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A 401(k) funded with after-tax money that grows and is withdrawn tax-free in retirement.
A Roth 401(k) takes contributions from after-tax pay, so qualified withdrawals in retirement — including all the growth — are tax-free. It has no income limit, unlike a Roth IRA, and any employer match goes into a pre-tax account. It tends to favor those who expect to be in the same or a higher tax bracket later.
A worker early in their career who expects higher future earnings may prefer a Roth 401(k).
The Roth vs Traditional IRA question comes down to one thing: when do you expect to pay a lower tax rate? Here is how to think through it for your specific situation.
Read article →Educational disclaimer: All content on WealthSerene.com is for educational purposes only and does not constitute investment advice. Projections and calculations are illustrative — actual results will vary based on market conditions, your specific situation, and many factors outside this tool’s scope. Always consult a qualified financial professional for advice specific to your situation. View full disclosures →