1) Write 2-3 sentences explaining why you can “put more money” in a Roth 401(k).
The way I see it is that it boils down to after-tax. Everything you contribute has already been taxed, which means when you retire you benefit from the tax free withdrawals.
2) Write 2-3 sentences explaining the “arbitrage” of a traditional 401(k).
From what I gathered this is an advantage earned by using your highest earning periods to contribute. Since it hasn’t been taxed yet, you gain the benefit later of maybe being in a lower bracket in the future and now having as much of your retirement taxed. 3) In 5 years, suppose you and your spouse have a household income of $300,000. As such, you are not eligible for direct contributions to a traditional IRA. In 2-3 sentences, explain whether or not you will use a backdoor Roth IRA
I wouldn’t, I know it’s legal, but it seems undoubtedly shady. I’d also be wary of messing up the conversion step and being taxed even more, which as the notes says is the whole reason to do this (get taxed less, not more). So while the gains realized would be nice, it’s just a little out of my comfort zone.
