Investing for a 28-Year-Old
At higher income levels, the Roth vs. traditional 401(k) decision becomes meaningful. A traditional 401(k) reduces taxable income now at your current marginal rate; a Roth 401(k) pays tax now but grows tax-free. If you expect to be in a higher bracket at retirement, Roth 401(k) wins. If you expect a lower bracket, traditional wins. Many plans now offer both options in the same account.
The Mega Backdoor Roth lets you contribute after-tax dollars to a 401(k) beyond the standard $23,500 limit (2026), then convert those dollars to Roth status. The total 401(k) bucket limit (employee + employer + after-tax) is $70,000 for 2026. Not all plans support in-plan Roth conversions. Verify your plan documents before assuming this strategy is available.