🔺 r/personalfinanceuDaddy_nivek·36 days ago
Maxing out Roth IRA vs putting that money in a 401k when it comes to compounding interest?
Hi I just got a big boy job with a 401k match that I plan to max out. My question is, why do many people suggest maxing out your Roth IRA after hitting your employers contribution match, wouldn't putting those extra 7k in the 401k increase your gains over time a lot more, since the 401k will have a larger amount of money. In 5 years 401k would have 70k from my contributions + employee match, then if I put the money I would out in a Roth IRA it would sit at 105k. Conversely, due to the cap the Roth IRA a would be sitting around 35k. So wouldn't the 401k be earning a lot more? Let me know if I'm missing anything. submitted by /u/Daddy_nivek to r/personalfinance [link] [comments]