I am a 33 year old single male with no dependents that currently makes about $100k a year. I have full benefits, including a matching 401k up to 6%. Recently, my employer introduced a 401k that included a ROTH 401K option. As a point of reference, I have $115k in a “traditional” 401k. I contribute 12% of my salary every other week towards this fund.
What I am trying to determine is if I should take advantage of this ROTH 401K option? I do have a separate ROTH IRA, which I contribute the maximum allowed amount to each year.
The issue I have run into is tax deductions. I have mortgage interest and property taxes that I can deduct that amount to something. Unfortunately, that’s about the extent of it outside of donations to charity, etc. I realize I get the benefit of using after tax dollars NOW to fun the ROTH 401K option with the idea that when I retire, my tax bracket will be higher and I won’t then have to pay the tax on the funds I take out since I paid the tax on them now. In exchange for this, I don’t then get to deduct them on my taxes NOW like I do with the “traditional 401K” offering.
I’m trying to decide if I should contribute the full 12% to the ROTH 401K, if I should split it and put 6% there and the balance into the “traditional 401K” offering, or if I should continue to keep 12% in the “traditional 401K” offering.
What are your thoughts?