Reply to Explain like I'm 5... maxing out retirement

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[quote=Anonymous][quote=Anonymous]I feel like I am smarter than this post will make me sound, but I cannot figure out what maxing out retirement means.

Let's say I have access to four retirement vehicles:
Traditional 401k through work
Roth 401k through work
Roth IRA
Traditional IRA

My income puts me out of the running for a Roth IRA, so I'm down to three options.

I can put $6k into my Traditional IRA, right? Regardless of any 401k investments?

Now where I'm really stuck... $20,500 is the maximum for the TOTAL of my traditional and Roth 401ks, right? Or can I contribute that in EACH?

So if I'm understanding correctly, the absolute maximum I can contribute in a given year is $26,500?

(for the sake of this question let's ignore Backdoors, that feels like a problem for another day...)[/quote]

- 401K - $20,500 is the max you can contribute to a 401K - Regular or Roth.  If you are over 50, you can contribute another $6500.  At your income level, a Roth 401K does not make sense.
- 401K - Check if your company has a mega-401K.  This allows you to contribute after-tax $$ in addition to the 20,500 to your 401K and convert that to a Roth (aka mega-backdoor Roth).
- IRA - You can contribute to either a traditional or Roth IRA.  At your income level, you can contribute to a Traditional IRA and convert that to a Roth (backdoor Roth).  $1000 more if you are over 50.  You cannot deduct contributions to a Traditional IRA so kinda pointless unless you do plan on converting to a Roth.
[/quote]

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