Here's How I understand it.
Traditional - can be a 401k or IRA, means the contributions are put in tax free (a tax deduction, lowers your taxable income), the earnings grow tax free, and you pay taxes when you take the money out in retirment.
Roth - can be a 401k or IRA, means the contributions are taxed when you put them in, but the earnings grow tax free and your withdrawals in retirement are tax free.
401k - can be Traditional or Roth, this is an employer sponsored retirement plan. You contribute money, the employer has a broker than manages your investment. Annual contribution limit is 18.5k in 2018.
IRA - can be Traditional or Roth, this is an Individual Retirement Account, you pick your broker, funds, stocks, bonds, whatever. The whole thing. Annual contribution limit is 5.5k for 2018, I think.
401ks and IRAs have limitations based on your income, but I'm not sure how those work.
Do I have it down right? I'm asking because a lot of times when I read threads on /personalfinance and some other financially oriented subs and other articles, it seems like everyone mentions 401k in the Traditional sense and ignores that Roth 401ks exist. Is that just me or is it actually like that? Are Roth 401ks not commonly offered? Are they relatively new?
Submitted December 24, 2017 at 10:52PM by Creative_Deficiency http://ift.tt/2psDcz0
