# 33-year old single; what's the most optimal 401k/Roth strategy? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [January 21, 2021, 4:39am UTC](https://boards.straightdope.com/t/33-year-old-single-whats-the-most-optimal-401k-roth-strategy/931054 "2021-01-21T04:39:49Z")\ **Posts on this page:** 3\ **Page:** 2
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [January 26, 2021, 3:12am UTC](https://boards.straightdope.com/t/33-year-old-single-whats-the-most-optimal-401k-roth-strategy/931054/21 "2021-01-26T03:12:13Z")
> [@Ludovic](#): > > Which end the money is taxed at doesn’t matter: what matters is the tax rate when you withdraw versus add, and that the growth is tax-deferred. Yeah, I once read that if you’re diligent about saving the tax savings, when you save pretax, it’s pretty much a wash, all else being equal (assuming tax rates are the same etc.). That’s a big “IF” though. We don’t know what tax laws are going to be like in 10 years, and the general assumption is that you’re likely to be in a higher tax bracket as you get closer to retirement. To some extent, a Roth “future-proofs” your retirement funds against changing tax laws. The arguments for Roth vs traditional are not just about the cash flow, however. - With Roth, there is no required minimum distribution while you are alive (your heirs may have to take withdrawals; I’m not up on those rules) - With Roth, you can tap the principal (not the earnings) without penalty with some restrictions (i.e. 5+ years after you start the account… but don’t do that!) so it can be an emergency fund. ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [January 26, 2021, 3:24am UTC](https://boards.straightdope.com/t/33-year-old-single-whats-the-most-optimal-401k-roth-strategy/931054/22 "2021-01-26T03:24:02Z")
> [@Mama\_Zappa](#): > > The extra money (“catch-up”) is indeed 6,500 a year, though that starts at age 50, not 40. Yes, that was a typo, apologies; I used the 50yo figure earlier in that sentence. > [@](#): > > It wasn’t clear whether the “Roth” mentioned by the OP was a Roth IRA, or a Roth option on his 401(k). I assumed he meant a separate Roth IRA. My assumption is if he is contributing to both a “401k” and a “Roth” that both are employer provided and therefore both 401k’s > [@](#): > > With Roth, there is no required minimum distribution while you are alive (your heirs may have to take withdrawals; I’m not up on those rules) Roth 401k’s still have required RMDs following the same rules as traditional 401k’s. [Although there are tricks you can use to avoid Roth 401k RMDs](https://www.kiplinger.com/article/retirement/t045-c050-s003-how-to-avoid-required-distributions-from-roth-401k.html) ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [January 26, 2021, 4:02am UTC](https://boards.straightdope.com/t/33-year-old-single-whats-the-most-optimal-401k-roth-strategy/931054/23 "2021-01-26T04:02:25Z")
> [@squeegee](#): > > Roth 401k’s still have required RMDs following the same rules as traditional 401k’s. [Although there are tricks you can use to avoid Roth 401k RMDs](https://www.kiplinger.com/article/retirement/t045-c050-s003-how-to-avoid-required-distributions-from-roth-401k.html) Ah - I stand corrected, again! Yeah, rolling it into a Roth IRA in a timely manner would fix that. Don’t do it until you have to though, as money in a workplace plan has [better protection against lawsuits and bankruptcy](https://www.kiplinger.com/article/retirement/t047-c000-s004-protecting-retirement-accounts-from-creditors.html#:~:text=Company%20retirement%20plans%2C%20such%20as,that%20threshold%20adjusts%20for%20inflation).), than money in an IRA. As a side note: whatever you do IRA-wise, make sure you have designated a beneficiary. When my mother died, her IRA - then worth something like 80,000 - nearly got turned over as an asset of the estate, versus being inherited, because the bank didn’t have the right beneficiary paperwork on file. Bank error, not Mom’s error. This was important because if it had been turned over to the estate, it would still have been divided among us 4 kids, but only AFTER it had been liquidated and taxes paid on the withdrawal. Since it wound up being treated as an inherited IRA, I have to take money from it every year based on my estimated life span, and the account has continued to grow tax-free. I get something like 800 bucks every summer based on that required minimum. [Previous page](https://boards.straightdope.com/t/33-year-old-single-whats-the-most-optimal-401k-roth-strategy/931054.md?page=1)