How To Decide Between 401K And Roth 401 K?

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   David G. Pipes, CLU®, RICP®

   Business Development Officer, T.D. McNeil Insurance Services, Fresno, California

   The decision is based on when you want your money taxed. In a standard 401(k) plan the money is deducted from payroll and not reported as income. The benefits when withdrawn are fully taxable as ordinary income. With a Roth 401(k) the benefit is paid with after-tax dollars, however, the entire benefit (principle and earnings) is free of income tax if the plan has been in force 5 years and you are more than 59.5 years old, disabled or using the money for a first time home purchase.

   Answered on February 3, 2015

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