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Roth 401k tips that you need to know ifyou want to become a millionaire

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I’m gonna talk about 5 Roth 401k tips that you need to know ifyou want to become a millionaire but before we do if this is your firsttime at our channel or you haven’t subscribed click on the subscribe buttonat the bottom my name is Travis Sickle CERTIFIED FINANCIAL PLANNER with Sickle Hunter Financial AdvisorsSo the first tip with the Roth 401k that you need toknow is you need to know where your match is going your match for the Roth401k does not go in to the Roth 401k it actually goes on the traditional side soit goes in pre-tax so the employer contribution the matching dollars is notgoing to end up in your Roth 401k so if you’re looking at the Roth 401k sayingwait a second I want to put money into the 401k but I’m not getting the matchthat’s where it is so make sure you look a little bit closer before you decidethat you’re not going to use the Roth 401k because you’re not getting thematch because you are now if you

don’t see the Roth 401k contribution on thetraditional side and ask your employer because you might not have a Roth 401kmatch at all but you still need to look a little further because you don’t wantto miss the Roth 401k match so tip number two is work smarter not hardernow it’s great that you can put money into the Roth 401k it’s pre-tax growstax-deferred and in retirement it comes out tax-free but you also want to take alook at that traditional 401k why because you don’t want to pass up anycredits or deductions that you might qualify for now that’s a huge thingthat’s overlooked very often we usually just compare the two different types ofretirement plans and see one pre-tax versus after-tax dollars but you alsowant to look at the other taxes that you’re paying because you might be ableto save a bunch of money just by making sure that you’re balancing between theRoth 401k and the traditional 401k three of those credits will be the saverscredit the child tax credit and the health care premium tax credit so useboth the traditional 401k and the Roth 401k to maximize your savings and themoney in your pocket tip number three is you can double up on your after-taxsavings so if you really want to maximize in your retirement don’t justlook at the Roth versus the traditional side because you can maximize it byputting up to $19,000 in all 401ks combined so the traditional plus theRoth 401k combined as 19,000 in addition to that you can also put an additional$6,000 into the Roth IRA or the traditional IRA now you just need tolook at the income limits the income limits are gonna be significantly lowerfor the traditional side than the Roth IRA but it’s definitely worth a lookwhere you can put money into the Roth 401k and the Roth IRA at the same timetip number four now the Roth 401k and the Roth IRA have different rules soit’s really important that you look at those rules

so you don’t make a mistakenow one of those rules is the RMDs the Roth 401k actually does have RMDswhere the Roth IRA does not but you can always roll it into the Roth IRA to helpavoid those RM DS the reason that you need to know about the Roth 401k aremd’s require minimum distributions which happen at age 70 and a half and laterthe reason that you need to know that is because if you roll that money into theRoth IRA just to avoid the RM DS well you need to have that Roth IRA open forfive years which brings me to tip number five if you want to retire early oravoid those RM DS and have a whole issue with them then you’re going to need tohave a roth IRA open for five years now the Roth 401k no matter how long youhave it open that does not carry over into the Roth IRA but the good news isall you need to do is have it open now if you don’t meet the incomerequirements there are three separate ways that you can fund a Roth IRA withany income limit one of those is going to be the backdoor Roth IRAso that is nonny ductal contributions to an IRA that are then converted into theRoth IRA of course you can just go and open up a Roth IRA if you still qualifyor if there’s a year that you do qualify go ahead and just open up and fund thatRoth IRA just so you can avoid that five-year rule so the Roth IRA five-yearrule starts on January 1st of the tax year that you open that Roth IRA so evenif you do it right before tax time for the previous tax year

it’s actuallyJanuary 1st of that tax year that qualifies for that five-year ruletechnically you don’t need to have it open for five years just five tax yearsnow the only time with that five year rule for the Roth IRA side that thatfive year clock restarts is a Roth conversion so even though you can rollthe Roth 401k into the Roth IRA it doesn’t reset that clock it stays withthe Roth IRA when you opened it the third way that you can open up a RothIRA is taking an in-service distribution now that depends on your plan not allplans have them so you have to ask your plan administrator whether or not youcan do an in-service distribution but if you can that means you can roll Roth401k dollars into the Roth IRA before you sever employment the Roth 401k has aton of benefits including that 19 thousand dollar limit and if you’re 50or older you can do the catch-up contribution bringing it to $25,000that’s a lot of after-tax dollars that are going to grow tax-free tax deferredand have a huge benefit in the future but you just want to know the rules tomake sure that you’re using the Roth 401k to your advantage so you can becomea millionaire and save a ton of money tax-free if you’ve enjoyed this video besure to subscribe and leave your comments down at the bottom

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