33F making $130,000 a year. I've had a 401k for awhile and it currently sits at $150,000. I (stupidly) never opened an IRA earlier in my career. At this income level/age, does traditional or roth IRA make more sense?
Additional point is that I will be married in the next year, and at that point our combined income will put us over the limit. Not sure if that changes what I should do now vs. just change strategies later.
Traditional or Roth IRA if starting at 33
byu/therambunctiousotter inpersonalfinance
Posted by therambunctiousotter
10 Comments
>At this income level/age, does traditional or roth IRA make more sense?
Your income is too high to deduct trad contributions, so roth IRA is your only option
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
Roth or traditional: https://reddit.com/r/personalfinance/comments/10qwnrx/why_you_should_almost_never_contribute_to_a_roth/
Backdoor roth: https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/ https://www.whitecoatinvestor.com/fix-backdoor-roth-ira-screw-ups/
[deleted]
Roth always. Almost. Even for my mom at 77 she is converting to Roth.
You could be eligible to contribute to a Roth 401k at your work. Most companies allow it now.
It means paying more tax in your paycheck withholding now, but gives you more flexibility in retirement.
You could contribute 9% to each:
* traditional 401k
* Roth 401k
Be sure to configure your investments for both, so you’re in the market.
Hi as a noob here. I’d personally do the jobs 401k/traditional an max that out (hopefully the employer has a match) and also try to do a Roth as a secondary thing. The roth is already taxed monies. 401k helps you lower your take home $$$ which means less tax burden!
General rule of thumb is go all Roth until you cross the 32% tax bracket.
Granted no one knows what taxes will be in the future, especially decades out, but that’s a good threshold.
I would max your 401k first and if there’s extra, put it into a Roth. You’ve got a good starter. The more you put in now the more you make later.
Do Roth.
While traditional makes the most sense for tax optimization at your income for a 401k, if you contribute to a traditional IRA then 1) you are already too high to deduct and aren’t getting any benefit 2) even if you’re below the cut off (say now you make 75k), if you anticipate any raises then you want to keep the option to doing a backdoor Roth open. If you contribute to a traditional IRA, the pro rata rule kicks in making a backdoor Roth a taxable event
I’m 32 and I max my Roth every year. Since you’re about to lose Roth eligibility, do the max contributions for 2025 and 2026 now (unless you’re getting married in calendar 2026, I’m not a tax advisor).
In some ways it depends on how soon you want to retire. I’m aiming for FIRE so the tax free (well, post-tax) account is a good option for me.
When you get to 73 and have a 401K, it is best to consider converting it to a Simple IRA. That way you can take a good portion of your RMA as a QCD.