3 Common Retirement Accounts

401k vs Traditional IRA vs Roth IRA

3 Most Common Retirement Accounts

    401K/ 403b

  • Provided through employer
  • Pre-tax contributions/ Taxed withdrawals
  • Possibility of employer match
  • Not subject to income limits
  • Higher contribution limit than IRAs
  • Earliest Distribution Age: 59.5
  • Required Minimum Distribution Age: 70.5 (unless you are still working)
  • Traditional IRA

  • Individual account provided by financial institution
  • Pre-tax contributions/ Taxed withdrawals
  • Limits exist for the amount of contributions you can deduct on your taxes.
  • Lower contribution limits than 401k/ 403b
  • Earliest Distribution Age: 59.5
  • Required Minimum Distribution Age: 70.5
  • Roth IRA

  • Individual account provided by financial institution
  • After-tax contributions/ Tax free withdrawals
  • Income limits exists
  • Lower contribution limits than 401k/ 403b
  • Can withdraw the amount you have contributed at any time tax free. (If you withdraw the earnings on your contributions you may face taxes and penalties.)
  • Required Minimum Distribution Age: None!

 

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