401K & Roth 401k strategy

Samsara
GetCheddar

Go to company page Samsara

GetCheddar
May 21, 2021 13 Comments

Is my general strategy correct?

Currently I contribute just enough 401k to maximize the company match.

I then contribute the rest to Roth 401k to fill the remaining gap up to the $19.5 limit.

Is this what everyone else is doing?

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  • Siemens
    DontPipMe😬

    Go to company page Siemens

    DontPipMe😬
    Usually if both are offered, both are set up for the match (so technically no need for you to contribute to a regular 401k at all). The company match goes in tax deferred, but there’s nothing you can do about that.

    On the topic of strategy, keep in mind that 19.5k isn’t a super special number for Roth. Most good plans offer mega backdoor making 19.5K more of a technicality for Roth (if you do immediate backdooring).

    Also on the topic of strategy: It’s wise to consider having a healthy mix of pre and post tax. Pretax *does not automatically mean you will have to pay tax on it*: it means it will be counted as income at distribution. If you have a small mix of pretax and Roth, you can use pretax up to desired tax bracket (remember with standard deduction taxes don’t start until the tens of thousands…) and then use Roth once you’ve hit your desired tax rate. This nets you a lower tax rate than strictly one or the other.
    May 21, 2021 0
  • Bloomberg / Mgmt
    peetapiper

    Go to company page Bloomberg Mgmt

     peetapiper
    What's your goal? If it's to have the most in a tax free account for the future then I'm sure you can put all of it in Roth and still get the match. Check with HR.
    May 21, 2021 0
  • Your company match may apply to contributions to roth 401k - check with your HR dept (the match $ will be deposited in regular 401k)
    May 21, 2021 0

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