Hunt said $19,500 of after-tax money "is far more valuable than the same dollar amount in pre-tax money, especially over many years."
If your employer matches a certain percentage of your contributions into the 401, try to at least contribute up to that match, advisors say. The company's money will be added pre-tax, whether or not your contributions are taxed. When you hit age 72, you must start taking an annual required minimum distribution, or RMD, from your 401.also are made on an after-tax basis, so you don't have to pay taxes when you take money out in retirement.
However, there are income limits. You can contribute the maximum of $6,000 if you make less than $198,000, if you are married and filing jointly, or less than $125,000 if you are single. You can contribute a reduced amount if you make between $198,000 and $208,000 and are married or between $125,000 and $140,000 if you are single.
Experts advise building up a Roth IRA when you are young, because you may not qualify when you are older and making more money."I recommend it to all my clients, unless they are in a situation where they think they will make significantly less in the future," Hunt said.
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