u get tax saving now with a 401k, but pay taxes upon disbursement, later.
with roth ira, no tax relief now, but u dont have to pay taxes upon disbursement.
2006-11-30 07:55:16 · 8 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
It's a good idea to have both because you don't really know what your financial situation will be when you retire so it's a good idea to have money that's tax-free as well as money that's taxed. Save some taxes now and some later. Then you can play with disbursements to do what's best for your tax situation after you retire.
2006-11-30 08:40:27 · answer #1 · answered by parsonsel 6 · 0⤊ 0⤋
This has been a debate for a while and after studying the arguments, I think it probably makes no difference. Paying taxes later vs now is probably a bad idea unless you think you'll be in a higher tax bracket at retirement. There are online calculators to help you-try searching for 401k vs roth ira. My concern is that you make sure to contribute at least whatever amount your company matches to your 401k-that's free money and is the best deal around! You could also start a Roth IRA in addition to your 401K
2006-11-30 08:37:45 · answer #2 · answered by Middleclassandnotquiet 6 · 0⤊ 0⤋
NO, no, no If you ROLL over the 401K into an IRA, there is NO tax due. . . .have it sent from 401k directly to bank/broker for your IRA If you roll over a Roth 401k to a Roth IRA, again no tax issues The tax issue is when you take money from your 401k and do NOT roll it over YOU MUST convert the $$ to IRA within 60 days, no exceptions, so get it done!!! Best to have direct rollover, from custodian to custodian.
2016-05-23 05:44:26 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I believe you have been given bad information, if you leave your money in the 401k or Roth until your 56, there are no taxes to pay
after you withdraw your money. There are tax advantages to having both.
2006-11-30 08:07:39 · answer #4 · answered by nbr660 6 · 0⤊ 0⤋
One of the realities of life is that sometimes a sum is greater than it's parts.
Just for you to consider, pulling out large amounts of cash in later years to pay medical costs - results in higher tax liability. So if this is a concern, switch to a roth.
2006-11-30 17:28:30 · answer #5 · answered by J. C. 6 · 0⤊ 0⤋
One thing you didn't mention is wheather or not your company matches any portion of your 401K. If they do, you should continue to put enough in to get the match. That's free money. You could then take the rest and put in a Roth.
2006-11-30 08:50:04 · answer #6 · answered by deep5223 4 · 0⤊ 0⤋
roth is better listen to clark howard on am 750
you will find everything you need to know
2006-11-30 07:59:03 · answer #7 · answered by Anonymous · 0⤊ 0⤋
I would suggest you call the Dave Ramsey show and ask him what he thinks.
888-825-5225
2006-11-30 08:04:17 · answer #8 · answered by foolograce72 2 · 0⤊ 0⤋