how are you contributing to 401k

[AryaD]

what is the best strategy to contribute to traditional 401k and roth 401k. Meeru andaru ela split chesthunnru. I don't have any plans to live in this country after 50 years of age. what is best ratio to distribute between traditional 401k and roth 401k.

General ga US people ki set ayye retirement strategy manaki set kaadu kada. Obvisouly manaam retire ayyatappudu 401K lo 1.5mn - 2mn cash vuntundhi anukunta. From 59.1/2 every year $150k teesina kuda we will be in the 24% tax bracket (assuming tax rates stay intact). Is it better to pay taxes now and enjoy tax defered withdrawal on contributions and gains from roth 401k?

[AFDB_Director]

go for ROTH IRA. After 59.5 years, you can withdraw without taxes or penalties even on earnings

 

[AryaD]

Just now, AFDB_Director said:

go for ROTH IRA. After 59.5 years, you can withdraw without taxes or penalties even on earnings

 

I am no longer eligible for roth IRA if combined income exceeds 203K.

[AFDB_Director]

3 minutes ago, AryaD said:

I am no longer eligible for roth IRA if combined income exceeds 203K.

backdoor ROTH IRA kaaka. Google it, most of us are not eligible for ROTH IRA. I am doing backdoor ROTH IRA for past 3 years. 

[AryaD]

2 minutes ago, AFDB_Director said:

backdoor ROTH IRA kaaka. Google it, most of us are not eligible for ROTH IRA. I am doing backdoor ROTH IRA for past 3 years. 

so how are you distributing 19,500 between 401k and IRA?

[AFDB_Director]

3 minutes ago, AryaD said:

so how are you distributing 19,500 between 401k and IRA?

19,500 in 401k (to take advantage of employer's match as well)and 6000 in backdoor ROTH IRA. Once I jump from current employer to new, I will transfer all my 401k funds to ROTH IRA so that I can manage them by myself. I usually go with Vanguard mutual funds as thy have very low expense ratio. 

[dasari123]

14 minutes ago, AFDB_Director said:

go for ROTH IRA. After 59.5 years, you can withdraw without taxes or penalties even on earnings

 

How to do that bro ? 

[AFDB_Director]

Just now, dasari123 said:

How to do that bro ? 

you can open Roth IRA with any of the brokerages, vanguard is what I prefer, they have low fees. If your income is more than $200k, you can go backdoor ROTH. nenu explain cheyyatam kante "how to do back door ROTH IRA" ani google cheyyi, lot of vids. 

[idibezwada]

what ever it is..just max out

[AryaD]

4 minutes ago, AFDB_Director said:

19,500 in 401k (to take advantage of employer's match as well)and 6000 in backdoor ROTH IRA. Once I jump from current employer to new, I will transfer all my 401k funds to ROTH IRA so that I can manage them by myself. I usually go with Vanguard mutual funds as thy have very low expense ratio. 

Looks like there are limits on income for contributing to IRA, so everybody may not be able to contribute to traditional IRA as well as backdoor roth IRA. When you transfer funds from 401k to roth IRA that is called taxable conversion. You need to pay taxes on that amount right?

[AFDB_Director]

5 minutes ago, AryaD said:

Looks like there are limits on income for contributing to IRA, so everybody may not be able to contribute to traditional IRA as well as backdoor roth IRA. When you transfer funds from 401k to roth IRA that is called taxable conversion. You need to pay taxes on that amount right?

no income limits for traditional IRA, the tax deduction will differ depending on your income. andhuke backdoor IRA antunna. You first invest in trad-IRA, then you can do backdoor Roth conversion. 

if you rollover 401k to Roth IRA, you will pay income taxes, but after that no taxes on all earnings