I Love how you speak about these topics, and go the way you go over the questions and debates most people would have actively watching your content.

great video, I am lower income bracket, make gross income about $40k. I made a spredsheet to see what are my all annual expenses and how much I need to save for my Emergency Fund, then I came up with 10% for 401k and 5% of my after taxed income (after deducting for my expenses and EF) formy Roth IRA. in this way I can gradually fullfill my expectations of EF in short term even though I cannot max-out both my accounts. when I am finished with my EF, I will increase my contribution rate in both a little bit

Hi Katie, one thing that will put people in a higher tax bracket in retirement, are RMD’s (required Minimum Distributions) if you save a lot and you have a healthy 401(k) or IRAs you could end up with a hefty RMD, and SS which could put you in a higher tax bracket. And depending on your birth year, you have to take RMD s at ages 70, 72,75. For instance, I am going to postpone my Social Security to 70 and then five years later I will have to start taking RMDs and if I grow my 401(k) and IRA‘s as I hope to do, I will definitely be in a higher tax bracket that I am today. So people need to keep that in mind because uncle Sam will want his tax cut from your retirement account eventually. Hopefully your wealth builder plan tool will include retirement distributions, RMDs for those of us, moving into the retirement stage, and no longer in the accumulation stage. Really enjoy your videos. Keep up the good work! I hope my 23 year old niece is will follow you and learn from your excellent videos.

Easy to understand. Great vid, Katie. Thanks!

This is exactly what i was looking for. Thank you

Great information, however, you are incorrect about not being able to deduct traditional IRA and 401k. There are income limitations (116k adjusted gross income for married filing jointly as of right now or 73k single). This is set by IRS every year.

I’m at 40 percent tax deferred, 12 percent cash, 15 percent investments, 13 percent Roth the rest in house and automobiles

Going from 10% 401k to maxing it is like more than 30% of a paycheck omg

That was the best video I have ever seen on the 401k ❤❤❤

Would 401(K) rules apply to SIMPLE IRA's ass well? I work for a smaller company and are offered SIMPLE IRA's with a 3% match, $15,500 deferral limit in 2023.

I have heard, contribute to 401k enough to get the full match. Then work on maxing out ROTH. Then with leftovers contribute to 401k or traditional ROTH.

What if the company doesn’t do company match? Would it be ideal to invest in a 401(k) or 403B first in that situation or invest in Roth IRA first?

Let me preface by saying your tax bracket does matter on Roth eligibility and what your future bracket will be. Note the Trump tax cuts expire in 2026. If you are at the 22%(24%) or lower then Roth is the way to go. Unless you have match in Roth 401K then max out your Roth IRA then Roth 401K. The 401K tends to have less fund options and has administrative fees compared to a Roth IRA at a brokerage like Vanguard, Fidelity or Schwab. When you get older you will have ups and downs in the market and you will have unplanned emergencies, medical, etc. If you do pretax retirement understand that if you aren't doing something with your current tax savings (paying off mortgage, college for the kids, HSA, taxable brokerage) you aren't fully getting the benefit because all of your future contributions and capital gains will be taxable at your retirement tax bracket. So in effect 12% or 15% of your retirement portfolio belongs to uncle Sam. Don't forget that 0%, 50%, 85% of Social security benefits can be taxed depending on your provisional income which includes all taxable income, municipal bonds and social security payments. Special note: The provisional bracket hasn't been adjusted for inflation and is based on the value of a dollar in the early 1990s. More and more seniors are having to pay tax on the social security they receive. Even worse is when a spouse dies they are in the single tax bracket which increases tax liability (social security tax torpedo). And don't forget IRMAA is based on taxable income so medicare premiums for part b/d can be higher. And because means testing is backdated a few years before you're 65 so you limit the number of years you have to convert pretax retirement to Roth. For those in higher tax brackets you're kind of limited, but if you aren't putting your tax savings to use now or putting aside for future tax liability it is a wash. I agree with Katie about having money in different buckets (Pretax, tax advantaged, taxable) because tax laws change and by doing so you have more options to deal with Fedzilla.

Been researching on this topic on KZfaq for a day. You did a better job than all other KZfaqrs i watched

Lol. So many people say Roth is better. Even Dave ramsey. Lol. Would u rather have 2 million it 20 to 30 yrs tax free or have to pay tax on it?

Roth IRA or Roth 401(k) 's can help you save on taxes in retirement. Not only are withdrawals tax-free at 59 1/2 , it won't impact the taxation of your Social Security benefit and Medicare premiums.This is an important aspect of a Roth accounts that most people are not aware of.

I make $91,000 in California and my marginal is 22% and I’m 24 yrs old. Doesn’t it make sense for me to contribute to Roth if I intend to spend significantly more at age 65 than what I’m making now at age 24? Spending and earning a lot now doesn’t necessarily mean you won’t spend more on the future, right?

Good video but what about increased tax brackets in the future (jobs act expires soon) and the widow tax torpedo in later retirement/ medicare costs etc. tax free roth 401k/ira keeps you clear of these higher tax/income issues.

Imagine thinking the gov won’t increase taxes in the future lol. Roth all the way

I appreciate that you give sophisticated information, and put it simply for viewers while also treating us with respect intellectually