Roth vs 401k
First of all, I commend you for taking your granddaughter under your wing. You both sound special.
Based on the information given, she is solidly in the 15% tax bracket. That being said, she needs to gross about $1.18 for every dollar that she puts into a Roth because she gets no tax deduction. ($1.18 -15% = $1).
Conversely, it would only cost her .85 to put $1 in the 401(k) because of the tax savings. Now I know the current thinking is she will be able to take the money out tax free at retirement. That's true....if the tax laws in 40 years are the same as today. No one can guarantee that. We may have an entirely new tax structure - a value added tax, a flat tax, or the Fair Tax.
My fear is that the Roth's will ultimately be subject to some form of means testing as Social Security is today, i.e., if your income is over $34000 for an individual, up to 85% of your SS is taxed. Many don't remember that at one time SS was totally tax free until the government needed more tax revenue. That pile of billions of untaxed dollars that the "wealthy" will have accumulated makes an inviting target. Just some food for thought.
Of course, this recommendation assumes that the fees are reasonable and the investment choices are good in the 401k. A deductible IRA from Vanguard (VFINX) is probably a better choice. She can put in up to $5500 (net cost $4675) and keep it when she leaves her current job.
Vanguard charges no fees for the IRA but has low management fees on their funds.
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