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Future Insight – The Jenkins (thejenkinscomic.files.wordpress.com)

submitted 1 year ago by [email protected] to c/comicstrips

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Source: https://thejenkinscomic.wordpress.com/2023/10/01/future-insight/

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[–] droans 1 points 1 year ago (1 children)

401ks are still usually (but not always) superior to IRAs.

Not usually, just very rarely.

Unless you declare bankruptcy or have high income, your first step is to fund your match but then max out HSA and IRA first. Once those are hit, then you should fund your 401(k).

401(k)s have fewer choices and come with fees. Pretty much all IRA accounts will allow you to choose any investment and have no fees.

The IRA deductible contribution limit is even lower if you're earning >$73,000 in annual income. In fact, those earning >$83,000, can't deduct any IRA contributions at all

Roth IRAs have a soft cap at $129K/$204K with the hard cap at $144K/$214K. This is also your MAGI, not your salary. Only Traditional has that lower limit. You can also use the non-deductible Traditional IRA for a backdoor Roth if you're over the limit.

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago)

Not usually, just very rarely. [...] 401(k)s have fewer choices and come with fees. Pretty much all IRA accounts will allow you to choose any investment and have no fees.

FWIW, I do bring this up in my main post -- it's just that I'm drawing on my own personal experiences and... in my experience I've always been able to get the options I want without extra fees. In retrospect, that's probably just because of two things:

I'm not a particularly choosy investor so the relative lack of salience gives me a blindspot when considering the investor experience.
I no longer qualify for deductible IRA contributions so I naturally think about them less than I probably should when giving advice to other people.

In any case, I accept your argument and apologize for the oversight.

Roth IRAs have a soft cap at $129K/$204K with the hard cap at $144K/$214K. This is also your MAGI, not your salary. Only Traditional has that lower limit. You can also use the non-deductible Traditional IRA for a backdoor Roth if you’re over the limit.

Err... you can't deduct contributions to Roth IRAs, period. Moreover, I specifically say beforehand that I'm not talking about Roth accounts in the main bullet points: "This comparison applies to “traditional”, non-ROTH accounts". Forgive me for saying so, but I also felt no need at the time to explain MAGI for the purposes of this comparison -- that's probably on me as a careless layman, so thanks for putting that out there.

EDIT: Credit where it's due, I did mess up talking about the Roth IRA limit in a different part of the thread (here). The error is now corrected and the person responsible has been sacked.