Many Americans are happily anticipating the day when they can retire from work, and spend more time with the family by relaxing and taking more vacations. It is vital for a person to plan their retirement as early as possible so they can have enough money put away to save. It is critical that the money saved can last that individual for the rest of their years without that person worrying about entering back into the job market at an advanced age.
A question that many individuals have to weigh and ponder is whether to select the option of a Roth 401K plan for retirement or go with choosing the traditional 401 K plan. There are some unique differences between the Roth 401K plan and the traditional 401K plan. A person has to take the necessary time to review and compare both of the plans, to see what will be the long term benefits for them, as they approach and select one of the specific plans as a retirement option.
A Roth 401K plan will help an account grow tax free while a person is contributing to that account. It is only available to individuals who make up to $95,000 or married couples that make up to a combined $150,000 a year. The money contributions are not tax deductible, but a Roth happens to be a lot more flexible for individuals when it comes to withdrawing money early if it is needed before retirement. A Roth IRA will allow a person to leave money in its account and contribute to it for, however, long that a person sees it is fit for them to do so. A Roth does not have an age restriction of 70 ½ where a person is required to draw down their money at that age or they will begin to face late penalties by not withdrawing.
A traditional IRA is tax deductible in most cases. The withdraw period for a traditional IRA starts at the age of 59 ½ years and ends at the age of 70 ½. Taxes are paid on the amount that is withdrawn in that year for the individual. Any money that is withdrawn before 59 ½ years of age faces a 10 percent penalty in the amount that is withdrawn. A traditional Roth is available to anyone who wants to contribute to it. There are no financial restrictions to a person’s income with a traditional Roth.
Once a person decides, what option that they are going to select for their retirement, the only thing that needs to be done from now until that eventual day is to save money and let it build on a continuing basis. Those individuals that are disciplined about retirement who are able to think about their future are the one’s that will benefit and enjoy their lives as they get older. Those who show discipline in saving money will not regret the future once it arrives because they were able to look ahead and save money now, for retirement. Retirement is a beautiful and enjoyable thing, when a person has the money to do things in life that an individual feels is crucial to help in the enhancement of obtaining a happy and productive life.