Is Switching to Roth 401(k) Contributions Smart if We Want to Retire at 65 With $1M?

Core Insights - The article discusses the considerations for choosing between contributing to a traditional 401(k) and a Roth IRA, emphasizing that the decision depends on various factors such as age and tax implications [1][3][4]. Group 1: Age and Tax Considerations - Age is a significant factor when deciding to switch to a post-tax account like a Roth IRA, with younger individuals benefiting more from the long-term growth potential [3][4]. - The article highlights that individuals in their 50s are at a critical juncture, where the decision will hinge on growth potential and tax implications [4]. Group 2: Contribution Strategies - Incorporating Roth IRAs into a retirement strategy is advisable for individuals with substantial 401(k) balances, such as $1 million, to enhance long-term financial stability [5]. - Transitioning from traditional 401(k) contributions to Roth accounts will result in increased taxes due to the loss of tax deductions on contributions, which should be carefully considered [6]. Group 3: Contribution Limits - The article outlines the contribution limits for 401(k) and IRA accounts for 2025, with 401(k) limits set at $23,500 ($31,000 for those 50 and older) and IRA limits at $7,000 ($8,000 for those 50 and older) [8].