"Overwhelmingly, I'd say probably 95% of wage earners would be better off going all in on Roth 401(k) instead of traditional 401(k)."
"Money inside a Roth 401(k) is funded with after-tax dollars, then grows untaxed and comes out untaxed in retirement."
"You won't have the money to put into the regular investment brokerage account, but the advantage is enormous down the road because that money will have grown tax-free and you'll spend it tax-free."
High-income earners can benefit from backdoor IRAs to bypass Roth IRA contribution limits. Clark Howard recommends that 95% of wage earners should opt for Roth 401(k) over traditional 401(k). This strategy allows tax-free growth and avoids future tax uncertainties. However, if income profiles do not fit, individuals may lose valuable deductions during high-earning years. Roth 401(k) contributions require upfront tax payments, but the long-term tax-free growth outweighs the initial costs, leading to a potentially larger retirement nest egg.
Read at 24/7 Wall St.
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