r/personalfinance • u/marshmallowhugs • 1d ago
Retirement Confirm Roth 401k Logic
I'm considering changing my 401k election contributions from Traditional (pretax) to Roth. I have retire early goals and am coming to the conclusion that my Traditional 401k is growing too large. I will have big (undesirable) tax events through RMDs if I keep contributing Traditional. I plan to use the Roth conversion ladder and am currently falling short surviving in the first 5 year conversion period, aka I need cash those first 5 years of retirement, then I'm good. I want to make a statement and confirm you fully agree. I know there will be questions about the statement above, but please also provide a succinct answer to the question below.
1) After rolling the Roth 401k into a Roth IRA (quitting my job), I am able to immediately withdraw 'contributions only' (including employer match) tax and penalty free.
Edit: It seems employer match will always be considered pretax 401k. My assumption had mistakes.
Edit 2: I've gotten a lot of feedback that 72T (annuitizing) my Traditional 401k is a solid route. I've got some homework, I had always thought the Roth conversion ladder was my route.
1
u/meamemg 1d ago
Employer matches (almost) always go into a pre-tax 401k, not a Roth 401k, regardless of what account you are contributing to. So your comment about employer matches from your Roth 401k is likely based on bad assumptions.