401k vs Roth 401k – Which is Better? Which should you contribute to?

by | Dec 6, 2022 | Spousal IRA | 17 comments




Is it better to contribute to the 401k or Roth 401k? The Roth 401(k) could offer great benefits like tax-free growth & future tax-free income. But which is more tax-efficient for you and your future… In this video I talk about the differences between the 401(k) vs. Roth 401(k) and which may be better for you to save in.

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A lot of company sponsored retirement plans offer a 401(k) for you to save in. Does your employer retirement plan also provide you the ability to contribute to a Roth 401k? A Roth 401k could offer some great benefits like tax-free investment growth and future tax-free income. Should you contribute to a 401k or Roth 401k? Your situation may help determine which could be best for you and I’ve provided the following guidance in the video:
-How to determine if the Roth 401k is available to you
-401k vs Roth 401k explained
-How much you can contribute to the Roth 401k or Traditional 401k
-Discuss if you can contribute to both a Roth 401k and Traditional 401k
-Tax differences between the two
-Factors to help determine which is better for your situation the 401k or Roth 401k
-Understand the 401k vs. Roth 401k for high income earners
-A key tip for on the Roth 401k and making the most of your tax-free investment growth

#401kvsRoth401k
#401k
#Roth401k…(read more)


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17 Comments

  1. manuel urena

    Thanks for this information

  2. M. M.

    How many Roths can you have at one time.

  3. Adam Caruso

    Love the video. I'm 25 years old and have my entire Roth IRA (over $45K) invested in leveraged ETFs TQQQ and TMF. Using a 55%, 45% allocation respectively and rebalancing every three months. I'm absolutely convinced that this is the best long-term strategy out there. Results on my channel

  4. James Bond

    I am 39 years old. I have $206,000 in a traditional 401K plan. I just started doing a Roth 401k and the balance is $2,400. I get $600 of matching contributions from my employer every year. They also contribute 3% of my yearly earnings towards the plan , up to 9% the longer I stay with the company. I am able to contribute $600 a month to the Roth 401k and live very comfortably. I know that nothing is guaranteed. But am I saving enough for retirement? Thanks

  5. Comfort Addy

    Thanks for explaining

  6. Reversion to the mean

    Great comparison video. For anyone just starting their journey or those that may not know….Research and be sure to set up a ROTH IRA at least 5 years from retirement. It can be done with very little money, but there is a 5 year clock on the "account" before you can withdraw tax free. This way you start the clock in plenty of time. Hopefully you are able to contribute regularly to both, but many cannot. And another important note is…..Once you meet your employer match, if you are lucky to have one, it may be beneficial to stop there and then max out your IRA first. The reason is you will probably have a better investment choice.

  7. Thomas Winter

    I have question, I use my company 401k program and they match 6%. I know they only match with pretax dollars. If I contribute 6% in ROTH 401K, do they match my exact contribution, or do they match 6% of my pretax gross?

  8. Everett

    Can I roll my 401k in to roth 401k

  9. Nick V

    The US National Debt clock is now over $28,000,000,000,000. Trust me folks. Tax rates will rise for everyone. Pay taxes now and put your money in Roth investments.

  10. D. Carter

    It's super simple. Due to market growth, your contributions will likely be 10% of your total account balance when you retire. That means you can either pay income taxes on 90% of your withdrawal (Traditional 401k) or 0% of your withdrawal (Roth 401k). It's a no brainer. Trying to predict future tax rates is unnecessary for this decision.

  11. jgallone

    For a Roth 401K, if you get an employer match, the amount that is contributed by the employer match is taxed at withdrawl. Might not be a huge issue, but something worth noting.

  12. Scott DeLeeuw

    And then the part everyone always misses, what if you only need $40k per year in retirement from your traditional, but your RMDs are $140k because you've done a great job saving? Sure would suck to be forced into a higher tax bracket and higher medicare premiums when you don't even need the money, just because you chose traditional. Oh, and when you die, your heirs are forced to liquidate the traditional, within 10 years! Inheritance is nice, but it could totally mess up their tax situation as well.

  13. Tukong’s TV

    Q: another question, so actually you can both open a Regular 401k and Roth 401k at same time?

  14. Tukong’s TV

    Q. If you roll over a 10k from regular 401k to Roth 401k is the 10k will get tax and how much % is will be tax?

  15. The British

    Appreciate the clear comparison. I was ignorant and confused a Roth 401k as being the same as an IRA Roth. Good to see a long term view too. Thanks for sharing this!

  16. Fred S

    Good video. our 401K offers after tax contributions also which are not the same as ROTH but allow me to contribute much more. I roll over the after tax 401K into a ROTH IRA and the after tax into a traditional IRA.

  17. Anthony Timoteo

    It's so confusing. I am 60 years old with no savings. My employer is finally offering 401k with 5% match. I plan to retire at 65 and was wondering which is my best option 401k or Roth 401k ? I only make $ 32,000 a year and my house should be payed off at age 65 also…..

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