Originally Posted by jakeyt
Does it make more sense to max out and try to put $17.5K into my 401k? I can, one day, roll it over into a Roth IRA? Won't everthing I put into a Roth IRA be post-taxed anyways, so aren't I getting taxed twice?
I don't believe you can convert a Roth IRA into Traditional IRA or 401k (or even understand the logic). Even rolling a traditional IRA into a company 401k is highly dependent on the sponsoring 401k.
You can, however, convert a traditional IRA into a Roth via backdoor conversion. This is a useful tool for high income earners who are exempt from Traditional IRA deductions. Simply fund a traditional IRA, don't claim exemptions, and then convert the account into a Roth. Keep in mind, that you must convert ALL available accounts into a Roth status, which means you are liable for any taxes owed on the basis of your traditional IRA accounts. The advantage of the backdoor, allows for a tax free shelter for retirement funds once all tax exempt vehicles (e.g. traditional 401k or SEP-401k) are exhausted. Theoretically, by applying such tactics, a married couple couple can save 17.5K + 17.5K + 5.5k + 5.5k = 46k in retirement accounts per year. Not gigantic numbers, but a nice foundation for long term financial planning.
EDIT: you can recharacterize a Roth
see: IRS publicationEdited by norcaltransplant - 3/28/13 at 4:11pm