1. 113 POINTS
    Brandi Jo Newman
    Founder, BrandiJoNewman.com, Texas
    Both have annual contribution limits: 401k = $18,000/year including employer match, Roth = $5,500/year

    Both have catch up provisions if you are over 50 years of age

    401(k) is tax deferred but a Roth is with after tax contributions, grows tax free and distributions are tax free.

    Roths have income limits as well:

    If married filing jointly and make over $181,001 annual income, ineligible for Roth.

    Single - Annual income greater than $120,000, ineligible for Roth.

    Neither of them have any guarantee of returns and no protection for principle. Cannot access the funds without paying 10% penalty and pay ordinary income tax on growth/contributions.

    The alternative to a Roth is cash value whole life insurance - unlimited contributions and guaranteed growth with principle protection - plus asset protection and liquidity.
    Answered on March 26, 2015
  2. Did you find these answers helpful?

Add Your Answer To This Question

You must be logged in to add your answer.

<< Previous Question
Questions Home
Next Question >>