As the founder and president of Bergen Financial Group, Darcy Bergen leads a team of financial advisors in offering a range of financial services including retirement planning, income strategies, wealth management, and estate planning. Darcy Bergen and his associates at the company take into account different types of retirement plans when advising their clients.
Among the retirement plans to choose from are the Roth independent retirement account (IRA) and the 401(k). These two plans differ in key ways. A Roth IRA is set up directly with an investment firm and funded by the after-tax income of an individual. Withdrawals on a Roth IRA are not taxable. On the other hand, a 401(k) is sponsored by an individual's employer and funded by a designated portion of the employee’s pre-tax income; withdrawals on 401(k)s are taxable.
Additionally, a 401(k) has a higher annual limit of contribution--up to $19,000--as compared to the Roth IRA’s limit of $6,000 for those under 50 years old. For ages 50 and above, 401(k) holders can contribute an additional $6,000 annually, while Roth IRA holders must settle at an additional $1,000 per year.
A final key difference centers on the plans' investment options. For the 401(k), employees are limited to the investment choices of their employer, whereas the Roth IRA gives employees control over the type of investments they choose to make.
Among the retirement plans to choose from are the Roth independent retirement account (IRA) and the 401(k). These two plans differ in key ways. A Roth IRA is set up directly with an investment firm and funded by the after-tax income of an individual. Withdrawals on a Roth IRA are not taxable. On the other hand, a 401(k) is sponsored by an individual's employer and funded by a designated portion of the employee’s pre-tax income; withdrawals on 401(k)s are taxable.
Additionally, a 401(k) has a higher annual limit of contribution--up to $19,000--as compared to the Roth IRA’s limit of $6,000 for those under 50 years old. For ages 50 and above, 401(k) holders can contribute an additional $6,000 annually, while Roth IRA holders must settle at an additional $1,000 per year.
A final key difference centers on the plans' investment options. For the 401(k), employees are limited to the investment choices of their employer, whereas the Roth IRA gives employees control over the type of investments they choose to make.
