I have the option of all 3, what are the basics for each?
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When do you want to pay the taxes on your money, now or when you take it out? Will reducing your taxable income now be really beneficial to you? You need to answer those questions for yourself. Roth can be a really good option if you can afford today’s taxes because the growth is tax free and the disbursements are tax free. That is powerful in retirement planning.
Pre tax can be helpful because you are saving a percentage before the taxes hit, so you might save a little more and it reduces your taxable income, you might owe the feds less money on tax day. When you go to take the disbursement you have to pay federal income taxes on it.
In both scenarios, the maximum you can save without paying a 6% tax is $6,500 a year if you are under 50. That is the benefit of a 401(k) plan, your maximum contribution is $22,500, also your employer match doesn’t count against that limit.
EDIT – I interpreted ROTH as a Roth IRA, not a Roth 401(k). In general, though, the same considerations are taken into account; roth is after tax and pre tax is before tax. They are both retirement accounts. The difference is 401(k) is employee sponsored where as IRAs are individual accounts between you and your broker.
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