conversation: User (CarpetLord): "I’m hoping for somebody to poke a hole in my thinking. I’ve historically only contributed to a traditional 401k and now I’m considering doing half in  ROTH 401k. Right now my traditional 401k contributions of 18,500/year are saving me $4070in taxes. Once my wife starts working I’ll save $4440in taxes(24% top bracket) for me and $4440 for her when she maxes her 401k out too. \n\nAssuming I’m going to contribute the same effective value to either 401k option, it looks like this: \nMy 401k will yield: 18,500, 5% interest rate, 35 years=$1,758,773\nIf I take the $4440 saving in taxes and invest that in a brokerage account, it will yield $422,105.\n\nROTH 401k will yield $1,758,773. \n\nNow once I’m retired and let’s say I want $100k/year. For Roth, it’s simple, I don’t pay taxes and $100k/year will last me 17.59years. \n\nFor traditional, the 401k will be taxed as income, and using today’s tax tables, that will put the rate at 17.3%. The brokerage will be taxed as capital gains at 20%. Using a weighted average with the different balances, I get a tax rate of 17.8%. That means I need to withdraw $121,700 to get $100,000/year. This will last 17.92years. \n\nIf I use a 32% current top tax bracket(income between $315,000-$400,000), then the traditional+ brokerage will get me $100k/year for  19.08 years. \n\nIf you do this same exercise with the 24% bracket and assume you only need $77k/year in retirement, then the traditional 401k makes more sense as it will last you 24% longer than the Roth. \n\nThe above calculations assume that we have the same tax bracket setup in 35 years. It seems like there is a slim chance that we have the same setup and with the traditional barely edging out the Roth, I feel like I’d rather have my money in the Roth. Unless they impose a tax on Roth accounts, I’d feel better about a bucket of money that isn’t subject to a change in tax policy like the traditional and the brokerage would be. \n\nI also like the idea of being in retirement and having two different buckets of money to withdraw from where one bucket is subject to taxes and one isn’t. I think I want half of our money in traditional and half in Roth. \n\n\nAlso, I know I’m only looking at one retirement account when in reality my wife and I have 4 but I think the logic applies to her 401k as well. \n\n\nBg info: \n26. Married. No kids. \nMy Salary+bonus= $170k\nWife-student, will be making ~$120k starting in 2019.\n\nCurrent balances:\n401k: $130,000\nRoth IRA: $26,000\nWife Roth IRA: $10,000\nBrokerage: $16,000\nSavings: $10,000\nEmergency:$15,000\nNo debt besides small mortgage. &lt;100k\n\nTLDR: I’m going to start contributing to ROTH 401k since there isn’t that much of a difference. \n\n"
  Self: "Roth 401K is going to be a better deal long term. If you were closer to a 220K combined income I would say trad 401k would be idea to max out then be eligible to contribute to Roth IRA. But I believe even if you and you’re wife contributed 18,500 you would still be over the limits for Roth IRA"
  User (CarpetLord): "We will be close to $290k but we will each just do a backdoor Roth IRA for as long as that is still allowed. "
  Poptorts (Poptorts): "what do you do that earns $170k/year? are you in a big city?"
  User (CarpetLord): "Petroleum Engineer. Work in Dallas, which is big enough. "
  