3 Responses to “401K or Roth IRA – Which is Better?”

  1. Dheemi says:

    Roth 401k vs Traditional 401k ,which is better ?
    I am confused about whether to invest on Roth 401k or Traditional 401k. I did breif comparion on both 401k Retirement plans but got even more confused .Any solutions ?

  2. Mark says:

    Both Roth 401k and Traditional 401k are employer sponsored plans. In Comparison to the traditional 401k, the Roth can be funded with after-tax dollars. Here is a quick comparison of both accounts :-

    References :

  3. doreen k says:

    You are almost always better off choosing the Roth 401K. You have to fund it with post-tax dollars, which means you don’t get the upfront tax break, but all your earnings will accumulate tax free as long as you follow the rules. By the time you retire, most of the balance in your 401K should be from earnings, on which you would have never paid taxes.

    Since you are funding the account with post-tax dollars, any early distributions you might take (either at termination of employment or for a hardship withdrawal) will not be subject to taxes or penalties IF you take only the amount representing your contributions. You must avoid withdrawing earnings in order to keep these from being subject to taxes or penalties.

    With a Roth 401K, you don’t have to worry about being in a higher tax bracket at retirement or if taxes will be higher in the future. All your qualified withdrawals from a Roth 401K will be tax free.
    References :
    retired financial institution executive (32 years)

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