To Roth or Not to Roth? That is the Question

In this episode, we answer another listener question about whether he should invest in a Traditional 401k, a Roth 401k, or both.   If you’re employed, chances are your employer offers a 401k. Normally, this would be a Traditional 401k, but check with HR to see if they offer both a Traditional and a Roth. 401ks allow you to invest your pre-taxed income, and sometimes employers will match up to a certain percent. If they do, take it — it’s free money. However, Traditional 401ks have a yearly limit as to what you can invest. Therefore, some employers will also offer a Roth 401k which allows you to invest after-taxed money from your check — there is also a limit too.   If you can afford to max out both, go for it. If not, go with a Traditional 401k, and anything over the limit to which you can invest, through that in the Roth — hopefully, your employer will do some matching there too.   Show Notes Health Savings Account (HSA) — This is a savings account you can open to use for health-related costs. Learn more about your ad choices. Visit megaphone.fm/adchoices