roth in the first place? Neither you nor I know what tax rates will be in the future. Why would you leave that to chance during the years when you are likely the most financially vulnerable? Reason #3: Your heirs don't deal with RMD's if they inherit your Roth IRA (assuming transferred from a Roth 401k to Roth IRA which isn't a taxable event). Your heirs can then open an inherited Roth IRA for 10 years and build on your nest egg TAX FREE even while building on their own Roth IRA. AND the inherited Roth IRA doesn't require your heirs to be 59.5 years old to distribute without 10% penalty! You can't do that with traditional. Also, they have to be bothered with RMD's in a traditional account. Do you really want to be fiscally married to the government? I'll take the divorce and the freedom. Thanks. I have yet to meet one person who went Roth that regretted it. NOT ONE.
William Roth should have a national holiday named after him.
So… basically, if you are poor and you work at a job that offers the option. Do the Roth 401 (k). If you are filthy rich…get the IRA. If you are a CEO, rich. Get the Roth 401 (k). So get the Roth 401 (k) if you actually have a job.
I have an even contribution to both because I'm not sure what my tax rate will be at retirement. You don't have to optimize everything all the time, just be involved as much as you can.
I’m still unsure. My wife’s work matches 10% in her 401k. We were just looking at it and she has a Roth option(I’m not sure if that’s a Roth IRA or a Roth 401k). We make 130k combined. We opened her a Roth IRA last year. I’m unsure if she can or should be contributing to the Roth 401k(assuming it is a Roth 401k).
I’ve heard Roth conversions can save taxes long-term, but how do you know when to convert? If my income spikes this year, is it too late? And what if tax rates change again?
I did 2 years max contribution with a senior catch up into a 401k, then I did the Roth 401K with the catch up in the 3rd year. The match went into the 401K not the Roth. So basically I have a 75% 401k and 25% Roth 401k. I don't really see a way to invest the Roth 401K differently than the rest of my 401k, or to do a withdrawal from the 401k 1st? Am I missing something?
I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
Always want a roth maybe 401k roth and IRA roth open both put $100 in the roth IRA. That account once 5 years passes can be used for tax free growth after your 59 1/2. IRS doesn't care when it grew or how it grew they just want to know the first time you put $1 in after that it's about being past 59 1/2. Once your past 59 1/2 the account can be used as a great way to invest money in the market tax free. This is something that no one ever told me I was just told can't do anything until your 59 1/2. I think the assumption is by lot of investment advisors is once your 60 won't care about investing anymore in the markets because your retired not true.
1. How about conversion from 401K to a Roth 401K. How is that treated
2. My understanding: I am over 59 ½.. : Let’s say either the Roth 401K or the Roth IRA are seasoned, if not, then one of them has to become seasoned. To do a Roth conversion from a 401K to a Roth IRA, it starts a 5 year clock for every conversions. To do a roll over from a Roth 401K to a Roth IRA, it takes on the life of the original Roth IRA. Does converting 401K to Roth 401K carry a 5 y ear clock? if so, does it cancel out when the money in the Roth 401K is rolled over to Roth IRA? Supposed to take the life of the original Roth IRA? Am I correct in this scenario, so I should always convert from 401K to Roth 401K then roll it over to Roth IRA so I don’t have to worry about the 5 year clock for the conversion from 401K? I hope I am making sense.
In summation: I want to move mony from 401K to Roth IRA, to go around the 5 year clock for every conversion, was wondering if converting from 401K to Roth 401K then roll over to Roth IRA would be better. Your thoughts and advice please.
I’m a firm believer of growing as much money as possible tax free. We do ROTH IRAs, Roth 401k, and a Roth 457b. I don’t trust the government when it comes to taxes in 20-30 years.
In short, RMDs no longer a limitation for Roth 401k so Allocation options is main advantage as mentioned in video. Roth IRA has more options and less fees than the 401k.
But you can contribute more to the 401k, so if you have tons of income do both, but not so much income you are disqualified for Roth IRA.
ADR: Always Do Roth. Reason #1: If you can afford to pay the tax, the entire amount in a Roth 401k is 100% yours. You can't say that about a traditional 401k. The traditional 401k leaves you fiscally married to the government. Yeah, you get an upfront tax break but with trillions in debt, the US is not the business partner I want. Way too much risk. Reason #2: Traditional 401ks require RMDs unless you do Roth conversions. Wouldn't it just be easier to do Roth in the first place? Neither you nor I know what tax rates will be in the future. Why would you leave that to chance during the years when you are likely the most financially vulnerable? Reason #3: Your heirs don't deal with RMD's if they inherit your Roth IRA (assuming transferred from a Roth 401k to Roth IRA which isn't a taxable event). Your heirs can then open an inherited Roth IRA for 10 years and build on your nest egg TAX FREE even while building on their own Roth IRA. AND the inherited Roth IRA doesn't require your heirs to be 59.5 years old to distribute without 10% penalty! You can't do that with traditional. Also, they have to be bothered with RMD's in a traditional account. Do you really want to be fiscally married to the government? I'll take the divorce and the freedom. Thanks. I have yet to meet one person who went Roth that regretted it. NOT ONE.
William Roth should have a national holiday named after him.
So… basically, if you are poor and you work at a job that offers the option. Do the Roth 401 (k). If you are filthy rich…get the IRA. If you are a CEO, rich. Get the Roth 401 (k). So get the Roth 401 (k) if you actually have a job.
This was very helpful
Jesus, answer the question in hand.
75% of this Video was a waste of time, get to the point and answer the actual question
Lord exactly question I wanted answered buy it took them way too long to actually answer sheesh, good info but answer the question first
I have an even contribution to both because I'm not sure what my tax rate will be at retirement. You don't have to optimize everything all the time, just be involved as much as you can.
Thanks to secure 2.0 act, there is no rmd for Roth 401k as of 2024. Thank you, President Biden.
I’m still unsure. My wife’s work matches 10% in her 401k. We were just looking at it and she has a Roth option(I’m not sure if that’s a Roth IRA or a Roth 401k). We make 130k combined. We opened her a Roth IRA last year. I’m unsure if she can or should be contributing to the Roth 401k(assuming it is a Roth 401k).
between the two it's Roth 401k for sure because IRS Rule of 55 won't work with Roth IRA, and Roth 401k has ERISA protection whereas Roth IRA does not.
ROTH IS KING
I’ve heard Roth conversions can save taxes long-term, but how do you know when to convert? If my income spikes this year, is it too late? And what if tax rates change again?
I did 2 years max contribution with a senior catch up into a 401k, then I did the Roth 401K with the catch up in the 3rd year. The match went into the 401K not the Roth. So basically I have a 75% 401k and 25% Roth 401k. I don't really see a way to invest the Roth 401K differently than the rest of my 401k, or to do a withdrawal from the 401k 1st? Am I missing something?
Breathing to mic and typing constantly
Just mute your mic
Hire a sound guy guys
I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
Stay away from the 401k Roth the fees are robbery.
With the Roth401k, my employer let's me put up to $70,000 (2025) in combined employer/ employee contributions.
Always want a roth maybe 401k roth and IRA roth open both put $100 in the roth IRA. That account once 5 years passes can be used for tax free growth after your 59 1/2. IRS doesn't care when it grew or how it grew they just want to know the first time you put $1 in after that it's about being past 59 1/2. Once your past 59 1/2 the account can be used as a great way to invest money in the market tax free. This is something that no one ever told me I was just told can't do anything until your 59 1/2. I think the assumption is by lot of investment advisors is once your 60 won't care about investing anymore in the markets because your retired not true.
Your video is fantastic.
I have a two part question:
1. How about conversion from 401K to a Roth 401K. How is that treated
2. My understanding: I am over 59 ½.. : Let’s say either the Roth 401K or the Roth IRA are seasoned, if not, then one of them has to become seasoned. To do a Roth conversion from a 401K to a Roth IRA, it starts a 5 year clock for every conversions. To do a roll over from a Roth 401K to a Roth IRA, it takes on the life of the original Roth IRA. Does converting 401K to Roth 401K carry a 5 y ear clock? if so, does it cancel out when the money in the Roth 401K is rolled over to Roth IRA? Supposed to take the life of the original Roth IRA? Am I correct in this scenario, so I should always convert from 401K to Roth 401K then roll it over to Roth IRA so I don’t have to worry about the 5 year clock for the conversion from 401K? I hope I am making sense.
In summation: I want to move mony from 401K to Roth IRA, to go around the 5 year clock for every conversion, was wondering if converting from 401K to Roth 401K then roll over to Roth IRA would be better. Your thoughts and advice please.
I’m a firm believer of growing as much money as possible tax free. We do ROTH IRAs, Roth 401k, and a Roth 457b. I don’t trust the government when it comes to taxes in 20-30 years.