Frank Finance explains 401k, Roth 401k, 403b, Roth 403b,IRA, Roth IRA, 457b, and 457b Roth retirement accounts. Contribution limits, Roth vs Traditional, Age limits, Early withdrawals, and early withdrawal penalties are discussed.

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Frank will be Frank about how to save and invest in order to reach financial independence. Topics will be about Saving, Investing, Stock analysis, and Market news. Frank Finance looks to build up others by providing information that is meant to inform viewers on strategies and techniques as applied to saving and investing.

I am not a financial advisor. Not all topics are meant for every viewer and are geared toward education. I am passionate about saving & investing and seek to motivate my viewers, so that they also, can be successful with their finances.

0:00 Intro
0:05 Agenda
0:31 401k
1:19 Please Subscribe & Like
1:36 403b
2:08 457b
3:17 IRAs
4:06 Roth vs Traditional explain
5:00 Roth or Traditional what do I choose?
6:06 Final Thoughts/Recommendations
7:17 Thank you and please consider subscribing…(read more)

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As a burgeoning retirement saver, it’s important to understand the different types of retirement accounts available for you to grow your nest egg. Let’s take a look at the most common types of retirement accounts: 401k, 403b, 457b, IRA (Individual Retirement Accounts), Roth and Traditional Plans, and what makes each of them unique.

401k

A 401k is an employer-sponsored retirement plan that allows employees to contribute up to $19,500 annually as of 2021. In addition to your personal contributions, employers can also make contributions, usually in the form of matching a portion of your contribution.

One key benefit of a 401k is that contributions are automatically deducted from your paycheck, making it an easy way to save for retirement. Another benefit is that your contributions to a traditional 401k are tax-deferred, meaning that you pay taxes on the amount when you take distributions in retirement.
On the other hand, Roth 401k contributions are made with after-tax dollars, so you pay taxes up front, but qualified withdrawals are tax-free.

403b

A 403b is similar to a 401k but it is specifically designed for employees of non-profit organizations, educational institutions, and public schools. Both have the same contribution limits, but the investment options and administrative fees may be different, depending on your employer.

457b

A 457b is a deferred compensation plan available to employees of state and local governments or certain tax-exempt organizations. Contributions to a 457b are tax-deferred, but unlike a 401k, there is no early withdrawal penalty if you take distributions before age 59 1/2.

IRA (Individual retirement account)

An IRA is a retirement account that is not tied to your employer. You can open an IRA on your own, and both traditional and Roth accounts have a contribution limit of $6,000 a year as of 2021 (or $7,000 if you’re age 50 or older).

Traditional IRA

Contributions to a traditional IRA are tax-deductible, similar to contributions to a traditional 401k. This means the money you contribute reduces your taxable income for that year. However, you will pay taxes on your withdrawals in retirement, at the ordinary income tax rate at that time.

Roth IRA

Contributions to a Roth IRA are taxed now, but qualified withdrawals in retirement are tax-free. This means you won’t have to worry about taxes on any earnings your funds have accrued over the years.

It’s important to note that there are income limits for contributing to a Roth IRA, with a phase-out period for those with incomes between $125,000 and $140,000 for individuals and $198,000 to $208,000 for couples filing jointly.

The Bottom Line

When looking to start saving for retirement, it’s important to know the differences between 401k, 403b, 457b, IRA, Roth and Traditional plans. Speak with a financial advisor to determine the best plan for your specific situation and make sure you’re on track to meet your retirement goals. Remember, the earlier you start contributing, the more time your money has to compound and grow.