| Saving for retirement is usually something not on | | | | retirement, there are benefits and drawbacks to |
| a lot of workers minds until it starts getting close. | | | | both. No matter which you choose to focus more |
| Starting early is essential and the numerous | | | | on, these are both great tax advantaged |
| retirement investment accounts out there can | | | | investment vehicles. Assuming all else is equal, it |
| often confuse the average consumer. This article | | | | may be better to put most of your money into |
| will give some basic information concerning Roth | | | | your 401K, especially if your employer will match |
| IRA VS 401K investing for general purposes. | | | | contributions. Usually employers require a certain |
| Many employers offer 401K plans to their | | | | amount to be contributed by the employee |
| permanent employees for retirement. These | | | | before it will start matching contributions. A |
| accounts receive a portion of an employees pay | | | | drawback to the 401K is that money contributed |
| as often as the worker likes. Many corporations | | | | is not yet taxed and will be once it is withdrawn in |
| even have programs that will match dollar for | | | | retirement. Based on the tax bracket an individual |
| dollar the contributions of employees to their | | | | is in when they retire, this could be a significant |
| retirement accounts. Once the worker retires, | | | | chunk of the account. This is opposed to a Roth |
| they can cash out the 401K to use as retirement | | | | IRA in which dollars invested have already been |
| income. | | | | taxed and as long as the terms of the account |
| A Roth IRA is a bit different than a 401K in that | | | | are followed, the money can be withdrawn |
| it is not an employer sponsored program and it | | | | without being taxed again on long term capital |
| involves investing in the stock market as opposed | | | | gains. |
| to just saving money and earning interest income | | | | Both of these accounts have great tax |
| on it. Roth IRA's are usually a compilation of | | | | advantages and both are suitable for retirement. |
| different securities investments and the account | | | | When deciding which to contribute more too or |
| has a limited amount that can be contributed to it | | | | which to make a priority, look at your employer's |
| such as 4,000 dollars for 2009 and 5,000 for | | | | contribution matching plan as well as rates of |
| 2010. Most Roth's increase in increments of 500 | | | | return on Roth IRA's. Roth IRA Withdrawal |
| dollars per year after this. | | | | penalties or charges for early withdrawal of funds |
| If you have both of these accounts or are | | | | should also be considered as well as a 401k |
| deciding to use one or the other or both for | | | | Rollover to Roth IRA. |