November 4, 2014

What is the difference between a Roth 401k and a Traditional 401k? What is best?

3 thoughts on “November 4, 2014”

  1. Brennan Haag says:

    In a traditional 401k, you don’t pay taxes until you take the money out. For a Roth 401k you pay taxes when you put the money in the account. Whatever one is best for you depends on an individuals preferences.

  2. Garrett Haag says:

    A traditional 401k is at your work and you put income in it that has not been taxed yet, this lets you lower your taxes for the year you put the money in it, this can be helpful to someone who is in a higher tax bracket. A ROTH 401k is also at your work and you can put money after taxes in it that you will not pay any income taxes on the earnings of when you take it out under the right guidelines for withdraws. The best one for you depends on your tax level and what you think you will be earning in the furture, if you think you will be earning more in the future it is better to go with the ROTH normally. A good cut off point is between 50,000 and 70,000 depending on the individual. They both have the same yearly contributions of 17,500 in 2014. You can move both over to a place like Vanguard when you leave the company you have it with. The ROTH 401k turns in to a Roth IRA while the Traditional goes to a traditional.

  3. Mike Finley says:

    Those were great answers, gentlemen. I have nothing to add. Well done!

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