Advisers Favor Roth 401(k) for 26-Year-Old on $80,000, Keep $12,000 Roth IRA Separate
Updated
Updated · Reuters · May 13
Advisers Favor Roth 401(k) for 26-Year-Old on $80,000, Keep $12,000 Roth IRA Separate
5 articles · Updated · Reuters · May 13
Nearly 20 advisers told 26-year-old Carly to choose a Roth 401(k) over a traditional plan and leave her $12,000 Vanguard Roth IRA where it is.
A 6% employer match was the unanimous first priority: contribute at least enough to capture the full match, which advisers called free money.
Carly’s age and 22% tax bracket drove the Roth recommendation, with advisers arguing that paying taxes now could maximize decades of tax-free growth.
New York City’s high tax burden could still justify mixing in some traditional 401(k) contributions if Roth deferrals would squeeze her monthly budget.
The separate Roth IRA offers broader investment choice and more flexibility than a 401(k), while Carly remains eligible for full 2026 Roth IRA contributions below $153,000 of modified adjusted gross income.
In high-tax cities, does a Roth 401(k) still make financial sense after the latest tax code updates?
With 2026 tax law changes, is the traditional 401(k) now an obsolete choice for young professionals?