Roth IRA vs Roth 401k

[toboramai]

My company recently gave us the option to contribute to a Roth 401k in addition to the traditional 401k.

They do match the 401k but minimally and is dependent on firm's profits. I already contribute 15% to the traditional 401k and maxed out my roth ira for 2008.

I am not close to hitting the 15,500 limit on 401k but wonder if I should contribute money that I would use for my roth ira and instead put it into my roth 401k?

Downside: limited investment options with the roth 401k

I think it would be wise to put the roth ira money in the roth 401k as the company would match some even if it minimal with the same tax benefits. Is my logic \ understanding correct?


Thanks,

[jIM_Ohio]

What is your filing status on tax return, what is your AGI, and what is your taxable income?

This is a tax decision, you need to mention your tax situation for best advice.

[simpletron]

are you sure you get a match and not some form of profit sharing? aka with a match you get more, the more you contribute up to a point whereas with profit sharing it is at the company discretion and happens regardless to how much you contribute.

I get both a match and some profit sharing. the match happens every time I contribute, whereas the profiting sharing is a one time thing near the end of the year. but both are invested the same way as my contributions.

if it is profit sharing, then the only pros I can think of is possibly lower fees, maybe easlier to keep track of, lack of the 5-year rule, no income limit and higher roth limits(good if you are in a low tax bracket now). the negatives are following: mininum distributions(can be avoided by rolling over to roth IRA), harder to make withdraws(this could be a pro also), nonqualified distributions are partially taxable for roth 401K unlike a roth IRA where you can get contributions tax free anytime, and the limited investment choices(though I love my 401K choices).

[toboramai]

AGI is 75k with no deductions.

Profit sharing vs match, I'm currently unsure but pretty sure it is a match.

[jIM_Ohio]

AGI is 75k with no deductions.

Profit sharing vs match, I'm currently unsure but pretty sure it is a match.

single or married (or something else?)

[kv968]

Downside: limited investment options with the roth 401k

I think it would be wise to put the roth ira money in the roth 401k as the company would match some even if it minimal with the same tax benefits. Is my logic \ understanding correct?


Thanks,

If the investment options in the Roth 401k aren't that good (or if you're paying a high ER on them) you might be better off contributing to you own Roth. Also, the money the company matches in your Roth 401k is taxable when you take it out.

[toboramai]

Single.

The fees are low as it is with vanguard. Because of my line of work, I am limited what I can invest in anyways but our vangaurd is even more limited.