Personal Investments • Roth IRA conversion or Roth 401K- Trying to prevent a hefty tax bill in retirement

I have come to realize probably a little late that I have been contributing too much to traditional 401K (vs Roth).

Husband- 48 with 900K traditional 401k (no option to convert to Roth 401K)

Me- 44 with 1.2 MM in traditional 401K ($1M in 401K with former employer that allows me to rollover to brokerage of my choice)

Current taxable non retirement investment- $1M

Planning to do backdoor Roth IRA every year


There are 2 ways I can lower our total tax deferred retirement amount in 2024 and 2025 and stay within the 24% federal bracket)

Method 1
Contribute to Roth 401K going forward and (we plan on maxing out total of 46K)
Convert my traditional 401K with former employer to Roth IRA. (can convert 50K to stay in 24% bracket)

Method 2
Continue to contribute to traditional 401K which will lower my AGI (46K)
Convert my traditional 401K with former employer to Roth IRA (96k)


From a tax perspective, I thought both #1 and #2 yield the same results but rolling to Roth IRA give more flexibility than a Roth 401K in a way that allow me to choose my own investment, make withdrawal after 5 years if we want to retire before 59 however would give up safe harbor protection.

Are there any other considerations that I am not thinking of?

Statistics: Posted by Ccthealias — Tue Jul 16, 2024 11:04 am — Replies 0 — Views 8

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