Traditional vs. Roth 401k | Why I Chose Traditional (Pre-Tax)

Time Stamps below!

Relevant Articles:

00:00 Intro
00:23 Quick Disclaimers/Info
02:13 Difference between Traditional and Roth 401k
02:20 Traditional (Pre-Tax) 401k
03:11 Roth 401k
03:51 Max contributions
04:07 Which is better for your situation?
05:39 What my company offers/company match info
06:42 My initial thoughts/decision
08:13 Why I decided to do Traditional 401k
08:24 I did more research
08:58 Roth Conversion Ladder
09:31 Pay less taxes now
10:06 Tax savings = More money to invest now
10:42 My contributions are low
11:37 I’m diversified
12:31 Final important things/suggestions
15:03 My 401k Portfolio
17:33 Outro

#YouTubeRevenue #SideHustles #FinancialCoach

💰 Venmo: @DebtOverIt

________________________________________________________________________

*ACCOUNT BONUSES*

Earn 0.50% higher than the stated APY for 3 months (currently will be 1%)

Earn $100 after making a purchase in your first 3 months

💳 Chase Freedom Flex:
Earn $200 after spending $500 in first 3 months
No annual fee

20,000 miles after spending $500 in first 3 months
1.25 miles per $1 spent
No annual fee

*MAKE MONEY*

🌟Fetch app: Use my code EJH9Y for 2,000 points

*INVEST & EARN MONEY*

____________________________________________________________________

CHECK OUT MY BLOG:

*The links above may be affiliate links. This just means that if you make a purchase through one of the links, I make a small commission at no extra cost to you. I appreciate the support!

DISCLAIMER: I am not an expert or a financial advisor. I simply love talking about finances and want to share my journey to financial freedom and help others along the way!

[summerjoy]

Keep in mind that a major benefit of the Roth is that the earnings are tax free. Imagine what your earnings will be over 20-30 years. That’s a significant advantage over a Traditional 401k in my opinion.

[denorrisd]

Great video as usual, always good to watch and see you explain your thoughts and processes.

[RRW]

I chose traditional for several reasons. If I have to use my 401k it will be due to not being able to work for my income which means I'll almost certainly be in a lower bracket, I'm planning to move to a State with a lower income tax then mine in the future (not due to taxes) which means I absolutely don't want to pay taxes now, and it's more portable since if things change in life and I need to do a rollover/reverse rollover I won't do anything that I can't undo unlike if I rolled over a roth.

[jmmccrary]

I started a 401K about 30 years ago and so wish now that I had the option to do a Roth. I am now have a nice size IRA that I will have to pay a very large tax bill on when I start my mandatory withdrawals. I know its seems a long way in the future but the 401 K turned has turned into a huge tax burden i have to worry about. Seriously looking at options for doing Roth conversions to take money out of IRA and convert them to a Roth and pay tax before retirement income starts. Good luck to you. Very much enjoy your videos. Trying to get my kids to watch and learn from your tips.

[its.rachel.hickey]

Fantastic! I love how you always provide so much food for thought and your whole process!

[danielford]

When you do the rollover to convert it to Roth you have to pay the taxes up front.

[inea-fijourney]

Great explanation, I started my 401k in 2018, and yes went through the same thoughts. And decided the same route. Pretax 401k. and on the side roth ira... Also, I wanted to let you know there is a really good video on Our Rich Journey channel about Roth Conversion Ladder if you are interested in knowing about it. Great video like always. keep sharing! 🔥

[MidwestMoneyMindset]

Great video & explanations :) I also choose to contribute solely pre tax in my 401k for now. It works for me since I also have a roth ira.

[devonbudgets]

I never understood the difference between the two...now I do! Thanks for the excellent explanation!!

[bigshoe]

This is a tough decision but given all the “free” money that’s being handed out lately I would bet that the tax rates will never be lower than they are currently.

[Donkeyearsa]

You are only saving $15.23 a week in taxes going with Traditional over ROTH. Going with Dave Ramsey's advice all you have to do is not eat out twice a month to save that amount.

[cletokings]

My strategy is traditional 401k, HSA for tax savings (6k per year) and a ROTH IRA for emergency account which I only put 2k per year.

[melissarodriguez]

I agree with you. I also do the pre-tax traditional 401K

[turtlescanfly]

I’m not sure if my employer offers a Roth 403b, but I decided to contribute to a traditional one. I max out my Roth IRA so I feel like there’s balance. I’m also pursuing PSLF for my student loans and my employer will reimburse up to $500 a month in student loan payments, so I’m trying to keep my taxable income low enough that my monthly payment won’t be over $500. I won’t be able to do that forever but the longer I can have my employer pay back my law degree the better

[mariaquintanilla]

Best and most clear explanation then the professional financial advisors!’ Thank you!

[adriancanning]

Not sure what this would be in the UK, I have a cash ISA account which is tax free.

[debtfreeF]

traditional 401k is such a great way to reduce your taxable income and invest!

[jaeade]

Personal Finance is personal - I like that❤️

[parthivc]

Currently, are you still continuing with 6% contribution to Traditional 401k or splitting it with Roth 401k? If splitting, what is the reason for that?

[JaniVMD]

This was super helpful since I too will start contributing to a 401k!