we are now able to contribute directly into a Roth IRA as an option to our existing 401K plans. About time.
we are now able to contribute directly into a Roth IRA as an option to our existing 401K plans. About time.
While his terminology was off the benefit is still the same. Contributing to a roth 401k is still after tax money that grows tax free and is withdrawn tax free. Another way of putting it is 10% to 20% of every dollar in your traditional 401k goes straight to the government when you withdraw it. So contributing to a roth 401k is like adding 10-20 percent more to your retirement savings since you don't have to pay taxes on it when it is withdrawn.
While his terminology was off the benefit is still the same. Contributing to a roth 401k is still after tax money that grows tax free and is withdrawn tax free. Another way of putting it is 10% to 20% of every dollar in your traditional 401k goes straight to the government when you withdraw it. So contributing to a roth 401k is like adding 10-20 percent more to your retirement savings since you don't have to pay taxes on it when it is withdrawn.
It's just the growth from there on out will be tax free.
It's just the growth from there on out will be tax free.
Not being sarcastic, just adding to your comment-- " It`s just the growth or the loss from there on out will be tax free"
With a Roth you pay taxes on the money you contribute now,but pay no taxes later. With a regular 401K you pay no taxes on contributions now,but pay taxes on earnings from it later. Hearing nasty rumors that tax benefits from both could go away in the future in an effort to get us out of the financial mess we are in.
As someone who has prepared literally hundreds of individual tax returns I can assure you that no loss is taxed on anything. If you are simply wanting to point out that losses can occur when investing for retirement you would be right, and if you don't want to incur said losses its best to keep your money in less risky investments. You won't earn as much money, but you will keep your principle in tact if that is your goal. My retirement is a good 30 years away so I'm not afraid to risk my money now for bigger returns later.
I haven't heard anything specific lately, but I do know hearings have been held on capital hill about either confiscating all privately held retirement funds and dumping them into one big government pot to be delved out when a person retires. Or requiring 401ks, IRAs, and other retirement vehicles to invest a certain percentage of the money they hold into government bonds as a way to fund the government's insatiable apetite for money. Both ideas should anger anyone who wants to save for their own retirement because all that is the government attempting to control yet another part of our lives that they have simply no business being apart of.