Question
Traditional 401(k) versus Roth 401(k) Jake has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and
Traditional 401(k) versus Roth 401(k)
Jake has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and has determined that he can afford a $15,600 contribution. Jakes salary is $130,500 per year, and he is in the 32% tax bracket.
If Jake decides to go with a traditional 401(k), his contribution amount will be $_______.
.And the amount offset via a reduced tax bill will be $_____.
If, instead, Jake decides to go with a Roth 401(k), his contribution amount will be $_____.
.And the amount offset via a reduced tax bill will be $_____.
Assuming all the same facts, suppose that Jake decides to open both 401(k) plans, splitting what he can afford to contribute equally between both plans.
Under this scenario, Jakes contribution amount will be $_____.
.And the amount offset via a reduced tax bill will be $_____.
When Jake retires, which plans monies will he be able to exclude from taxable income? Select: Roth IRA/Traditional IRA
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