Quote:
Originally Posted by jIM_Ohio
If a Roth 401k is not an option
and plan allows post tax contributions, it would be useful in same sense that a traditional (non deductable) IRA would be used AND it offers the added benefits that some 401k plans give access to money before age 59.5 (penalty free).
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I don't agree 100%.
An IRA you can contribute pre-tax or post-tax. Either or. People only make post-tax IRA contributions out of *desparation,* when they have no other tax shelter options. IT's a pretty crappy tax shelter.
A 401k you can do both pre-tax and post-tax. So it's not really apples to apples. No one in their right mind is going to give up the tax shelter of a pre-tax 401k for a post-tax 401k. I certainly wouldn't recommend it. If you want it penalty free, put it in a taxable account. No one keeps good tax records on these and many people end up double taxed with these types of accounts because they didn't keep their tax records for 50 years.
But as I said, I realize now that the post-tax is being presented as an option after the pre-tax 401k is funded. That makes sense. Then it's back to desparation for tax shelters. Crappy, but it works.