Match 401k, max out HSA (if you have an HDHP plan at work), max out Roth/Traditional IRA ($6000 total), max out the remainder of 401k (Roth or otherwise, $19500/yr), possibly taxable brokerage account (stick to stocks only for tax efficiency). Initially, I'm a firm believer that you need to enjoy life while you're young enough to do so. The risk I see, potentially, is that you always need to make sure you have some liquidity outside of these tax-advantaged accounts for emergencies, vacations, house purchases, kids, etc, etc. If I also have W-2 income and max out my 401(k), to calculate the amount I can contribute to my IRASEP I take 53,0000 – my 401(k) contribution = max … Take a look at your tax bracket and make a decision. Yes, but also put funds towards moving out in a few years like you had mentioned. Enjoy! ._3Qx5bBCG_O8wVZee9J-KyJ{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN{margin:0;padding:0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;margin:8px 0}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ.QgBK4ECuqpeR2umRjYcP2{opacity:.4}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label{font-size:12px;font-weight:500;line-height:16px;display:-ms-flexbox;display:flex;-ms-flex-align:center;align-items:center}._3Qx5bBCG_O8wVZee9J-KyJ ._2NbKFI9n3wPM76pgfAPEsN ._2btz68cXFBI3RWcfSNwbmJ label svg{fill:currentColor;height:20px;margin-right:4px;width:20px}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;-ms-flex-pack:justify;justify-content:space-between;padding:0;width:100%}._3Qx5bBCG_O8wVZee9J-KyJ ._4OtOUaGIjjp2cNJMUxme_ svg{display:inline-block;height:12px;width:12px}.isInButtons2020 ._4OtOUaGIjjp2cNJMUxme_{padding:0 12px}.isInButtons2020 ._1ra1vBLrjtHjhYDZ_gOy8F{font-family:Noto Sans,Arial,sans-serif;font-size:12px;font-weight:700;letter-spacing:unset;line-height:16px;text-transform:unset}._1ra1vBLrjtHjhYDZ_gOy8F{--textColor:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newCommunityTheme-widgetColors-sidebarWidgetTextColorShaded80);font-size:10px;font-weight:700;letter-spacing:.5px;line-height:12px;text-transform:uppercase;color:var(--textColor);fill:var(--textColor);opacity:1}._1ra1vBLrjtHjhYDZ_gOy8F._2UlgIO1LIFVpT30ItAtPfb{--textColor:var(--newRedditTheme-widgetColors-sidebarWidgetTextColor);--textColorHover:var(--newRedditTheme-widgetColors-sidebarWidgetTextColorShaded80)}._1ra1vBLrjtHjhYDZ_gOy8F:active,._1ra1vBLrjtHjhYDZ_gOy8F:hover{color:var(--textColorHover);fill:var(--textColorHover)}._1ra1vBLrjtHjhYDZ_gOy8F:disabled,._1ra1vBLrjtHjhYDZ_gOy8F[data-disabled],._1ra1vBLrjtHjhYDZ_gOy8F[disabled]{opacity:.5;cursor:not-allowed} Are there any fees or penalties? Regarding (1), you can in theory max out both accounts. Also, if and when you do leave your job, I would recommend rolling over your 401(k) into your Roth IRA. We don't know what your tax rate is, so we can't really say which is better. You can also just invest in mutual funds outside of structured retirement accounts and consider that your “bridge retirement.” You’ll use that money for the years between your early retirement and when you can access your 401k and IRAs without penalty. Even with a paid off house, maintenance and property taxes is a different sort of beast. I max out my HSA. .s5ap8yh1b4ZfwxvHizW3f{color:var(--newCommunityTheme-metaText);padding-top:5px}.s5ap8yh1b4ZfwxvHizW3f._19JhaP1slDQqu2XgT3vVS0{color:#ea0027} Max out any employer match on 401k (free money) Max Roth IRA. It may not be a good idea to do it, but it is possible; Pre-tax 401k - under current rules, you MAY be able to take 'substantially equal installments" over a period certain or based on life-expectancy without penalty (yes, there will be taxes). This is to say, if all you do is plop your $6,000 down in either one, and either pay your taxes if you pick the roth, or go buy some avocado toast with your tax savings with the trad, the roth is the better option. .Rd5g7JmL4Fdk-aZi1-U_V{transition:all .1s linear 0s}._2TMXtA984ePtHXMkOpHNQm{font-size:16px;font-weight:500;line-height:20px;margin-bottom:4px}.CneW1mCG4WJXxJbZl5tzH{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._11ARF4IQO4h3HeKPpPg0xb{transition:all .1s linear 0s;display:none;fill:var(--newCommunityTheme-button);height:16px;width:16px;vertical-align:middle;margin-bottom:2px;margin-left:4px;cursor:pointer}._1I3N-uBrbZH-ywcmCnwv_B:hover ._11ARF4IQO4h3HeKPpPg0xb{display:inline-block}._2IvhQwkgv_7K0Q3R0695Cs{border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._2IvhQwkgv_7K0Q3R0695Cs:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B{transition:all .1s linear 0s;border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._1I3N-uBrbZH-ywcmCnwv_B:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B.IeceazVNz_gGZfKXub0ak,._1I3N-uBrbZH-ywcmCnwv_B:hover{border:1px solid var(--newCommunityTheme-button)}._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk{margin-top:25px;left:-9px}._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:focus-within,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:hover{transition:all .1s linear 0s;border:none;padding:8px 8px 0}._25yWxLGH4C6j26OKFx8kD5{display:inline}._2YsVWIEj0doZMxreeY6iDG{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-metaText);display:-ms-flexbox;display:flex;padding:4px 6px}._1hFCAcL4_gkyWN0KM96zgg{color:var(--newCommunityTheme-button);margin-right:8px;margin-left:auto;color:var(--newCommunityTheme-errorText)}._1hFCAcL4_gkyWN0KM96zgg,._1dF0IdghIrnqkJiUxfswxd{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._1dF0IdghIrnqkJiUxfswxd{color:var(--newCommunityTheme-button)}._3VGrhUu842I3acqBMCoSAq{font-weight:700;color:#ff4500;text-transform:uppercase;margin-right:4px}._3VGrhUu842I3acqBMCoSAq,.edyFgPHILhf5OLH2vk-tk{font-size:12px;line-height:16px}.edyFgPHILhf5OLH2vk-tk{font-weight:400;-ms-flex-preferred-size:100%;flex-basis:100%;margin-bottom:4px;color:var(--newCommunityTheme-metaText)}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX{margin-top:6px}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._3MAHaXXXXi9Xrmc_oMPTdP{margin-top:4px} if you expect to exceed single or MFJ IRS limits for Roth it would be better to use that vehicle now while it is available to you. BTW your total IRA contributions (Roth+traditional) for the year cannot exceed $6K. Join our community, read the PF Wiki, and get on top of your finances! /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/IdCard.0f76af1b61e8e247d28f.css.map*/._2JU2WQDzn5pAlpxqChbxr7{height:16px;margin-right:8px;width:16px}._3E45je-29yDjfFqFcLCXyH{margin-top:16px}._13YtS_rCnVZG1ns2xaCalg{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex}._1m5fPZN4q3vKVg9SgU43u2{margin-top:12px}._17A-IdW3j1_fI_pN-8tMV-{display:inline-block;margin-bottom:8px;margin-right:5px}._5MIPBF8A9vXwwXFumpGqY{border-radius:20px;font-size:12px;font-weight:500;letter-spacing:0;line-height:16px;padding:3px 10px;text-transform:none}._5MIPBF8A9vXwwXFumpGqY:focus{outline:unset} I never found this advice helpful. I’m currently putting my 401k into Growth Funds of America. Bogleheads are die-hard fans of Jack Bogle and index fund investing in general - Jack Bogle founded Vanguard, is the father of index funds and an all-around inspiration for people who want to engage in passive investments (generally stocks and bonds) for a long-term return that will beat active alternatives. Open a brokerage account. The income limits for the Roth IRA apply only to Roth IRA contributions, so you could still contribute to a traditional IRA up to the $6,000 (or $7,000) limit. Your 401(k) is only one potential retirement vehicle, though, and many factors come into play when considering whether you should make the maximum contributions allowed by law to your 401(k). If yes to both then put it in traditional, otherwise put it in Roth. ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} Once I hit $2mil+ I'm just gonna retire put that in high yield at 2% and live off the interest; don't really spend more than $40k a year anyways. A mega backdoor Roth lets people save as much as $37,500 in a Roth IRA or Roth 401(k) in 2020. As your income and net worth grows, tax efficiency becomes more valuable. .LalRrQILNjt65y-p-QlWH{fill:var(--newRedditTheme-actionIcon);height:18px;width:18px}.LalRrQILNjt65y-p-QlWH rect{stroke:var(--newRedditTheme-metaText)}._3J2-xIxxxP9ISzeLWCOUVc{height:18px}.FyLpt0kIWG1bTDWZ8HIL1{margin-top:4px}._2ntJEAiwKXBGvxrJiqxx_2,._1SqBC7PQ5dMOdF0MhPIkA8{height:24px;vertical-align:middle;width:24px}._1SqBC7PQ5dMOdF0MhPIkA8{-ms-flex-align:center;align-items:center;display:-ms-inline-flexbox;display:inline-flex;-ms-flex-direction:row;flex-direction:row;-ms-flex-pack:center;justify-content:center} Make sure you are cognizant of that. Yes and yes. However, most people would recommend first contributing enough to get the full 401(k) match, then maxing out the $6K Roth IRA, and then continuing to fund the 401(k) with any additional money you have leftover (up to the $19K). I maxed out Roth IRA and 401(k) while having the money I got leftover from college(your $10k) in savings/emergency funds then saved what I didn't max out from my paycheck into a savings account and some in an investment stock account. And IIRC, he can apply earnings toward a down payment on a first home once they've been in the account for 5 years (and some other purposes). Freedom from both school and parents in your early 20's is the greatest feeling in the world and is worth the cost, IMHO. I count my blessings as I have reached the point where I max my Fidelity 401k each year and also max my Vanguard Roth IRA on January 1st. .ehsOqYO6dxn_Pf9Dzwu37{margin-top:0;overflow:visible}._2pFdCpgBihIaYh9DSMWBIu{height:24px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu{border-radius:2px}._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:focus,._2pFdCpgBihIaYh9DSMWBIu.uMPgOFYlCc5uvpa2Lbteu:hover{background-color:var(--newRedditTheme-navIconFaded10);outline:none}._38GxRFSqSC-Z2VLi5Xzkjy{color:var(--newCommunityTheme-actionIcon)}._2DO72U0b_6CUw3msKGrnnT{border-top:none;color:var(--newCommunityTheme-metaText);cursor:pointer;padding:8px 16px 8px 8px;text-transform:none}._2DO72U0b_6CUw3msKGrnnT:hover{background-color:#0079d3;border:none;color:var(--newCommunityTheme-body);fill:var(--newCommunityTheme-body)} In regards to your 401k offerings, I'm familiar with American Funds and while the expense ratios are higher than Vanguard expense ratios, American Funds have performed well when compared to Vanguard index funds even after the higher fees. ._9ZuQyDXhFth1qKJF4KNm8{padding:12px 12px 40px}._2iNJX36LR2tMHx_unzEkVM,._1JmnMJclrTwTPpAip5U_Hm{font-size:16px;font-weight:500;line-height:20px;color:var(--newCommunityTheme-bodyText);margin-bottom:40px;padding-top:4px}._306gA2lxjCHX44ssikUp3O{margin-bottom:32px}._1Omf6afKRpv3RKNCWjIyJ4{font-size:18px;font-weight:500;line-height:22px;border-bottom:2px solid var(--newCommunityTheme-line);color:var(--newCommunityTheme-bodyText);margin-bottom:8px;padding-bottom:8px}._2Ss7VGMX-UPKt9NhFRtgTz{margin-bottom:24px}._3vWu4F9B4X4Yc-Gm86-FMP{border-bottom:1px solid var(--newCommunityTheme-line);margin-bottom:8px;padding-bottom:2px}._3vWu4F9B4X4Yc-Gm86-FMP:last-of-type{border-bottom-width:0}._2qAEe8HGjtHsuKsHqNCa9u{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-bodyText);padding-bottom:8px;padding-top:8px}.c5RWd-O3CYE-XSLdTyjtI{padding:8px 0}._3whORKuQps-WQpSceAyHuF{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-actionIcon);margin-bottom:8px}._1Qk-ka6_CJz1fU3OUfeznu{margin-bottom:8px}._3ds8Wk2l32hr3hLddQshhG{font-weight:500}._1h0r6vtgOzgWtu-GNBO6Yb,._3ds8Wk2l32hr3hLddQshhG{font-size:12px;line-height:16px;color:var(--newCommunityTheme-actionIcon)}._1h0r6vtgOzgWtu-GNBO6Yb{font-weight:400}.horIoLCod23xkzt7MmTpC{font-size:12px;font-weight:400;line-height:16px;color:#ea0027}._33Iw1wpNZ-uhC05tWsB9xi{margin-top:24px}._2M7LQbQxH40ingJ9h9RslL{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-actionIcon);margin-bottom:8px} You can have both, but you can only contribute a total of $6000. Max out your 401(k) each year, and be sure to get your 401(k) employer match, if you have one. After putting some money in Roth, make sure you max out your 401(k). .FIYolDqalszTnjjNfThfT{max-width:256px;white-space:normal;text-align:center} Contribute as much as your'e comfortable to 401k beyond the employee match. The IRA contribution limit in 2021 is $6,000 or $7,000 if you're 50 or older. Good for you. Where to invest first: Roth IRA or a taxable brokerage account You make more money by maxing out a Roth IRA at 21 than someone maxing it out at 25. While the conventional wisdom is that you never want to tap a retirement account for anything other than retirement, if your only other option is to put the money in a low-yielding and/or taxable account, you may as well give yourself the option of saving it for retirement until a higher priority comes along. If you earn more than $139,000, you cannot make any contributions to a Roth IRA. This is often referred to as Section 72(t) payments. The limit for IRAs is $6000/yr. “Most people think that putting extra money aside for retirement i… /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/TopicLinksContainer.361933014be843c79476.css.map*/._2ppRhKEnnVueVHY_G-Ursy{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin:22px 0 0;min-height:200px;overflow:hidden;position:relative}._2KLA5wMaJBHg0K2z1q0ci_{margin:0 -7px -8px}._1zdLtEEpuWI_Pnujn1lMF2{bottom:0;position:absolute;right:52px}._3s18OZ_KPHs2Ei416c7Q1l{margin:0 0 22px;position:relative}.LJjFa8EhquYX8xsTnb9n-{filter:grayscale(40%);position:absolute;top:11px}._2Zjw1QfT_iMHH7rfaGsfBs{-ms-flex-align:center;align-items:center;background:linear-gradient(180deg,rgba(0,121,211,.24),rgba(0,121,211,.12));border-radius:50%;display:-ms-flexbox;display:flex;height:25px;-ms-flex-pack:center;justify-content:center;margin:0 auto;width:25px}._2gaJVJ6_j7vwKV945EABN9{background-color:var(--newCommunityTheme-button);border-radius:50%;height:15px;width:15px;z-index:1} Your biggest expense for the foreseable future will be taxes, so anything you do to legally avoid them should be prioritized. Press J to jump to the feed. One of my employers had this as an option, when all of the funds had high expense ratios. I am interested in contributing $22,000 to 401K & $6,500 to IRA Roth. The contribution limits for both traditional and Roth IRAs are $6,000 per year, plus a $1,000 catch-up contribution for those 50 and older, for both tax years 2020 and 2021. Your wording is a little unclear so I’ll just say this in case you don’t know to potentially save you a headache: Once you max out your 2020 and 2021 Roth IRAs, you can’t contribute to any IRA — Traditional or Roth — until 2022. Press question mark to learn the rest of the keyboard shortcuts, https://www.reddit.com/r/financialindependence/. A Roth IRA is taxed when you submit money into the account, and then can be withdrawn in retirement … Unless you like paying taxes now or on your investments, maxing both out if you can comfortably afford it is a great idea. So, how to allocate retirement funds is a common question.If you can afford to max out both, here are the contribution limits for 2018: To me, it feels like another risk in investing that I can minimize by just using a Roth and knowing that the tax rate will be 0%. Are there any fees or penalties? Hey, when people say “higher or lower than what you expect in retirement,” what does that mean exactly? Would I be better starting a traditional IRA through vanguard and just pumping money through VTSAX or increase my 401k option? The r/personalfinance sub has a wiki on Roth vs traditional that might help. 25 years old currently putting 5% in my company’s 401k up to match. The company I am working for has a 401(k) and will match it to 5%. Not judging, I actually have considered a similar type plan. Most of us will be in the lower tax bracket after retirement. Of course there will be certain aspects like additional principle for investing due to the tax break initially from a trad 401k and tax code changes in the future, etc, but this would only adjust the specific % threshold on gains required in which roth take home gains surpass trad. ._1EPynDYoibfs7nDggdH7Gq{margin-bottom:8px;position:relative}._1EPynDYoibfs7nDggdH7Gq._3-0c12FCnHoLz34dQVveax{max-height:63px;overflow:hidden}._1zPvgKHteTOub9dKkvrOl4{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word}._1dp4_svQVkkuV143AIEKsf{-ms-flex-align:baseline;align-items:baseline;background-color:var(--newCommunityTheme-body);bottom:-2px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap;padding-left:2px;position:absolute;right:-8px}._5VBcBVybCfosCzMJlXzC3{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;color:var(--newCommunityTheme-bodyText)}._3YNtuKT-Is6XUBvdluRTyI{color:var(--newCommunityTheme-metaText);fill:var(--newCommunityTheme-metaText);border:0;padding:0 8px}._3YNtuKT-Is6XUBvdluRTyI:active,._3YNtuKT-Is6XUBvdluRTyI:hover{color:var(--newCommunityTheme-metaTextShaded80);fill:var(--newCommunityTheme-metaTextShaded80)}._3YNtuKT-Is6XUBvdluRTyI:disabled,._3YNtuKT-Is6XUBvdluRTyI[data-disabled],._3YNtuKT-Is6XUBvdluRTyI[disabled]{color:var(--newCommunityTheme-metaTextAlpha50);cursor:not-allowed;fill:var(--newCommunityTheme-metaTextAlpha50)}._2ZTVnRPqdyKo1dA7Q7i4EL{transition:all .1s linear 0s}.k51Bu_pyEfHQF6AAhaKfS{transition:none}._2qi_L6gKnhyJ0ZxPmwbDFK{transition:all .1s linear 0s;display:block;background-color:var(--newCommunityTheme-field);border-radius:4px;padding:8px;margin-bottom:12px;margin-top:8px;border:1px solid var(--newCommunityTheme-canvas);cursor:pointer}._2qi_L6gKnhyJ0ZxPmwbDFK:focus{outline:none}._2qi_L6gKnhyJ0ZxPmwbDFK:hover{border:1px solid var(--newCommunityTheme-button)}._2qi_L6gKnhyJ0ZxPmwbDFK._3GG6tRGPPJiejLqt2AZfh4{transition:none;border:1px solid var(--newCommunityTheme-button)}.IzSmZckfdQu5YP9qCsdWO{cursor:pointer;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO ._1EPynDYoibfs7nDggdH7Gq{border:1px solid transparent;border-radius:4px;transition:all .1s linear 0s}.IzSmZckfdQu5YP9qCsdWO:hover ._1EPynDYoibfs7nDggdH7Gq{border:1px solid var(--newCommunityTheme-button);padding:4px}._1YvJWALkJ8iKZxUU53TeNO{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7{display:-ms-flexbox;display:flex}._3adDzm8E3q64yWtEcs5XU7 ._3jyKpErOrdUDMh0RFq5V6f{-ms-flex:100%;flex:100%}._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{color:var(--newCommunityTheme-button)}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v,._3adDzm8E3q64yWtEcs5XU7 .dqhlvajEe-qyxij0jNsi0{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._3adDzm8E3q64yWtEcs5XU7 ._12nHw-MGuz_r1dQx5YPM2v{color:var(--newCommunityTheme-button);margin-right:8px;color:var(--newCommunityTheme-errorText)}._3zTJ9t4vNwm1NrIaZ35NS6{font-family:Noto Sans,Arial,sans-serif;font-size:14px;line-height:21px;font-weight:400;word-wrap:break-word;width:100%;padding:0;border:none;background-color:transparent;resize:none;outline:none;cursor:pointer;color:var(--newRedditTheme-bodyText)}._2JIiUcAdp9rIhjEbIjcuQ-{resize:none;cursor:auto}._2I2LpaEhGCzQ9inJMwliNO{display:inline-block}._2I2LpaEhGCzQ9inJMwliNO,._42Nh7O6pFcqnA6OZd3bOK{margin-left:4px;vertical-align:middle}._42Nh7O6pFcqnA6OZd3bOK{fill:var(--newCommunityTheme-button);height:16px;width:16px;margin-bottom:2px} I’m fairly new to all of this. Most investors can’t afford to max out their 401k and their IRA. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/ReredditLink.f7b66a91705891e84a09.css.map*/It’s much harder to adjust to a lower paycheck than it is to adjust to a higher one later. Or if I'm planning on retiring early, should I put that money into a traditional 401k, as that's the only account that is easy to pull from via a conversion ladder? So, in short, save as much as you can at a young age, find the right balance between long-term plans and short-term cash needs, and learn as you go. Id still max out a Roth IRA since you’ll need to cover 5 years of expenses once you decide to pull the trigger and stop working, and Roths give you more flexibility than other accounts. Regarding (1), you can in theory max out both accounts. The IRA maximum applies to all your IRAs, so if you max out your Roth IRA contributions for a given year you can't contribute anything to a Traditional IRA. The maximum you can contribute to your 401 (k) in 2019 is $19,000, or $25,000 if you're aged 50 or older. Reddit; 14 thoughts on ... My mortgage is paid off and now i want to restart my $401K & IRA Roth. But there are differences, including on withdrawal rules. If I decide to retire early and want to use some money out of either the Roth IRA or 401(k), how do I do that? If you can do it, then yes...you can do $19k in a 401k and $6k in a Roth IRA. Would I not be better to put my money into a Roth401k so I am not taxed on the GROWTH instead of a traditional 401k? This includes Roth IRA or Traditional IRA. You wouldn't be able to take ad-hoc distributions in varying amounts, as they need to be relatively level annual installments in order to avoid the premature distribution penalty. ._2YJDRz5rCYQfu8YdgB_neb{overflow:hidden;position:relative}._2YJDRz5rCYQfu8YdgB_neb:before{background-image:url(https://www.redditstatic.com/desktop2x/img/reddit_pattern.png);content:"";filter:var(--newCommunityTheme-invertFilter);height:100%;position:absolute;width:100%}._37WD6iicVS6vGN0RomNTwh{padding:0 12px 12px;position:relative} Press question mark to learn the rest of the keyboard shortcuts, https://www.bogleheads.org/wiki/Prioritizing_investments. I max out my 401k - traditional. Your income will be the main factor. The thought process is that it allows me to take money out tax-free during big spending years in retirement and the … You can split … You could consider a taxable account if you really don't want to contribute to your 401k. @keyframes ibDwUVR1CAykturOgqOS5{0%{transform:rotate(0deg)}to{transform:rotate(1turn)}}._3LwT7hgGcSjmJ7ng7drAuq{--sizePx:0;font-size:4px;position:relative;text-indent:-9999em;border-radius:50%;border:4px solid var(--newCommunityTheme-bodyTextAlpha20);border-left-color:var(--newCommunityTheme-body);transform:translateZ(0);animation:ibDwUVR1CAykturOgqOS5 1.1s linear infinite}._3LwT7hgGcSjmJ7ng7drAuq,._3LwT7hgGcSjmJ7ng7drAuq:after{width:var(--sizePx);height:var(--sizePx)}._3LwT7hgGcSjmJ7ng7drAuq:after{border-radius:50%}._3LwT7hgGcSjmJ7ng7drAuq._2qr28EeyPvBWAsPKl-KuWN{margin:0 auto} Employers had this as an option, when people say “ higher or lower than what you are young feel! Do it, then yes... you can only contribute a total of $ 6000 contribution in. 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