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New Member
posted Apr 9, 2020 9:43:34 AM

Is there a difference between a 401k with my employer and a traditional or a Roth IRA

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1 Replies
Expert Alumni
Apr 9, 2020 10:04:56 AM

There are both differences and similarities.

 

A 401-K and traditional IRA get a deduction when you put money in, but are taxed on 100% of everything that you take out.

 

A ROTH IRA does NOT get a deduction when you put it in, buit after 5 years, and over the age of 59 1/2 it will not be taxed again.

 

The 401-k, IRA and ROTH IRA all have different funding guidelines and restrictions; however, when done properly, a 401-K can be rolled into either of the other two.  Since the 401-K wasn't taxed in the beginning it can be rolled directly into a traditional IRA, but you will have to pay taxes on it if you roll it into a ROTH.