Originally Posted by
LeineLodge
I think I missed the earlier post’s point of the $23k pre-tax on the first pass through.
So you’re saying the most tax efficient angle is to max employee pre-tax, then fill in the rest with 401a -> Roth (to max extent possible, not a full $46k, due to “racing” the company) forcing the 17% to spill into the MBCBP?
let's set the brake for just a sec.
I say that because strategy can be very different based on taxes and goals. If you want to save the most possible on taxes this year, sure- the pretax option exists. A sample scenario is the last kiddo is coming off your tax return in 2024 and you just made the move to WB-A. Your income is now higher and you have less in deductions, and you realize that your standard of living is now below your income by a big margin. This may be a time to lower your tax bill, yet still save for that long and fun retirement.
If you have deductions still (known as dependents) and haven't made it to the planned "peak" earning years, it may make more sense to bite the tax bullet now with Roth instead of conversions or taxable income later.
Everything walks back to the "why" in the savings plan. That plan can and will change as life happens and desires change. One year it may make a lot of sense to race the company and jam as much into Roth as possible, other years you may do the complete opposite. If you are saving overall, you are doing better than most. When it gets hard to determine how to save excess money, it could be time to bring a financial planner into the mix.