i have been contributing to a pre tax 401(k) and company offers roth also

i am finally in a position where i can put money aside for retirement. ill walk with a pension from the RR, but to get full pension id have to stay til 67. i started late. you need 30 years in and 60 years old for 100% i started at 37.

i have been putting 4-10% in per pay and more when i can.

just got a letter from fidelity, that they now offer a roth 401(k)
since it is with post tax dollars, is it worth it? i have been doing my best to get my taxable income as low as i can.

i am completely new and ignorant to this. i know i need to get debt down before, because its pointless to use savings to pay debt when i decide to retire.

im trying to go at 62. unless there is a significant difference between 62 and 67.

thanks for all the help!

 

Roth rocks. While you pay now, you don't pay on the earnings when you choose to w/d the funds.

So the bet is that taxes will be more later than they are now, even though your income bracket may fall. I'll take that bet all day.

The other Roth benefit is that you are not required to start w/d's at 70.5 like you are with traditional IRA/401ks. Yes, that means if you didn't need it, it can be part of an estate with minimal consequences for your heirs of choice.

 

that makes sense and is confusing at the same time.
like i said im new at all this, i cant take a dispursement until 70.5 (without penalty) correct? that kinda stinks if i would need my money at 62-67.

wow. looks like i have a lot of learning to do.

if you were in my shoes, with lingering shitty debt, would you attack that first, then start plowing ahead? i dont have much to loose right now, but i dont want to screw myself in the future.

 

You can w/d w/o penalty at 59. The 70.5 is a mandatory time to begin a minimal w/d amount, assuming you weren't already meeting or exceeding.

I can't offer exact advice because I dont know your details. And don't want to.

You can easily find all the rules via Google.

The good news is that you are trying, planning and studying. Way better than too many who don't

 

thanks for the help! wasnt expecting you to be a FA.......i misunderstood the manditory minimums at 70.5 i can live with being able to get at my money at 59.5 cleared up enough for me to soak in tonight! ill get my debt paid down, and put in both. right now im just doing traditional 401k because of my gross for the year. best i have ever had. and need to get taxable down some more.

 

Regarding your debt, it really depends on what kind of interest is on the debt. If the interest charged is higher than you average rate of return on your 401k (include your employer matching/contribution in your rate of return), then I think your money would be better put to work towards paying off your debt. Credit card debt (in my opinion) should always be paid off before savings/retirement planning because your return will never cover the credit card interest payments.

Your max contribution on a Roth 401k is $18k for FY2015, which may/may not factor into your decision. If you feel that your tax bracket is low (or lower than it will be in the future) then Roth contributions make more sense over a traditional tax-deferred 401k.

 

401k isnt company matched. only downfall of my job. i think you are right in that i need to get my unsecured debt down. thanks for all the help.