When to Switch From a Roth IRA to a Traditional 401(k)

When to Switch From a Roth IRA to a Traditional 401(k)

A Roth IRA is a far different savings account from a traditional 401(k).

They differ in tax treatment, investment options, and employer contributions. Knowing where and why they differ can help you understand when to switch over from a Roth IRA to a traditional 401(k).

The 401(k) plan, named after section 401(k) of the Internal Revenue Code, is an employer-sponsored retirement plan. Employees can designate a percentage of each paycheck, before taxes are deducted, to be diverted into their 401(k) account. Money withdrawn from a 401(k) is subject to income taxes as if it were income earned; however, investments in a 401(k) are exempt from capital gains and dividend tax.

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Source: Fool.com