Is a Roth 401(k) Better Than a Roth IRA?
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- Опубликовано: 22 июл 2021
- Listen to how ordinary people built extraordinary wealth-and how you can too. You’ll learn how millionaires live on less than they make, avoid debt, invest, are disciplined and responsible! Featuring hosts from the Ramsey Network: Dave Ramsey, Ken Coleman, Christy Wright, Rachel Cruze, Anthony ONeal and John Delony.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
I have thought about it, but haven't figured out how to get consultation, I don’t live in a big city.
Really? Have you searched? Use any investor/advisor tool. Look for Monica Mary Strigle I am close to retirement with 1.4 M to my name outside of retirement accounts. I hired her services 3 years ago, she contributed immensely to my portfolio progress.
What is her fee structure like? Are her services available to about anyone? Can you share more details?
It’s not much to share, you can interview her yourself, write her and set up a time you can talk to her that fits both your schedules. Happy Investing. Thank me later.
Roth IRAs are a tax-efficient choice for investment. Contributions are made with after-tax dollars, and your investments can grow tax-free. In retirement, withdrawals are tax-free, allowing you to keep more of your earnings. The power of compounding, earning interest on both your initial investment and its returns, means your investment can grow exponentially. Starting early gives your investment more time to benefit from compounding.
Effective personal finance management matters more than the income source, whether from a job or investments. A certified financial advisor can offer tailored guidance to reduce expenses and boost income, optimizing your financial situation.
I completely agree; I am 60 years old, recently retired, and have approximately $650k in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
@@mariaguerrero08 This is exactly how i wish to get my finances coordinated ahead or retirement. Can I get access to your advisor?
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. “Camille Alicia Garcia” is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
This is useful information; I copied her full name and pasted it into my browser; her website popped up immediately and her qualifications are excellent; thanks for sharing.
Biggest financial mistake I ever made was with my 401k. My company had a Roth 401k when my kids were in college, but I didn't actually start contributing until year 3 of the 6 years I had kids in college. Because I was helping them with expenses, I was entitled to the tax credits, so my effective tax rate was extremely low. That is the time you NEED to be in a roth! i still retired with about $350k in my 401k.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Sonya lee Mitchell is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Recently retired and unsure if my 401(k) and IRA will provide a stable future. i need an approach that will align with my risk tolerance and financial goals, i set aside $1m to achieve this. Do you suggest i get into stocks or buy a rental property?
Look up dividend aristocrats. Pick six to ten from that list. Those companies have a track record of 25+ years of paying dividends. Also, its advisable you work with a financial advisor to help set up a well-structured portfolio.
I agree. Based on personal experience working with a financįal manager, I currently have ($2million) in a well-diversified portfolio that has experienced exponential growth from when i started. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
Your manager must be really good. How I can get in touch? My retirement portfolio's decline is a concern, and I could use some guidance.
Sonya lee Mitchell is the licensed fiduciary I apply. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
Thank you for the lead. I searched her up, and I have sent her an emaiil. I hope she gets back to me soon.
Great video, I have always wanted to invest and start my retirement plans early enough, but I never did. I hope it is not too late for me? I will like good advice on how I can start up my retirement and put up some investments as well. This world in getting more difficult to live in everyday. One needs to prepare for the future and kids inheritance.
I total agree, get the assistance of an expert and save yourself the troubles that comes with investing or trading. As for me, I am very busy with work, I do not have time to monitor my investment, but I still make so much profit every time. That is because I have someone doing all the work on my behalf.
You need help from a professional. That was what I did when I was about to begin my retirement.
Does anybody have a nice recommendation for me?
Her name is Leticia Zavala Perkins.
How do I get her contact?
Remember company match will go into your traditional 401k
For now. Look to see this possibly change via SECURE Act 2.0 in the future.
Some match to a Roth 401k. My wife’s does.
@@redsoxwinagain2007 the match still goes into traditional, company matches can't be Roth.
@@GetAtThat they are talking about today, not future. When changes are made in the future then they can change their strategy, if necessary.
My match goes into Roth 401k:]
$19,500 limit in the Roth 401k this year vs. $6000 limit in the Roth IRA. It's an incredible vehicle for retirement either way.
$26k limit for us geezers 50 and over.
@@edhcb9359 I wish that was the same for everyone. When I turn 50, I'm increasing it to the max. I'm already at 19,500.
@@orion3706 You can actually do it starting in January when you are only 49 if you are turning 50 that year.
@@edhcb9359 Awesome! I'm for sure taking advantage of that.
@@orion3706 Yep, that’s exactly what the situation was for me
such amazing advice on this show i really wish i had learned all this earlier in my life.
Another thing to consider is that a roth401k has a rule that allows you to take money out at 55 and retire early. Where the IRA has a %10 penalty. So I hear I’m looking for more information about this
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals?
keep contributing! I'd suggest you consider financial advisory at this point in time, remember you are in for the long haul
I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit me the time to analyze stocks myself. Thankfully, my portfolio has just 5X in barely 5 years, summing up nearly $1m after subsequent investments to date.
bravo! I appreciate the implementation of ideas and strategies that result to unmeasurable progress, thus the search for a reputable advisor, mind sharing info of this person guiding you please?
She goes by '‘NATALIE ANN BRINKMAN’ I suggest you look her up online. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did
Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.
I use both Roth 401k and Roth IRA, the $6,000 ira limit is too small
Must max out both for many years in the s&p 500 index funds to reach a multi million in your retirement
Both are good. Max out employee March then Roth though
Caller: Hey Dave I have a question about my 401k
Dave: Better than I deserve what can I help you with?
Caller: I wanted to know the difference between 401k and IRA.
Dave: Sell your truck, like yesterday!
😂😂😂
😂😂😂😂😂😂
This is the first comment of this same type that has actually made me laugh
😂😂😂
Lol
“This is how wealth is made”
The first step to attaining wealth is figuring out your goaIs and risk toIerance - either on your own or with the heIp of a financiaI pIanner, and foIIowing through with an inteIIigent pIan, you wiII gain financiaI growth over the years and enjoy the benefits of managing your money.
I am fortunate I made productive decisions that changed my finances (gathered over 1M in 2years) through my financiaI planner. Got my 2nd house in Feb, and hoping to retire soon. Give this a try and attain good-returns.
researvh the name, if you care.
REBECCA MARTIN WATSON.
l’m amazed to partake on this, lt has rekindled the fire to my goals.
Great advice!!
I disagree. I love the roth ira better after the match because usually less fees, you don't have to worry about the company delaying contributions, don't have to worry about the transfer issues after you leave the job, etc. You just have way more control with an IRA. I would do Roth 401k match, then max out the Roth IRA, then max out an HSA if you have one THEN come back to the 401k.
Yeah, this is the right order if you cannot max out all of these accounts.
Interesting
The fees are dictated by your company plan and what it has negotiated.
I thought the 5 percent match goes to the traditional side of the 401k
@@WICK203 It does technically but if he is doing 15% himself its 15% in the roth and 6% or whatever the match is in the traditional. So 21% total which is good.
Can you take out contributions and earnings whenever for Roth 401k or 5 years for both?
You just answered my question 😁🙏
Fun fact the match is pre-tax either way. A company with give you Roth Matching.
It's not true that fund choices are the only consideration for Roth 401(k) versus Roth IRA, the Roth 401(k) also has additional restrictions such as RMDs that make it inferior to the Roth IRA.
After you get your employer match (whether that's Roth 401(k) or your company only offers Traditional 401(k)), you should immediately turn to maxing out your Roth IRA.
But you can roll Roth 401k into a Roth IRA after separation of service.
RMDs are a thing, but not a real problem for a Roth 401K.
Hi Dave this month I started emergency fund, 401 and Roth and paying off debt But I been calling show I’m in trouble with my car loan
401k has the higher contribution limit & 401ks usually come with better legal protection against creditors depending on the state
Depends if you stay at the job long enough to get vested. Depends how much you make for tax purposes and where you think taxes will go in the future 🚀
I’m surprised not many people talk about an invested HSA it’s triple tax advantaged. Fund your Roth IRA, Roth 401k and your HSA in index funds and you’ll be well on your way
I agree! I have colleagues that are not interested in investing their HSA. Mind boggling to me!
HSA is only triple tax advantage if you eventually use the money for healthcare expenses. If you invest money in your HSA and it grows over 40 years and then you withdraw and use it towards non healthcare living expenses then you pay taxes on the amount withdrawn
@@dretaylor3285 I’m aware and I’ve explained it to them but they’re not interested. And they aren’t using the funds either (young, no kids). To each their own I just think letting thousands sit there when you have growth options is a missed opportunity.
@@dretaylor3285 Correct, but chances are in retirement and with old age having healthcare costs is almost a guarantee. And that gets pricey when one is retired and doesn’t have an employer sponsored plan. You make a good point though definitely come thing to consider! I’ve been paying my healthcare expenses out of pocket to let the HSA amount build quicker as the max yearly contribution is pretty small
If you have an HSA, then yes, it's good.
Employer match in the 401k, Max HSA and Roth IRA, then either come back to 401k or contribute to a taxable account depending on goals. The HSA and Roth IRA have too many benefits and flexibilities to pass up
🙌
Exactly. I’m not sure why people create so much controversy and discussion around this when the correct approach for nearly anyone is just that simple.
Chris- exactly my thoughts as well. Similar to the money guys show order of operations.
The video was asking the question of if Roth 401k has no fees and same investment options as the Roth IRA, is there any reason to do that rather than continuing to dump into the Roth 401k. Dave seems to think there's no advantage there to open a Roth IRA account. Do you have reason otherwise?
@@boekjar A video cannot ask a question. The person asked a question, which did not include fees or investment option, just which one was better. While a Roth 401k and a Roth IRA may have the same investment option you want, Roth 401ks universally have fees attached to them that may not be there with Roth IRAs. In addition, Roth IRAs don't face penalties on contribution withdrawals. Outside of the match, Roth 401k should be after HSA and Roth IRA, if able, because of the fees associated with them and the lack of control over your own money. There will likely not be a MASSIVE difference, but you should still probably do the Roth IRA before Roth 401k (after match of course).
Dave,
When you commented on 401k ROTH vs personal ROTH - I didn't hear you contrast the RMD with the two options. Could you elaborate?
Roth IRA has *_no_* RMD. Roth 401(k) has RMD but you can simply roll Roth 401(k) balance to Roth IRA after you leave the company.
----- Edit
Secure 2.0 Section 325 Roth 401(k) will no longer subject to RMD in 2024.
Hi, which company should I get term life insurance with return of premium ?
From what I heard is that company match is in the form of traditional and not Roth. I am not sure if AO is just having a slip of the tongue when he mentions a matching Roth 401K
Company match is always traditional. When you do a rollover from a previous employers 401K it goes into a traditional IRA UNLESS you choose to rollover into Roth, however rolling all of that money into a Roth means you’d have to pay taxes on every dollar that your company contributed which could be substantial
Typically, (or at least this is how it works with my company), you can choose either traditional or Roth, and the company will match regardless. If you choose Roth 401k, your dollars are in the Roth bucket while the match will be in the traditional bucket. I’m also allowed to choose a mix between Roth and traditional. 60/40 for example if I wanted to.
... there's a big difference on when you can access the account. Roth IRA principal can be accessed earlier than ROTH 401k which can make a big difference if you retire before 59 1/2. While the growth would be same, the actual accounts have some different rules behind them, so please consult a professional and see what works best for your situation
They both allow original contributions to be withdrawn any time without the penalty, right? Just the growth that shouldn't be touched? But they have a difference, you say?
still should max out both if able to - and let it compound and take advantage of tax free growth
I have both of the IRA's, and you never have enough savings. Never!
Anything I’m or above 22% bracket is best for traditional 401k or traditional IRA. Unless the first bracket becomes 22%, you’ll pay less tax in retirement.
Personally i like IRA better after the employer match. You're not subject to any sudden changes in fees or investment options out of your control. With an IRA, you have way more control.
So my company matches 50% of base pay up to 6% for 401k and I've set my contribution rate to 10%. I've also maxed my contributions to my Roth IRA. Are there any other avenues I should pursue to maximize my retirement savings? Is my contribution rate to 401K too high?
Sure! Just contribute more to the 401(k), unless you are dissatisfied with the funds available, then open a traditional IRA. You're effectively saving 16% (your 10% plus the employer match), but there is no such thing as too much savings!
Personally, I have an SP 500 Index fund available, so I load in on the 401(k) with a maxed out Roth IRA. I'm skeptical retirement will put me into a higher tax bracket, in fact I expect to have less income when I retire, so I feel the traditional is the way to go, but I keep the Roth as a hedge.
You’ll need to do 12% into 401k to get the full Match as they only match 50% of yours.
Too high depends on what your income will be in retirement.
You’re doing 16%+ of your income which is great! But the answer is, possibly.
Traditional is best for your 22%+ bracket dollars now that’ll fill the lower brackets in retirement. Just enough to live on and burn up before RMDs at 72 and passing your Roth to heirs.
What’s your income, age now, age of retirement and will you have any income in retirement other than Social Security?
I’m making an online calculator to do this as I’m in the same boat.
The match baby - tip top priority 😉
I do both. Match at work. My part is Roth. And I max my Roth outside work
401k is also the most protected fund and cannot be taken away via a lawsuit
Roth IRA is safe too right?
@@nerad1994 hmmmm don’t think so, you’d have to check though
Unless you get divorced, then you're losing half.
When contributing to a 401k roth, the company match is treated as traditional correct? As in, their contribution grows and will be taxed when you take it out, but your contributions grow tax free due to the fact they have already been taxed.
Q1 Yes company match goes toward your traditional 401(k) balance.
There was a change. The Secure 2.0 Act allows employers to offer employees the ability to choose whether or not to receive employer-matching contributions as pre-tax or after-tax.
When do you pay the taxes on the employer match? My employer match is pretax but goes into my 401k roth. im confused! HELP!!
Your employer match goes toward your traditional 401(k) balance and is taxed upon withdrawal.
I don't think the question was answered, i.e., should I invest in a pre-tax 401k or a Roth IRA? There are numerous considerations that are too complicated to be answered on a phone call to a radio personality. This is where you really need to sit down with a financial advisor / CPA to work through the various scenarios.
1. Where are you in your career path?
2. Do you plan to invest a dollar amount or a percentage of gross income?
3. What is your income / tax bracket?
4. Do you plan to leave a legacy to your heirs?
5. Do you anticipate being in a lower tax bracket when you retire?
The appeal of Roth is that you invest after tax dollars and there is no tax on the growth. The pre-tax 401k takes advantaged of tax deferred dollars, which may allow you to build a larger nest egg, with the disadvantage of having to pay tax on the investment and the growth at withdrawal.
The real problem is that no one knows what the politicians in Washington will do. In 2019, Congress passed the Secure Act, which significantly curtailed the "stretch provision" on inherited IRA's, which now means your heirs must withdraw all proceeds of an inherited IRA within 10 years - often in their high income earning years. Congress is also chomping at the bit to raise the tax rates. As a result, 401k to Roth conversions have significantly increased in the past couple of years, but those come with their own set of considerations, such as where do you stand with regards to Medicaid, Social Security, etc.
I don't think he answered the question as well. As you stated, there is a ton of factors to consider. Everyone's situation will be different and there is no one size fit all answer.
What if you cant max out your roth 401k but you can max out the traditional 401k, due to your tax bracket. Which one would be better?
If you are in a high tax bracket do traditional. If you are in a low tax bracket do the Roth.
Depends on your tax bracket, but I love the Roth 401k.
Traditional for all dollars in or above 22% tax bracket. The rest Roth, backdoor Roth etc.
If you’re saving more than 15-20% of your income then ask a CPA/CFA to make sure you’re not doing too much into traditional. You want enough to fill the lower brackets in retirement and then Roth for remaining buffer of spending and to be passed to heirs.
I’m working on my own calculator for this myself.
@@nathanhedglin931 Also, a lot of us are avoiding high state income tax by using the traditional. I would be paying 9.3% marginal rate in CA but instead will be retiring in tax free Florida.
@@edhcb9359 It also depends on what your plans are for retirement. If you expect you pay more taxes in retirement, then paying the taxes now will be better.
I’m not eligible for Roth due to income level. But I do max out traditional 401k. Ramsey should talk about that. Not everyone can or should contribute to Roth. Eligibility phases out with income.
Back door Roth
There is no income limit on Roth 401K.
Should I invest in a 401k non matching or an IRA? Thank you
If you have good investment choices at low cost within your 401(k) you should consider contributing to both 401(k) and Roth IRA.
401k allows you to put aside a lot more than an IRA ($22,500 vs $6,500 or $30,000 vs $7,500 if you are over 50).
An IRA give you more control than a 401k, where you usually have to pick from a defined set of options.
If you don't have more than $6500 to invest per year (or $7500 if you are over 50) , the factors to consider are how much control you want over your investments, the quality of the offerings in the 401k, and any associated fees.
If you can invest more than $6500 (or $7500), you will need to use your 401k for at least some of that money. If you contribute too much to your IRA, there is a penalty. I somehow managed to contribute $125 too much this year, and had to arrange for a disbursement to get back under the limit.
Anyone have input on if the company doesn’t match at all? Would I be better off not investing through company and just get something on my own?
If your retirement plan has low cost and good (preferably S&P 500 and similar) investment choices you can contribute to it.
In 2023, you can only contribute up to $6500 in an IRA ($7500 if you are over 50).
If you want to contribute more than that, you will need to use the 401k. It gives you a much bigger bucket to put stuff in ($22,500 per year, $30,000 if you are over 50).
You should put as much as you can into your Roth accounts. All the contributions and growth come out tax free. The more you put in and the more time you give it to grow, the more significant it becomes.
The employer might match in pre-tax
The company match for a Roth 401k goes into the traditional side right?
Company match is usually tax deferred, so goes to regular 401K regardless of you investing in either Roth 401K or regular 401K.
Depends on your plan. Some will allow you to direct a company match or portion to your Roth 401k if you have both trad 401k & Roth 401k.
@@mtanjil "Company match is usually tax deferred" Is *_ALWAYS_* tax deferred
@@r.3161 No, company match is directed to your *_traditional_* 401(k) balance.
Change for 2024: The Secure 2.0 Act allows employers to offer employees the ability to choose whether or not to receive employer-matching contributions as pre-tax or after-tax.
Can you do both?
Yes, you just can't contribute more than the maximum allowed amount. You can divide it up any way you want.
@@damondiehl5637 The maximum amount for each type of account? For example Roth IRA $7,000 and Roth 401(k) $23,000?
If you make above a certain amount of money do you even get the Roth option?
No, BUT you can contribute money that doesn’t get a tax deduction to a Traditional IRA or possibly to a post-tax 401k THEN convert to a Roth; called backdoor and mega-backdoor Roth, respectively.
What's the path of my combined income (married) exceeds 240k per year combined?
The money he puts in through the Roth 401k will be post tax. But the match will still have to be taxed.
Im probably going to take heat for this, but i like a traditional 401k/457 plan, and i like those better than a Roth IRA, even though the IRA grows tax free because the contribution limit is so much higher. It's harder to gain traction with an IRA, and many states don't tax retirement income, which 401k and 457 plans are included in that.
A 401k certainly does allow you to contribute a lot more each year than an IRA (3x as much). My 401k offers a plan that mimics the S&P500, so I have chosen that over the target date funds. If you max out your 401k, you can still contribute to an IRA. And, the whole thing can be Roth, even the employer match in the 401k.
If I want to retire before 59.5 and pull my investments out before that age, shouldn't I just invest all my money into a brokerage account instead of into Roth/traditional 401k accounts? Yes I know it's gonna be taxed much more, but I'm really not liking the idea of waiting till 59.5 to pull out my investments.
I don't know about ALL, but it sounds like you should put MOST of it in your brokerage account. Seems short-sighted though. You could easily find yourself going back to work and having to invest a lot more for retirement because you gave up the benefit of time.
you can contribute more to the 401k Roth. Dave should have discussed that
Interesting
True 19.5K vs 6K. I do 19.5 in Roth with 9 K company match and 6K in my roth IRA and 6K in my wifes.
I agree, I still don’t know the difference between a Roth 401(k) and Roth IRA. I’m sure he has gotten another video that I can research.
@@erodz2943 yea $19,500 is the annual 401k limit. $6,000 is the Roth IRA limit.
@@sandiweidler8862 only difference is the amount you can contribute
Most 401ks charge an ongoing maintenance fee of around 0.50-1%. Roth ira is better after match then go back to 401k
Does Anthony even listen to the questions? It's like he didn't even hear that the 401K had a Roth option...
Anthony is not smart. He doesn’t understand the “why” behind his answers. He just regurgitates Dave’s anticipated responses.
Most people are in a higher tax bracket mid career, and will be in a lower bracket in retirement. With a Roth, they're paying more taxes during their working years, and saving less as a result.
I max out my Roth 401k and Roth IRA every year. I hope it pays off one day!
$19,500 + $6,000 = $25,500 is a big chunk of change! For someone in 22% Federal Tax Bracket that requires $32,692 of pre-tax income!
@@alrocky it is and it requires laser focus to get it done and make it happen.
@@alexhung7158 do you mean traditional 401k and then Roth IRA?
Mind if I ask what your annual income is. You are filing single?
@@f430ferrari5 I am filing single and my job pays $55k a year. I have a Roth 401k and a roth ira.
@@alexhung7158 it seems you have the opportunity to put yourself in a lower tax bracket.
At 55k and you take 10% pre tax and you reduce agi to 49.5k and the 12k standard deduction puts you in 12% vs 22%.
Do you plan to have your salary increase pretty significantly over the years? I would think yes. You have future higher income years to focus more on Roth. This is of course assuming tax rates stay the same.
In other words let’s say you’re making 80K. You’re still stuck in the same tax bracket even if using pretax. This is the time to put more into a Roth?
I would have both, and max bot out.
Max traditional 401k and max personal Roth IRA is the best Strategy for middle class Americans. You need a mix of pre tax and post tax
@@MrOfficer235 nah roth all the way when your effective tax rate is below 30%
The majority of Americans will be in a lower tax bracket when they enter retirement. The tax savings of a traditional over the standard 25-30 year career is a huge opportunity cost that a Roth 401k will miss. That increases your take home pay to allow you to invest in a personal Roth/brokerage/real estate etc. Again I believe in Roth accounts I’m simply stating for diversification purposes you need both. Standard 401k and personal Roth IRA.
Interestingly, many of those who make to much money to contribute to a Roth IRA will always qualify for a Roth 401(k).
Investments is the best way to find balance between saving and living, This way
you have your savings
intact and then live comfortably off the revenue coming in from your investments.
Financial freedom is possible, you just need to know what to do
and when to do it. I am a living testimony.
People waste their time calling in like they never heard of Google
Open the Roth IRA asap to start the 5 years counting. When you leave your current employer you can roll your Roth funds and any post-tax contributions into the Roth IRA.
Will a Roth 401k directly rollover into a Roth IRA when changing jobs?
Yes and no. Yes that it can be directly rolled over. No, it isn't automatic. Roth 401k rolls over into a Roth IRA. Trad 401k rolls over into a IRA. You have to initiate the rollover with the 401k company by calling them. If you don't initiate the rollover nothing will change. I did the traditional rollover a few years ago and they sent me a check for the amount in my account and I had a time limit that I had to deposit it into my IRA by.
Dallish Texash
Roth IRA gives you more opportunities to invest where you want invest.
Can you open roth ira for my son he is 9?
Does you 9 year old have [a job] earned income?
Arent there income limitations on a traditional Roth IRA. I had to stop contributing to mine. Good place to be but I’m kind of bummed.
Yes there is but if you are at that limit you can do "backdoor roth ira"
Sounds like that guy.
The match will be pre tax. His portion will be Roth. That needs to be explained.
While your 401k and IRA account would likely continue to grow even after you stop contributing to it, that growth might be limited by the Market, your personal plans and also other factors. For this I see need for annuities. I still will like to know how to compound $2m and above in retirement without holding cash.
Bond and other fixed income asset if properly managed could produce the yield needed to provide solid income for retirement. The importance of a continuous wealth accumulation and ensuring financial stability is why boomers turn to advisors in retirement planning.
It is very important to be proactive and also consider diversifying assets to manage risk especially in uncertain economic times. The ability to identify and mitigate potential risk on my assets is the reason I delegate my day-to-day investment activities to trusted advisor ever since I had a major step down amids rona-outbreak in 2019. Now I am close to retirement and my goal of $1m retirement funds even after other investment is 95% sure.
It is important to consider a financial planner early, before the last year of retirement. I am currently working with a financial planner called Jason Herman Pierce. I really appreciate his cutting edge financial strategies. It really works for me. His vast knowledge of international market and tax implications allow us to moderately diversify my investment portfolios, minimize tax liabilities and access new markets with potential high returns. And I am two year from retirement and my financial goals is secured.
Please how can I get in touch with the advisor guiding you. I am close to retiring and I didn't make proper planning and investment for retirement. Thinking about now scares me. I have to start somewhere. It is better late than never.
His name is Jason Herman Pierce. You can google him via your search engin to get information about him. I am sure you will be fine.
Best option is a Roth 401k because you contribute more than the standard $6,000.
You also don't have as much control of your investments. There's no reason why someone can't do both
Once we get to step 4, invest 15% of your household income into retirement. Does this mean 401k or Roth IRA?
Whatever it takes. You can only put $7000 per year in an IRA, so you may need some another account to put the rest, to get to that 15% threshold. A 401k allows you to contribute $23,000 per year. And the 401k generally has an employer match for at least some of your contribution, so that is free money you are not getting if you don't participate. If the options offered in your 401k are acceptable, you could probably do it all there, and not use an IRA at all.
401k
Pro - you can contribute up to $23,000 per year ($30,500 if you are over 50) and employers usually match some of it (100% return on your investment).
Con - you usually have to choose from a limited set of funds. For most people this is a non-issue. The funds are pretty good, especially if they offer a fund that mimics the S&P500.
IRA
Pro - you have total control over what goes into it
Con - You can only contribute $7000 per year ($8000 if you are over 50).
So, between a 401k and an IRA, you can set aside $30,000 for retirement ($38,500 if you are over 50). That's a serious chunk of change for most people.
I feel like the Roth IRA is a better idea. That's 6000 for people who knows how to buy stocks.
Plan to plan it is but if you have a match that 100% return on your money
My IRA is invested into 4 different mutual funds. I don't have to know anything about buying stocks
I agree, plus the withdrawal option of contribution after 5 years and Roth IRA is not subject to min distribution requirement.
Not true. The 401K likely has higher fees
Max 401k
Max Roth IRA
Max HSA
If I’m not good well before retirement I’ll be beside myself.
Max to the 401k match first and than max out the HSA and then back to the 401k
I thought most employers match goes into a traditional IRA even though you are contributing to a Roth.
In the past the employer match had to be in a Traditional account. The Secure 2.0 Act allows employers to offer employees the ability to choose whether or not to receive employer-matching contributions as pre-tax (Traditional) or after-tax (Roth).
@@damondiehl5637 Just curious, if you elect employer match to Roth, does the employee then pay taxes on the $ amount matched?
@@rodrigok1220 No idea. The Act is new, so the employer's matching contribution had to be Traditional in 2023. Looking at my taxes, I don't see where the 401k money was applied to the tax equation.
We prefer max out traditional 401k and max out Roth IRA. To be well diversified you need both.
The most significant financial blunder I ever committed was with my 401k. During the six years that my kids were in college, my company offered a Roth 401k, but I only began contributing in the third year. Due to assisting my children with expenses, I qualified for tax credits, resulting in an exceptionally low effective tax rate. It was precisely during this period that a Roth account would have been most beneficial! Despite this misstep, I still managed to retire with approximately $350k in my 401k.
People don't really know this, You need to create your own process, manage risk and stick to the plan, through thick or thin while also continuously learning from mistakes and improving.
This is precisely why I like having a portfolio coach guide my day-to-day market decisions: with their extensive knowledge of going long and short at the same time, using risk for its asymmetrical upside and laying it off as a hedge against the inevitable downward turns, their skillset makes it nearly impossible for them to underperform. I've been utilizing a portfolio coach for more than two years, and I've made over $800,000.
Could you kindly elaborate on the advisor's background and qualifications?
The advisor that guides me is Sonya lee Mitchell, most likely the internet is where to find her basic info, just search her name, She's established.
I searched her full name online and found her webpage. I emailed to make an appointment to talk with her; hopefully, she gets back to me.
why is nobody asking about the withdrawal/distribution differences here between roth401k and a Roth IRA? THIS… is another reason why I don’t like Dave Ramsey advice.
And his employer match will go into traditional.
Can be Roth, now, in 2024.
If me and wife make less than 200k all together, can each one of us contribute $6500 to Roth IRA?
MFJ MAGI less than $218k you may each contribute $6,500 to Roth IRA
Get your match in your Roth 401k if available, then max your Roth IRAs. You can select whatever investments you want in your IRA whereas your employer might not have good selections. Also, you can withdraw Roth IRA contributions whenever you may need them. After this, go back and max the Roth 401k.
Comment
Just waiting to read all the woke insurance salesmen posts about how whole life is a better investment.
What if your employer matches a Roth IRA? Would you then chose IRA or 401k
Always take match first in a 401k, then IRA to avoid fees and have more control and flexibility, then back to 401k.
They didn't mention in order for your roth 401k to be tax free when you withdrawal you must have a roth Ira open for 5 years.
That is not correct. Your Roth 401(k) is tax free at retirement age even if you have no Roth IRA.
The 401k is only as good as what’s in it. I’d go with the Roth option though.
For middle class Americans the best strategy is max out traditional 401k and then max out a personal Roth. You need both pre tax and post tax to be in a good position.
@@MrOfficer235 if your company is matching towards your Roth 401K then that portion is already designated as traditional. In other words, money you put in your Roth 401k is post tax, money your company matches into your Roth 401k is pre tax, and is therefore traditional by default. There’s no need for anyone to go traditional 401K when a Roth 401K is offered because they will always have a de facto mix of pre and post tax money
It’s the Spammer!
@@appleforever6664 😂
Roth IRA is better than a Roth 401K, but both are good.
Employer match aside (which precedes this), if you can contribute to a Roth IRA, do that first until you reach the max, then contribute what's left to the Roth 401K.
Roth IRA have is better tax free at the end
ROTH ANYTHING IS BETTER THAN EVERYTHING.
Company match, and then invest in Bitcoin.
This didn't age well.
None of this will matter, when the market tanks what this guy has saved will be gone. Should have did an IUL.
Hahaha!! The sky is falling on wall street!!...GTFOH. IULs are garbage with their high fees/commissions and capped gains.
roth Bitcoin ira
From my experience with this, the Roth 401k MATCH is taxable income, but all the growth is tax free.
For everyone's experience whether you contribute to traditional 401(k) or Roth 401(k) the company match goes toward one's *_traditional_* 401(k) balance.
The Secure 2.0 Act allows employers to offer employees the ability to choose whether or not to receive employer-matching contributions as pre-tax or after-tax.