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hankmoody666 t1_j2ap3jh wrote

25(m) here. My company is rolling out a Roth 401k in the new year. Matching at 6%.

Last 3 years I have maxed out both Roth IRA and 401k (also 6% but I can’t find anything that says they would match both if I tried it). I probably can’t squeeze all 3. Anyone have any advice on balancing all 3 and making a choice on what to prioritize?? Salary 112k if that helps.

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techcaleb t1_j2ayjdd wrote

You can't max out both traditional and roth 401k anyway - the limit applies to any combination of both. Since you are already maxing out both, changing to contributing to Roth 401k would let you effectively contribute more (if you want to) because you are contributing with after-tax money.

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hankmoody666 t1_j2b5wpt wrote

Thank you.

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SavageDuckling t1_j2ek6ia wrote

Also, the match is always traditional “pre-tax” money. So if you put 6% into Roth for the match, the 6% match itself is pre-tax. So If you did 6% into Roth; it’d be a perfect split of 6% in each category if you wanted to split them.

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dequeued t1_j2cl6n2 wrote

> would let you effectively contribute more (if you want to) because you are contributing with after-tax money

This is really the wrong way to think about this (basically, what you're saying is at best technically true).

  1. You're ignoring the tax savings from contributing to a Traditional that result in more income which can then be invested, used to pay down debt, etc. Only if you spend it on ephemeral stuff does that money "disappear".

  2. The goal with the "Roth vs. Traditional" decision should really be made based on whatever nets you the most money to spend in retirement. For most high earners, that's almost certainly Traditional. Read Roth or Traditional for a longer discussion.

(tagging /u/hankmoody666)

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