Choosing Between a 401(k) or a Roth IRA

CHOOSING BETWEEN a 401 (K) OR A ROTH IRA Experts recommend that 15% of all take-home pay should go into a retirement account 401(K) BASICS 50% Approximately 50% of Americans have access to a 401(k) 401(k) plans are retirement savings plans offered by employers to employees 401(k) plans allow employees to invest a portion of their Saved funds grow tax-free until retirement paychecks 97% 3% $18k Withdrawals after retirement are of employers match 401(k) The typical employer match is 3% $18,000 cap on yearly taxed as income contributions contributions ROTH IRA BASICS IRA %$4 $5.5k 5yrs IRAS are "Individual Retirement $5,500 cap on yearly Monetary investments are pre-taxed Deposits and gains can only be withdrawn at the age of 59 % after at least 5 years of Accounts" contributions investment S116k $183k joint individual $16,000 individual income cap for $183,000 joint income cap for full full contribution contribution 401(K) VS. ROTH IRA 401(K): 7 fees 1%A Employees are locked into management and investment options dictated by employer's plan Some plans have fees 1% higher Plans are susceptible to 7 different fees than Roth IRAS 10%>59/2 Withdrawals before the age of 59 ½ incur a 10% penalty Withdrawals after retirement are taxed as income ROTH IRA TAX FREE PENALTY FREE Investors choose their own Withdrawals are tax-free Withdrawals of contributions are management and investment options penalty-free 1ST Withdrawals of earnings before the age of 59 incur penalties Withdrawals for a child's education or a first-home down payment are penalty-free Experts agree that investing in both a 401(k) and a Roth IRA is ideal for most investors Information from http:/www.thesimpledolarcom/roth-ira-vs-40k/ http://www.nerdwallet.com/blog/investing/40k-roth-ira-retirement-account/ http:/www.forbes.com/sites/maggiemograth/2015/05/15/what-the-heck-is-a-4 Ok-and-other-investing-questions-youre-too-embarrassed-to-ask/ http:/finance yahoa.com/news/roth-ira-vs-401k-whats-113050704.html https://www.fidelity.com/viewpoints/retirement/cashing-out NOTLA WEALTH EMPOWERED FREE !