Jackburton
Gone Fish'n
Interesting no one talks about the age of the OP. We know he's 18-20 away from his projected retirement, which means 18-20 years of growth. I'd personally think about doing less than max if you can't afford it and go the Roth401K route. Considering the majority of what's in your 401k will be growth, you'd already have a defined taxation at this point, the future, who knows. You'll also have to remember that any pension you receive will be taxable and adding any pretax 401k withdrawals will add onto that amount, increasing your tax bracket.
If you are worried about the increase in taxes you'd pay vs the amount you put it, just take what you currently do pretax and multiple your tax bracket into it, (10,000.00 * .25 = 2500.00). Now take the remainder 7500.00 and divide that by your yearly wage (example 7,500.00 ~ 50,000.00 = .15 ). So set your 401kRoth at 15% and you'll keep the same paycheck size as if you would have gone 25% pretax. The benifit of doing this will allow you have 100% tax free growth instead of oweing the government any money when you leave. If there's one thing we can all agree on, it's not oweing the government is a good thing.
If you are worried about the increase in taxes you'd pay vs the amount you put it, just take what you currently do pretax and multiple your tax bracket into it, (10,000.00 * .25 = 2500.00). Now take the remainder 7500.00 and divide that by your yearly wage (example 7,500.00 ~ 50,000.00 = .15 ). So set your 401kRoth at 15% and you'll keep the same paycheck size as if you would have gone 25% pretax. The benifit of doing this will allow you have 100% tax free growth instead of oweing the government any money when you leave. If there's one thing we can all agree on, it's not oweing the government is a good thing.
Last edited:
