Submitted by AmishDrew t3_1000997 in personalfinance
Suspicious-Kiwi123 t1_j2ewehk wrote
If you have access to a 401k with match, contribute up to to that level. Then Roth IRA (or Backdoor depending on income level) up to $6,500/year. Then back to 401k up to the max. Then HSA (if your Health Care Plan allows). Then taxable account.
Follow the Prime Directive Flow Chart: https://i.imgur.com/lSoUQr2.png
AmishDrew OP t1_j2f4564 wrote
Awesome! This is super helpful. Just curious what is the benefit of 401k -> Roth IRA max -> 401k max vs 401k max outright?
Suspicious-Kiwi123 t1_j2f5784 wrote
Because all of your earnings in Roth IRA are 100% tax free. This can and should be significant since you are starting at age 28.
If you maxed out Roth IRA w/ $6500 annually from age 28 to age 67, you would have $3,000,000 tax free at age 67 (at S&P 500 historical 10% annual return)
AmishDrew OP t1_j2f5vs0 wrote
Great explanation. I appreciate it!
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AutoModerator t1_j2ewekg wrote
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