(23M) Fresh out of college and my income is now $90k. Currently have ~$4000 in Roth IRA which I’ve had for a little over 2 years. Currently only contributing $100/mo (was contributing $250 but I moved some money around to buy company stock). Company gives 3% 401(k) matching so I contribute the 3% and contribute 7% to the Roth 401(k). Total amount in these employer account is ~$5500 for a total of around $9500 in retirement savings.
Should I pull $400/mo from the Roth 401(k) to max the Roth IRA out or is there no appreciable difference in spreading contributions between the two?
>Should I pull $400/mo from the Roth 401(k) to max the Roth IRA out or is there no appreciable difference in spreading contributions between the two?
I’d recommend focusing on the Roth IRA (AFTER you get the company match) because you have more control and a much greater variety of funds to choose from.
Then if you have more money to save for retirement (after 401k match, after maxing out the $6k Roth IRA), you should put more money into the 401k. BTW at your salary, you’d probably be better off doing traditional 401k over a Roth 401k.
Roth 401k has a higher contribution limit, 2021 the limit is $19.5K and 2022 is $20.5K. It doesn’t matter really unless you are trying to max out both your Roth IRA and 401k accounts. Max out the match the company gives you 3% is pretty weak imo, it seems like the standard is normally 6% or higher. Your time in the market will always beat timing the market. Keep investing early and you’ll set yourself up for a great retirement.
How are you making $90k per year and only contributing $100/month?
You should focus only getting your taxable income reduced if your salary is at the $90k range. If it were me I’d be putting it into a traditional.
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