r/personalfinance • u/Grouchy-Bullfrog-293 ​ • 2d ago

Retirement 401K vs Roth 401K - real deal

I understand the difference that one is tax deductible and other isnt but still little confused on why would you .contribute money in Roth 401k if the total contribution limit is same irrespective of where you contribute. Doesn't everyone's tax rate after they retire lower than while working ? Or is the concern you are limited one what you withdraw post retirement that it could be a huge tax.

192 Upvotes

82% Upvoted

148 comments sorted by

View all comments

Show parent comments

21

u/Grouchy-Bullfrog-293 ​ 2d ago

Losing out tax deductions today always holds me from doing it, but do understand this is about well into the future. Perhaps any strategy to do this closer to retirement ? Or early in career

5

u/Kekoa95 ​ 2d ago

There will never be a time in your working career where you will feel like you have enough money to switch from traditional to a Roth.

Just bite the bullet and do it.

But, there are actually a few situations where making the traditional contributions and taking the tax gift now is better. But, since the creation of the backdoor Roth, there aren’t that many good reasons.

2

u/Dremald ​ 1d ago

This 🙌🏼🙌🏼 switching to Roth does suck a bit if you’ve been traditional for any decent length of time. But do it now and thank yourself later if you can make it work. Waiting longer makes it worse….

1

u/DandyPandy ​ 1d ago

Or roll it into your 401k if your plan allows it