Hi Jeremy, can you please discuss the Roth vs Traditional options for 401K, your recommendation, and why? I’m currently maxing out my 401K with traditional contributions but am on the fence about switching to Roth due to the tax-free growth. Thanks!
A few notes on this choice:
- It’s impossible to know which will be better without knowledge of the future. i.e. it depends on your future tax bracket and potentially tax changes in the future.
- They’re both good. They both offer a significant tax break over a brokerage account.
So which you choose isn’t a massive decision or anything. Broad strokes, Roth is better for young people and/or lower income people. If you’re near retirement and a high income earner, Traditional is probably better.
Also note that Traditional gives you the option of doing a “roth IRA ladder” if you plan to retire well before 65. Roth is nice because you can take out large chunks in retirement without impacting your marginal tax rate, plus you can access the principal tax/penalty free at any time.
So, personally I kinda like Roth but just pick what makes sense for you and go for it! 
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I’ll cover this in tonight’s office hours (10/28/2020) with the recording available afterwards on the course site!
If you’re not signed up for office hours, you can sign up here.
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