Roth 401k vs. Traditional 401k
Hi Terry, my 29 yr. old daughter is a high income earner as a consultant and in the 24% marginal tax bracket for 2024. She currently participates in her company’s 401k with a company match. Her company’s financial retirement resource for employees suggested she stop contributing to the traditional 401k and start anew with contributions going to a Roth 401k. The company match would continue in the new account. Her 401k would remain as is. She is in a 24% tax bracket and just takes her standard deduction as a single person. Should she start a new Roth 401k or continue with the 401k. She obviously would be paying more taxes upfront which would reduce her take home pay. In retirement her income would presumably be lower so her tax bracket would be less than what she is in now. What do you recommend? Thank you!
Terry Says
I absolutely recommend that young people contribute to a Roth when available. The won’t miss the tax deduction, but they will benefit hugely from tax-free growth over the years!