Miracles of modern finance

My new company offers the new Roth 401(k). The Roth 401(k) has been around since 2006, but many companies still don't offer it.

It's a great program. You contribute after-tax dollars, and then your money grows tax-free forever, and withdrawals are tax-free. The limit is $15,500 per year, like traditional 401(k)s, but $15,500 after-tax is equivalent to about $23,000 pre-tax in a high-tax state like California, meaning the Roth effectively allows you to contribute much more.

Further, many dual-income families exceed the income limits to use Roth IRAs. The new Roth 401(k) has no such limits, so it's the only way for high-income families to get money into Roth accounts.

Some advisers recommend traditional deductible accounts over Roth if you expect your tax rate in retirement to be lower than it is currently. This is, of course, unknowable. But if you think taxes will be lower in general in the future, you're not paying attention to what's going on with the deficit, Social Security, Medicare, and HillaryCare.

If your company doesn't offer the Roth 401(k), talk to the head of HR. Tell him he should be fired for gross incompetence.

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