Roth ira account:
Contributions to your Roth ira account, are not tax deductible; but your withdrawals are tax free, after age 59 ½. To be eligible to contribute to a Roth ira account, your adjusted gross income must be under $120,000 if single and $176,000 if married. Another nice advantage of using a Roth ira account as an investment vehicle is that you can contribute to a Roth ira and your 401 k plans in the same tax year.
401 k plans:
401 k plans do operate a little differently when it comes to taxation and tax deduction. The contribution you make to your 401 k plans are in effect, tax deductible, because your taxable income is lowered by your contribution amount. Your 401k retirement account does grow tax-deferred. At retirement, withdrawals from your 401 k plans are not tax-free.
Take the time today to review your entire retirement account, your 401 k plans, your ira plan and your Roth ira account. This action today will help you turn the savings you have within those accounts into a stream of retirement income that can last throughout your entire retirement.