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david12795 OP t1_ja5wdv8 wrote

Reply to comment by longshanksasaurs in Help me understanding I am using my employer's 401K correctly. by david12795

Thank you. So I won’t look into diversify my fund. However, now I have another dilemma I am really not sure if I’m gonna end up being there two years, so I wonder if there is a point in still continuing to contribute.

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longshanksasaurs t1_ja5xhqx wrote

Yes, you should still contribute. The tax benefits alone on your money makes it worthwhile.

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david12795 OP t1_ja5zbeb wrote

Thank you I will now.

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longshanksasaurs t1_ja60el9 wrote

Also -- for your piece of mind, if you change jobs, you'll be able to roll over this 401k money to another job, or an individual traditional IRA.

Ideally, you probably want to even save more for retirement -- 15% if you can swing it.

You can diversify in terms of tax strategy by putting your additional retirement savings in a Roth IRA.

Check out the flowchart on this page, it has a lot of other good advice:

https://www.reddit.com/r/personalfinance/wiki/commontopics/

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david12795 OP t1_ja61ey5 wrote

I still have my 401k from my previous job. Do you personally recommend to keep it there or roll it to my Roth IRA or current employer 401k?

Thank you for your help! And I have seen that chart. Maybe I will increase my contribution. Is it better to focus on my employer 401k then Roth IRA? Even if I don’t plan on staying for two years?

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longshanksasaurs t1_ja68l6y wrote

For your previous 401k: only roll it into your Roth IRA if it was Roth 401k money. Otherwise, rolling into your current employer 401k is a fine choice.

For your current contributions: the standard advice is to go in this order:

  1. 401k up to the match
  2. Roth IRA up to the limit
  3. 401k up to the limit
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david12795 OP t1_ja6d7c6 wrote

thank you! ill have to login to my empower (my previous employer) and check to see what it was.

i came across employee pre tax and employee roth 401k when trying to change my contribution amount to 10 percent. for some reason, i got a little confused on what pre tax is, but then thats another word for traditional lol. it seems employee roth 401k is the way to go.

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but thanks for your suggestion, ill focus more on my IRA and then eventually work more on my 401k up to the limit (or as high as i can)

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longshanksasaurs t1_ja7hnt6 wrote

Sure thing. I suggest just using the traditional (pre tax) 401k, then going to Roth IRA, then back to traditional 401k

Here's some reading, if you have the time:

/r/personalfinance/comments/10qwnrx/why_you_should_almost_never_contribute_to_a_roth/

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david12795 OP t1_ja7l5hd wrote

This is very confusing 😫. I thought the general consensus was employee Roth IRA. I had just changed it last night. Ok I’ll read that again later. Hopefully I won’t get more confused lol

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