From Peter Reagan at Birch Gold Group
When you’re planning for retirement, one of the many decisions you’ll have to make is whether to contribute “pre-tax” or “after-tax” dollars.
Each has its advantages, and here’s a general summary of maximizing your savings using a 401(k) plan:
If you have a 401(k), one of the big questions is whether to make pre-tax or Roth contributions — and the answer may be complicated, experts say.
While pre-tax 401(k) contributions reduce your adjusted gross income, you’ll owe levies on growth [also known as “taxes”] upon withdrawal. By comparison, Roth 401(k) deposits won’t provide an upfront tax break, but the money can grow tax-free.
Some 80% of employer retirement plans offered Roth contributions in 2022, compared with 71% in 2018, according to a recent Vanguard report based on roughly 1,700 retirement plans.
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