About a week ago I received a disk in the mail containing information on the 401k plan. I have known that a traditional 401k plan has been available, but I was delighted to learn that a Roth option has been available as of this past July 1st. I signed up right away this week, and wanted to do my part to spread the word on what I believe is a very useful investing tool.
I don't understand why I wasn't told of this option sooner because I would have been in on day 1. Perhaps its because I haven't participated in the traditional 401k plan which has been available all along...Anyway...for anyone who may not know the differences, on a Roth plan (IRA or 401k), you will likely get no tax break for the year when you invest the money, but all of your money including growth and dividends are typically tax free when you withdraw it so long as you are over 59 1/2. This is in contrast to the traditional plan where you get a tax break in the year you make your contribution, but then, once you start withdrawing, you are taxed at ordinary income rates, which are higher than capital gains and dividend rates.
I don't understand why I wasn't told of this option sooner because I would have been in on day 1. Perhaps its because I haven't participated in the traditional 401k plan which has been available all along...Anyway...for anyone who may not know the differences, on a Roth plan (IRA or 401k), you will likely get no tax break for the year when you invest the money, but all of your money including growth and dividends are typically tax free when you withdraw it so long as you are over 59 1/2. This is in contrast to the traditional plan where you get a tax break in the year you make your contribution, but then, once you start withdrawing, you are taxed at ordinary income rates, which are higher than capital gains and dividend rates.
