Roth vs 401

Forum|Forum|2 years ago
July 26, 2023
2 replies
12 views

At age 64 and almost ready to retire, is it better to put money in a Roth, or max out a 401K contribution?

Ask the Experts - Retirement - July 2023

JBedford

Level 6

Hi, @bonitacsmith2 , thank you for your question! But unfortunately, that is not a tax question, but a financial planning question. I can only state that from a tax perspective, withdrawals from a Roth are generally tax-free, since the contributions are not tax deductible. On the other hand, 401(k) contributions may be tax deductible, but are generally taxable upon withdrawal. Beyond that, I advise you to consult with a financial advisor. Sorry I couldn't be more help!

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Denisev1220

Level 4

This is an excellent question. You can contribute far more to a 401k and get the tax benefit for it while you are making more income. A Roth is tax-free when you take it out, but you will likely be earning less in retirement so you would be in a lower tax bracket when taking out the 401k.

If you weren't so close to retirement it might pay to build up a Roth. Does your employer offer a 401(k) Roth? You would be able to contribute as much as a 401(k). Do you need the tax deferred benefit of a 401 (k) now?

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer".