[USER]

I recently reached the IRS contribution limit for my 401(k) and I’m weighing my options.

Is it wise to continue contributing after-tax to my 401(k) with the company match, or should I stop contributing after-tax and instead use that money to self-invest in stocks through a traditional brokerage account?

Looking for thoughts and advice from anyone who’s faced a similar decision.

[Jamie]

Are you sure the employer match continues? Check the plan documents.

[Jule]

That tax free growth is super sweet. I never miss on leveraging the after tax in my 401k up to the max ($70k total) and then make sure it gets converted to Roth.

[Trevor]

I would recommend both for different reasons. If your plan allows the additional after tax contributions AND in plan roth conversions, then you can get all of that money into a roth account.

You will be taxed on any earnings but some plans will even let you automate the conversion so it will happen every payday, before any earnings accrue.

A standard brokerage account is super-helpful if you plan to RE because you’ll have more flexibility withdrawing the funds, and likely very low taxes because it’s only on the gains.

You’ll need to weigh your own needs and benefits to decide for yourself.

[Author]

Posts