Ask a Planner – Dana R. Cahan, CPWA, Wealth Advisor
“Should I Contribute to William Hill online betting appa pre-tax or Roth 401(k)?”
The beginning of the year is a good time to check-in on your benefits william hill slot gamesand make sure you have accounted for the increased limits for 2023 (i.e. 401(k) plan limits have increased from $20,500 in 2022 to $22,500 in 2023) and to consider incrementally increasing the amount you put into your annual retirement accounts. Even a 1% annual increase can produce large benefits during retirement. Did you know that over 80% of employer-sponsored retirement plans now offer 401(k) Roth options? Take this time to consider whether contributing to William Hill online betting appa pre-tax or Roth 401(k) in an employer-sponsored retirement plan is the right option for you.
The basic difference between a traditional and a Roth 401(k) is when you pay the taxes. With a traditional 401(k), you make pre-tax contributions, so you get a tax break up front, helping to lower your current income tax bill. Both your contributions and earnings grow tax-deferred until you withdraw the money. At that time, withdrawals are considered ordinary income and you will have to pay tax at your current william hill live online casinotax rate; there may be state taxes as well. (With certain exceptions, you’ll also pay a 10 percent penalty if you’re under 59½.) With a traditional pre-tax 401(K) you will also be required to take minimum distributions in your 70s (just as you would with a traditional IRA) so your money cannot continue to grow tax-deferred indefinitely.
With a Roth 401(k), it’s basically the reverse. You pay tax on your contributions now, at your current tax rate, meaning there is no upfront william hill live blackjacktax deduction. However, withdrawals of both contributions and earnings are tax-free at age 59½, as long as you’ve held the account for five years. There are also no required minimum distributions on Roth accounts during one’s lifetime 1 so money in a Roth account continues compounding and growing tax-free until you decide to withdraw from the account. This is a complicated and highly personal decision that depends on an individual’s specific circumstances and timeline.
william hill live blackjack
Written by Dana R. Cahan, CPWA