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I already have a 401k at 6% with company matching 6% also. But alittle over a year ago I enrolled into a Roth. I only give 1% and it's only at 1k. Is it worth to keep doing this or just close it and put it into the 401k and increase my 401k to 7 or 8%?
Is a Roth like the 401k where it buys shares of specific stocks or bonds. Or is it like a savings account?
I've tried searching on the site that has my 401k (trowe) but can not find my roth on there. I thought since they had my 401k they would have my Roth.
A Roth IRA is like a 401(k) in that it is category of retirement accounts. It is different though because a Roth uses post tax dollars but the withdrawls are tax free. 401(k)s and Traditional IRAs use pretax dollars but the money is withdrawn subject to ordinary income taxes. You can invest in just about anything you want like for example mutual funds.
The order of precedence is contribute to at least your company match to a 401(k), then you can either contribute more (and reduce your taxes) or contribute $5000 to a Roth IRA.
Personally, I contribute the IRS max to my 401(k), then I contribute $5000 for me and $5000 for my non-incoming producing wife (yes you can do that). Then I contribute 4 X $2000 to College Savings Accounts for my four kids. Any additional money I invest goes into S&P500 index funds. That's it.
I'll check which one it is. And is the 401k and Roth typically handed by the same company?
Not always. They may have the same broker managing the funds but the 401K could be with Fidelity and the Roth could be with American Funds, for example. You should be getting quarterly statements from your funds. If you are not, call your HR department. All the info you need should be on there.
Yes, your Roth is like your 401K where you can select different funds to put money into. You probably don't want to have the same funds for both accounts though. You may want to check with a financial planner to help you and make sure you are making good choices.
Checked my stub and it shows 401k Roth. My 401k is pre taxes but my Roth is not. I have sent an email to my HR department looking where I can go to access the account. I know I can change my 401k to pre or post taxes but don't know about the Roth. I'm a noob on this investment stuff. I figured it would be good to have 2 different types of retirement accounts to grow while the market was down. My 401k is 98% stocks with 2% in bonds
Also can I send money to my 401k outside of my paychecks? Like say from taxes I get back from the end of the year from uncle Sam?
Checked my stub and it shows 401k Roth. My 401k is pre taxes but my Roth is not. I have sent an email to my HR department looking where I can go to access the account. I know I can change my 401k to pre or post taxes but don't know about the Roth. I'm a noob on this investment stuff. I figured it would be good to have 2 different types of retirement accounts to grow while the market was down. My 401k is 98% stocks with 2% in bonds
Also can I send money to my 401k outside of my paychecks? Like say from taxes I get back from the end of the year from uncle Sam?
Your 98%/2% is pretty aggressive. You might want to back that down to 80/20, which is more stable yet still being aggressive and not missing out on the ups in the bond market. It IS good to have both a Roth and a traditional 401K so you didn't make any mistakes there. Mainly your growth is smaller in your Roth because you aren't putting much in there and you aren't getting the company match so don't worry about that too much-but do get it allocated properly.
Typically you can't put outside money into a 401k. Some plans will allow you to roll an existing 401K into it but not many. If you have tax money coming back you can put that into a Roth IRA or Traditional IRA.
It's great that you are concerned about your money and saving it properly .
Checked my stub and it shows 401k Roth. My 401k is pre taxes but my Roth is not. I have sent an email to my HR department looking where I can go to access the account. I know I can change my 401k to pre or post taxes but don't know about the Roth. I'm a noob on this investment stuff. I figured it would be good to have 2 different types of retirement accounts to grow while the market was down. My 401k is 98% stocks with 2% in bonds
Also can I send money to my 401k outside of my paychecks? Like say from taxes I get back from the end of the year from uncle Sam?
Hi there!!
I just want to throw my $.02 in.. since it sounds like your company offers similar retirement benefits as mine. My company has a 401(k) retirement plan and a Roth 401(k) plan... they match up 1/2 of my contribution up to 8% {where yours matches 100% up to 6%}.
You def. want to know who manages your accounts (401k & Roth) - so good job on inquiring with HR about that. I actually just posted a thread a week or so ago about the benefits of contributing 100% to Roth versus a ROTH/401k mix... so you may want to check that out. Eventually I'm going to do a mix.. probably 6% Roth, 2% 401(k)... Why more Roth? I'm just 27 and because I am not at the peak of my career & because of other research I've done I feel a Roth is better for me than 401(k) (others here may disagree... and that's fine, but this is my personal opinion). I am currently contributing the full 8% in my Roth... but (because it's a Roth) it does NOT lower your tax responsabilities each paycheck. So in short - I'm contributing a lot to my retirement, but still getting taxed on my full salary... which can net a check much smaller than you may like. After I do the 6%Roth/2%401k mix my check will increase - slightly.
Really, though, the choice is obviously up to you... just do your research on 401(k) versus Roth... use some of the many paycheck calculators that are available and retirement calculators as well... between all of that you should be able to see what works best for you!
Checked my stub and it shows 401k Roth. My 401k is pre taxes but my Roth is not. I have sent an email to my HR department looking where I can go to access the account. I know I can change my 401k to pre or post taxes but don't know about the Roth. I'm a noob on this investment stuff. I figured it would be good to have 2 different types of retirement accounts to grow while the market was down. My 401k is 98% stocks with 2% in bonds
Also can I send money to my 401k outside of my paychecks? Like say from taxes I get back from the end of the year from uncle Sam?
From the sounds of it you have a Roth 401k. There are actually a couple different types of retirement accounts, the quick and easy ones:
Traditional 401k, typically the one people refer to when they say "401k". This is pre-tax. Wage contributions are the only way to contribute. You can up it at any time though.
Roth 401k. This is fairly new, maybe a few years old. Contributions are post-tax on your end, and company contributions actually go into the Traditional 401k account.
Traditional IRA. Pre-tax "on your own" contributions. Many companies do them. It's a way to save extra and shield those earnings from taxes (right now). Money withdrawn early is subject to large $$ penalties.
Roth IRA. Same as above but post-tax. Keep in mind, any $$ you put into a Roth IRA can be withdrawn any time without penalty (contributions, not gains).
The way TRowe does it (I also have an employer Traditional and Roth 401k thru them) is you login and can direct X% to your Traditional and Roth 401k accounts. But company contributions will most likely always go to the traditional account. Keep in mind with your pay stub indicating you are in the "roth 401k", those contributions are actually after tax.
Update: Trowe actually has the Roth account too. I'd try to explain it but I think a picture can explain it better.
I think it just opened more stocks/bonds/funds that I was able to buy when I opened the Roth account.
Once I get my finances right I'm going to bump the Roth to 3% and increase both the 401k and Roth when I get raises so I never get attached to the raise money. And I'm keeping it this risky, until I get older. I've debated on opening my 401k to all stocks (company offers it) but it is really complicated on all the fees.
Keep in mind even if you are contributing fully to the Roth 401k, the company match (6% I think for you?) is going into the Traditional 401k. So you are really splitting your pre/post tax savings 50/50.
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