Should You Stop Using a Roth 401(k) After a Certain Income? (Money Q&A)
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Sep 8, 2025
This discussion dives into whether high earners should reconsider their Roth 401(k) contributions. Andrew offers insights on tax-loss harvesting strategies, tax implications for various retirement accounts, and the critical 75-80% income rule for retirement. He also highlights factors affecting the choice between traditional and Roth accounts. Additionally, there are tips on saving for children's future expenses and smart ways to manage emergency funds as interest rates change. The impact of a recent TransUnion data breach adds an essential layer to planning for retirement.
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volunteer_activism ADVICE
No Taxes Inside Tax-Advantaged Accounts
Move investments freely inside Roth, traditional IRAs, 401(k)s, and HSAs without triggering taxes.
Avoid selling inside taxable brokerage accounts unless you accept capital gains consequences.
insights INSIGHT
Tax Consequences In Taxable Accounts
Selling winners in a taxable brokerage creates capital gains even if you immediately reinvest.
Long-term holds get lower rates (0/15/20%) while short-term gains are taxed at ordinary income rates.
volunteer_activism ADVICE
How To Tax-Loss Harvest Correctly
Use tax-loss harvesting in taxable accounts to offset gains or up to $3,000 of ordinary income per year.
Reinvest into similar but not identical funds and avoid buying the same security within 30 days to dodge wash sales.
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In this episode of The Personal Finance Podcast, Andrew answers eight questions on tax strategies and retirement planning, covering when investment moves trigger taxes (depends on account type), tax loss harvesting for high earners, why the 75-80% retirement income rule uses pre-tax numbers but you should plan more conservatively, strategic Roth 401k timing in lower tax brackets, a TransUnion data breach affecting 4.4 million Americans, income thresholds where traditional 401ks beat Roth options (24-30% marginal rates), saving for kids' expenses using the five-year investment rule, emergency fund storage as rates drop, and comprehensive pension planning beyond just relying on guaranteed payments.
Today we are going to answer these questions:
Do you get taxed when moving money from one investment to another inside the same account?
How does tax-loss harvesting work?
Most retirement rules I’ve seen state that you want 75 to 80% of your pre-retirement income. Is that before or after taxes?
Should you max out a Roth 401(k) in the first quarter of the year because of the lower marginal tax rate?
At what annual income should someone avoid a Roth 401(k) and do traditional for tax purposes?
Putting money away for kids’ wedding, cars, etc.—for when they get older. HYSA or brokerage?
What are the best high-yield ways to store an emergency fund?
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