What you need to know: 401K vs. Roth IRA accounts

LITTLE ROCK, Ark. (KTHV) -- Oftentimes we see 401K plans offer Roth accounts within the plan. It can be confusing to know what the differences are and which you should choose.

Financial advisor Barry Corkern shared advice on "THV 11 This Morning".

-Traditional accounts are tax deductible when you make the contribution, but taxable when you take it out at retirement

-Roth accounts are exactly the opposite, taxable when you make the contribution, but not taxable when you take it out

-There are no RMDs (required minimum distributions) for Roth accounts, which can be a problem for some of us

-Choosing between the accounts depends on your decision to pay taxes now or pay taxes later, and it is impossible to answer the question for any individual without some analysis. But generally, Roth 401(k) accounts make a lot of sense for young workers in low income tax brackets.


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