Which is better; 401K, IRA, or Roth IRA?
Each has its own strengths. Fortunately this is not an either or proposition. You can have both depending upon your income, Roth IRA may not be available to you. IRA limits on contribution are much lower than those for 401k. In Roth, contribution is after tax and there are no taxes to pay upon withdrawal. In 401k, contribution is pretax and all withdrawals are taxable. Neither account allows taking anything out before 59.5 age w/o penalty. Limits change annually. You can find them by google search.
Which is better - a Roth IRA or a 403b plan?
Unless your employer is giving you extra money for the 403b, the Roth IRA is ideal. Most people getting a 403b typically have a pension plan and are going to get a nice taxable retirement. Putting more money away pre tax is just going to put you into a higher tax bracket when you retire and start trying to use that 403b. It just doesn’t make any sense. Most 403bs are also tied to an annuity. An annuity is life insurance that protects the principal and since it is insurance, has a cost. This cost might be below average returns. Instead of having the freedom to follow the markets, you are stuck making no more than maybe 3–4% (some years not even making that). You have a safe retirement account with your pension, having a little risk in the roth account could probably help tremendously, especially when you want to start using the money when you retire.
What is better 401k or IRA?? Pros and Cons?
401(k) because it usually has employer match. When an employer matches your funds, it is the same thing as a bonus return the first year of investment. In other words, it's FREE MONEY if you stay at the company long enough to vest! 401(k) Pros: Company Match, Larger contribution limits ($15,500 for 2007) 401(k) cons: limited investment choices (you have to invest in the choices of the plan). IRA Pros: You can invest anywhere you want to. IRA Cons (lower contribution limits ($4,000 for 2007), and no Employee match. After taking advantage of any vesting your company offers, I like IRA's better, because you have complete control on where they're invested. You can have an IRA and a 401(k) so I'd start with the 401(k) and if you like the investment options, you can invest there. If you max out on your IRA contributions ($15,500 this year if you're under 50) then you can throw in an IRA. ($4,000 this year if you're under 50) I hope that helps.
Roth IRA Vs 401K?
If your company has 401K benefit, you should join it because the money you deposit into the account doesn't need to pay tax at that time (more than 10K a year). Roth IRA is after-tax and has some restriction. You won't be able to use Roth if your income is higher than certain amount. Also, you need to pay tax for those amount. Only the capital gain is not taxble. If your company has 401K, I suggest that you use 401K. If you don't work in certain year, then use Roth IRA to leverage the tax.
What's better, traditional IRA's or Roth IRA's?
Depends - on lot of factors. FYI: Most of the answers above are either partially correct or completely wrong...For e.x. the limit is $4000 for 2006 and not $3000. Also you do not pay tax on your earnings/income in ROTH IRA.. If you want to bring down you taxable income NOW ( for Tax Year 2006 for example ), you can contribute to traditional IRA. If you want to pass on your earnings and everything to your kids, ROTH IRA is good. No such thing in Trad. IRA. You are REQUIRED to withdraw from T. IRA once you reach 57 or 58 years old and pay taxes at that time, based on whatever tax bracket you're in at that time. You are never required to withdraw anything from ROTH IRA Also you need to qualify for full contribution per year in both IRAs...based on your AGI, married/single or married filling jointly etc. If you have lot of time before you will need money, park your money in ROTH IRA, eventhough you don't get any tax break today. If you think you will be retiring soon....time is against you...Compounding will never come into play..In that case, I thinkn you will be better off, taking the tax break today by contributing to Traditional IRA. As I said, there are so many variables that applies differently to different individuals...You need to consult with your tax/accountant guy/gal to get a better advice as they are most likely to know your financial situation than anyone on the internet.
Can I roll my 401 k into a Roth IRA?
You roll your 401K into a traditional IRA, then roll the traditional IRA into a Roth. You will have to pay taxes on the income, but for some the Roth is a better deal (especially if you want to leave non taxable money to your children).
Which is better for a 40 year old a roth 401K or traditional 401K
Its not one or the other but more of how to separate and contribute to both and be tax efficient about it. At $70k income, you are at 25% federal tax rate if you're a single. If you're married, you're at 15% tax bracket. Depending on where you fall, Roth or Traditional will make more sense. Other thing to consider is will you have significant other taxable income when you are taking distribution from Traditional? If so, Roth probably will be better but if you will have little or no taxable income besides your retirement account, then Traditional will be better. Here's a real life example of 2 clients I have. One is a multi rental property owner who also owns construction business. He has passive income that will be consistent even after retirement. His tax rate going down is slim to none. For him Roth will be most likely better. Another client I have makes great money now but when he retire, he will have social security only. For him Traditional makes more sense since he will have tax deferred from current 25 to 28% margin and pay 10 to 15% tax on that money later when he retires and takes distribution from it. For majority, it's usually best to do traditional 401k with company and do an additional Roth IRA with after tax money.
Is it okay to have a Roth IRA and no 401k?
Original question: Is it okay to have a Roth IRA and no 401k?Having both is your best long-term strategy, but if you’re not yet able to contribute more than $5500 per year, it doesn’t make much difference for most employees.401k’s are better because:They have higher contribution limits ($18,500 vs $5,500)Some employers match the funds you contribute, which is free money!Both types of accounts come in traditional (tax exempt contributions) and Roth (tax-free earnings) versions.IRAs have a couple of advantages, neither of which is better than free money:The money is completely under your control. You pick the fund manager.You can choose from a lot more types of investments that are offered in even the best 401k plan. Those funds aren’t any better than what’s offered in a good 401k plan (though they can be better than a bad one).By the time you retire you will probably have both. I currently have money in two previous employers’ 401k plans (in both regular and Roth) and two IRAs: traditional and Roth. I’ve rolled money from several previous employers’ 401k plans into my IRAs.