401K hindsite

[TrudyM]

If I could go back in time I would.
When you make investment decisions you have to make assumptions.
The biggest I made was that tax rates (brackets and rules) in retirement would be the same as they were when I was working. Now it looks like tax rates will be going up in retirement so all those tax deferred dollars will be taxed at a higher rate than they would have been.
Second mistake- when Roth Iras came about and later the options of Roth 401K's I didn't focus on what they were. Everybody said ok it is after tax dollars invested but I missed the gains and income building in the account would also be tax exempt on withdrawal. Didn't focus- like so many others including my husband busy working only skimmed the notices when the options came up. When I think of how much went into our 401Ks since 1998 and what they are at now I just feel dumb that I didn't change over to Roths when I could.
Advice to all our kids, do the Roth 401k if it's available, tax rates are headed up (IMHO)and tax free growth is a no brainer.
Don't be dumb like I was.:cry:

[gomoho]

Woulda, shoulda, coulda - most of us have made mistakes, but only with the knowledge we have gained through age do we realize they were mistakes. So count your blessings you HAVE money you will pay tax on tell you kids to get a good financial advisor!

[rayschic]

If I could go back in time I would.
When you make investment decisions you have to make assumptions.
The biggest I made was that tax rates (brackets and rules) in retirement would be the same as they were when I was working. Now it looks like tax rates will be going up in retirement so all those tax deferred dollars will be taxed at a higher rate than they would have been.
Second mistake- when Roth Iras came about and later the options of Roth 401K's I didn't focus on what they were. Everybody said ok it is after tax dollars invested but I missed the gains and income building in the account would also be tax exempt on withdrawal. Didn't focus- like so many others including my husband busy working only skimmed the notices when the options came up. When I think of how much went into our 401Ks since 1998 and what they are at now I just feel dumb that I didn't change over to Roths when I could.
Advice to all our kids, do the Roth 401k if it's available, tax rates are headed up (IMHO)and tax free growth is a no brainer.
Don't be dumb like I was.:cry:

Without getting into your specific situation, you should look into converting your trditional IRA into a Roth. Depending on your ages and tax bracket,it may make sense. You can convert just portion each year, pay taxes on the amount you convert.Talk to a tax advisor.

[l2ridehd]

There are ways to convert 401K/IRA $$$ to a Roth account. Amount is limited each year and has to be done with a knowledge of your specific tax situation to know if it makes sense. Don't beat yourself up to bad, depending on your tax situation when you were in the accumulation phase would depend on which was best, 401K or Roth. And Roth has earnings limitations that may not even have allowed you to utilize that plan.

And telling our kids to use one vs the other doesn't work either. Our law makers have an insatiable need for tax revenue and if they need to change the rules to get it, they will. Just as they have already spent your Social Security $$$ and are eyeing our 401K $$$ as a way to get more money to satisfy their need to give money away to get votes to stay in power.

[ajbrown]

This site often gives me something new to consider. I have always contributed the maximum I could to my 401k. Until about 5 years ago that was 100% traditional IRA, I honesty forget when the companies I worked for started the Roth option as part of the 401k.

Five years ago, I continued with the maximum 401k contribution, but put 50% in a Roth and 50% in traditional. I did that because I simply did not know what would be best.....

Trying to predict the incompetence of our leaders for the next 20 years is difficult, but I find it hard to believe my income could be anywhere near it is now, thus i should be in a lower tax bracket?

I do not know if the answer is straight forward to me, but the OP has given me something to consider.

PS. I always enjoy reading opinions from others with more experience than I in these subjects. If nothing else it gets me thinking about something I was otherwise ignoring....

[rayschic]

This site often gives me something new to consider. I have always contributed the maximum I could to my 401k. Until about 5 years ago that was 100% traditional IRA, I honesty forget when the companies I worked for started the Roth option as part of the 401k.

Five years ago, I continued with the maximum 401k contribution, but put 50% in a Roth and 50% in traditional. I did that because I simply did not know what would be best.....

Trying to predict the incompetence of our leaders for the next 20 years is difficult, but I find it hard to believe my income could be anywhere near it is now, thus i should be in a lower tax bracket?

I do not know if the answer is straight forward to me, but the OP has given me something to consider.

PS. I always enjoy reading opinions from others with more experience than I in these subjects. If nothing else it gets me thinking about something I was otherwise ignoring....

It depends on your age and when you will need to use your IRA money.
The farther you are away from needing the money, the longer your money will grow tax free in a ROTH, the better. If you are in a low tax bracket now, it might make sense to convert from your traditional IRA, pay taxes now, and let it build tax free. Basically, you want to convert up to the amount that will keep you in the same bracket. For example, if you are married filing jointly, you can have up to $72,500 in income to stay in the 15% bracket. So if your AGI for 2012 was $50,000 you could convert up to $22,500, pay 15% tax on April 15. Then, when you withdraw the money, no additional taxes. You can keep converting every year until it is all ROTH. Also, you are not required to make distributions at age 70 1/2 so if you don't need the money at that age, it can continue to grow tax free. Always consult a tax advisor. This is a just an oversimplified example.

[ivanhoe]

If I could go back in time I would.

Advice to all our kids, do the Roth 401k if it's available, tax rates are headed up (IMHO)and tax free growth is a no brainer.
Don't be dumb like I was.:cry:

Whoa! don't advise that until you determine if the company is contributing!
Giving up free money is a no brainer.