The Roth IRA and 401(k) are two of the most popular retirement accounts.
Choosing which strategy is best for your circumstance can be a tough decision.
This article will compare the benefits of choosing a Roth IRA vs. 401(k),
and help you decide where to save and invest for the long run.
What are the differences between a Roth IRA vs. 401(k)?
The first significant difference between investing in a Roth IRA versus a 401(k) plan is how you go about making contributions.
With a Roth IRA, the onus is on you to open the account and then fund it.
With a 401(k), contributions come directly from your paycheck through your employer’s payroll system.
Snatch the 401(k) Match
It’s also important to consider how employer matching contributions work within a 401(k) plan. Many firms have a matching policy.
Pulling money out of your retirement comes with a penalty. With a Roth IRA you can withdraw contributions at any time.
Early Withdrawal Rules
A Roth 401(k) is another employer-sponsored retirement account, but will grow tax-free through retirement.
how do Roth IRAs differ from Roth 401(k)s?
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