Go ahead and max the regular IRA. Roth vs. The Roth 401(k) was introduced in 2006 and was designed to combine features from the traditional 401(k) and the Roth IRA. Many new investors wonder if they should invest in the 401k or Roth IRA. Creditor protection is better in a 401k plan vs. a Roth IRA. Depending on who you are, a Roth plan might be better or worse for you compared to a traditional plan. You're able to withdraw your contributions tax- and penalty-free at any time, for any reason. Once your IRA is maxed out, go back to the 401K. Additionally, the ability to fund a Roth IRA is subject to certain income limits . When you rollover funds from a Roth 401(k) to a Roth IRA, it’s the age of the Roth IRA that sets the clock for the 5-year rule. Access to a high-paying stable value fund in the 401k plan. Income limits. Or something else? Definitely go with tax advantaged accounts before regular investment accounts. 40 yr old with no retirement just about to start first job in US making above average salary. Press question mark to learn the rest of the keyboard shortcuts, /r/personalfinance/wiki/index#wiki_retirement_accounts. Which to Max out First – 401k or Roth IRA? We're a small company of about 15, who have recently become independent from a much larger company (which is why I only know we'll have a 401K in the future, but don't know the funds/matching details yet.). The Roth 401(k) and the traditional 401(k) each offer a different type of tax advantage, and choosing the right plan is one of the biggest questions workers have about their 401(k). With a Roth IRA, you make contributions with money on which you've already paid taxes. Traditional 401(k) vs. Roth 401(k) Here’s the shortcut (and more about this soon). Rolling over a Roth 401(k) to a Roth IRA can make sense in the right circumstances, but you need to be aware of the rules. If they offer a 401(k) with huge expense ratios and it's all actively managed funds, then unless you plan to leave the company soon for a job that doesn't have a 401(k) (or that you won't be eligible for until 2014 or later), skip it. My question hence is about potentially using after tax 401k to Roth ira mega backdooor exclusively to get tax free growth for life. Let's say someone who's 30 makes $100k a year and contributes 6% of their paycheck a year to either a 401k or Roth IRA. Traditional 401k. Does your wife's company match her 401K contributions? When choosing between a Roth 401k vs Roth IRA, there are a few similarities and differences you need to be aware of. Annual Contribution Limits: Traditional and Roth IRA vs. 401k. … Scenario 1: Low tax bracket now, high tax bracket later (Roth 401k wins!) Eligibility and Contribution Limits . Thanks! 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