Roth vs Traditional 401k for people making 200 - 300k

Amazon kudobear
Feb 10 23 Comments

I am planing to start maxing out my 401k this years and wondering if I should go roth or traditional or half and half.

I plan to retire at around 50 years old and based on the trajectory, I will have around 6 million net worth outside my primary residence.

TC: 220k, will probably be quite stable between 200 - 300k in the next few years.

Any input is appreciated.

P.s I don't plan to put in any money in backdoor or mega backdoor Roth plan. I am only willing to contribute 20k to 401k because I can't withdraw them until age 59.5 and I would love to have more other passive income stream built up between the gap of my initial retirement and 59.5.

comments

Want to comment? LOG IN or SIGN UP
TOP 23 Comments
  • Oracle / R&D lHEA77
    You are very confused. You probably mean to ask about 401k contributions not IRA contributions. At your income level, you should go 100% traditional in your 401k.
    Feb 10 6
    • Infinera nG0!#@
      Why not Roth ?
      Feb 10
    • Amazon kudobear
      OP
      My concern is that with 6mil invested, on avg 7% I could be making 400k after retirement. If I ended up withdraw all the profit. Wouldn't I ended up paying more with traditional 401k
      Feb 10
    • Amazon kudobear
      OP
      Thank you so much. The article is pretty insightful. I guess I will go full traditional 401k then and potentially convert to roth in the future.
      Feb 10
    • Oracle / R&D lHEA77
      You mean full *traditional 401k*, not IRA!

      And yes, this guy's blog is very good.
      Feb 10
    • Infinera nG0!#@
      If your family combined income is already above AMT, why wouldn’t you do Roth 401K?
      Feb 10
  • Google / Eng Bluths
    If you aren’t doing backdoor, how do you plan to put money in Roth IRA? You make too much money.
    Feb 10 3
    • Amazon kudobear
      OP
      Through company's plan? I thought you cannot invest Roth IRA on your own bit you can do it through company's 401k plan.
      Feb 10
    • Workday / Eng efficient
      You are talking about mega backdoor? Does amazon 401k plan allow that?
      Feb 10
    • Oracle / R&D lHEA77
      Others on Blind have said that it does not. But that's irrelevant because the OP thinks 401k and IRA are the same, which they are absolutely not.
      Feb 10
  • Microsoft am sjbg
    You are incorrect about not able to withdraw 401(k) there is more than one strategy to tap that money before retirement age
    Feb 10 3
  • Amazon kudobear
    OP
    Thanks for the input, changed title and question to 401k instead of IRA.
    Feb 10 0
  • Apple / Eng cpKz41
    Do Roth 100%. Especially considering you live in a no income tax state right now. Assuming Seattle .
    Feb 10 4
    • Amazon kudobear
      OP
      So based on 2019 tax bracket, I will be paying 35% on the fund I put in 401k if I do roth. I am thinking that about putting in traditional 401k for now and convert to Roth later.
      Feb 10
    • Apple / Eng cpKz41
      Not a good strategy at all.
      Feb 10
    • Amazon kudobear
      OP
      Could you clarify please? I don't think I would withdraw more than 200k per year after I retire. If so, traditional IRA seems to be a better deal at the moment
      Feb 10
    • Apple / Eng cpKz41
      Traditional has minimum distribution requirements.
      Feb 10
  • Roku / Eng
    Mr.Scrooge

    Roku Eng

    PRE
    Yahoo, Oath
    Mr.Scroogemore
    Yoe?
    Feb 10 1