3 key differences between a Roth 401(k) and a Roth IRA

3 key differences between a Roth 401(k) and a Roth IRA  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  VIEW IN BROWSER | SUBSCRIBE WED, SEP 22, 2021 YOUR WEALTH Editor's Note A TV advertising slogan for Syms clothing stores in the 1980s stated: "An educated consumer is our best customer." The same, of course, can be said when it comes to your money. The more financial education you gain, the more savvy you will be when it comes to finding the best place to invest your money. And it can get complicated, so knowing what you don't know is key. For example: How do you choose between saving in a traditional retirement account and saving in a Roth account? If you work for a large employer, you more than likely can contribute to either a traditional 401(k) plan or 403(b), a Roth 401(k) or a Roth 403(b), or both. If you're self-employed, or if a 401(k) or 403(b) isn't offered where you work, you may need to choose between a traditional Roth account or Roth individual retirement account, or both. It's important to know that retirement accounts like 401(k)s, 403(b)s, and IRAs have a great deal in common. They all offer tax benefits for your retirement savings — like the potential for tax-deferred or tax-free growth. However, the big difference between a traditional account and a Roth account is taxes. With a traditional account, your contributions are generally pretax. They will reduce your taxable income and, in turn, lower your tax bill in the year you make them. On the flipside, you'll typically pay income taxes on any money you withdraw from your traditional 401(k), 403(b) or IRA in retirement. A Roth account is the opposite. Contributions are made with money that has already been taxed (your contributions don't reduce your taxable income), and you generally don't have to pay taxes when you withdraw the money in retirement. This means you need to choose between paying taxes now or in retirement. These are complicated questions and, of course, you want to make the right decision. After doing some research and homework, it might make sense to contact a financial expert for some further guidance. * * * * * * * * * * * * * * * * * * * * * * * * * * The 11th Annual CNBC's Delivering Alpha Summit returns on Sept. 29. As one of the most influential investor conferences, Delivering Alpha brings together the biggest asset managers and investors, plus influential political and economic figures, for a high-level discussion on the critical issues in today's global economy. Register now. For more cool stuff like this, check out CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. Jim Pavia Money Editor @JIMPAVIA 3 key differences between a Roth 401(k) and a Roth IRA Roth accounts allow for after-tax savings in 401(k) plans and individual retirement accounts. But there are some big differences between the two. Democrats' plan for new exchange-traded fund tax draws industry fire Senate Finance Committee Chairman Ron Wyden has floated a new tax on exchange-traded funds' in-kind transactions, which may have a negative effect on investors. What the federal debt ceiling showdown could mean for you Here's a breakdown of what may happen if Congress fails to suspend or increase the debt ceiling by October. Banks consider climate risk for home loans, a process called 'underwaterwriting' or 'blue-lining' Blue-lining is when banks or mortgage lenders draw lines of risk around certain neighborhoods and streets, often without clear disclosure. 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