401k vs. Roth 401k

The difference between a 401(k) and a Roth 401(k) is essentially the same as the difference between a Traditional and a Roth IRA in terms of what tax benefits each account offers.

Which one is more advantageous for you will again depend on other factors such as your age, future earnings potential and if your employer even offers a Roth option for your 401k plan.

Personally, I use a Roth 401k and a Traditional IRA for my retirement savings.  A set amount is taken directly from every paycheck and deposited into my Roth 401k by my employer.  When it’s time to file my tax return, I work with my accountant to see if I can get an immediate tax reduction by making a deducible contribution to my Traditional IRA.

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3 thoughts on “401k vs. Roth 401k

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