I think it depends on when you think your income will be at a higher tax rate - now or after you retire. If you think your tax rate is higher now than it will be later, do 401K. If you think your tax rate will be higher years from now (like when we're paying off national debt), Roth. Or better yet, hedge your bets and do both. When I used to make more money and didn't have daycare expenses or college to save for, I maxed out both, but now i am doing solely the 401K because I can save the most $ and reduce the taxes on my income now.

You don't have to max out. You could do 5500 in the roth and then whatever you have left in the 401k.

Some people also can afford to actually type "you"

u can do both if you are in the income range. some people can max out both the 401k and a ROTH IRA

Anonymous wrote:I thought it was always best to max out the Roth IRA (if you qualify, which OP may not), and then move to the 401k, (unless there is a company match). It's not like you can only do one or the other.

As a practical matter most people can only do one or the other, and OP specifically said that was the case here. It's pretty much always best to max out a company match. After that I think there are no hard and fast rules (certainly not that Roth IRA is should be funded first).

a couple of thoughts:

401k is good for lowering your AGI/taxable income. At $130k, esp if you don't own a home, you probably need this more.
401k usually is limited ot the funds your employer offers, so you may have less flexibility with what to choose and they may have higher fees, etc. with a roth you can choose any fund.
For a ROTH, you can borrow for it to pay for college expenses, penalty free. Can't do that with a 401k.

Do you own a home? What other savings do you have? How's your emergency fund? All these would be important to know.

I thought it was always best to max out the Roth IRA (if you qualify, which OP may not), and then move to the 401k, (unless there is a company match). It's not like you can only do one or the other.

Anonymous wrote:How much do you have saved currently? If very little, I'd focus on maxing out the Roth IRA first then saving in the 401K.

This advise doesn't make sense to me. If the OP doesn't have much saved, and is limited in how much they can save, then the thing to do is save as much as possible, which means saving in a 401k. I have a Roth, but I save in it after I max out my 401k, not instead of it.

How much do you have saved currently? If very little, I'd focus on maxing out the Roth IRA first then saving in the 401K.

Anonymous wrote:Can you do a Roth 401k? Even better

I would still vote for 401k -- will let you save more and even considering rates may go up that doesnt mean you will be in a higher tax bracket-- you are probably better taking the deduction now for as much as you can save.

Can you do a Roth 401k? Even better

401k.

You can put $17,500 + $5,500 in your 401k. What investment options do you have there?

Are you married? You might not qualify for a roth IRA contribution if single and you contribute to the 401k and/or receive some other kind of pension/retirement plan. If you are married, the income limits are higher. And if there is no other plan you can contribute the IRA.

Given the higher contribution limits, I'd do the 401k.

Isn't the 401(k) pre-tax, and the Roth post-tax? I would do the 401(k). I'm 55, I have a 401(k) at work (with a match). I do that to the max, and also the over-50 catch up. I'm doing the catch up ($5,500) as a Roth.

55, make $130/year and work for a company with no 401(k) match. Don't have enough money to fully fund both. So which would you do first and why?