What Is Roth IRA 401K?

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    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Roth IRA and a defined contribution plan formed by your employer under section 401(k) are both retirement plans but are quite different. The Roth IRA is your individual plan funded with after-tax dollars while the employer sponsored 401(k) is your employer’s plan—you have access to your contributions and eventually to your employer’s contributions after a period of time. Your contributions are made with before tax dollars. The 401 (k) benefits in retirement after age 59.5 are fully taxed as ordinary income while the income from the Roth IRA is not taxed at all.
    Answered on November 7, 2014
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