Personal Investments • Traditional or roth 401k for my specific situation?

I am currently 32 and in the 24% tax bracket, with the following asset allocation:
- taxable account: 65%
- roth ira/401k: 7.5%
- HSA: 2.5%
- traditional 401k: 25%
...
- likely retire early, say early 50 at the latest

Currently at about $350k in traditional, $150k roth ira but the gap will continue to increase given the different max contribution limits between 401k and ira.

I expect to need $100k annual income for retirement so it looks like 22% based on 2024 tax bracket.

Your relatively large taxable account, $350K/0.25*0.65 = $910K, means your marginal tax rate for Roth conversions in ~20 years (given current tax law) would be anywhere from 15% to 27% for a single filer with $100K income, depending on which accounts are the source of that income.

You could make a reasonable case for a traditional/Roth contribution split anywhere from 100/0 to 0/100, depending on your assumptions for future tax law, investment performance, etc.

Switching to 50/50 now means you won't be more than half wrong.

In any case, you should be fine.

Statistics: Posted by FiveK — Sat Jan 06, 2024 12:22 am — Replies 10 — Views 509

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