Take the Roth
My current employer offers a regular 401(k) and a Roth 401(k). I've got several years before I retire, so which one should I choose?
Dear Dave,
My current employer offers a regular 401(k) and a Roth 401(k). I've got several years before I retire, so which one should I choose?
-Jennifer
Dear Jennifer,
Take the Roth!
If you put your money into a Roth 401(k), and by retirement age there's $1 million in there, that money is yours tax-free. By comparison, if it's in a regular 401(k), you'll pay taxes on that $1 million, which will come out to about $300,000 - maybe $400,000 at the rate things are going now. You'll lose 30 to 40 percent of your money.
My personal 401(k) is a Roth. And in this situation, yours should be too!
-Dave
Dave Ramsey is America's trusted voice on money and business. He's authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids and is out now. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.