I’m 50 With $650k in My 401(k). Should I Pivot to Roth Contributions?

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At age 50, Roth contributions might be valuable, for the right household.

With a Roth portfolio, the question is balancing the opportunity costs against long-term savings. Here’s the general rule of thumb:

• The earlier in life you start contributions, the more your Roth’s untaxed gains will offset its upfront taxes.

• The later in life you start contributions, the more your opportunity cost of income taxes will outweigh the portfolio’s untaxed growth.

For most households, if you get started in your 20s and 30s, a Roth’s untaxed growth will typically generate benefits that outweigh the costs. Households that get started in their 60s will generally spend more on upfront taxes and opportunity cost than they’ll save on taxes.

If you get started between the ages of 40 and 50, however, the math gets trickier.

For example, say that you’re 50 years old with $650,000 in your 401(k). Should you pivot to Roth IRA contributions? The answer depends on your overall finances. Here’s how to think about it. And if you need more personalized help with this or other retirement planning questions, considering reaching out to a financial advisor.

A Roth portfolio is a form of tax-advantaged retirement plan called a post-tax account. There are two types of post-tax retirement accounts: Roth IRAs and Roth 401(k)s. A Roth IRA is available to all households, while a Roth 401(k) is only available if your employer offers one. While Roth 401(k) plans are relatively uncommon, they have become more widely available in recent years.

You fund a Roth portfolio with money on which you’ve already paid income taxes. You get no tax breaks at all for a Roth contribution. Once invested, the assets grow untaxed and, later in life, you pay no taxes on your withdrawals, neither the principal nor the returns.

In fact, withdrawals from a Roth account don’t count toward your taxable income at all. This, in turn, can help with systems such as Social Security benefit taxes, Medicare premiums and Medicaid eligibility. It also exempts Roth accounts from RMD rules.

With a Roth contribution, you fund your portfolio with earned income. This is money that you have earned through work, and which is eligible for income taxes. You cannot contribute to a Roth portfolio, or any other tax-advantaged retirement account, with money that is not considered earned income. Most notably, this means that you cannot make contributions from investment returns.

Like all tax-advantaged retirement accounts, the IRS limits how much money you can contribute to a Roth portfolio each year. Roth IRAs share the same limit as all IRA accounts. As of 2025, that limit is $7,000 per year, with an additional $1,000 per year in catch-up contributions allowed for those aged 50 and over. Roth 401(k)s share the same limit as all 401(k) accounts. As of 2025, that’s $23,500 per year, plus $7,500 in catch up contributions for those aged 50 to 59, and up to $11,500 in catch-up contributions for those 60 to 63.

A traditional 401(k) is a form of tax-advantaged retirement account called a “pre-tax” portfolio. With these portfolios, you get a full tax deduction for all contributions made each year. This effectively lowers the cost of contributing to your retirement portfolio, allowing you to contribute and save more money over the long run.

For example, say you pay a 20% effective tax rate and contribute $23,500 to your 401(k). If you had paid taxes on that money, it would have cost $4,700 ($23,500 * 0.2). However, since your 401(k) contribution is untaxed, you have that additional $4,700 to invest. You can use this money to either make your 401(k) contribution effectively cheaper, or you can use it as capital in an IRA or a taxed portfolio.

However, when you withdraw this money in retirement, you pay income taxes on the full amount withdrawn (principal and returns). This is as opposed to a Roth portfolio, where you pay no taxes on your withdrawals, and a taxed account, where you pay a mix of income and lower capital gains taxes depending on your assets.

This sets up the tradeoff between a Roth portfolio and a traditional 401(k).

A Roth portfolio comes at an upfront cost. When you make a contribution or a conversion, the upfront taxes mean that you have less overall money to invest. Pre-tax accounts, by contrast, let you keep the untaxed portion of that income as investable capital. However, in retirement, a Roth portfolio lets you keep all of your money, while you pay full income taxes on withdrawals from a pre-tax account.

For example, take someone who pays a 20% effective tax rate. They have $5,000 to invest each year in an account that will grow at 8% each year. A Roth IRA investment might have the following profile:

• Account: Roth IRA

• Post-Tax Investment: $4,000 (Income Taxes of $1,000)

• Portfolio After 30 Years: $493,383

• 4% After-Tax Withdrawal Value: $19,735 (Untaxed Withdrawals)

• Account: Traditional 401(k)

• Post-Tax investment: $5,000 (Untaxed Contributions)

• Portfolio After 30 Years: $616,729

• 4% After-Tax Withdrawal Value: $23,662 (Income taxes of approximately $1,007)

The outcome will differ based on your specific situation, but that’s the point. Sometimes, a Roth portfolio’s untaxed status will far outweigh any additional returns you could have generated with a pre-tax portfolio. Other times, the additional capital of a pre-tax portfolio will outweigh the tax savings.

Consider reaching out to a financial advisor to discuss your circumstances and strategy.

Here, you have $650,000 in a 401(k) at 50 years old. Should you pivot and start contributing to a Roth portfolio instead?

The answer is… it depends.

First, consider your financial goals. If you’re looking to diversify your income streams in retirement, then this might be a strong approach. You already have a well-funded retirement account. Even with no further contributions, at a mixed-asset 8% rate of return, this portfolio could be worth more than $2.4 million by age 67, so you have some room to take risks and invest for a different tax and RMD status. If you’re having trouble determining which option might be best for you, consider consulting with a financial advisor.

The same is true if you’re looking to bolster your estate planning. A Roth portfolio will carry significant value for your heirs so, again, this could be a good move.

The question gets more complicated if you’re looking to simply maximize your after-tax income. First, look into whether your employer offers a Roth 401(k) program. If so, then you can pivot entirely and start making all of your retirement contributions to a Roth portfolio. If not, then you’ll need to fund a Roth IRA. At age 50, the maximum contribution is $8,000. You’ll need to put any additional contributions into your 401(k) (typically recommended) or a taxed portfolio (less preferred).

Also, consider how your 401(k)’s pre-tax status affects your investment capital. To put it another way, once you begin paying taxes on these contributions, will you be able to contribute the same amount of money to your Roth portfolio? Or will you need to reduce your contributions based on the taxes? A Roth portfolio is often a good idea if you would make the same investments regardless of tax status, neither reducing your investment to account for taxes nor increasing it to take advantage of tax deductions.

For example, say you can afford to make the maximum $31,000 catch-up contribution to a 401(k) plan. You will make this contribution regardless of its tax status, either paying the extra taxes or accepting the tax break without adjusting your financial strategy. In that case, you have the option of about $1.04 million worth of portfolio growth on which you’ll pay taxes in retirement, or on which you won’t. In that case, the choice is relatively clear.

This is the core tradeoff to consider at age 50, with about 17 years left until full retirement age, you still have the time to grow realistic wealth in this portfolio. You can potentially take real advantage of the untaxed returns that a Roth portfolio can offer. The question is how you will invest, and how the new tax status of your contributions will change your math.

Either way, consider speaking to a financial advisor to make sure you’ve got all your bases covered for a comfortable retirement.

You’ve hit 50, should you pivot to Roth IRA contributions? The answer depends entirely on your personal financial position and your long-term plans. However, this far out from retirement, you still have time for this to save you some real money.

• A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• No matter what you do, that $650,000 401(k) is going to draw some real income taxes once you retire. So here are some common tax breaks for retirees that will help you keep as much of your savings as possible.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

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