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What is a roth 401k plan?
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5th Nov 2009 by Daniel Cross, ChFC
A Roth 401K is an employer sponsored retirement account that works in similar fashion to a Roth IRA. In a traditional 401K or IRA, money that is placed into the account is tax deferred meaning that taxes are not paid until it is withdrawn at retirement. The Roth varies in that taxes are paid up front, but then accumulate tax free and are able to be withdrawn without any tax liability. These have become very popular in recent years as investors have come to realize the benefit of allowing their money to grow without having to pay any additional taxes on the gains. For retirees, the Roth is helpful since they can withdraw the funds without having to worry about jumping into another tax bracket.
A Roth 401K is an employer sponsored retirement account that works in similar fashion to a Roth IRA. In a traditional 401K or IRA, money that is placed into the account is tax deferred meaning that taxes are not paid until it is withdrawn at retirement. The Roth varies in that taxes are paid up front, but then accumulate tax free and are able to be withdrawn without any tax liability. These have become very popular in recent years as investors have come to realize the benefit of allowing their money to grow without having to pay any additional taxes on the gains. For retirees, the Roth is helpful since they can withdraw the funds without having to worry about jumping into another tax bracket.
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20th Oct 2009 In Retirement
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