![]() 1Īnother difference is that if you withdraw money from a traditional 401(k) plan before you turn 59½, you pay taxes and may potentially owe a 10% penalty on the entire distribution. Any earnings then grow tax-free, and you pay no taxes when you start taking withdrawals in retirement. You make Roth 401(k) contributions with money that has already been taxed-just as you would with a Roth individual retirement account (IRA). With a Roth 401(k), the main difference is when the IRS takes its cut. Then, contributions and potential earnings grow tax-deferred until they're withdrawn, usually in retirement. Most people are familiar with how traditional 401(k) retirement plans work: An employee contributes pre-tax dollars and can choose from a variety of investment options. For more information about the SECURE Act 2.0, please read this article or speak with your financial consultant. Please note: This article may contain outdated information about RMDs and retirement accounts due to the SECURE Act 2.0, a law governing retirement savings (e.g., the age at which individuals must begin taking required minimum distributions (RMDs) from their retirement account will change from 72 to 73 beginning January 1, 2023). ![]() (1222-2NLK) this article or speak with your financial consultant. ![]() Environmental, Social and Governance (ESG) Investing.Bond Funds, Bond ETFs, and Preferred Securities.ADRs, Foreign Ordinaries & Canadian Stocks.Environmental, Social and Governance (ESG) ETFs.Environmental, Social and Governance (ESG) Mutual Funds.Benefits and Considerations of Mutual Funds.
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