Ask an Advisor: We're in Our Mid-50s With $2 Million in 401(k)s. Should We Switch to Roth Contributions?

Core Insights - The decision to switch from traditional 401(k) contributions to Roth contributions depends on individual circumstances, including tax implications and future tax rates [1][2][5] - Roth 401(k) plans are increasingly offered by employers, combining features of traditional 401(k)s and Roth IRAs, but traditional 401(k)s remain more popular due to immediate tax benefits [2][4] - Contributions to a Roth 401(k) are made with after-tax dollars, leading to tax-free growth and withdrawals, which can be advantageous for long-term tax planning [3][4] Group 1 - Roth 401(k) contributions do not reduce current tax bills, as they are made with after-tax income [3] - A hybrid approach of contributing to both traditional and Roth 401(k)s can provide greater tax diversity and flexibility in future tax planning [4] - The primary disadvantage of Roth 401(k)s is the immediate higher tax bill, which may deter some individuals from switching [5]