Which one is best when it comes to retirement, Roth Ira, 401k or for example traditional ira. In this video, I’ll teach you how these work and I’ll give you a system on the best way to prioritize your investment into them.

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1. Let’s break Down what they are
– These are all just retirement account, some of them pay taxes today and never get taxed again like the Roth Options
– And some of them give you a tax break today and you pay taxes later on, like the normal traditional ones
– But they all share one thing in common and that is that your money grows tax-free

Basics:

Roth IRA or Roth 401k:
– You pay taxes today and you never pay them again
– You can always role over a Roth 401k into your Roth Ira which you fully manage after your done with your employer tax-free
– You can use a SEPP plan to go on for at least 5 years minimum or until you turn 59 and a half ( you can avoid taxes and penalties )

Traditional Ira
– Has the same limits of a Roth ira, which currently is $6000 annually
– This money will grow tax-free and also give you a tax benefit today
– But when it comes to taking your money out in the future you will be taxed on the current income tax rate ( you are required to start taking money out by 72 – Roth doesn’t have a requirement )
– You can also role over your 401k tax-free when you leave your employer

401k plan, With has Roth option to or 403(b) but that’s another video for another day ( but its basically options for government employees, medical or non-profit employees also )
– Now the good thing with the 401k is that you can now invest up 19,500 a year, a lot more than the limit on Roth and Traditional Ira
– And also your employer might match some of the money you invest to incentives you to invest and also save money on taxes
– If a company offers a Roth 401k do it that, and have they’ll have the match go into a 401k

2. Strategy A ( Priority )
– If your employer has a Match
– Which always means free money
– If they have a Roth always do the Roth 401k, it’ll be better in the long term

What you want to do is this:
– You want to invest as much as needed to get the maximum match from your employer and all the free money
– Then you want to grab any additional money max out your Roth Ira
– And then if you have even more money, you can put towards maxing out your 401k
– And you have even more you can put into a Taxable account

Why:
– Because this way you get all the free money first
– But you also invest into your Roth which gives you more freedom with your money
– And if you have money left over you can max out with them

3. Strategy B
– If your employer doesn’t match
– Which sucks but happens

What to do:
– Max out your Roth IRA first so that’s $6k ( ps you can invest into traditional ira the limit is 6k between them both )
– Then you can max out the ROTH 401k they offer or the 401k option
– But remember, this money will be locked in for a long time ( so make sure you have an emergency fund and don’t invest more than 10%-25%)

Bonus: if you have kids you can also invest an additional 5% into a 529 account

When you leave your employer

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor….(read more)

LEARN MORE ABOUT: IRA Accounts

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When it comes to retirement planning, there are a variety of options available to you. Two of the most popular are the Roth IRA and the 401k. But which one should you prioritize?

The Roth IRA and 401k are both retirement savings plans that offer tax advantages. However, they have some key differences that you should consider when deciding which to prioritize.

A Roth IRA is an individual retirement account that allows you to invest after-tax dollars. This means that you won’t pay taxes on any of the money you withdraw during retirement. This makes it an attractive option for those who expect to be in a higher tax bracket when they retire.

A 401k is an employer-sponsored retirement plan. Contributions to a 401k are made with pre-tax dollars, meaning you won’t have to pay taxes on the money until you withdraw it during retirement. This makes it an attractive option for those who expect to be in a lower tax bracket when they retire.

Another retirement savings option is a traditional IRA. This is an individual retirement account that allows you to invest pre-tax dollars. Like the Roth IRA, you won’t have to pay taxes on any of the money you withdraw during retirement.

So which one should you prioritize? It depends on your individual situation. If you expect to be in a higher tax bracket when you retire, then a Roth IRA may be the best option. If you expect to be in a lower tax bracket when you retire, then a 401k may be the better choice. And if you’re not sure, then a traditional IRA may be the safest bet.

Ultimately, the best way to decide which retirement savings plan to prioritize is to consult with a financial advisor. They can help you determine which option is best for you based on your individual circumstances.