7 Top Differences Roth IRA vs IRA

No matter when you are planning to retire, one simple fact remains constant; you cannot rely on Social Security to support you during your retirement years.

For most, Social Security benefits will not provide sufficient retirement income.


  1. The main difference between the two is that an IRA is set up by the individual and funded with their own money, while a 401(k) is set up by an employer and usually includes contributions made by the employer as well.


  1. One account isn’t better than the other, each has its own requirements and advantages.


  1. Those that do use the Roth tend to be younger workers. Contributions to a traditional 401(k)are made with pre-tax dollars, while the Roth 401(k) offers no upfront tax break. Thus, the conventional wisdom is that older workers in their prime earning years should focus on using the traditional 401(k) given the ability to reduce their current taxable income.


  1. Withdrawals from a Roth 401(k) don’t impact your adjusted gross income. That can help you minimize the “Social Security tax torpedo.


  1. If you retire before age 65, when Medicare kicks in-and you need to purchase health insurance through the ACA exchange, using your Roth for living expenses can reduce your insurance cost. Roth withdrawals don’t count as taxable income, so your income may be low enough to qualify for subsidies.


  1. A big factor that can favor a Roth IRA is estate taxes, for the simple reason that it’s bad news to pay estate taxes on a retirement account when part of it isn’t even yours in the first place – it’s earmarked for Uncle Sam!


  1. While the Roth IRA may be favorable in many situations, it’s hardly automatic in all of them! It’s important to evaluate the details of your situation make a decision accordingly.

How to decide between Roth IRA vs 401(k)?

So, should you choose an IRA or a 401(k)?

  • Yes to 401(k) IF your employer matches your contributions: You’re able to save more than you could put in an IRA ($5,500 per year)
  • Yes to Roth IRA IF your employer does not match your contributions or you’re self-employed.
  • Yes to BOTH and IRA and a 401(k) IF you have so enough money to contribute that just one type of investment vehicle isn’t enough. As long as your employer offers a 401(k), you could do both, saving up to $23,000 a year!

2019 Roth IRA vs 401(k)

The money in your retirement accounts is protected from creditors if you are forced to file bankruptcy.

When you leave your employer, you have a few options:


  • Keep your money in your employer’s 401(k) plan
  • Cash it out (with penalties if you are under 59-1/2 years old)
  • Roll it over into another 401(k) retirement plan.

Roth IRA vs 401 (k) Advisors Buffalo,NY and Tampa FL

The process at Mintco Financial  begins with an in depth evaluation of your current financial situation.

Once we’ve established your overall objectives, we’ll focus on your specific goals.

With changing economic conditions and market swings, we advocate investing sensibly over the long run.

We work with you side by side so that you’re confident in and comfortable with the financial suggestions we make.

Contact us :

Buffalo,NY 716-565-1300

Tampa, FL 813-964-7100