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UPS Retirement Topics
Roth 401K vs 401K What are differences?
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<blockquote data-quote="UpstateNYUPSer(Ret)" data-source="post: 1334455" data-attributes="member: 12570"><p>Contributions to a traditional 401k are made with pre-tax money while those to a Roth 401k are made with after tax funds. Withdrawals from a traditional 401k are taxed at the rate in effect at the time of the withdrawal while those from a Roth 401k are tax free. Keep in mind that contributions to a Roth 401k will have a greater impact on your net pay than those to a traditional.</p><p></p><p>The traditional 401k gives you the tax break upfront-----contributions are not taxed and are subtracted from your gross for tax purposes----while the Roth 401k gives you the tax break on the back side.</p><p></p><p>You cannot roll your traditional 401k balance in to a Roth 401k.</p><p></p><p>With 10 years in you may better served by suspending contributions to your traditional 401k and initiating them in your Roth 401k. Yes, you will have two separate 401k's, but you will be able to roll over your traditional 401k upon separation and/or retirement to lessen the tax blow.</p><p></p><p>All new hires should choose the Roth over the traditional.</p></blockquote><p></p>
[QUOTE="UpstateNYUPSer(Ret), post: 1334455, member: 12570"] Contributions to a traditional 401k are made with pre-tax money while those to a Roth 401k are made with after tax funds. Withdrawals from a traditional 401k are taxed at the rate in effect at the time of the withdrawal while those from a Roth 401k are tax free. Keep in mind that contributions to a Roth 401k will have a greater impact on your net pay than those to a traditional. The traditional 401k gives you the tax break upfront-----contributions are not taxed and are subtracted from your gross for tax purposes----while the Roth 401k gives you the tax break on the back side. You cannot roll your traditional 401k balance in to a Roth 401k. With 10 years in you may better served by suspending contributions to your traditional 401k and initiating them in your Roth 401k. Yes, you will have two separate 401k's, but you will be able to roll over your traditional 401k upon separation and/or retirement to lessen the tax blow. All new hires should choose the Roth over the traditional. [/QUOTE]
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Roth 401K vs 401K What are differences?
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