401k vs ROTH IRA

I'm only allowed to change my benefits once a year. My company will match up to 3% max if I contribute 6% into my 401k.

I can put 3 percent in my 401k and 3% in my ROTH IRA. It actually doesn't matter how I split my contribution up.

What does the OG recommend? I'm 33 and this is the first year I will be contributing towards my retirement. Phone Post 3.0

My deadline to change is tomorrow. Any financial advice would be appreciated. Phone Post 3.0

Later Phone Post 3.0

Don't know man, I'm kinda leaning toward a ROTH because you pay the tax now. When you're 65 and cashing out the 401k the taxes have to be higher at that point right? I'm no financial wiz. Phone Post 3.0

6% to 401k. 4% to ROTH. That'll get you 9% to 401k and 4% to Roth. Diversify but get all the free money you can out of your company.

I will have a pension, 457b, Roth, and whole life insurance. Preparing. Phone Post 3.0

torubu - 6% to 401k. 4% to ROTH. That'll get you 9% to 401k and 4% to Roth. Diversify but get all the free money you can out of your company.

I will have a pension, 457b, Roth, and whole life insurance. Preparing. Phone Post 3.0
I agree with all of this except the whole life... You can get the same benefit amount with term.. take the difference and add that to the Roth... You'll earn way more in just saving than you will in their cash 'value'... Check out your in force illustration Phone Post 3.0

6% in the 401k to get the match. Then as much as you can in the Roth IRA. Phone Post 3.0

Put as much as you can in the 401k that they'll match, then put stuff in the Roth as well.

 

But you're 33 and this is the first amount of money you're putting into retirement?....dude

If I quit my job & roll my 401k to an IRA, how much in penalties & taxes do I have to pay? Phone Post 3.0

baby-silverback - If I quit my job & roll my 401k to an IRA, how much in penalties & taxes do I have to pay? Phone Post 3.0
None. Have it go directly into your rollover IRA. Ask whoever you have your rollover IRA at (I use Schwab) how to do it. You do have to pay taxes and penalties if you withdraw the money and it is paid to you that is why you want to do a rollover directly to your rollover IRA Phone Post 3.0

Jhay -


Put as much as you can in the 401k that they'll match, then put stuff in the Roth as well.



 



But you're 33 and this is the first amount of money you're putting into retirement?....dude

I just started saving around that age as well but a wise man once told me that if your trying to save money while paying off debt your doing it wrong. Pay off as much debt as you can until you have almost nothing left. Then start saving. It makes no sense to dump into savings early on in life when you still have bills to pay. I no longer have a mortgage or car payments or school debt. I can invest my entire paycheck into stocks or savings or what not. Phone Post 3.0

baj54 - 
Jhay -


Put as much as you can in the 401k that they'll match, then put stuff in the Roth as well.



 



But you're 33 and this is the first amount of money you're putting into retirement?....dude

I just started saving around that age as well but a wise man once told me that if your trying to save money while paying off debt your doing it wrong. Pay off as much debt as you can until you have almost nothing left. Then start saving. It makes no sense to dump into savings early on in life when you still have bills to pay. I no longer have a mortgage or car payments or school debt. I can invest my entire paycheck into stocks or savings or what not. Phone Post 3.0


Compound interest though my friend, the earlier you start the easier it will be.

^^ Definitely start saving as young as possible.

Do you mean Roth 401k rather than Roth IRA? An IRA is not a workplace retirement plan. It is an individual retirement plan. Unless your income (AGI) is rather high (over $110kish), you can contribute to both a 401k (traditional or Roth) and a Roth IRA.

The decision to use a tax deferred (aka traditional) account or a tax exempt growth (aka Roth) account is typically based on where you see your tax rate in retirement. If you think your tax rate will be lower in retirement, defer taxes and pay that bill at the lower rate by using a traditional account. If you think your tax rate will be higher in retirement, pay that tax on that income now by using a Roth account.

What are the expense ratios and load fees on the funds you would like to buy in this (these?) account(s)? Checkout Vanguard's expense ratios for similar funds. If your fees are higher, contribute enough to get the match (6%), then open a Roth IRA with Vanguard and contribute as much as you can there. If you max out your IRA (the max is $5500 for 2015), continue contributing to your 401k (the max is $18k for 2015).

Shallow Graves - Don't know man, I'm kinda leaning toward a ROTH because you pay the tax now. When you're 65 and cashing out the 401k the taxes have to be higher at that point right? I'm no financial wiz. Phone Post 3.0

You don't cash out a 401k when you retire. You take out what you need (there are requirement minimums, but many people need more than that) and pay income taxes on that.

extnct1 - 
torubu - 6% to 401k. 4% to ROTH. That'll get you 9% to 401k and 4% to Roth. Diversify but get all the free money you can out of your company.

I will have a pension, 457b, Roth, and whole life insurance. Preparing. Phone Post 3.0
I agree with all of this except the whole life... You can get the same benefit amount with term.. take the difference and add that to the Roth... You'll earn way more in just saving than you will in their cash 'value'... Check out your in force illustration Phone Post 3.0

Yeah, whole life is typically a rip off. Term is usually the way to go.

cdmontgo - 
Shallow Graves - Don't know man, I'm kinda leaning toward a ROTH because you pay the tax now. When you're 65 and cashing out the 401k the taxes have to be higher at that point right? I'm no financial wiz. Phone Post 3.0

You don't cash out a 401k when you retire. You take out what you need (there are requirement minimums, but many people need more than that) and pay income taxes on that.


Exactly, taking smaller payments as needed should put you in a pretty low tax bracket.  Obviously there are many factors to it, but fundamentally it should work that way for most people.

23 and I'm hoping to pay off my debt and start investing my retirement within the next year. Phone Post 3.0

baj54 - 
Jhay -


Put as much as you can in the 401k that they'll match, then put stuff in the Roth as well.



 



But you're 33 and this is the first amount of money you're putting into retirement?....dude

I just started saving around that age as well but a wise man once told me that if your trying to save money while paying off debt your doing it wrong. Pay off as much debt as you can until you have almost nothing left. Then start saving. It makes no sense to dump into savings early on in life when you still have bills to pay. I no longer have a mortgage or car payments or school debt. I can invest my entire paycheck into stocks or savings or what not. Phone Post 3.0

It depends on the rate of the debt versus the rate of the investment gain, and tax issues (gains tax, debt deductions). But I'm a big fan of great simplification over maximum efficiency.

cdmontgo -
baj54 - 
Jhay -


Put as much as you can in the 401k that they'll match, then put stuff in the Roth as well.



 



But you're 33 and this is the first amount of money you're putting into retirement?....dude

I just started saving around that age as well but a wise man once told me that if your trying to save money while paying off debt your doing it wrong. Pay off as much debt as you can until you have almost nothing left. Then start saving. It makes no sense to dump into savings early on in life when you still have bills to pay. I no longer have a mortgage or car payments or school debt. I can invest my entire paycheck into stocks or savings or what not. Phone Post 3.0

It depends on the rate of the debt versus the rate of the investment gain, and tax issues (gains tax, debt deductions). But I'm a big fan of great simplification over maximum efficiency.
Not just that... You don't pass up 401k match causeyou have bills... At least get that shit Phone Post 3.0