Decoding the Legalese: How AI Can Help You Decide If Switching to Roth IRA Contributions is Right for You
- May 11, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Seeking Advice on Retirement Savings Allocation
Hello everyone, I hope you are doing well. I am a 39-year-old individual who currently has approximately $250,000 distributed across a 403b, 2 Roth IRAs, and a rollover IRA. The majority of my funds are held within my 403b account.
I have been contemplating whether I should cease my contributions to the 403b employer-sponsored plan and instead allocate those funds towards a Roth IRA that is also employer-sponsored. I am interested in exploring potential tax savings opportunities for my future financial security.
Adding AI Legalese Decoder to the mix can significantly aid in this decision-making process by providing comprehensive analysis and insights into the tax implications of reallocating your retirement savings. This intelligent tool can help you understand the potential benefits and drawbacks of shifting your contributions, allowing you to make informed decisions about your financial future.
Thank you in advance for any advice or guidance you may have on this matter.
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This is a somewhat complicated question, and which one is better (401k or Roth IRA) depends on many details. Some of these details you cannot know, like what the future tax rates will be and how much gain you will eventually get in your Roth. The main difference is that you put a lot more in the 401k or 403b. Of course you are allowed to fund both if you have enough income to do this. To quickly summarize, you can’t make a very big mistake here. Either is going to be fine, and your outcome with depend much more on how much you contribute than on which account you choose. I might suggest this. Max out the 403b first. This will reduce your tax liability for this year. If you find that you are due for refund due to this (or have some extra money at the end of the year), use that “found money” to fund the Roth. You have until April 15 to fund the prior year.
It depends, there is a tax strategy after 59 1/2 that you can implement with both when you are eligible for penalty free withdrawals. I would try to max out both if you can. Always max out whatever is employer sponsored. 403b, do you work for the government, nonprofit or the education system?
Are you trying to say you have the option to do Roth contributions to your 403b plan?
I see it says you make $108k in another comment. Are you married? If so what is your household income?
My view is that any money that is being taxed at the 22% tax bracket or above should go towards traditional 401k/403b, and then you try to max out your Roth IRA each year.