I started my career later than usual (28) and for the last 3 years I‘ve been contributing to both pre-tax and post-tax 401k via my company. Recently, I had a large salary increase to ~$136k gross/year and I contribute about 7% to my pre-tax account, 5% to my Roth account and I get 100% employer match at 3% which is about 15% total contributions. I understand the concept of *why* one should/shouldn‘t contribute to a Roth 401k, but I wanted to explain my understanding and get your advice. After running the numbers, I realized that, with inflation and continuing on my current path, my withdrawals in retirement would be in the same tax bracket that I am currently in (24%). Obviously if I continue on my current trajectory of increasing my salary until retirement, at some point I will be in a higher tax bracket than when I will withdrawal and at that point I should decrease the amount I put into my Roth 401k and put that into my pre-tax 401k, right? But what I’m wondering is if I should I do this already in 2023? In addition to that, I should be doing the backdoor Roth IRA method with the smaller amount I will continue to contribute to my Roth 401k, right? Or should I first focus on maximizing my 401k contributions first before I worry about any IRAs? For context, I am paying off student loans and trying to save up for a house so I am currently not maxing out my 401k contributions because that money is going into a HYSA. 

Thanks all for your time!
First off, congratulations on your salary increase and your proactive approach to retirement planning. It's never too late to start, and it's great that you're thinking ahead. Your understanding of the Roth 401k vs pre-tax 401k is generally correct. In an ideal world, you'd want to contribute to a Roth 401k when you expect your tax bracket at retirement to be higher than your current tax bracket, and vice versa for a pre-tax 401k.

As for your question about whether you should already switch more of your contributions to your pre-tax 401k in 2023, it depends on a few factors such as your expected salary growth, the tax laws at that time, your expected retirement age, and your expected income needs in retirement. 

The backdoor Roth IRA is a strategy typically used by high earners who aren't eligible to contribute to a Roth IRA due to income limits. It involves contributing to a traditional IRA, then converting that into a Roth IRA. If you're considering this, be aware of the pro-rata rule which could lead to unexpected tax consequences if you have other traditional IRAs.

When it comes to prioritizing between maxing out your 401k contributions vs contributing to an IRA, there's no one-size-fits-all answer. It depends on your personal financial situation, your goals, and other factors. Generally, it's a good idea to at least contribute enough to your 401k to get the full employer match (which it sounds like you're doing), since that's essentially free money. After that, whether you should prioritize maxing out your 401k or contributing to an IRA depends on factors like the investment options in your 401k vs the IRA, your tax situation, and your income.

Given your current financial goals of paying off student loans and saving for a house, it's understandable that you're not maxing out your 401k contributions. A HYSA can be a good option for short-term savings goals like a house down payment.

Keep in mind that everyone's situation is unique and what works best for one person might not work best for another. It might be a good idea to consult with a financial advisor to discuss your specific situation in more detail.
### Human
I started my career later than usual (28) and for the last 3 years I‘ve been contributing to both pre-tax and post-tax 401k via my company. Recently, I had a large salary increase to ~$136k gross/year and I contribute about 7% to my pre-tax account, 5% to my Roth account and I get 100% employer match at 3% which is about 15% total contributions. I understand the concept of *why* one should/shouldn‘t contribute to a Roth 401k, but I wanted to explain my understanding and get your advice. After running the numbers, I realized that, with inflation and continuing on my current path, my withdrawals in retirement would be in the same tax bracket that I am currently in (24%). Obviously if I continue on my current trajectory of increasing my salary until retirement, at some point I will be in a higher tax bracket than when I will withdrawal and at that point I should decrease the amount I put into my Roth 401k and put that into my pre-tax 401k, right? But what I’m wondering is if I should I do this already in 2023? In addition to that, I should be doing the backdoor Roth IRA method with the smaller amount I will continue to contribute to my Roth 401k, right? Or should I first focus on maximizing my 401k contributions first before I worry about any IRAs? For context, I am paying off student loans and trying to save up for a house so I am currently not maxing out my 401k contributions because that money is going into a HYSA. 

Thanks all for your time!

### Assistant
First off, congratulations on your salary increase and your proactive approach to retirement planning. It's never too late to start, and it's great that you're thinking ahead. Your understanding of the Roth 401k vs pre-tax 401k is generally correct. In an ideal world, you'd want to contribute to a Roth 401k when you expect your tax bracket at retirement to be higher than your current tax bracket, and vice versa for a pre-tax 401k.

As for your question about whether you should already switch more of your contributions to your pre-tax 401k in 2023, it depends on a few factors such as your expected salary growth, the tax laws at that time, your expected retirement age, and your expected income needs in retirement. 

The backdoor Roth IRA is a strategy typically used by high earners who aren't eligible to contribute to a Roth IRA due to income limits. It involves contributing to a traditional IRA, then converting that into a Roth IRA. If you're considering this, be aware of the pro-rata rule which could lead to unexpected tax consequences if you have other traditional IRAs.

When it comes to prioritizing between maxing out your 401k contributions vs contributing to an IRA, there's no one-size-fits-all answer. It depends on your personal financial situation, your goals, and other factors. Generally, it's a good idea to at least contribute enough to your 401k to get the full employer match (which it sounds like you're doing), since that's essentially free money. After that, whether you should prioritize maxing out your 401k or contributing to an IRA depends on factors like the investment options in your 401k vs the IRA, your tax situation, and your income.

Given your current financial goals of paying off student loans and saving for a house, it's understandable that you're not maxing out your 401k contributions. A HYSA can be a good option for short-term savings goals like a house down payment.

Keep in mind that everyone's situation is unique and what works best for one person might not work best for another. It might be a good idea to consult with a financial advisor to discuss your specific situation in more detail.<eos_token>