• Home
  • E-Booklets
  • Pay Less Tax
  • Privacy Policy
  • Cheatsheets
  • Contact Us
  • About us

Retirement Income

New Ways to Get More Retirement Income

  • Retirement Advisors
  • Retirement Insurance
  • Retirement Investing
  • Retirement Living
  • Retirement Planning

Tax Savings from the Roth 401(k)?

Posted on July 1, 2012 by bobrichards

Numerous investors have a new retirement savings choice: the Roth 401(k). Plus it might potentially be considered a large advantage to all those people who're getting close to retirement and wish to conserve much more and take advantage of tax savings.

To begin with, the Roth 401(k) is not for everyone. If you're in retirement, it is not accessible to you, because as with the traditional 401(k), the Roth 401(k) is provided by employers. However for individuals who're still working, the Roth 401(k) may be considered a practical investment option.

Just like it sounds, the Roth 401(k) brings together functions of the Roth Individual Retirement Arrangement (IRA) and also the conventional 401(k). As with a Roth IRA, you get numerous tax savings:

• contributions to a Roth 401(k) are made on an after-tax basis (i.e. no tax savings at time of contribution);
• the account develops tax-free;
• withdrawals aren't subject to income tax (provided you have held the account for 5 years or even more, and also the syndication is made once you reach age 59½, if you become handicapped, or if you pass away).

But as with a 401(k), you might contribute to a Roth 401(k) regardless of your income, and its contribution limitations are the same as the conventional 401(k), which in 2012 is $17,000-or $22,500 for all those 50 or older.

What which means: If you're attempting to stash as much as possible into your retirement accounts, the Roth 401(k) could potentially be a great opportunity for tax savings, based on your other economic circumstances.

Before you decide to contact your employer, although, you might want to be aware of two things. First, the contribution limit applies to contributions to both types of 401(k) plans, so you can only save a total of $17,000 in your conventional 401(k) and Roth 401(k) put together. Nevertheless, you may utilize both plans, contributing, for instance, $8500 to each. Additionally, your employer might not yet provide the Roth 401k so that you can enjoy the tax savings explained.

Who might select the Roth 401(k) over the traditional 401(k)? That's a personal choice which you need to discuss with somebody familiar with your individual financial circumstances and goals, like your economic or tax consultant. However in general, if you expect your income tax rates to be exactly the same or higher in retirement than it's now, you need to choose a Roth 401(k). Or, in the event you believe your tax bracket will be lower in retirement than it's now, you might select a traditional 401(k).

You Pay More Taxes Than Necessary

And we guarantee your CPA has never told you The problem with paying taxes is that most people overpay. So if you are concerned about having enough in retirement, you must stop overpaying taxes. I know you think your CPA takes care of this for you. WRONG. I AM a CPA (retired) and I can tell you that 90% of CPAs do nothing more than enter your information into the little boxes on the tax return but NEVER tell you how to pay less next year. Why? Many of them simply do not know what we can show you. In ten minutes.
Get Your Copy Now - 6 Ways to Cut Retirement Taxes

You might also like:

  • How to Pay Lower Taxes on IRA Distributions
    How to Pay Lower Taxes on IRA Distributions
  • Recession Can Be Good for Retirees - The Silver Lining of Recession
    Recession Can Be Good for Retirees - The Silver Lining of…
  • Bear Market - When Will It End?
    Bear Market - When Will It End?
  • When Will the Stock Market Recover
    When Will the Stock Market Recover

Filed Under: Tax Savings

About bobrichards

Bob Richards
Editor | Involved in Various Marketing Positions within the Financial Services Industry

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Second place winner best retirement blog

SH award winner SMALL (1)

Not Enough Savings to Retire?
Learn Six Ways to Earn Retirement Income (from home)

You do not need special talents, skills, computer knowledge, etc. We show you multiple ways others are working a few hours a week to generate a comfortable retirement income.

Download Free Copy

Latest Posts

Recession Can Be Good for Retirees - The Silver Lining of Recession

Recession Can Be Good for Retirees - The Silver Lining of Recession

Bear Market - When Will It End?

Bear Market - When Will It End?

When Will the Stock Market Recover

When Will the Stock Market Recover

How to Pay Lower Taxes on IRA Distributions

How to Pay Lower Taxes on IRA Distributions

Retired and Stocks Losing Value

Retired and Stocks Losing Value

Categories

  • 401K IRA Roth Withdrawals, Distributions, and Rollovers
  • Annuities for Income
  • Estate Planning
  • Retirement Advisors
  • Retirement Insurance
  • Retirement Investing
  • Retirement Living
  • Retirement Planning
  • Social Security
  • Supplemental Retirement Income
  • Tax Savings
  • Alternative Investments
  • E-Booklets
  • Pay Less Tax
  • Privacy Policy
  • Cheatsheets
  • Contact Us
  • Subscribe
  • Sitemap

Recent Posts

  • Recession Can Be Good for Retirees - The Silver Lining of Recession
  • Bear Market - When Will It End?
  • When Will the Stock Market Recover
  • How to Pay Lower Taxes on IRA Distributions
  • Retired and Stocks Losing Value

The Retirement Income Blog

25A Crescent Drive #1508
Pleasant Hill CA 94523
T: 844-887-4131
E: [email protected]

© 2018 Retirement Income