Roth 401k contributions

[BuckyBadger]

My husband and I currently contribute $16,500 to each of our 401k (403b for me) accounts. We also contribute $5,000 each to a non deductible IRA that we are going to roll over into a Roth using the current income limit "loophole."

But I just realized that my company offers Roth contributions to my retirement account. I don't believe that this is offered through my husband's work.

So is this only advantageous if you are currently in a low tax bracket? Should I even consider it? My husband and I make $230,000 between the two of us (no dependents, either) so we are in a high tax bracket and we do enjoy the tax benefits of pre-tax contributions.

Does it make sense to hedge our bets about what tax rates are going to be in 2045 or so? Would your opinion change if they close the rollover income limit loophole for Roth IRAs?

[JoshuaHeckathorn]

The answer depends on whether you would rather pay taxes now or later. Do you think you'll be in a lower tax bracket in retirement? Would you rather just pay the taxes now for the assurance that you won't have to pay them later? There aren't any income restrictions on ROTH 401Ks, so plenty of high-income earners do prefer them over making pretax contributions.

Some couples simply choose to have one spouse contribute to a ROTH 401K while the other contributes to a regular 401K to hedge your bets, as you mentioned.

[Hector]

Does it make sense to hedge our bets about what tax rates are going to be in 2045 or so? Would your opinion change if they close the rollover income limit loophole for Roth IRAs?

do this.

[1yearfrom0debt]

I like the idea of hedging your bets. Tax law and code could change at anytime. With that said, I believe the ROTH will survive. If you have that long to contribute, you can always make changes later!

[bennkar]

I would (and do) hedge my bets by having at least some of your retirement money in a Roth acct (of whatever type you can use). Who knows what will happen with tax rates going forward? I sure don't. But I think if they were to remove the tax breaks on already saved Roth monies, all He11 would break loose. The most likely scenario is that they remove the ability to save more Roth money forward, and then you will wish you had done it years ago. I agree there is a chance you will pay a lower tax rate in the future, but really, looking at today's economy, how likely do you think that is going to be? My guess is not very likely.

As for me, just this May I got my first opportunity to save in a Roth account at work, and I split my savings $2 Regular / $1 Roth at that time. I'm thinking I should reverse that ratio starting next year, assuming I can afford the tax hit (which I should be ok with then). I currently have an overall $180k regular to $38k Roth ratio, but I would like for that to hit 50/50 by the time I hopefully retire in 13 years (unlikely I know to hit 50/50, but its a goal for now).