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Traditional or Roth? 401(k)

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  1. Which option is right for you? Traditional or Roth? 401(k) Pension Maxima Investment Advisory

  2. Traditional versus Roth 401(k)

  3. Which one is more advantageous? Scenario (1): Tax rates at contribution and withdrawal are the same.

  4. Which one is more advantageous? Scenario (2): Tax rate at contribution is greater than tax rate at distribution

  5. Which one is more advantageous? Scenario (3): Tax rate at contribution is lower than tax rate at distribution

  6. Application: Traditional or Roth?

  7. Other Tax Considerations for Traditional 1. Moving money to Traditional can help drop a tax bracket. Example dropping from 25% to 15% can mean huge savings! 2. First $11,500 in earnings are normally tax free or taxed at a very low rate. You should always keep some money in Traditional for tax free or low tax withdrawal before you start distributing from Roth.

  8. The End The information regarding investment contained herein is general in nature and should not be considered legal or tax advice. Pension Maxima Investment Advisory does not provide legal or tax advice. This information is provided for general educational purposes only and you should bear in mind that laws of a particular state and your particular situation may affect this information. You should consult with your attorney or tax advisor regarding your specific legal or tax situation