Which is better, Pre-tax 401k or Post-tax 401k?

Pre-tax 401k or Post-tax 401k? Here's my general rule of thumb: If you are a high-income earner, maximize your pre-tax 401K first. If your employer allows it, once you have maximized your pre-tax 401K, you can put more money into a post-tax 401k. Not every employer allows that, but a lot of them do.

If your employer allows that and you can save a little bit more—this year's limit is 22,500—if you can save more than that, you can put that money in a post-tax 401K. Then, at the end of the year, you fill out a form and convert that post-tax 401K into a Roth backdoor Roth. That's a simple mechanism the government still allows. There was a proposal to ban it, but it's still an option.

So, you can put away a lot—I think a total of up to $66,000—in your 401k this way. Make sure you first maximize your pre-tax 401K, get all the tax benefits, and then put as much money as you can into a post-tax 401k, and then switch that post-tax into a Roth 401k so you won't have to pay taxes on the gains and on that amount in the future.

With a Xillion account, you can manage your 401k pre-tax and post-tax really well. We also will walk you through which funds to buy and all that. Go to xillionapp.com and create an account.