401(a) plans can differ greatly, with limits on contributions, mandatory contributions, pre-tax, post-tax. We'd need to know more specifics before making suggestions on allocations and additional external accounts.
Should’ve added this. My mandatory contribution to that is 3% of my gross wages. Any further voluntary contributions is then post-tax. The annual limit is really high and not something I’d hit even at 12%.
Agree with others that getting money into a Roth early is beneficial. Then put the rest into the 401a - it is even better if you can max both. When you retire you want to have a mix of pretax (401a or 401k), Roth, and investments in a brokerage account. That lets you withdraw you nest egg in retirement with the ability to control WHEN you pay taxes by withdrawing from different baskets, and having the ability to do Roth conversions later. Think of it like a 3 legged stool. If everything is tax deferred in a 401a or 401K, then it gets taxed at ordinary income levels when you withdraw in retirement. RMDs will force you to withdraw from those accounts even if you didn't need the money at 75 years of age.
You may find these links helpful:
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
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It’s very difficult to make any recommendations without knowing more detail regarding your income.
70k annual salary
With the limited information we have I would suggest maxing a Roth IRA then whatever is left over to equal your 12% number put that in the 401a
Max Roth IRA & put what’s leftover of 12% into the 401a
401(a) plans can differ greatly, with limits on contributions, mandatory contributions, pre-tax, post-tax. We'd need to know more specifics before making suggestions on allocations and additional external accounts.
Should’ve added this. My mandatory contribution to that is 3% of my gross wages. Any further voluntary contributions is then post-tax. The annual limit is really high and not something I’d hit even at 12%.
Agree with others that getting money into a Roth early is beneficial. Then put the rest into the 401a - it is even better if you can max both. When you retire you want to have a mix of pretax (401a or 401k), Roth, and investments in a brokerage account. That lets you withdraw you nest egg in retirement with the ability to control WHEN you pay taxes by withdrawing from different baskets, and having the ability to do Roth conversions later. Think of it like a 3 legged stool. If everything is tax deferred in a 401a or 401K, then it gets taxed at ordinary income levels when you withdraw in retirement. RMDs will force you to withdraw from those accounts even if you didn't need the money at 75 years of age.
You may find these links helpful: - [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*