Financial bloggers often portray the traditional IRA vs. the 401(k) plan as a debate, as if one plan is better than the other. In truth, they’re very different plans, and they fill very different needs. If you can, you should plan to have both. This is especially true if your 401(k) plan is fairly restrictive.…
Thinking about converting your retirement account to a Roth IRA? It’s easy to see why the Roth IRA is so incredibly popular. Contributions to a Roth IRA are made with income that has already been taxed, meaning there’s no initial tax benefit, but the money you have in a Roth grows tax-free over time. Roth…
The Roth IRA vs. traditional IRA – they’re basically the same plan, right? Not exactly. While they do share some similarities, there are enough distinct differences between the two that they can just as easily qualify as completely separate and distinct retirement plans. To clear up the confusion between the two, let’s look at where…
Early retirement has become a popular financial goal. And well it should be. Even if you never retire early, just knowing that you can is liberating! And it may just be the strategy that frees you up to take on even bigger challenges in life. That can happen when you reach the point where you…
The 401(k) plan is the largest asset many investors own, accounting for 34.1% of their total net worth, according to the U.S. Census Bureau. Regularly checking your 401(k) account can help you stay on top of your investments and make sure that your money is working for you in the best way possible. What Is…
A major decision in retirement planning is whether to make pre-tax or Roth (after-tax) 401k contributions. Pre-tax contributions go into your retirement account with money that has not been taxed, and then taxes will be paid when the funds are withdrawn in retirement. With Roth contributions, taxes will be taken from the money prior to…
Most people have never heard of a SIMPLE IRA and are curious to know the rules, limits, and how it differs from a 401(k). A SIMPLE IRA sounds “simple” to set up, but is it really that easy? And how does it compare to the 401k and other retirement plans that exist? We’ll answer that…
Opening a Roth IRA can be a smart move if you want to invest for retirement and save money on taxes later in life. However, there are strict rules when it comes to how much you can contribute to your Roth IRA. Contributions to a Roth IRA are made with after-tax dollars, which means your…
I’m a big fan of the Roth IRA, and investors who understand its massive tax-free benefits are also. Recently a reader sent in this question about it: “I’ve been investing in a Roth IRA for several years thanks to your blog! I initially started in a basic index fund but after doing more research I…
When it comes to the Roth IRA vs. the Roth 401(k), there are many similarities to keep in mind. For example, both plans let investors build up tax-free income for retirement, yet both fail to offer any upfront tax benefits in the year you contribute. That said, there’s one major difference between the Roth IRA…
