Microsoftgrindlc123

Roth or pre-tax 401k

I am early in career and MSFT only contribute to pre-tax, is it better to do all Roth or mix of 50% Roth and rest pre-tax. I pay fidelity to manage my 401k investment. What index funds in fidelity are good for medium and low risk? married, #401k #msft #fidelity TC: $195k

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Amazon BlindIy Jan 18, 2020

Depends on your own situation. However TC is actually very relevant here and not just because it’s Blind.

Airbnb Blahblahxa Jan 18, 2020

AGI is more relevant, since OP might be married.

Amazon BlindIy Jan 18, 2020

In that case certain kinds of visas are relevant as is state/locality and pretax deductions for different tax purposes... that’s why I led with “depends”

Microsoft mgTL73 Jan 18, 2020

If you are early in your career, then why are the looking for medium to low risk funds? You are in a position to take higher rush when younger. Join the invclub DL in Microsoft. There is a great OneNote with lots of good info

FICO greyKnight Jan 18, 2020

How about sharing some of that wisdom with us?

TriNet faanggg Jan 18, 2020

Can you please that link? I mean the content of the notes?

CloudBees rfXQ86 Jan 18, 2020

I did both. Either 401k pretax and roth ira orvice versa. But at very least max out these tax advantage accounts first. Savings are savings and investments are investments. Both will make you money. Squeezing out 5 percent here or there is something to not stress about.

Tableau leetcodеr Jan 18, 2020

I don’t think you are eligible for Roth.

Google swinglyf Jan 18, 2020

Assuming high tc, go pretax first and after tax rolled into Roth after.

Microsoft proclimate Jan 18, 2020

Max out Pre-tax 401k, then backdoor Roth IRA in that order. https://www.investopedia.com/terms/b/backdoor-roth-ira.asp If you have 6k spare in your bank right now, make sure you get the 2019 backdoor Roth IRA amount in before tax day, otherwise it is gone forever.

Google bighead2 Jan 18, 2020

TC? it matters here

Airbnb Blahblahxa Jan 18, 2020

AGI matters more

Google bighead2 Jan 18, 2020

right, but AGI will depend on Roth vs Traditional decision OP is asking about. Either way, we're missing needed details

Amazon Blin$Ninja Jan 19, 2020

I am coaching few people and if you are interested DM me

Merrill Lynch Jbox5002 Jan 19, 2020

Remember that the Tax Cuts and Jobs Act sunsets in 2025. Pre-2018 tax rates were noticeably higher for someone in your tax bracket and if the TCJA isn't extended we could see tax rates revert back. For some people, it makes sense to do Roth 401k contributions, after tax contributions, and a back door Roth IRA. Your situation might benefit from more pre-tax contributions. You might actually need to reduce your contributions to maximize just the company match, and focus on an emergency fund. Dont ask questions in a vacuum and assume that someone will be able to provide the correct answer. When it comes to risk, I agree with the comments that if you are young you can afford to take on more risk. But if you watch your account closely and it makes you sick when the market drops to the point you want to sell out, then a more balanced portfolio might be appropriate. It might make sense to find a financial advisor of sorts who can get the full picture of your situation. You might even have a family member or friend who can help.

Airbnb Blahblahxa Jan 20, 2020

OP hasn’t responded so probably doesn’t care about this any more, but we need to know your AGI (Adjusted Gross Income, appears on your tax return every year, includes spouse’s income) since you’re MFJ. TC is only your situation. We need to know your tax filing situation including your family, particularly tax bracket. If you’re in a high tax bracket, pre-tax is always better because you won’t pay taxes on the money until you retire. If you’re in a low tax bracket, Roth is probably better for you. You’ll pay the taxes now, the money will grow tax free, and withdrawals are tax free when you retire. You added that you want to know mutual funds that are low risk. Don’t do that. Bet on the highest risk stuff at this point in your career. Go all in on a total market or S&P 500 ETF or mutual fund. You can’t touch the money until you’re at least 60, so don’t worry about market ups and downs.