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I currently contribute 12% pretax to my 401k and 12% posttax to my Roth account. My company match is 5% for my 401k. How would my taxes be affected if I lowered my 401k to 5% and increased my Roth to 17%?

Ask the Experts - Retirement - July 2023

Tax Hero Niki

Level 5

Hi m crespo1!

When you reduce your pre-tax contributions, you can expect to lose some upfront tax savings and have a larger tax liability. However, by contributing to your Roth, you will be increasing your future tax savings because, as you know, certain Roth disbursement are tax-free. For an actual dollar estimate of the impact, it will be based on your full income profile, and whatever tax bracket you fall under. For example, if your income puts you around a 15% effective tax rate, then you can expect your tax savings to decrease by 15% of the change in contributions. You can use the following tool to get a more precise estimate: https://turbotax.intuit.com/tax-tools/calculators/taxcaster/